Rail Services

Wednesday 17th May 2023 Lords Chamber

Statement

The following Statement was made in the House of Commons on Thursday 11 May.

“In my most recent Oral Statement to the House, I made clear the Government’s commitment to deliver a railway that works for passengers, businesses and the taxpayer. Where services are not up to scratch, we are holding operators to account, and where there are systemic weaknesses in the industry, we are pushing ahead with reform. So I wish to update the House today on our progress, starting with the future operator of the TransPennine Express contract.

Since I took office, I have been clear that First TransPennine Express’s service levels have for too long been unacceptable. Passengers, including many honourable and right honourable Members across this House, have faced significant disruption, including regular cancellations and poor levels of communication. The underlying reasons behind this vary, but what is clear is that the twin challenges of Covid and industrial action have left their mark. First TPE’s driver training backlog now stretches to nearly 4,000 days, which means that, at any one time, it can draw on only 80% of its total driver workforce. Add to that a breakdown in relations between the operator and the driver union ASLEF, all told, there simply have not been enough drivers to run the planned timetable. Inevitably, passengers have borne the brunt, facing cancellation rates of up to 23% on Monday to Friday services and gaps in services on some routes of up to six hours. That clearly is not good enough, a point I have made directly with FirstGroup, which owns First TPE, and which the Rail Minister—the Minister of State, Department for Transport, my honourable friend the Member for Bexhill and Battle (Huw Merriman)—has made in weekly meetings with the Rail North Partnership, where Transport for the North jointly manages First TPE’s contract with the Department for Transport.

We will always hold operators to account for matters within their control. We will give them a chance to put things right, but despite a recovery plan put in place since February, there remain significant challenges underpinned by ASLEF’s distinct lack of co-operation. To achieve the performance levels I expect, passengers deserve and the northern economy needs, it is clear that both the contract and the underlying relationships must be reset. I have therefore decided not to renew or extend First TPE’s contract when it ends on 28 May. Instead, I am exercising my operator of last resort duties and directly awarding a new TPE contract to a public sector operator that will manage it on my behalf.

As Transport Secretary, my obligation, first and foremost, is to secure passenger rail services on which TPE passengers can rely. That requires a new approach, and one that the OLR is best placed to deliver in these circumstances. Most significantly, it provides an opportunity to reset relations between management and all stakeholders—from passengers to trade unions. I have also asked my officials to review services in the north to help drive efficiency and find better ways to deliver for passengers across the region, and I will ask all interested parties, including the northern mayors and Transport for the North, to engage with the Government on this work.

While today’s decision will be welcomed by many and while it shows a Government alive to the concerns of passengers, as my honourable friend the Rail Minister and I have made clear, it would be misguided for anyone to think this is an instant solution. The problems First TPE faced will not disappear overnight. Any operator facing industrial action and a union co-ordinated ban on overtime working will struggle to run a reliable service. So I invite those who have long called for today’s decision, including unions, northern mayors and colleagues across the House, to work constructively with me and the Rail Minister to fix the underlying problems and help return the service levels to where they should be. The OLR is just the next stop on the line—it is not the terminus station—and once market conditions allow, we intend to subject this and indeed all contracts, both private sector and those under the OLR, to competitive tendering.

There will be some, unfortunately, who use today’s decision to further their ideological ends, and to argue that this justifies all rail contracts being brought under public control. That would be a mistake. The majority of taxpayers do not use the railways regularly, but they could be saddled with the huge costs of nationalisation, only to inherit the industry’s problems with no plan to fix them. Nationalisation is a soundbite, not a solution, and this Government will always be guided by the evidence to help make the best decisions for passengers. That is why, earlier this year, having seen the noticeable improvements on Avanti West Coast, I resisted calls to bring the franchise into public ownership. I extended Avanti’s contract by six months—a decision vindicated, with Avanti-caused cancellation rates at the end of March falling to 1.4% from 13.2% in January, and continuing to improve, despite ongoing challenges.

