East Coast Main Line

Thursday 27th November 2014 Commons Chamber

10:35

[Michael Dugher (Barnsley East) (Lab)]

(Urgent Question): To ask the Secretary of State for Transport to make a statement on the Government’s decision to award the franchise for the east coast main line.

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

This morning, I announced the intention to award the InterCity east coast franchise to Stagecoach-Virgin, exactly on the schedule that we promised two years ago. That is great for passengers. It will bring more trains, faster trains, newer trains, better services and better value for money. It is good for towns and cities up and down the east coast. It is good for our economy and for jobs. It is proof that the right route forward for our railways is the private sector and the public sector working together. This deal will make the route of the Flying Scotsman a world-beater once again.

We have heard different advice from the Opposition—led, of course, by the unions. They told us to leave the route in the hands of the emergency public sector operator. They do not understand how that would deny the east coast line new ideas and investment. They do not understand that the operator was set up as a short-term measure by the last Labour Secretary of State for Transport. That is why the noble Lord Adonis said at the time:

“I do not believe that it would be in the public interest for us to have a nationalised train operating company indefinitely”.—[Official Report, House of Lords, 1 July 2009; Vol. 712, c. 232.]

Indeed, the then Minister of State at the Department for Transport, the right hon. Member for Tooting (Sadiq Khan), said that

“one reason we are able to invest record sums in our railway service is the revenues that the franchises bring in and the premiums that they pay”.—[Official Report, 1 July 2009; Vol. 495, c. 430.]

They were right then and they are wrong today.

It is this Government who are powering ahead with better plans for our railways. The new franchise will be good for people who use the line. The deal will strengthen the vital links from London to Scotland, all the way along the route as far as Aberdeen and Inverness. Passengers will benefit from regular, faster, more frequent services to places such as Falkirk, Stirling and Edinburgh. Journeys between London and Edinburgh will regularly be down to just 4 hours by May 2020. Leeds will see regular journey times go down to just 2 hours.

Places such as Leeds, Bradford, Shipley and Harrogate will see more direct services each day. Sunderland, Middlesbrough, Huddersfield and Dewsbury will get new east coast services. There will be the first direct service from Huddersfield to London since the 1960s. Lincoln, which gets just one train a day to London under the current operator, will get one every two hours with the new one. We have protected the service levels to every current main line station as well. By May 2020, all those destinations will be served by the new intercity express trains, which will be built in the heart of the north-east at the new plant in Newton Aycliffe.

I ask the hon. Member for Barnsley East (Michael Dugher): why does he want to deny the north all those benefits? The new operator will provide 50% more capacity across the east coast network, a 40% increase in peak seats to and from King’s Cross, and a refurbishment of the existing fleet. It will cut some of the most expensive fares by 10% from May next year.

The franchise is not just good for the passengers; it is good for the staff. There will be investment in skills, with a graduate programme and new apprenticeships. There will be a national academy for rail professional education based in London, York and Derby. The franchise is good for taxpayers, too. It will run for eight years, with the option to extend it for a further year. In that time, it will return £3.3 billion in premium payments to the taxpayer. These figures are robust and have been subject to rigorous scrutiny, including by independent auditors. The deal will bring more services, more passengers and a growing return.

The Government’s franchising programme is creating the railways that this country needs. Passengers in Essex, London and the south-east already benefit from the improved services that a partnership between the public and private sectors can provide for our railways. This award is further proof that private competition is good for passengers, staff, communities and taxpayers. The quality of the new operator’s plans will benefit the whole country.

[Michael Dugher]

If this is such a good deal, why did the Secretary of State not offer to come to the House and make a statement, to share all the good news with us? Are the Government desperate to avoid scrutiny of their shambolic approach to franchising, which has cost the taxpayer millions of pounds?

First we had the west coast fiasco, which wasted £50 million, and then Ministers presided over the loss of hundreds of millions more, with delays to investments and franchise extensions. Now, on the east coast main line, we see Conservative dogma on privatisation put before the interests of the travelling public.

