(1 day, 10 hours ago)
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Richard Fuller (North Bedfordshire) (Con)
Through you, Madam Deputy Speaker, I thank Mr Speaker for granting me permission to speak on a matter that is of crucial importance to my constituents. The topic of this Adjournment debate is the impact of the East West Rail Bedford to Cambridge business case on North Bedfordshire constituency. I am very grateful to the Minister for being in his place; I have not have a chance to share some of my questions with him, so I would be very happy for him to write to me after the debate if he does not have answers to them tonight.
What does East West Rail mean to North Bedfordshire? It is an opportunity that was lost. The concept of connecting Oxford through Milton Keynes to Bedford and Cambridge is a sensible one, but sadly it is a concept that in practice has gone very far off track. That is partly due to the legacy of the former Liberal Democrat mayor of Bedford borough, who supported a route through the town of Bedford and then north through rural North Bedfordshire. That route is long, hilly and incredibly environmentally damaging, and despite protestations, it must surely be much more expensive than any alternative. It has left my constituents scratching their heads about why we would build a railway line in such a damaging way.
Since that time, my constituents across North Bedfordshire have faced a series of questions that remain unanswered and that are increasingly a source of irritation. The people who work at East West Rail are good people, and I have nothing against them, but I do have something against the project and how it is being progressed. The town of Clapham, just outside Bedford, will be cut in two by the development of the railway. The route takes a very sharp turn out of Bedford and goes up a hill, as part of the hilliness of this railway. Residents’ concerns about having a green tunnel to help somewhat with the environment stay in abatement. The villagers of Ravensden and Wilden are sadly getting increasingly resigned to the fact that a railway will carve through their rural landscape. At Chawston, which is a tiny little village, a substantial amount of land has been earmarked by East West Rail so that trains can pass. Finally, there are the villages of Roxton and then Tempsford, which is rumoured to be on the list to be a new town. Currently it is a village of 300 households.
For North Bedfordshire, this railway will have a significant impact on the environment and on our rural life, but beyond that, the business case matters for a range of reasons. First, a substantial amount of public money—in the billions—will be invested to construct an entirely new rail route from Bedford through to Cambridge. As the Minister will know, we are just a week away from a Budget. It is perhaps the third Budget in a row where a Labour Government will come back for more taxes. He will know, as we certainly do, that looking after public money is a primary duty of us here in this House. If we are seeing a waste of public money, it requires as much additional scrutiny as can be done—certainly in government, but also beyond—and yet it has been a number of years since the last assessment of the economics of East West Rail was delivered by the company that was available for us to scrutinise. Incidentally, that assessment was pretty bad. When I say pretty bad, I mean bad, bad, bad from the point of view of public finances. Since then, there have been dramatic changes, and some that might help the case of East West Rail, but many—particularly with inflation—may move things the other way. My constituents are left in a position where they do not know whether this project will make any economic sense at all, and it started from a position where it clearly did not.
I do not think that it is right that the people of North Bedfordshire should be left in the dark. I also, by the way, do not think that taxpayers should be left in the dark. That is why my purpose tonight is to convince the Minister that he and the Government owe it to the people of North Bedfordshire and to taxpayers to provide right now—tomorrow will do—the latest updated business case for the East West Rail project. The Minister covers lots of other forms of transportation and covers for rail for Lord Hendy in the other place, but he must know the importance that has been attributed to financial transparency in our rail projects specifically, and know not to wait until the deal is done. This is my key request to the Minister. I would like him to say that he has been convinced by the arguments about public money and that he has been convinced that allowing transparency of the business case is the right thing to do. It is his right and ability to do that, and I will explain to him why he should do it.
First, this point of transparency was surely at the heart of the reviews of the oh-so-disastrously-managed HS2 project. You will remember that, Madam Deputy Speaker, as do I. Frankly, the taxpayers of this country will remember it for a long time. Rightly, Governments of the day had two reviews—Oakervee and Lovegrove—to try to find out how we could improve governance of our very important rail projects. I would like to go through some of that, because, sadly, it does not seem that Government have got the message on these things. I would be interested to know the Minister’s thoughts.
In the Lovegrove report, there was a response to a request that was made by local campaigners in July for the Government to release the business case. Annex A of the letter from the Government refusing the release said that while the outline business case was still being developed, releasing it would “be misleading” and that disclosure would produce “a chilling effect” on discussions between the Department for Transport, Network Rail and East West Rail. So providing information about the business case would be “misleading”. Well, who is it going to mislead? Do the Government think we are not smart enough to understand that numbers may change, and inputs may not remain the same in terms of their costs? Do they think we will not understand the numbers? It seems to me an unusual defence to say that providing the British people with information about how their taxes might be spent before those taxes are committed is somehow misleading—and what is the “chilling effect”? I do not see loads of private companies rushing up to provide competing rail services from Oxford to Cambridge. It does not hang together.
