Rolling Stock (North of England)

Ian Mearns Excerpts

Wednesday 12th March 2014 Westminster Hall

[Angela Smith]

I thank my hon. Friend for that intervention. Indeed, I agree with him on most of those points, particularly about the northern hub, which was initiated by the previous Government and brought forward to completion, in terms of agreeing all the terms and the funding for it. That was a genuinely cross-party effort, and there was a genuine consensus on it, to ensure that the northern hub goes ahead. However, the problem with the northern hub is that although it opens up the network, frees it up and creates more capacity, there remains a potential problem, to which my hon. Friend the Member for Blackley and Broughton (Graham Stringer) referred earlier, of providing the rolling stock that is necessary to ensure that we can make good use of the increased capacity.

[Ian Mearns (Gateshead) (Lab)]

We need to highlight the point about the differentiation in investment in different parts of the country. At a presentation last week to the all-party group on rail in the north, Network Rail outlined its plans for investment, including in the northern hub. However, the only reference to the north-east of England were signs on the map saying, “York”, and, “To Scotland.” The north-east of England was not an afterthought—it was not even a thought.

[Angela Smith]

That illustrates perfectly that we have to defend it. It is one of the sad realities of parliamentary life that those of us in the north of England, including those in the north-east and the furthermost outreaches of the north-west and Cumbria, have to defend our corner at every twist and turn.

The hon. Member for Colne Valley (Jason McCartney) wanted me to give way. I shall, but this is the last time, because I really must make progress.

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[Mr Iain Wright (Hartlepool) (Lab)]

I congratulate my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) on securing the debate. I want to focus on Hartlepool. Hartlepool and Seaton Carew stations had almost 580,000 passengers last year. Hartlepool is the sixth busiest station in the north-east, which is probably a result of the direct service to and from London operated by Grand Central, but also of Northern Rail services, which operate southbound to Middlesbrough and northbound to Newcastle, calling at Seaham, Sunderland and Heworth, with some services continuing to the Metrocentre, Hexham and Carlisle.

As has been said, to facilitate greater economic development, it is important to attract more people on to the railways through reliability, value for money, the provision of routes where people want to go, at a time that suits them, and, crucially, rolling stock that is modern, clean, accessible and comfortable for passengers. One of the Department for Transport’s 12 policies is expanding and improving the rail network. Within that policy the Department states:

“Rail is vital to the UK’s economic prosperity. If rail services are inefficient and do not meet people’s needs for routing or frequency, business and jobs suffer.”

I do not think that anybody would disagree with that, but the condition and suitability of the rolling stock is also about meeting people’s needs. I ask the Minister: why is quality of the rolling stock not included in that policy?

If the age of rolling stock is seen as an indicator of comfort for passengers, Northern Rail, as we have heard, is lacking. It currently has the oldest fleet of rolling stock in the franchised railway, with an average age, as my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) said, of 24 years. The average age has increased steadily since quarter one of 2008-09, indicating that no investment in newer stock has been made.

[Ian Mearns]

The line that my hon. Friend is talking about, which serves Teesside, the east Durham coast and Sunderland and goes through to Newcastle and beyond, passes through my constituency. The sad fact is that, although Teesside and Tyneside are only 35 miles apart as the crow flies, a train from Newcastle to Middlesbrough is timetabled to take an hour and 35 minutes. It is a disgrace.

[Mr Wright]

My hon. Friend is right, and that is partly because of the age and condition of the rolling stock. Things are bad on that line, particularly for Hartlepool commuters, because, as we have heard, Northern Rail is still operating the old Class 142 Pacer trains, which were built as a stopgap in the 1980s. They are little more than cattle trucks and are totally unsuitable for a modern rail network.

A constituent who commutes to and from Newcastle for work every day wrote to me about Northern Rail services, which she described as “dilapidated”:

“I’m sure that you are aware that the condition of the train is also antiquated and they frequently break down due to age and disrepair... in winter they lack an operative heating system and are filthy...The service received by passengers on this line is worse than ever and something must be done in order to bring Northern Rail to account and operate within its rail passenger charter.”

I hope that the Minister will address those concerns directly.

I have several questions, but they boil down to this: when will my constituents receive modern, comfortable and appropriate rolling stock, with such things as customer information systems and suitable accessibility for disabled people, which seem commonplace elsewhere in the country, but are lacking in my area? Why are Hartlepool and the north-east so badly short-changed, given that fares have gone up remarkably?

Is the Minister planning to change the formula for spending on transport? Expenditure per head of population on transport infrastructure in London is £2,595; it is £5 per person in the north-east. I appreciate that the formula is based on population, but the Minister must accept that that gross imbalance is simply wrong. Will he consider levelling the track on transport spend for the north-east to help facilitate proper economic growth in my region? Secondly, will he use smarter procurement to stimulate more manufacturing of rolling stock in the UK, and particularly in the north-east? The Government’s handling of the Bombardier issue on Thameslink was little short of shambolic, although their handling of last month’s decision on Crossrail was better. Will the Minister endeavour to ensure that Hitachi, newly based in the north-east, can be as competitive as possible, enabling manufacturing to be retained and enhanced in the north-east, jobs to be created, and supply chains to have the long-term confidence to plan for the future?

My area is badly short-changed over the quality of train services and rolling stock, and I hope that the Minister will address that.