It is absurd in the extreme that our own public operator should be the only rail company in the world that has been barred from challenging to run its own services. It is not too late to halt the process, but given that the Secretary of State is adamant that it will go ahead, that we are only months away from an election and that there is no political consensus for this major decision, will he give a formal written ministerial direction to his permanent secretary to outline that he is still insisting on proceeding with this flawed process?

The Government say that £3.3 billion will be paid to the Exchequer over eight years, but the operator says it will be £2.3 billion. Why the discrepancy? Is the Secretary of State’s announcement already unravelling? Given that Virgin charges some of the highest peak fares in the country on the west coast, will passengers on the east coast main line face more fare rises to pay for this decision? Is it time that the Government legislated to allow a British not-for-profit public sector operator to take on and challenge train operators on a level playing field?

It is clear that the whole franchise process should never have happened. It was rushed through on a rigged political timetable, and by the time this service is privatised it will have paid more than £1 billion to the Exchequer. The entire process is a disgrace. The taxpayer and the travelling public have been sold down the river.

[Mr Speaker]

Order. I point out that this urgent question got off to an over-long start because in seeking to be informative, the Secretary of State went way beyond the allotted time for a ministerial response. I want to accommodate colleagues but we have a short period, so pithiness is of the essence.

[Mr McLoughlin]

Thank you, Mr Speaker. I welcome the hon. Member for Barnsley East to his position. He is no stranger to the Department for Transport because he was special adviser to Stephen Byers when he was Transport Secretary—a time of glorious indecision for our railways. This is the third shadow Secretary of State I have witnessed during my short time at the Department. No doubt if I wait a bit longer, another one will be along shortly.

The hon. Gentleman mentioned dogma, but I think the dogma comes from the party that did not implement any of these measures when it was in a position to do so. When Labour had 13 years to set up a public sector operator, it rejected that. Directly operated railways were always there as a matter of last resort. On the subject of dogma, the hon. Gentleman is speaking for ASLEF and the Transport Salaried Staffs Association, repeating what they are saying almost word for word. They have given more than £350,000 and £220,000 respectively to the Labour party, so I will not accept comments about dogma from Labour Members.

I am also interested in what the right hon. Member for Edinburgh South West (Mr Darling) said on franchising:

“One of the purposes of franchising is to ensure that we get better value in respect of the subsidy paid in the particular case, but we also want better services.”—[Official Report, 1 February 2005; Vol. 430, c. 703-4.]

That is exactly what I have announced this morning for the east coast main line: better services to towns and cities that have not been served since the 1960s. The party that represents dogma sits on the Opposition Benches; the party challenging Britain’s railways and companies to come forward with new and better services, serving more communities than ever, sits on the Government Benches. We have seen the railways grow, from providing services for 760 million passengers to providing them for 1.6 billion passengers last year. This is a time of great renaissance for the railways—something that I celebrate, but the Opposition complain about.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Extreme brevity is now required. Let us be led by Mr Philip Davies.

[Philip Davies (Shipley) (Con)]

Thank you, Mr Speaker. As the Secretary of State knows, I have long lobbied for additional railway services on the east coast line to Shipley and Bradford, so I very much welcome his statement today. Will he confirm exactly how many additional services there will be to Shipley and Bradford, when they will come on track and what can be done to try to speed up the process?

[Mr McLoughlin]

I am very happy to write to my hon. Friend with the exact details of how many extra services there will be. There will be a great increase, with six services overall to Shipley—in 2018-19, I think—as a result of the new intercity express programme trains that will serve the line. I am happy to provide my hon. Friend with more information in due course.

[Julie Elliott (Sunderland Central) (Lab)]

Why do the Government think it is better for our country to pass the profitable east coast main line into private hands, with money going to shareholders rather than the people of this country, and throw out TUPE regulations, which will jeopardise the terms and conditions of the work force on the east coast main line?