According to one of the campaigners,
“Lovegrove’s account of HS2’s Accounting Officer Assessments in 2019 describes a Department that kept spending money on an unaffordable project ‘on the basis that a process to determine its future was underway,’ while systematically failing to make clear to Parliament how immature the underlying costings actually were. He goes further, describing how the HS2 Board’s own information packs created ‘a veil behind which less good news becomes difficult to assess or even identify’—and that this was still true two years later, in 2021. The consequence, in his words, is that ‘the Civil Service failed to recognise the scale of the remaining intrinsic risk’ and gave ministers advice that ‘fails to give a good sense of the scale of the uncertainty.’”
It is clear to me that the lesson from HS2 is that it is in the best interests of the Government to share information as a project is undergoing an evaluation of its financial costs, precisely so that the Government can avoid some of the mistakes that were identified in the HS2 project. If it was important for HS2, it is even more important for East West Rail, perhaps not in terms of scale but certainly in terms of relative lack of value.
One of the ways in which the Government assess the value is through the benefit-cost ratio framework, and we do have information about that, dating back to 2023. Let me explain this to the House. A benefit-cost ratio of less than 1 is “poor”. There is nothing below “poor”. “Low” is 1 to 1.5, “medium” is 1.5 to 2, “high” is 2 to 4, and “very high” is greater than 4. When time is tight, public money is important, and one would hope that most of the projects are closer to the 4, 3 or 2. So where did East West Rail stand at the last count? Well, it did not stand at 4, or 3, or 2, or 1; it stood at 0.3. Basically, this is a railway project that wastes 70p in every pound, which is clearly “poor”. The East West Railway Company then came up with something called the theory of change to push the figure up—we can understand that; like other things, employment changes, new houses are built and so forth—which boosted it from 0.3 to 0.6.
It is clear from the last time the public were given sight of the business case that this railway line project is extremely poor value for money. I think that that should concern the Minister, and it certainly concerns me. Over time, the milestones for the benefit-cost ratio got worse. In 2019, the benefit-cost ratio was 1.1 to 2.4. Now it is down to 0.3, although potentially it could be raised to 0.5 and potentially to above 1, so it is not doing very well on an absolute basis. An argument may be made that there is a social benefit to railways that goes beyond the financial benefit-cost ratio. Governments of all stripes—not just this lot; it was my lot before—have, as it were, counted other things in already. Perhaps it is possible to stretch it and say that there is even more public benefit, and I will come to what that may be in a minute. This is why the benefit-cost ratio causes even more concern.
Let us just take a wander down the benefit-cost ratios of Britain’s railway projects in the recent past, so we can see whether East West Rail is an outlier or part of the pack with the usual returns. The benefit-cost ratio of HS2 was originally 2.3; it is 1.5 to 2.3. HS2 phase 1—the London to Birmingham part—had a benefit-cost ratio of 1.2 to 1.7, which is getting close, but is still four times the benefit-cost ratio of East West Rail. For Crossrail 2, it is 1.7 to 2.7—way ahead. For the Bakerloo line extension, it is 2 to 3, and for Sutton tram link extension, it is 1.3. I challenge the Minister to find a railway project that is such a grotesque waste of public money as East West Rail. I do not think he will.
This matters, because being honest about public money matters. We should be honest when something sounds like a really good idea, but when we actually put our mind to it and do the detailed work, it starts to look like a really bad idea. We really should have the courage—we need to have the courage in this House—and the Minister and the Government must have the courage to go back to first principles and say, “We just don’t want to be part of continuing something that has started to look completely wrong.” Year after year, I make the case to Ministers of all parties to have that moment of courage of going back to first principles. Their first principle is that they should look after public money as though it is their own, rather than just fritter it away because someone else in the past said it was a good idea, and perhaps that is the consensus, so we have to stick with it because someone said. That is no way to have our Executive run this country, because it just leads us into all sorts of mistakes. My hope is that the Minister will be that man of courage. I look at him and I think, “I am in with a fighting chance.”