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[Mr Harris]

I will not declare an interest. I am not being paid the salary any more; I do not need to declare an interest. However, it is a fact that since 1993, railway rolling stock has been among the newest rolling fleet of any in Europe. We have an outstanding safety record and there have been record numbers of passengers. Nevertheless, it is clear from this debate and many others in the past that the current model is not delivering for a significant number of passengers. Rolling stock is one problem, and far too often Ministers and civil servants make those decisions over the heads of the train operating companies at the behest of the rolling stock companies. That is unacceptable and clearly must be addressed if we are not to have debates similar to this in future. Another clear failure in the market—I would say it is the biggest one—is that our constituents are paying far too much for their rail fares.

The market simply does not deliver on crucial aspects. It does deliver in some areas, however, which is why I am cautious about simply saying that everything would be wonderful under nationalisation. I remember when the railways were nationalised and everything was not wonderful. We have to be cautious about taking an ideological point of view, but this is not an ideological debate; it is a practical debate.

How do we ensure that our constituents get the best possible service from the rail industry? Let us cast ideology to one side and look at what can be done practically. We may well have to follow the Network Rail example and look at train operating companies and say that the private experiment has not worked.

[Ian Mearns]

There is an interesting dilemma for Government, as they have conceded on state ownership. When it comes to rolling stock and train operating companies, they agree with German, Dutch and French state ownership, just not UK state ownership. Is that not a paradox?

[Mr Harris]

My hon. Friend is absolutely correct that that is a paradox. I have some sympathy with the Minister, because I know that his civil servants are going over the heads of the train operating companies and deciding which rolling stock is most appropriate to which franchise. I am attending this debate because every decision taken on rolling stock has a domino effect on every other franchise. The TransPennine Express franchise serves my city of Glasgow. The west coast franchise, which was badly handled, also serves my constituency and the east coast franchise, which should not be privatised before the general election, also serves Scotland. We are all in this together, as it were. All passengers rely on decisions taken by the DFT. The Minister will no doubt say that it is a privatised industry and that such decisions are out of his hands, but they are not; they are very firmly in his hands. The question we should address is: is that the correct way to make those decisions?

We must make a decision. Either civil servants and Ministers should take responsibility as well as the blame—at the moment all they get is the blame—or they should give all those decisions to the private sector and make it a truly privatised industry. My gut instinct is that that model would not work for our constituents and it is our constituents, not political ideology, that must take precedence.

East Coast Main Line

Ian Mearns Excerpts

Tuesday 12th November 2013 Westminster Hall

[Mrs Hodgson]

No, I will not. I will make some progress, because many hon. Members want to speak.

This is the people’s railway. It is delivering real improvements for our constituents, unencumbered by the primary purpose of having to pay dividends. That is not to say that Directly Operated Railways is squandering millions on such trivial things as improving the experience of their customers and therefore winning more of them; it is also chipping in a lot of money to the Exchequer. By the end of this financial year, it will have returned £800 million to the Treasury and put the rest of its surplus of nearly £50 million back into the service. It of course gets the lowest rates of public subsidy of all the train operators, except London commuter services.

Ministers have always talked about the need for a private operator to bring in extra investment, but have failed to make clear how much will be brought in by this process. What investment we know about appears to come from the public purse. Just as with Royal Mail, Ministers seem to be privatising the profit, while keeping the ongoing costs on the public books.

The Minister will say that decisions should not be taken on the basis of ideology, and to an extent I agree, although I must of course confess to having a default opinion when it comes to the ownership of public services. However, the returns to the Treasury and the improvements in services provide the business case in support of our argument that the line should remain directly operated. Perhaps that is why nearly half of Tory voters oppose the Government plans. If anyone is guilty of ideological decision making on this issue, it is surely the Government.

As if the west coast main line shambles, which cost taxpayers £55 million, was not bad enough, the contract extensions for other franchises—the Government have had to negotiate them so that they could bring forward the east coast main line tender—will cost taxpayers millions more in lost revenue. For example, First Great Western paid £126 million in premiums last year, but will pay only £17 million next year, as a result of the extension terms it has been given by the Government. Ministers are actually throwing money away hand over fist, just so they can make a point of privatising a franchise that they know is doing perfectly well in public hands.

[Ian Mearns (Gateshead) (Lab)]

My hon. Friend is making an excellent speech. Is it not ironic that the Government want to return the east coast main line to the private sector when it is clearly succeeding very well in the public sector, while the private sector has failed twice on that line?

[Mrs Hodgson]

That is exactly the point. Despite all the evidence to the contrary, the Government clearly do not think that a state-owned company can run the franchise viably and deliver the investment in service improvements that we want.

How ironic it is that many of the probable bidders for the service are subsidiaries of state-owned railways. Eurostar and Keolis have confirmed that they will team up to bid for the franchise. As the Minister will be aware, those two companies are majority-owned by the National Society of French Railways—SNCF—which is France’s state-owned operator. Arriva, which already operates so many franchises, including the Tyne and Wear Metro in the north-east, and has received much Government investment over the past few years, will probably throw its hat into the ring. It is of course owned by Deutsche Bahn. Abellio, which, with Serco, runs Northern Rail trains in my area, might well be tempted. It is a part of the Dutch state-owned rail operator. The Government are therefore quite happy for the east coast main line to be run for public benefit—just as long as the British public do not benefit.