Let me now turn to industrial action. For months, the Rail Minister and I have worked hard to change the tone of the dispute, and help facilitate fair and reasonable pay offers for workers. In negotiations with train operating companies, the RMT and ASLEF are refusing to even put those pay offers to a vote of their members, despite RMT members who work for Network Rail voting overwhelmingly to accept a similar deal earlier this year. Instead, the RMT has balloted for yet more industrial action and, along with ASLEF, it has cynically called strikes that will cripple the network during the Eurovision Song Contest this week. We are hosting Eurovision because last year’s winner, Ukraine, cannot. It will be an event attended by displaced Ukrainians who have fled Putin’s war, and the House has just been hearing about that threat, so it beggars belief that unions have chosen to disrupt such an internationally symbolic event—one that not only presents a united front against Russia’s aggression but shows solidarity with Ukraine’s resistance. So my message on behalf of fed-up passengers is to say to the union leaders, “Call off your strikes, put the fair and reasonable pay offers to a vote and give your members a say on their future.”

With or without the unions’ support, the industry must modernise to avoid permanent decline, and we are building unstoppable momentum towards rail reform, as I set out in my Bradshaw address in February. I have announced that Derby will be the location for the new headquarters of Great British Railways, and today I can report progress against the commitment I made to extend single-leg pricing to the rest of the London North Eastern Railway network. Tickets will go on sale from 14 May for travel from 11 June, and it means that LNER passengers will benefit from simpler, more flexible and better-value ticketing, removing the frustration that a single ticket can cost almost as much as a return.

In conclusion, since becoming Transport Secretary, my approach has been to listen to the experts, weigh up the evidence and make decisions in the interests of the travelling public. Today’s announcements show a Government tuned in to the concerns of passengers in the north, unafraid to take tough decisions to deliver better services, and relentlessly focused on modernising our railways while protecting passengers from the effects of industrial action. That is what the British people deserve, it is what we are delivering, and I commend this Statement to the House.”

18:43

[Baroness Taylor of Stevenage (Lab)]

My Lords, it would be churlish not to welcome a sensible, if very belated, decision from the Government to remove the TransPennine Express route from FirstGroup. The appalling service suffered by people and businesses in the north, at the hands of TransPennine Express and other rail networks, has finally been acknowledged by the Government, and their decision indicates that they can no longer go on defending the indefensible, at least in the case of this railway.

TransPennine’s appalling record of cancellations—almost one in five trains cancelled and fewer than half the services on time—begs the question just why it took so long for the Government to provide at last some light at the end the tunnel for passengers and take the service back into public ownership. East coast services, Northern Trains, London and Southeastern, and now TPE, have all had to be nationalised since the Tories came into office. Will the Minister now admit that the rigid model of privatisation so keenly promoted by her Government has comprehensively failed? We now need to reassure passengers and businesses that services will improve. What steps are the Government taking to bring about the rapid improvement in service on TPE that we all want to see?

When I challenged the Minister recently about the profits of rail operators—profits which seem quite extraordinary to passengers in the face of such failure—she said that they related to a time before the delays and cancellations were a problem. In fact, the issues with TransPennine go back at least seven years. In August and December last year, shareholders cashed in a £15 million bonanza, paid out at the same time as passengers were facing more than half of trains running late. How can the Government continue to justify this profiteering when they now agree that this operator has behaved so poorly that its contract must be removed?

What is being done under the operator of last resort to address the issues of poor management which have led to this horrible failure of service to the travelling public? Will the Government now do their job and get round the table to resolve the industrial relations issues which have exacerbated the problem?

What plans are there to ensure that the right levels of investment are made in TPE to ensure that it delivers the reliable, excellent service that the region deserves, and to ensure that passengers do not have to endure the dangerous overcrowding which has characterised TPE for so many years?

We all know that these problems are not limited to TPE. Surely it is time for the Government to legislate for reform of our whole railway system to create Great British Railways, which will also drive contractual and fare reform. This will deliver much-needed improvements to the railways for passengers and freight customers, and for the taxpayer, who will then be investing in the success of our railways—not picking up the tab for their failure.

[Baroness Randerson (LD)]

My Lords, I thank the Government for this Statement, and I welcome the decision. It really was the only one possible, because TransPennine Express not only was hopelessly failing to improve and to deliver an acceptable service but was guilty of wilfully attempting to deceive customers—and indeed the Government—by using P cancellations as routine. P cancellations are of fundamental inconvenience to passengers; they were going to bed in the evening thinking that they could get their early-morning train and waking up to find that it had been cancelled.