In that spirit, I have some questions for the Minister. As I said earlier, I do accept—I did not have the chance to brief the Minister beforehand—that he may not have the answers to hand, but I would be grateful if he wrote to me. First, when the last business case was produced, the Government used a discount rate of 3.5%. The Treasury has now decided to lower that discount rate to 3%. As the Minister will be aware, if we lower the discount rate from 3.5% to 3%, we will give more credit to revenues in the future relative to costs in the near term, which is clearly the profile for a rail project. Will the Minister commit that when, and I hope it will be tomorrow, he publishes the current business case, the financial case or full cash projections—I do not mind which of those three options he chooses—he will in all those cases ensure he has provided the information so that a like-for-like comparison can be made? Basically, we need the numbers for the period in which he is discounting the costs and revenues, so that we can assess the impact of the change in the discount rate.
Secondly, in coming to Bedfordshire the wonderful initiative of Universal Studios has an impact on East West Rail and vice versa. As I understand it, to handle the structural demand, Network Rail has lined up an estimated £650 million of funding to help with the track capacity extension required. That takes us back to the decision in 2020, when there was a straighter, more direct route south of Bedford, and there was going to be a station—a hub station—at Wixams. Now that Universal Studios is being built at Wixams, would it not make sense to look at creating that hub station for Wixams, rather than going into the town of Bedford and going north? This is a very significant change, and Universal Studios is going to have 10 million visitors a year.
Tempsford may or may not be a new town, but taking a village of 300 people and building a town of 100,000 is big change. One of the problems is that East West Rail, desperate to justify its business case, may want to take credit for new housing growth at Tempsford. Frankly, I do not think East West Rail contributes very much—certainly not in the near term—to the growth of Tempsford, because that planning has been there for quite a long time. Will the Minister commit to ensure that the case for East West Rail is made to stand on its own merits, rather than trying, artificially and in my view wrongly, to claim benefits from other measures, such as Tempsford new town?
East West Rail has built part of its railway. It has built the part from Oxford to Milton Keynes, which was opened to passenger traffic two years ago this month, in October 2024. As the Minister knows, since then not a single passenger has travelled on a train, because it cannot work out with the union whether or not there needs to be a guard to open and shut the doors. That is two years of zero passenger revenue against expectations, which will surely have an impact on the business case. Will the Minister commit to publishing an assessment of the financial impact of the failure to run a railway for two years on the overall financial case for East West Rail?
Originally, East West Rail was to run trains on diesel. Then it was proposed to be electric. Then it was proposed to be battery. Now, it is proposed to be battery, electric and diesel. Can the Minister confirm whether East West Rail has finalised what form of traction it will use on its railway? It seems to me to be critical to know how it is going to pull the trains along on the line. I am not a railway engineer, but even I think that that is kind of a basic requirement. East West Rail needs to be forced to make a decision. I understand that it may not want to take a decision, but it really needs to.
Finally, in closing, as I look to the Minister, who I trust to be a courageous man and a good man, I want to ask him a candid question. If he was given a proposal to spend billions of pounds on a railway to which he could say yes or no, and he was told the railway would be lose billions and billions of pounds, and he was told that on value-for-money terms it would be the worst railway built this century, and he was told that after 20 years of operation the company had still not decided on how to power its trains, and he was told that two years after opening its railway it still had not carried a single passenger, would he really give the project the go-ahead?
The Parliamentary Under-Secretary of State for Transport (Justin Madders)
I am grateful to the hon. Member for North Bedfordshire (Richard Fuller) for securing the debate. I have taken a note of his questions. He will be aware that I am not the Rail Minister. As he gracefully pointed out, I did not get advance notice of his questions —certainly, some of them were of a more rhetorical nature than others—but I will endeavour to ensure that the Rail Minister provides him with a response. I will speak more generally to start with.
East West Rail is a priority transport project for the Government. It will significantly improve connectivity for the hon. Gentleman’s constituents. It will help to unlock good growth, jobs, new homes and opportunities across the Oxford to Cambridge growth corridor. As we know, the corridor boasts a number of strengths. It is home to world-leading employers and universities. It has one of the highest concentrations of high-tech firms in Europe. It is attracting inward investment, as we have heard, from the likes of Universal, for its new theme park at Stewartby, and in science and innovation at sites such as the biomedical campus in Cambridge.
However, the corridor’s growth has been constrained with high house prices, pressure on existing infrastructure, including the road network, and a long-standing lack of east-to-west connectivity. Those issues are summed up perfectly for the hon. Gentleman’s constituents by the fact that there are no direct rail routes to Oxford or Cambridge, and that it is easier to travel to London by rail than it is to get across the region. That leaves people reliant on cars, infrequent bus or coach services, or not making journeys across the region at all.