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[Mark Lazarowicz]

My hon. Friend might be, but that is not the issue today. What we are talking about today is giving an alternative to the private sector. He just referred to other industries, and one of the issues about those industries is this: to what extent is there real competition?

One of the problems is that within the railway sector in the UK, a very limited number of UK companies are able and willing to put in a bid for a line. On the east coast and west coast lines, we all know that the major UK bidders will always be drawn from Virgin, First Group, National Express and possibly Stagecoach.

Of course, Virgin also runs planes to Edinburgh and Aberdeen, and First Group and the other companies operate other rail services. Some of them also operate bus and express coach services. So the issue is ensuring that there is at least some competition in the system, which the existence of Directly Operated Railways on the east coast main line would certainly provide.

[Ian Mearns]

rose—

[Mark Lazarowicz]

I will give way to my hon. Friend and then I will move on, to ensure that I make some progress.

[Ian Mearns]

It is ironic that, despite the number of Eurosceptics on the Government Benches, the Government are clearly in favour of state ownership—but Dutch, German and French state ownership of UK railways, not UK state ownership of UK railways.

[Mark Lazarowicz]

Indeed. However, my hon. Friend is being perhaps a bit too restrictive, because I understand that one of the companies shortlisted for one of the Scottish railway franchises is the mass transit railway system—MTR—in Hong Kong, which I presume is ultimately owned by the Chinese Government. It appears that although the Chinese are able to build our nuclear power stations and run our railways, the British state is unable to do so.

I come to the essence of the argument. The Government say that one of the reasons why the east coast line should go back into the private sector is the success that there has been since the railway system was privatised. One of the oldest logical fallacies in the book is to say that because event B followed event A, event B must have been caused by event A.

What the Government are saying, of course, is that because passenger numbers have gone up since the railways were privatised, that must be because they were privatised. However, the fact is that we have not been able to establish that link between the two. For example, I can look at the local bus company in Edinburgh, my home city, which is municipally owned. The number of bus passengers has gone up dramatically in the past 20 years. That company is in the public sector, but I will not say that the rise in passenger numbers is just because of that.

Equally, however, saying that the rail network’s being in the private sector is why the number of passengers has gone up seems a very weak argument. In fact, the number of passengers on other state-owned railways in other parts of the world has gone up as well. The argument about privatisation seems very weak.

As my hon. Friend the Member for Washington and Sunderland West pointed out, Lord Adonis, when Transport Secretary, made references to privatisation that are continually mentioned by the Government in defence of their policies. However, he has made it clear that he has learned from experience and is approaching this issue in a non-dogmatic fashion, in a way that the Government are signally failing to do.

Let us not forget that it was a Conservative Government who privatised the railways in the first place, against the wishes of the Labour party. Labour colleagues in Parliament at the time voted against that privatisation. Of course, the Labour Government after 1997 had a large number of priorities and I can certainly see why the issue was not, at that time, their No.1. However, as I have said, we are talking about the situation here and now. We have an opportunity to judge from experience and to ensure that the public get the best value for money and the best service, which, in my and my colleagues’ view, would be obtained by ensuring that the east coast line stays in the public sector.

Reference has been made to the way in which foreign companies are able to bid for the franchise. I will not develop that point any further, given that it has already been made by other colleagues. However, I will again make the point that there is a real issue about the lack of genuine competition within the rail franchising sector in the UK, including among British-based companies. Also, the point that my hon. Friend the Member for Easington (Grahame M. Morris) made about comparing rail with the utilities was very well made.

One of the points made by Ministers when they have argued why the east coast main line should go private again is that—as I think one of the Minister’s predecessors, the right hon. Member for Chelmsford (Mr Burns), said—the record of East Coast trains on punctuality had “plateaued”. Again, that is another example of desperation and of the Government trying to grab arguments to support a weak case.

The fact is that East Coast trains has a good record on punctuality. As we all know, the main reason why there have been problems with train punctuality in recent times is certain factors—first of all, the recent storms, which were clearly beyond anyone’s control. Above all, however, they have been due to problems with infrastructure, which have not been the fault of East Coast trains.

I asked a parliamentary question on the issue a while ago. I received an answer about the 2012-13 split in responsibility for delays on East Coast trains: 18% of them were due to East Coast itself, 13% were due to “Other Train/Freight Companies” and 69% were due to Network Rail. We know that one of the reasons why 69% of delays were due to Network Rail was problems with the overhead line system, which was, of course, put in place on the cheap, and for which—again—a previous Conservative Government clearly have to take responsibility.

My hon. Friend the Member for Washington and Sunderland West referred to the new targets from the regulator regarding punctuality. One of the things that the regulator said in its recent report was that there is a problem with reliability on the east coast main line, and I welcome the fact that it did. However, like my hon. Friend, I am concerned about how the performance measurements for the east coast service have been reduced by comparison with those for many other lines in the country.

I know that it only sounds like a marginal reduction if the performance target is reduced from 90% to 88%, but of course what we want to aim for is 100% reliability. Obviously, we will never get 100% reliability, but every time the target is reduced—even by 1% or 2%—we release the pressure on that operator to ensure that, as far as possible, all their trains arrive on time.

The fact is that the new target for cancelled or seriously late trains was set at a rate that would allow 4.2% of east coast line trains to arrive more than two hours late or not at all. That does not sound like much, until we put those figures in another context and say that one in every 24 trains could be cancelled without any penalties whatever being imposed on the operator responsible.