[Mr McLoughlin]

I am not quite sure why the new old Labour party, led by the right hon. Member for Doncaster North (Edward Miliband), is so concerned about profits. Profits are not a bad thing. They go towards paying pensions and towards rewarding people who invest in companies. A number of people the hon. Lady represents rely on pensions that are generated by profits. That, I would have thought, is a good thing. It is not just about profits. The overall return to the rail franchises is 3%. Investment by the rail companies has resulted in tremendously better services for passengers up and down the country.

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

Does the Secretary of State recognise that what matters to my constituents is not who owns the operator but whether the trains are on time, clean, reasonably priced, retain good staff and stop at places such as Berwick and Alnmouth?

[Mr McLoughlin]

Indeed. I think the right hon. Gentleman will agree that the new trains, which will be built in the north-east shortly, will be of tremendous benefit on this particular line and will provide the investment the line has wanted for many a year.

[Roberta Blackman-Woods (City of Durham) (Lab)]

I hope the Secretary of State will forgive me if I do not share his enthusiasm for today’s announcement. Some of us have been here before, with private sector companies promising the earth to win contracts and then not delivering in practice. Why did the Government not listen to local people and keep the excellent East Coast in place as a public sector comparator? What will he do to ensure the promises that have been made will be delivered?

[Mr McLoughlin]

The people who are serving on East Coast trains now will be the people serving on the new InterCity franchise that I have announced today. I will quote another Labour Member of Parliament; that seems to be a bit of a habit this morning. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) said:

“will he be fair to the marvellous train crews of Virgin Trains, who give extraordinarily good service, and tell them that their future is assured? Will he simply award the franchise to Virgin, which has carried it out brilliantly?”—[Official Report, 15 October 2012; Vol. 551, c. 53.]

In fairness, he was referring to the west coast main line, but if I go back to that statement I could quote those people time and again.

[Sir Edward Leigh (Gainsborough) (Con)]

For years in north Lincolnshire, we have been arguing to get back our through-train from London to Grimsby via Market Rasen. At the moment, the train stops at Lincoln. What hope is there of getting back our train?

[Mr McLoughlin]

If my hon. Friend presses me further, I will certainly come back to him in more detail. It is tremendous news that we have increased the number of trains to Lincoln to six a day, but I know that colleagues want services to go elsewhere, which is why the study being done with northern authorities on the northern powerhouse strategy is looking at how to improve connectivity for our market towns and cities in the north.

[Mr Dennis Skinner (Bolsover) (Lab)]

Does the Secretary of State agree that both times the private sector has run the east coast line it has been a failure, whereas the public sector, which has been running it for some considerable time, has handed over more than £1 billion to the Treasury? Why change a winning formula? Why does he not agree with the 70% of the population—I am one of them—who believe that rail should be brought back into public ownership?

[Mr McLoughlin]

I wish I could say I am surprised by the hon. Gentleman’s announcement that he is one of those who would like to see the railways re-nationalised. When we had a nationalised railway system, it was dying on its legs. It was providing only 760 million journeys a year, whereas today’s railway provides 1.6 billion and employs more people—more people working on our railways, more people using our railways. I thought he would welcome the fact that instead of a dying, declining industry, today it is a vibrant industry employing more people and improving opportunities for everyone, whatever their background. I celebrate that; he is disappointed by it.

[Andrew Percy (Brigg and Goole) (Con)]

There is no doubt that the east coast rail service has been good over the past five years, but it has lacked new investment, so I welcome today’s announcement. Will the Secretary of State confirm that the thing we hope for and desire—direct rail services to Grimsby, in my case via Scunthorpe—remains a possibility and that he will work with us to see how viable it is?