All areas of the country suffered from Covid, but not all train operating companies made such a hash of staff relations. I have said in this House before that I travel every week on Great Western Railway, and its recovery has been much smoother. It has relatively few cancellations, and the staff are pleasant, helpful and very well trained. Every week, I am very pleased that I am travelling on Great Western and not TransPennine. This Statement is long on anti-union rhetoric, but it fails to recognise or to say with any grace that good management in the rail industry is fundamental. It is important that good management in those train operators that have managed the situation well is recognised.

I am very pleased to see recognition in the Statement of the potential positive role of regional transport authorities. I was delighted to see that, and I hope it is fully followed through. However, the Statement says

“we are building unstoppable momentum towards rail reform”,—[Official Report, Commons, 11/5/23; col. 488.]

but there is no sign of the Great British Railways legislation which is fundamentally needed to sustain and boost that process. The Government will say that it is possible to create a lot of that structure without the actual legislation. However, in reality, you need the controlled, guiding mind to drive through all the other changes beyond those that can be done without the legislation. The uncertainty that currently exists has a crippling effect.

In practice, since Covid, we have, in effect, a nationalised rail industry, because the Government in the shape of the Department for Transport takes day-by-day, detailed decisions and does day-by-day, detailed funding. Therefore, despite the anti-nationalisation rhetoric in the Statement, without the legal creation of the mixed public-private vision of GBR as a concept—with which I agree—this Tory Government will bequeath a nationalised rail industry to their successor at the general election. We need a refreshed, cleaned-up service based on a contractual system that replaces the current failed train operating company franchise system, and we need a simplified, cheaper fare system. I would be very grateful if the Minister could address in her response what government plans there are for GBR legislation, whether that is definitely now kicked into the long grass beyond the general election, and, specifically, what, if any, government plans there are to introduce a wholesale, simplified fare system.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

I am grateful to both noble Baronesses for their contributions and I will endeavour to answer as many questions as possible. I will start with the noble Baroness, Lady Taylor, who asked, “Why now?” Of course, it is very simple: it is because the contract is coming to an end. It is coming to an end on 28 May, so that is why we made the announcement on 11 May that the contract would come to an end and indeed it would then be handed over to OLR. Obviously, the decision was taken after much consideration. It was important to work in accordance with the policy statement that we had already published. We considered carefully whether to extend or award a new contract, and, after very careful consideration and with regret, we decided not to do so.

However, the Government are clear that we want to hold train operating companies accountable for those things that are within their control, and it is also clear that at TPE there were many things that were not in the management’s control and which will have impacted the services that were delivered to passengers. That included a very high level of absence, obviously the complete lack of rest-day working, and some very interesting shenanigans from the noble Baroness’s friends at ASLEF. In April 2023 they were offered literally the same deal for rest-day working that they had in December 2021 but they managed to say that that was not good enough. I do not know—I do not understand it any more. Clearly, we are in a situation where nothing is ever going to be enough, but of course it is the passengers who are suffering at the hands of the Labour Party’s friends.

Other issues have impacted TPE. It has had a much higher level of driver departures than would normally happen: 56 versus 25 in a normal year, and each one takes 18 months to replace. It is with regret that we felt that, despite an encouraging recovery plan, it was not going to reach a good conclusion. The reason why we felt that OLR was the right course of action is because it is an opportunity to reset and review. I say “reset” because there certainly needs to be a resetting of the relationship between TPE and all its stakeholders, whether that be government, the trade unions or indeed, quite frankly, their very poorly served passengers. Everybody within the industry wants TPE to succeed—except, potentially, the trade unions, which are not behaving as they should. I encourage all stakeholders involved in this, which includes the northern mayors and lots of council leaders, to work together to try to reach a good solution.

The Secretary of State has asked for an official review of services across the north to look at their effectiveness and delivery. It is worth recalling, and it seems rarely to get mentioned, that the TPE contract is the joint responsibility of the Department for Transport and Transport for the North, on which many Labour politicians sit. It is important to understand that chucking blame around about how ghastly the department is, is not really very helpful. We all have to work together to improve TPE’s services, and I hope we will be working closely, hand in hand, with Transport for the North to do that.