As my hon. Friend has said, there are concerns about the fact that that change was not referred to in draft proposals for the new punctuality performance targets; it was a change that people could not be consulted on. The Minister should give an explanation as to why that was the case. Bluntly, if he cannot provide one today, he should go away and look at the issue, because it was a major defect in the process.

It is time for the Government to drop their dogmatic approach to the east coast line and to give the public sector operator a chance. Let Directly Operated Railways put forward an alternative model and we will see what represents the best value for money and the best service for the public. Please, Minister, do not come forward with the argument that I heard from one Minister some time ago, which was, “We couldn’t do this because the law wouldn’t allow us to do it, and we had to put it out to the private sector.”

As a Back Bencher, I cannot speak for those on the Labour Front Bench, but were the Government to come forward and say, “Yes, we will change the law to allow East Coast trains to continue to operate the franchise,” I cannot think that my party would oppose that. Perhaps the Minister will make that offer today. I am sure that my hon. Friend the Member for Nottingham South (Lilian Greenwood) would be happy to respond to that.

It is time for the Government to change their policy. It is not what the public want, what the staff want or what the communities want—and it is not in the best interests of the public purse, either.

[Sheila Gilmore (Edinburgh East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) on securing the debate. It is important that we continue to raise and debate the issues on the east coast main line, with a view to persuading the Government, I hope, that they have gone down the wrong track. It is not too late to go into reverse. I am a regular railway traveller, but this is one time when I will be more than happy for the train to stop and go backwards.

It was not such a joy to arrive at Newcastle station a couple of weeks ago and be told that the best advice was to get off the train and go home. My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) and I were so determined to get here that we ignored that advice and soldiered on to Peterborough. That delay was due not to the train operator, but to the stormy weather; the line was certainly not the only one affected on that date. Some might suggest that East Coast let us down, but we were clear that that was not the case. Indeed, when we tried to take other lines to get from Peterborough to London, we discovered that they were all affected, whether they were privatised or not.

Things like that will happen in any travel system, but the service has—many regular travellers will say this—improved over recent years. People enjoy their journeys. I have said this before and I will say it again, because it is important from a Scottish perspective and an environmental perspective: the improvements are making inroads into getting those important business travellers, who otherwise might always travel by air, to use rail. If we are serious about creating a modal shift in transport, we have to make rail both attractive and reliable to get that kind of traveller. That is one thing the service has done extremely well.

I have taken part in at least four of the several debates that we have had on the east coast main line. As well as the Westminster Hall debate referred to by my hon. Friend the Member for Washington and Sunderland West, we had a Backbench Business Committee debate in the Chamber in which many colleagues spoke. We have had many opportunities to ask oral questions, and we have all taken them up. At this stage, one might think that we should find something new to say and look at the matter from some new angle, but the problem is that our questions have never been answered. It is important that we go back over those questions. Perhaps on this occasion we will get responses to some key points.

[Ian Mearns]

My hon. Friend is absolutely right. Ministers might ask why the public have so little confidence in the re-privatisation of the east coast main line, and the answer is simple: for the bulk of the time since the railways were privatised, the franchise has been in the hands of the private sector. The orders for new rolling stock on the line have only been secured since the franchise has been in the public sector. Much of the existing rolling stock is 35 or 40 years old. For the bulk of that time, it has been in private hands with little investment, apart from a lick of paint.

[Sheila Gilmore]

I thank my hon. Friend for making an important point on East Coast that speaks to how we run the railways. A lot of the public assumed that privatisation would mean that investment would be brought in and that everything would be brought up to scratch. That was the selling point.

The track investments are necessary and we need to see considerable improvement in the infrastructure on the east coast main line, particularly with the overhead lines, which have caused a lot of the recent problems. We need to see that crucial investment and we need to see the rolling stock upgraded, but none of the onus will be put on those who are being asked to tender for the service. Whatever investment there is will come from all of us as taxpayers.

The notion that we have to privatise to get investment was the selling point at the beginning, which people perhaps swallowed. They probably thought, “Yes, if that is a way of improving things, we will at least give it a try,” but that investment is not happening and will not happen in this case either. All the things that desperately need to be done will not get done through this privatisation process, which is, in many ways, a distraction from the measures that could lead to a real step change. We have talked about improvements and we are not complacent. We do not think that everything is perfect. We want to see a step change in the line, but it will not come through this process.

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[Karl MᶜCartney]

I am, and I am happy to accept that the majority of people in his constituency, and the passengers who use the rail station he uses, might, like him, not want to see any changes to the level of services they enjoy. However, some of us, in seats that do not receive such a regular service, might feel differently, and that might be where the ideological difference is.

[Ian Mearns]

Unfortunately, a couple of weeks ago, we had the wrong sort of trees on the line, and my hon. Friend the Member for Easington (Grahame M. Morris) and I had to get off a train at Peterborough. We had a chat with quite a lot of residents and people who work on the railway there, and I have spoken to lots of people from Peterborough since. It is quite clear that the vast majority of them do not want the line to be taken out of public ownership and re-privatised. That is not Gateshead—that is Peterborough.