The Government are committed to addressing those constraints to growth, and East West Rail is central to our ambition to realise the full potential of that corridor. The remaining stages of the railway involve upgrading the existing Marston Vale line between Bletchley and Bedford and constructing the new section of railway between Bedford and Cambridge, which the hon. Member focused his comments on. Those stages will be delivered from 2030 onwards, and East West Rail completed its final route-wide consultation on them in the spring. It is currently finalising its proposals for a development consent order application, which I understand will be some time next year.
The plans for the railway include eight new stations, including at Tempsford in the hon. Gentleman’s constituency, and up to five passenger services per hour. It is not just local journeys that will be improved; the new line will have interchanges with major rail lines, expanding connectivity with the rest of the country. At Tempsford, the new station will also be served by the east coast main line. The East West Rail line will also be partly electrified to support net zero operations using hybrid battery-electric trains, providing greener and faster journeys for passengers. I hope that in part answers one of the hon. Member’s questions.
All those new changes will mean a step change in connectivity across the region and will offer benefits to the hon. Member’s constituents. He has diligently raised—not for the first time—the business case for East West Rail. The BCR is an important measure of value for money, but it is only one part of the overall assessment. Together with the strategic case for East West Rail, that wider evidence informs Government decision making.
For East West Rail there is a clear and compelling strategic case for the project in overcoming the constraints in the region, and in particular, providing opportunities for new jobs, and for new sustainable communities to grow. The line will serve potential new town sites that have been identified by the Government in Tempsford and Milton Keynes, as well as supporting the Government’s aims to unlock development in both Oxford and Cambridge.
We are already seeing investment being brought forward along the planned route, whether that is in new housing developments or the new Universal theme park at Stewartby. Because of that, the project has backing from major employers and institutions across the region, as evidenced by the support of the Oxford to Cambridge supercluster group. Details on the case for the project were set out in the consultation earlier this year, and the economic and technical report on the project published in 2023 provided a significant amount of detail on the different options that had been considered to improve connectivity, as well as the case for the railway.
The hon. Member identified that that was some time ago, and that there have been a number of changes, possibly further strengthening or weakening the case. Further information on the case will be provided as part of the development consent order application and a full business case will be prepared once planning consent has been secured.
Richard Fuller
I do not think that the Minister has taken up my offer of releasing the business case tomorrow. If we go with the process that the Government are hiding behind, will the decision to go ahead by the Government, as well as the DCO from a planning point, have been approved by the time that case has been presented to the public?
Justin Madders
The exact sequencing of those things is something that I would defer to the Rail Minister on, and I will get him to write to the hon. Member. It is the case that the economic benefits and the business cases are considered in tandem with those issues. Publication will be issued once the planning consent has been secured, which is typical for those types of projects, as the hon. Member will know. I hear what the hon. Member says about transparency. He is right that it will not be released tomorrow, but it will become a public document, and I can assure him that he will have his opportunity to make further comment on it.
It is important to state that the benefits that the line will unlock will come from the railway as a whole, in particular the new section of railway between Bedford and Cambridge. It is also important to say that unlocking the opportunity here is a key part of the strategic and economic cases for the scheme and, in accordance with departmental guidance, additional benefits that are dependent on the scheme will be included in the overall value for money assessment. The latest estimates suggest that the East West Rail line will increase the regional economy by some £6.7 billion GVA per year by 2050 and, obviously, those figures will be updated as we go forward.
There will be significant benefits from the development of the East West Rail line. It is important to state that the latest plans will mean delivering services between Oxford and Stewartby, and then between Oxford and Bedford, ahead of the completion of the line in full, which will allow services to run to the new Universal theme park at the earliest opportunity. I heard the hon. Member’s question about the location of the theme park, and I will take that back to the Rail Minister, too.
While is important to recognise the benefits that East West Rail will deliver, we also recognise that the construction will have some impact on the communities that the hon. Member represents, and significant work has been done to assess alternative routes through public consultation. That work has concluded that serving Bedford directly and enabling fast, direct journeys from stations on the Marston Vale line to Cambridge are a key part of realising the full benefits of the project, which may be the answer to one of his questions—I will ask the Rail Minister to confirm that in writing.
As the hon. Member will be aware, the East West Rail company has worked to reduce the impact of the line on local communities whenever possible, which includes impacts on homes, local businesses and farmland. In its spring consultation, the company set out a range of ways in which it has responded to feedback in the hon. Gentleman’s constituency, including moving and lowering the alignment of the railway to reduce visual impacts between Clapham Green and Colesden and working to reduce construction vehicle movements and potential impacts on properties.
I recognise that the hon. Member raised an awful lot of other, more detailed matters. As I have already committed to doing, I will ensure that the Rail Minister provides a full written response.
Question put and agreed to.