The noble Baroness once again brought up the issue of profits and dividends. I cannot give her a finance 101 class, because it would be wrong and potentially a bit rude. However, dividends are of course not the same as profits, as I am sure the noble Baroness understands. I cannot address that any further: I have tried before and it probably did not work, so I will just have to leave it.

As the noble Baroness will know, there are a number of reforms that we can do now. The key to that is work- force reform. The transition team is doing the long-term strategic plan. Workforce reform is key, but that has stalled. Why has it stalled? I think the noble Baroness knows the answer without me telling her.

Turning to the comments of the noble Baroness, Lady Randerson—

[Baroness Taylor of Stevenage (Lab)]

On the Minister’s last point, I did raise the issue of management. There are two sides to the story in any industrial relations issue, and there has clearly been some poor management involved here. I am not going to put blame on one side or the other, but I did ask the Minister to comment on how poor management in TPE was going to be addressed. On the issue of profit, TPE passengers find it extraordinary that such huge profits were taken and that they resulted in dividends to shareholders. This company, which had run the service so badly, was being rewarded, as were its shareholders, for that failure. Passengers find that extraordinary.

[Baroness Vere of Norbiton (Con)]

But of course they were not. But anyway, we have been around those houses many, many times, and I am frankly unwilling to do so again.

Had the noble Baroness let me finish my remarks, I would indeed have discussed the issue of management, in order to cover some of the issues raised by the noble Baroness, Lady Randerson, but as she has once again raised it, this is what I meant by the review and reset moment. It is an opportunity for the OLR to come in. It will look clearly at every aspect of the business, including the recovery plan, with fresh eyes, and I very much hope that there will be a renewed attempt to encourage the trade unions to think very carefully about the future of the rail industry in this country, for which, as I have said before, I am deeply fearful.

Turning to the comment of the noble Baroness, Lady Randerson, about P codes, she seemed to think that there was deception of the Government. I could not quite understand why that would be the case. I absolutely accept that we need to do something about the use of P codes, which are used by very few train operating companies. As she knows, the Office of Rail and Road is looking carefully at how it can improve the coverage of P code cancellations. From an industry perspective, we should make sure that they are almost never used, but sometimes they can be because there is train crew or rolling stock unavailability. Often, P codes can be used because there is engineering work, or whatever, which is clearly beyond the control of the train operating company.

As for somehow deceiving the Government by using P codes, I cannot see how that is possible, because the information about the performance of the train operating companies is assessed by independent evaluators. Unless the noble Baroness is suggesting that the train operating companies are pulling the wool over the eyes of the independent evaluators, of which I can see no evidence at all, I do not think the issue of P codes is wholly relevant in judging performance. It is relevant to the information provided to passengers, and that is why we asked the Office of Rail and Road to dig into it and think about how we can publish the most useful information. Of course, our ultimate goal is not to have short notice cancellations on or before the day due to lack of rolling stock or train crew.

The noble Baroness also mentioned the involvement of regional set-ups in rail, and I agree. That already happens with Transport for the North being involved in both TPE and Northern. Clearly, it is not a silver bullet, because TPE has gone the way it has despite the involvement of Transport for the North, but we agree with her that in future, making sure that strong regional economies are involved in their rail is critical.

We want to progress many elements of rail reform. We will bring legislation forward when parliamentary time allows. On simplified and cheap fares, I hope the noble Baroness has seen the announcement by LNER of a simplified single-ticket system, because that is the direction of travel. We do not want to roll it out across the entire system all at once because that might cause chaos, and then we would be accused of not having thought it through. But we are bringing it out—people will be able to buy tickets halfway through this month, so, very soon—to see how it works, because we believe it is a big step forward. I hope the noble Baroness will try it, and I will be very happy to take feedback from any noble Lord who has a go.

19:01

[Lord Beith (LD)]

My Lords, on the Scottish borders we have the absurdity that new stations are being opened—at Reston, for example, and East Linton—where the principal provider of trains is TransPennine. However, the service is so unreliable that it does not bother to publicise it, and it changes it at 10 pm anyway. The nationalised operator of LNER seems to be doing a not perfect but reasonable job in the circumstances. What confidence does the Minister have that the nationalised operator can tackle the problems that both sides of the House have talked about, which cannot be allowed to continue in their present state?