[Karl MᶜCartney]

I will take those comments with quite a large pinch of salt. I would probably take on board a little more the comments of my hon. Friend the Member for Peterborough (Mr Jackson) on behalf of his constituents. However, like him, I am pleased to see the new rolling stock on the east coast main line. Lincoln might—perhaps with hybrid locomotives—see better, more regular rail services, including at weekends. As I said, I have been fighting for that for my constituents.

The hon. Member for Edinburgh North and Leith managed to bring nuclear power stations into the debate and mentioned that in 1997 there were other priorities for the Labour party. Obviously there were, because you did not sort out any power stations and certainly did not sort out the rail system. You were all busy spending money our country did not have.

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[Grahame M. Morris (Easington) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bone, as always. I want to compliment my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) on securing the debate, one of several about the east coast main line that we have had in Westminster Hall and the main Chamber.

The Government have yet another opportunity to listen to what the overwhelming majority of the British public—not just in Easington or the north-east—are saying. Polling evidence shows that they believe that the east coast main line should remain a publicly operated service.

The last time we had a debate on this matter, the Minister’s predecessor, the right hon. Member for Chelmsford (Mr Burns), referred to me—and, if I recall correctly, my hon. Friends the Members for Livingston (Graeme Morrice) and for Gateshead (Ian Mearns)—as dinosaurs for believing that public services should be run for the benefit and in the best interests of the public.

I do support the renationalisation of the railways, and I certainly oppose the re-privatisation of the east coast main line—especially when there is evidence that Directly Operated Railways is providing a better service and returning more money to the taxpayer than the private sector. Furthermore, on two occasions when the private sector was operating the franchise, it failed. If my view makes me a dinosaur, so be it.

In numerous surveys, 70% of the public have regularly supported calls for the railways to be completely publicly run. That applies throughout the country and even in the south and south-east. Trains there are very congested, and there are similar concerns about the fact that private sector franchise holders are not delivering.

We have been given an example, in the success of the east coast main line under Directly Operated Railways, of how a public rail operator can work and deliver for the taxpayer. As my hon. Friends have said, more than £800 million in premiums will be returned to the Exchequer by Directly Operated Railways. The east coast main line receives the lowest net subsidy of any operator—only 1% compared with an industry average of 32% or more than £4 billion. The numbers tell the story. Let us not forget what happened previously, when National Express ran the service. It returned only £370 million in premium payments and turned its back on the franchise, leaving the taxpayer to pick up the pieces. Directly Operated Trains had to step in.

We have had private sector failures on the line and the operators have not delivered on their commitments, but the Government will not prevent National Express or other failed operators from bidding for the rail franchise. Labour Members have raised queries about that. The right hon. Member for Chelmsford confirmed in an answer to my hon. Friend the Member for Islington North (Jeremy Corbyn):

“National Express and its subsidiaries are permitted to submit for the pre-qualification process”—

that is, the bidding process—

“to run passenger rail services in all franchise competitions including the East Coast Main Line.”—[Official Report, 3 June 2013; Vol. 563, c. 970W.]

We should ask questions about that, given that the private operator has a track record—if hon. Members will excuse the pun—of failure.

[Ian Mearns]

Given the statistics that my hon. Friend has reeled off about the public subsidy going into private sector franchises, there is a good argument that the new rolling stock in the private sector franchises has been put in not by private sector investment, but by public sector subsidy. The public pay for private profit.

[Grahame M. Morris]

My hon. Friend makes an excellent point. We are privatising the profit and nationalising the cost and risk of the investment. That is a bizarre approach to the public finances. In my view, companies in either sector that fail to deliver on commitments or promises to the taxpayer should not be allowed to take over franchises—they have shown that they are not competent to run them.

It is very expensive to travel by rail in the United Kingdom, compared with other countries. British train tickets are now the most expensive in Europe. A typical season ticket costs 14p per kilometre in the UK, compared with just 8p per kilometre in Germany. Holland and France are the next most expensive countries. A day return in the UK costs 26p per kilometre compared with 17p per kilometre in Germany. As to season tickets into the capital, a 24-mile commute into Paris would cost £924 a year; a similar commute would cost £705 to Berlin and £654 to Madrid—but for someone travelling to London it would cost £3,268 a year. Those are huge sums, and after a decade of price increases. Those are never welcome, but at a time of austerity when wages are effectively frozen and, in many cases, falling, an intolerable strain is being put on family budgets.

While fares have been shooting up, dividends to shareholders in the big five transport companies contracted to run UK rail services reached nearly £2.5 billion. When people ask, “Where is the money going?” the answer is that a big chunk of it is going there—in dividends to private train operators. There are examples of excessive boardroom pay. Some of the highest paid directors receive more than £1 million.

East Coast offers a genuine alternative, with all profits reinvested back into services—money that otherwise would go as dividends for shareholders. I hope that the Minister will listen to the concerns expressed by hon. Members and the British public and end the failed franchise bidding policy.

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[Stephen Hammond]

My right hon. Friend makes an interesting point and alludes, as I did, to the whiff of mischief that we are hearing from Labour Members today.

The hon. Member for Washington and Sunderland West asked about the prospectus and where she might find it. It is available in the Library—and I have a copy here—but I will ensure that a copy is sent to her. She commented on performance, and I refer her to page 67, which states that the franchise agreement will include three levels of benchmarking for the performance metrics that any franchisee will have to meet.

