Regional Connectivity

Grant Shapps Excerpts

Wednesday 15th January 2020 Written Statements

[The Secretary of State for Transport (Grant Shapps)]

The Department for Transport, the Treasury and the Department for Business, Energy, and Industrial Strategy have been in discussions with Europe’s largest regional airline, Flybe, which plays an important role in the UK’s connectivity by flying regional routes.

In a sign of the Prime Minister’s commitment to levelling up all regions of the UK, the Government have announced additional measures to support regional connectivity across the UK, to ensure all corners of the country drive the economy, and fully benefit from prosperity in years to come.

A review of regional connectivity will ensure all nations and regions of the UK have the domestic transport connections local communities rely on—including regional services from local airports. This review, led by DfT, will consider all options to ensure we continue to have good regional connectivity. The DfT will work closely with the aviation industry, local regions and devolved nations to identify how we can support connectivity.

As part of this work and ahead of the March Budget, the Treasury will also be reviewing air passenger duty (APD) to ensure regional connectivity is supported while meeting the UK’s climate change commitments to meet net zero by 2050.

The outcomes of these reviews will benefit the entire industry, passengers, communities, regions and nations across the UK.

These measures featured in discussions between the Department for Transport, the Department for Business, Energy and Industrial Strategy and HM Treasury and Europe’s largest regional airline, Flybe, which plays an important role in the UK’s connectivity.

HMG was notified about the difficulties of Flybe on 11 January, and since then we have worked intensively with the company to understand their financial position and explore options. In the light of these discussions, the management and shareholders on 14 January took action to set Flybe on a recovery path.

[HCWS38]

Contingency Fund Advance

Grant Shapps Excerpts

Thursday 9th January 2020 Written Statements

[The Secretary of State for Transport (Grant Shapps)]

I hereby give notice of the Department for Transport’s intention to seek an advance from the Contingencies Fund. The Department requires an advance to meet its cash requirements pending parliamentary approval of the Supplementary Estimate 2019-20.

The Department is operating within the budget agreed in the Main Estimate, however, we will be seeking an increase in our net cash requirement in the Supplementary Estimate. Accessing the contingency fund is to allow the Department to move cash around the group to support existing expenditure consistent with existing Parliamentary Estimates and does not represent additional spending.

When the Main Estimate was submitted for approval, part of Network Rail’s (NR) grant-in-aid was excluded. The grant funding for NR in control period 6 was agreed shortly before the Main Estimate was finalised and in the transition from loan funding to grant funding the full value of the required grant was not captured in the Department’s net cash requirement. It was the Department’s intention that the final classification and cash requirement would be covered by the Supplementary Estimates process.

The advance will be repaid immediately following approval of the Supplementary Estimate. We have taken steps to review our processes and capture lessons learned, to prevent any similar issues from happening again.

Parliamentary approval for additional cash of £3.6 billion will be sought in a Supplementary Estimate for the Department for Transport. Pending that approval, urgent expenditure estimated at up to £3.6 billion will be met by repayable cash advances from the Contingencies Fund.

[HCWS23]

Northern Rail

Grant Shapps Excerpts

Thursday 9th January 2020 Written Statements

[The Secretary of State for Transport (Grant Shapps)]

Passengers in the north have had to put up with unacceptable services for too long. We understand how frustrating this has been for people and we are taking action to make sure that performance improves.

On 16 October 2019 I informed the House, through the Transport Committee, that I had issued a request for a proposal to the current Northern franchisee, Arriva Rail North (ARN) and to the operator of Last Resort as the first phase of securing options for the continuation of passenger services on the Northern franchise. This was triggered by concern over the financial position of ARN.

It has now been confirmed to me from the most recent available financial information that the franchise will only be able to continue for a number of months. The proposal I requested from ARN is being evaluated. Following completion of this process I will consider whether to award ARN a short-term management contract or whether to ask the Department of Transport’s own operator of Last Resort to step in and deliver passenger services. Longer-term decisions on the franchise will be made in the light of the recommendations of the Williams Rail Review.

My decision on which short-term option to choose will be made in accordance with the key principles set out in the statement on how I use my rail franchising powers. This includes:

protecting the interests of passengers

ensuring business and service continuity

preserving the interests of taxpayers by ensuring value for money

the continued quality of the franchise proposition;

In order to inform this decision, the Department will assess the extent to which each option performs against these principles. Our value for money assessment will be based on a number of criteria, including which option returns most money to the taxpayer, the risks attached to each, and the value of any improvements in passenger services. I intend to announce my decision before the end of January 2020.

To clarify, the current financial position of the Northern franchise will not impact on the railway’s day-to-day operations. Services will continue to run and there will be no impact on staff.

[HCWS24]