[Mr McLoughlin]

I shall certainly work with my hon. Friend to see whether we can accommodate what he wants. As I have often pointed out, 25 years ago I was a junior Minister in the Department for Transport, and in those days it was thought that the railways were yesterday’s business. Today, wherever I go, I am lobbied by MPs for more direct services from their constituencies. I celebrate that we are today announcing 75 new destinations for this service.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Secretary of State not realise that most people in Yorkshire think that privatisation has been a disaster for train services across our region? It has been rotten, and it will still be rotten under this new arrangement. We do not believe in pie in the sky. I am not the most radical Member on the Labour Benches, but I have been persuaded that we need to take the rail system back into public ownership. That is what we deserve.

[Mr McLoughlin]

I think the person who has just spoken is the hon. Member for Huddersfield, yet we heard not a single welcome for the new train service to Huddersfield. He would rather talk about dogma than celebrate the first direct link to his area since 1960. That sums up the Labour party 100%: it is the Labour party of Kinnock, rather than Blair or Brown.

[James Wharton (Stockton South) (Con)]

More trains; more investment; more money back for taxpayers; a link for Thornaby, in my constituency; a link for Middlesbrough; trains built down the road in Aycliffe—does my right hon. Friend agree that this is good news not just for passengers and taxpayers, but for the economy of Teesside?

[Mr McLoughlin]

Indeed it is. The decision by Hitachi to base its plant in the north-east, bringing more than 700 new jobs to the area, has been universally welcomed.

[Karl Turner (Kingston upon Hull East) (Lab)]

Why is the only public operator effectively barred from competing and operating the line, despite having reinvested £800 million into services rather than into the pockets of shareholders?

[Mr McLoughlin]

For the sake of brevity, I will refer the hon. Gentleman to my earlier answers.

[Julian Smith (Skipton and Ripon) (Con)]

I welcome the statement. It is great news that Yorkshire will get so many services from this deal. Could the Secretary of State say a little more about services to Harrogate and Thirsk, which serve my constituency, and more about Skipton? I know that my right hon. Friend was thrown off the station at Settle, but I hope he will fight for a Skipton daily service.

[Mr McLoughlin]

What I am announcing today is extra services right across the line. I hope that the services to my hon. Friend’s constituency will see the benefits of that, as well as of the new intercity express trains, which will be coming on course in just a few years’ time.

[Mr Speaker]

I cannot imagine the Secretary of State being “thrown”. It would be a deeply onerous task, accomplished not without emotion.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

The Secretary of State has made much of the potential benefits for employees, but is it not the case that he has ensured that TUPE will not apply, thus jeopardising the terms and conditions of the work force?

[Mr McLoughlin]

I think the hon. Lady is on to a technical point, but it will be a transfer over. It is a transfer over of the staff, who will be there on the same terms and conditions as they are at the moment—apart from those employed by Agility Trains.

[Sir Menzies Campbell (North East Fife) (LD)]

When will the better services to which my right hon. Friend refers include the electrification of the east coast main line between Edinburgh and Aberdeen? I ask that not least because it serves four stations in my constituency.

[Mr McLoughlin]

That may be a matter for the Scottish Parliament. If my right hon. and learned Friend does not mind, I would prefer to write to him about that.

[Mr Stephen Hepburn (Jarrow) (Lab)]

As a regular user of this service, I agree with the Secretary of State that East Coast making a profit is not a bad thing. The difference is that we want that £1 billion profit going back to the people of this country—not lining the pockets of his Tory friends.

[Mr McLoughlin]

The fact is, as I said, that directly operated railways have basically paid £1 billion to the Exchequer over the past five years. The new intercity express will pay £3.3 billion over eight years.

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

I welcome my right hon. Friend’s announcement, particularly in respect of the six additional trains per day running between London and Harrogate. I think this is a transformation of our services in Harrogate and Knaresborough. Does my right hon. Friend agree with me that this deal represents a huge boost—not just to our part of the economy, but to that of the whole of the north of England?

[Mr McLoughlin]

I do indeed. My hon. Friend can look forward to those extra services for his constituency, along with the others to which I have referred. We are talking, basically, about an increase of some 33% of services across the board, with 75 new destinations being served as a result of this morning’s announcement.