The hon. Lady referred to third class. I intervened to say that we will not specify that and have not specified it, but I gently guide her to Eurostar, which has a standard premier class to make better use of off-peak first-class coaches. If someone wanted to make better use of first-class coaches during off-peak times, I am sure that she and her constituents would regard that as a benefit.

[Ian Mearns]

The Minister is generous in giving way. If a franchise runs a first-class, a standard premium class and a standard class, does not standard class, de facto, become third class?

[Stephen Hammond]

I am not sure that the hon. Gentleman would argue that with British Airways, and I am not sure why he should do so with the franchise. His point is nonsense.

Oral Answers to Questions

Ian Mearns Excerpts

Thursday 7th November 2013 Commons Chamber

[Mr McLoughlin]

I well understand the concerns raised by my hon. Friend. This is one of the problems when major work is done on the railways. As he may have heard earlier, I travelled in the cab of one of those trains on Monday to see some of the work that is already ongoing in preparation for the electrification of the whole line. There will be some disruption—that is unavoidable. Nottingham station was closed for five weeks over the summer, but the whole job was done on time and it actually came in £5 million below budget.

[Ian Mearns (Gateshead) (Lab)]

T3. The Secretary of State will be aware that there has been significant disruption on the east coast main line because of infrastructure failure. I think we have now had three Mondays on which there has been significant disruption, and a fortnight ago 30,000 passengers were stranded, some for five or six hours, while repairs were carried out. The east coast main line was electrified on the cheap—many engineers tell us that, and there has been severe disruption. Can we do something about it, please?

[Mr McLoughlin]

I understand the hon. Gentleman’s point. It relates to what we are doing with HS2 to increase capacity in the longer term, although that is not the short-term answer he wants. I was disturbed to read the reports about the delays on the line, and I will talk to Network Rail to see if there is anything we can do.

East Coast Main Line Franchise

Ian Mearns Excerpts

Thursday 20th June 2013 Commons Chamber

[Mr Jackson]

If it is such a popular idea, why has the hon. Gentleman’s party not put it in its manifesto? Why in 13 years did it not repeal the Railways Act 1993 and go back to the good old days of British Rail, which did not get us to our destination very often or on time?

[Ian Mearns (Gateshead) (Lab)]

Will the hon. Gentleman give way?

[Mr Jackson]

Let me make some progress and I will give way to the hon. Gentleman shortly.

The Labour party has to bear some responsibility for the series of events that culminated in the current situation. As in so many areas, this Government are having to tackle that legacy. The Labour Government should have been more flexible with Sea Containers and Great North Eastern Railway, which was a very popular provider: it had good staff, good management and was well liked. Obviously, it was undermined—this was out of its control—by the parlous financial situation of Sea Containers, but the previous Labour Government was pretty inflexible and allowed National Express to overbid hugely and deliver a poor level of service. I think that the National Express management team is pretty hopeless. In fairness, the Labour Government did not have much chance or choice to do anything differently at that stage. Nevertheless, unless Labour gives an unambiguous commitment to renationalisation across the network, old Labour hon. Gentlemen will be whistling in the wind.

[Ian Mearns]

Will the hon. Gentleman give way?

[Mr Jackson]

No, I must make some progress, because Mr Deputy Speaker will reproach me otherwise.

It is worth mentioning that, in terms of premium, National Express paid £338 million to the Treasury between 2007 and 2010. It was not a basket case. It ran into difficulties as a direct result of the economic crisis and the less than benign economic circumstances, but it did pay in. As I have already told the hon. Member for Edinburgh East, the track access charges were significantly higher for National Express than they are for the current company.

I welcome the improvements in control period 4, which covers 2009 to 2014, including the new platform 0 at King’s Cross, the junction remodelling and in particular the removal of the major bottlenecks between Huntingdon and Peterborough and the overall budget of £240 million. I think we all welcome the new inter-city express trains, extra seats and the replacement of the slam-door rolling stock, which will come on stream in due course.

I am a fair-minded person, so I will admit that there have been mistakes in the franchising process. I challenged the Secretary of State about this in Transport questions a few months ago and the Public Accounts Committee looked at the issue, specifically on the west coast main line, in February and identified some key things. There was a failure to follow due procedures and, essentially, a failure of culture. There were Chinese walls between the permanent secretary and the franchise and procurement teams, which seemed strange and is unusual in the civil service. There was also a failure of oversight, with no one person being in charge of oversight and having responsibility for the franchising process from beginning to end.

In July 2011, the Public Accounts Committee published a report on Network Rail. Network Rail is an integral part of any debate about the east coast main line and its future. The Committee found that Network Rail was still less efficient than comparator organisations in Europe, but it did not know why. The Committee also found that the system of penalties and bonuses that were meant to drive improvements in efficiency were not doing so. Because it is an overly complex industry, the risk of poor value for money and inefficiency is endemic. Those were the key lessons of the PAC report.

There is a need to impose clear objectives on train operating companies to avoid overcrowding, or bear the costs of overcrowding. I am not convinced that the Department for Transport has addressed that important issue adequately. We need more clarity on the link between fares and new passenger places and on the balance of costs between the taxpayer and the passenger.

In its contribution to the debate about franchising, through the Brown report and the McNulty report, Passenger Focus has suggested some simple things that would improve the passenger experience, including right time performance information; better ticket information; making restrictions simpler and more apparent on ticket machines; and having performance indicators for the line of route and not just for the franchise as a whole. Those are simple things, but they would make the experience of our constituents who travel to the north of England, Scotland or London much better.