[Baroness Vere of Norbiton (Con)]

I agree that things cannot be allowed to continue in their present state. That is why we have brought in LNER, which will perform its duties and review every aspect, as I said earlier. Noble Lords should understand that this is not a silver bullet. I do not think we can expect a substantial change very soon, because we still have no rest-day working, as ASLEF will not allow it. Even if train drivers want to earn extra money, they cannot, because it is not being allowed. So it remains the case that only 80% of TPE’s drivers are fully trained, because there is a nearly 4,000-day backlog of training. Again, that cannot be done unless there is more flexibility within the train-driving community to allow that to be cleared, so it will take quite a long time, which is disappointing, but of course we hope to reset all relationships and move to a better future.

[Lord Scriven (LD)]

My Lords, I listened very carefully to the responses the Minister gave to the Front Benchers and, like many millions of passengers in the north, I am a little dismayed at some of the combative language that was used. I gently suggest to the Minister that, to solve this problem and get TPE working better, a little more collaborative language, rather than combative language, would be helpful.

I also point out to the Minister, who made cheap party-political jibes about Transport for the North, that it is a collaboration of all party leaders of all colours. It is chaired by a noble Lord who sits on the government Benches and includes the regional director at the Department for Transport, so please let us accept that as a united board across party politics, as well as the Department for Transport.

In so doing—and I hope the Minister will be a little more collaborative in the answer she gives me—one of the big issues for TransPennine Express, which many in the industry point out, is that part of the reason for the 56 drivers leaving is because they are being poached by freight companies offering double the salary. How does this new arrangement that the Minister has just explained help to deal with that problem? If it does not, what solutions does she suggest could be put in place to ensure that poaching does not continue and therefore cause a lack of drivers and the problem for passengers who use TPE services?

[Baroness Vere of Norbiton (Con)]

I am grateful to the noble Lord, and I am sorry he felt that I was being combative. I think was slightly responding to the fact of it being the terrible Tory Government yet again, when it is about partnership working. If we are going to make our railways work in the future, it is with this sort of partnership working with TfN, which is an organisation I have a great amount of respect for. I worked very closely with it for three years in my role in the Department for Transport. I have an enormous amount of respect for TfN, but it is just trying to understand that there are other parties involved which have been trying to help make sure that TPE operates as well as possible.

I understand the noble Lord’s point about the drivers. It is something that the OLR will need to look at. I think there are two issues: recruitment and retention. TPE has been very successful in recruiting. It has recruited 113 new drivers this year versus only 57 last year, so I hope we can reset the relationship with the new blood coming in—obviously they take a while to train. TPE is already a great place to work. We just need to make sure that the drivers feel supported and able to stay with TPE as it goes into the management of the OLR.

[Lord Shipley (LD)]

My Lords, I would like to press the Minister on timescales because the words “temporary measure” have been used. We are in a position now where over half of the UK rail network—that includes Scotland and Wales—is actually controlled by Governments. I feel as though the Government do not quite know what timescales they are operating to with their promise to return TransPennine, for example, to the private sector, at least through contract bidding. What measures are the Government going to use to decide whether TPE can be returned to the private sector? That question follows the other companies which have been put under government control—as I say, to put us in a position where more of the UK rail network is under government control than not. I simply do not know what the Government’s plan is any more. Where are we on Great British Railways? What is actually to happen? Have the Government got any ambition at all, or are they simply now responding to events?

[Baroness Vere of Norbiton (Con)]

I think it is twofold. Events in the rail industry are having a very significant impact on it and its long-term future, and I am worried about that. In terms of the train operating companies currently under the OLR, whether that be TPE or others, there is a process by which services are stabilised and in certain circumstances they are doing much better than they were before and that is fantastic news. TPE will go through the same sort of process to improve things as much as possible.

Then there would be a competition to procure a new operator. That is a two-phase process. The first is market appetite and the second is the competitive process. On market appetite, there is evidence to suggest—and I could not possibly explain why—some people might be slightly reluctant to get involved in UK railways at the moment. Obviously, that is really disappointing, but I think this goes to the heart of the problem. We want a good railway system or we do not. We need workforce reform. Industrial action is not all about pay; it is about workforce reform as well, and those two things must go hand in hand in order for us to have a modern seven-day railway which works for the passengers. That is what we are trying to achieve. Unfortunately, there are some roadblocks in the way at the current time.