[Graeme Morrice (Livingston) (Lab)]

Unlike the currently successful and profitable publicly owned service on the east coast main line, the previous two private operators failed—a point raised by my hon. Friends. What guarantee can the Secretary of State give that this latest franchise will not be third time unlucky?

[Mr McLoughlin]

Let me simply point out that a number of things have changed. The hon. Gentleman refers to franchises that were left by the last Government. Issues have been changed by this Government, and all the other franchises on the railways are currently running to the budgets that we have required of them. Some of them are subsidy receiving, but most are premium payments.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Thirsk and Malton will welcome a public-private partnership delivered by tried and tested operators. Will the Secretary of State confirm that there will be increased services from York that will take a shorter time, and will he let us know the balance between first class premium fares and standard class fares?

[Mr McLoughlin]

I might have to write to my hon. Friend on the details of the balance between premium and standard fares, but we have seen a tremendous improvement with the technology surrounding advanced booking, giving people some very good deals when they book their tickets in advance.

[Helen Goodman (Bishop Auckland) (Lab)]

Whoever runs the franchise, trains will be made at Newton Aycliffe. Will the Secretary of State please explain why he was quite content for a French nationalised industry to bid, but not for a British one to do the same?

[Mr McLoughlin]

I have no objection to foreign companies wanting to invest in this country. I would have thought that the hon. Lady welcomed the fact that Hitachi is building new plants in Newton Aycliffe. She is not decrying Hitachi because it is a foreign company, is she? I have no objection to foreign countries wanting to invest in the United Kingdom. I welcome it.

[Jason McCartney (Colne Valley) (Con)]

We shall have 3,000 extra seats during the morning peak time, 65 new state-of-the-art trains, a 10% reduction in long-distance Anytime fares and the first direct service from Huddersfield to London since 1960. Will my right hon. Friend continue to put passengers at the forefront of these new services?

[Mr McLoughlin]

I am grateful to my hon. Friend for what he has said, but I should point out to him that this is not just about passengers. It is also about staff—the staff who deliver a fantastic service on the east coast main line, and who will now be given better training. I think that the national academy—which, as I said earlier, will be based in London, York and Derby—is very good news for the people who work on our railways, as well as the passengers who travel on them.

[Alison McGovern (Wirral South) (Lab)]

Virgin fares on the west coast main line are excruciating. Will the Secretary of State tell us what he can do to protect passengers on the east coast line?

[Mr McLoughlin]

As I have said, some of the top fares will be reduced by 10% in May. Moreover, if passengers buy tickets in advance, they can obtain some very good deals.

[Mr Philip Hollobone (Kettering) (Con)]

Will the Secretary of State confirm that he has announced extra investment in our railways, extra services, extra trains, extra seats, and British-built trains for British passengers? Does he share my dismay at the economic illiteracy of Opposition Members, given that this is a good deal for passengers, a good deal for everyone who wants our economy to improve and a good deal for taxpayers, who will receive £3.5 billion back from these companies?

[Mr McLoughlin]

I do not think that I need to answer my hon. Friend’s questions, apart from the one about whether I was surprised by the attitude of the Opposition. The answer to that question is no.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

The Secretary of State’s idea of a public-private partnership seems to be “Private failure and public bail-out; private profit and public subsidy.” When I catch the train to Newcastle in two hours’ time I will ask the staff what they think, but in the meantime, can the Secretary of State confirm that there will be no reduction in direct services from Newcastle to London, no increase in prices—and no action from the Government when they fail to deliver on their long list of promises?

[Mr McLoughlin]

What I have announced amounts to extra points. But I see that we have now been joined by the right hon. Member for Edinburgh South West (Mr Darling). I can do no better than quote what he said when he was Transport Secretary:

“franchising is to ensure that we get better value in respect of the subsidy paid in the particular case”. —[Official Report, 1 February 2005; Vol. 430, c. 703-4.]

We also get better services. There will be increased services and faster services from Newcastle, and I think that the people of Newcastle will get a better deal.