I will finish my remarks by talking a little about competition and open access. I welcome the consultation paper that was published this month, “On-rail competition: Consultation on options for change in open access”. Open access is an important issue that we need to look at. The east coast main line is a good example of open access. It has brought significant benefits to parts of the network. Only a small part of the passenger rail network is open to competitive pressures. On the east coast main line, two non-subsidised open access operators, Grand Central Trains and First Hull Trains, compete with the franchiser. They have shown that competition leads to more journeys, higher revenues for the train companies, lower fares, and more and happier passengers.

The Centre for Policy Studies publication in March showed that passenger journeys increased by 42% at stations that enjoy rail competition, compared with 27% at those without it; that revenue increased by 57% at those with competition, against 48% at those without it; and that average fares increased by only 11% at stations with competition, compared with 17% at stations without it. So the franchise holder faces competition and still pays an increased premium to the Government, as East Coast has done. Open access competition has led to more routes and more high-speed access to new locations, including in London.

As a one nation Conservative—I suppose we are all one nation now, whether one nation Labour or one nation Conservative—I think that it is important that we have good transport infrastructure to places such as Sunderland, Hartlepool, Halifax, Hull and Bradford. All those places have seen a significant boost to their economic footprint and their direct access to markets. In the course of the public consultation on open access, we need to consider the benefits to local economies and, ultimately, to the taxpayer. Hitherto, the Office of Rail Regulation and the Department for Transport have set their face against open access and have been inflexible in the design of the franchise regime.

In conclusion, 20 years on from the Railways Act 1993, I believe that privatisation has been a success. Labour will not reverse it in government if it wins the next general election. The review of the franchise regime gives the industry an opportunity to facilitate more competition, more investment in our railways, more choice, and greater value for money and efficiency for our constituents. Ministers should seize this chance while they can.

--- Later in debate ---

[Hugh Bayley]

It is useful that the hon. Gentleman says that we should listen to Passenger Focus, because it currently gives the East Coast service the highest level of satisfaction that it has received since Passenger Focus starting doing its surveys in 1999.

[Ian Mearns]

The hon. Member for Peterborough (Mr Jackson) has just highlighted one of the problems that franchise holders like East Coast face. They are reliant on Network Rail and on the infrastructure if their trains are to run on time. Extraneous issues—including, unfortunately, people trying to commit suicide—are completely beyond their control. Having said that, they do very well in spite of all that.

[Hugh Bayley]

My hon. Friend makes a good point.

--- Later in debate ---

[Ian Mearns (Gateshead) (Lab)]

I congratulate my hon. Friend the Member for Edinburgh East (Sheila Gilmore) on securing this important and timely debate from the Backbench Business Committee—I have to declare an interest, because I sit on it. Like many colleagues, given the recent history of the east coast main line and privatisation, not to mention the present Government’s failure on the west coast main line franchise, I am deeply concerned about the Government’s plans and the impending privatisation of the east coast main line.

The Secretary of State for Transport’s announcement to start the tendering process for the east coast main line and nine further franchises paid no regard to public interest. It will result in the return of a profitable rail service to private hands within the next two years. The plans are no doubt a recipe for disaster. We already know that South West Trains, another private franchise, is in operating difficulties.

We have clearly established that Government Members are in favour of state ownership of the railways. I am sure that the hon. Member for Beckenham (Bob Stewart) and the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns), are in favour of state ownership, but not UK state ownership; they are in favour of German, French or Dutch state company ownership of UK railways. Do we honestly think for one moment that Angela Merkel would allow such a situation to prevail in the Federal Republic of German? I do not think so.

[Roberta Blackman-Woods]

My hon. Friend makes an excellent point. Is it not ludicrous that a publicly owned company in the UK cannot bid but publicly owned companies in other European countries can?

[Ian Mearns]

Given how Eurosceptic so many Government Members are, I think that it is utterly bizarre that they would rather see profits from UK railways going to France, Germany or Holland.

If Members have any doubts about the way this is all coming about, they need only look back a few years to the Government’s rescue of the line from the failing £1.4 billion National Express franchise. However, despite the private sector’s record of failure, the Government are determined to press ahead regardless of the interest of the travelling public. They would pursue the foolish policy of privatisation, despite history repeatedly telling us that the privatisation of railway lines and rail infrastructure is detrimental to cost and service for the customer and to the Government because of huge financial bail-outs.

The state-owned Directly Operated Railways, which runs the east coast main line, has generated and paid the Government £640 million in premiums and profits since 2009, and it is anticipated that by the end of this financial year that figure will be £800 million in total. Surely even the Chancellor or the Finance Ministers whom I faced on the Finance Bill Committee earlier this afternoon would want to see those moneys returned to the Chancellor’s coffers. Even this Government, given the current financial state of the country, should want to keep the franchise in public hands and see those profits repatriated to the Treasury.

The Government should pocket the profits for the public and use them to help cut the deficit and perhaps even invest in infrastructure. One thing that we have to accept about the east coast main line—railway engineers have told me this—is that, unfortunately, when it was first electrified I am afraid to say that it was done on the cheap; it was not a good model of electrification in the first instance. This Government, however, do not want to see that money reinvested. It is clear that, for them, private shareholder interest comes before the public interest. This is yet another example of this Government’s failed and ideologically driven economic policies.

No one denies that the east coast main line suffers its own problems of chronic under-investment, particularly with regard to what is now very tired rolling stock. We have discussed rolling stock reinvestment, but the problem is that we are being promised jam not tomorrow, but the day after tomorrow. The first new rolling stock on the east coast main line will be the diesel replacement, but that will not actually occur until 2018, with the rest of the fleet following further down the line. Let us not forget that the east coast main line inherited this burden from the privately owned rail firms, Great North Eastern Railway and National Express.

There has been very little rolling stock investment on the line for many decades. There has been some refurbishment, but that was mainly on carriages that were damaged following the tragic Hatfield and Selby rail crashes. The only way to run an effective rail service is to ensure that the infrastructure is up to scratch through continued investment, yet the overriding objective from a private sector perspective is not to invest in maintenance and customer satisfaction, but to return money to shareholders.

Privatisation in the rail sector is consistently lacking and detrimental to customers and the industry. Why privatise a service that has been successful? In short, it is not broke, so why fix it?

Let us recall the demise of Railtrack in 2002. The problems were numerous, but the straw that broke the camel’s back was the requirement for essential safety repairs following the Paddington and Hatfield disasters. Railtrack—a privately owned company under the failed model—was answerable to shareholders rather than the public. It was, to put it bluntly, badly managed, effectively bankrupt and unwilling to try to fund urgent safety improvements as well as normal running costs. Subsequently, as we know, the company was put into administration and Network Rail, a not-for-profit body, was invented to take over the rail network.

Given the inherent debt of Network Rail, is any Government Member suggesting for one moment that we re-privatise it? Of course not, because it would be completely and utterly stupid. Even if it were privatised—let us be honest—who really trusts this Government to introduce a fair and transparent, or even competent, tendering process in the current rail industry? Let us not forget the west coast franchise, for instance, which has cost the Government at least £50 million. What a complete shambles—a shambles that has resulted in Virgin, which lost to First Group in the tendering process, having to have its contract extended until 2017. The whole model does not produce competition; it produces a series of service monopolies on individual lines. That is not competition as anyone would understand it.

In among all this, the staff on the east coast main line have worked diligently and conscientiously through all the management changes over the years, but they have seen the equipment and rolling stock that they work on slowly deteriorate around them. Those staff are a credit to the service and deserve our congratulations. They and the travelling public they serve on the east coast main line deserve so much better.

The east coast main line should remain where the vast majority of the travelling public want it—in the public sector, in public ownership—and some of the surpluses that it generates should be reinvested into the service itself.

East Coast Main Line

Ian Mearns Excerpts

Wednesday 5th June 2013 Westminster Hall

[Ian Mearns (Gateshead) (Lab)]

It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on the fantastic speech he made in opening the debate.

Like many of my colleagues, given the recent history of the east coast main line—not to mention the Government’s failure on the west coast franchise—I am deeply concerned about their plans for the impending privatisation of the east coast main line. The announcement by the Secretary of State for Transport about the start of a tendering process for the east coast main line and nine further franchises pays no regard to the public interest, and a profitable rail service will return to private hands within the next two years. The plans will no doubt be a recipe for disaster.

My hon. Friend the Member for Middlesbrough established in his speech that Government Members support state ownership of the UK rail network, but importantly, that does not mean UK state ownership. Instead, they support German, French and Dutch Government ownership of the UK rail network. It has been interesting to hear about the lack of understanding of the complex interrelationships in the way our rail franchising system works, such as the relationship between Network Rail, the train operating companies and the rolling stock leasing companies, and about the failed diffuse franchising model established by the Tory Government from 1979 to 1997.

We are promised new rolling stock on the east coast main line, but initially only the diesel trains will be replaced, and that will not happen until 2018. No one denies that the line suffers from chronic underinvestment, particularly as there is now very tired rolling stock. However, let us not forget the burden that East Coast inherited from the privately owned rail firms, GNER and then National Express. Those problems were exacerbated, given the limited amount of rolling stock available on the line, by the Hatfield and Selby rail crashes. When full train sets are taken out of a service of that nature, it means that the operator is operating on very tight margins indeed.

The only way to run an effective rail service is to ensure that infrastructure is up to scratch through continued investment, yet from a private sector perspective the overriding objective seems to be not investing in maintenance and providing customer satisfaction, but retaining funds for shareholders.

Like the travelling public, I am deeply concerned about what is being proposed for us. If we acted on the proposal that my hon. Friend the Member for York Central (Hugh Bayley) has suggested and asked the travelling public on the east cost main line what they want for the future, we would get proof of the undoubted fact that the vast majority of them want the franchise to stay exactly where it is—in public ownership.

--- Later in debate ---

[Mr Burns]

The hon. Lady anticipates the very point I am about to make, which is that, under the Railways Act 1993, the Secretary of State has a statutory duty to ensure the continuous, seamless provision of rail services. That is why the Department for Transport has Directly Operated Railways. It is a body of last resort when there is a problem; it is not a permanent company, for want of a better term, to run a rail franchise indefinitely. My hon. Friend the Under-Secretary was correct in 2009, and the noble Lord Adonis was also correct.

[Ian Mearns]

Will the Minister give way?

[Mr Burns]

I am going to make progress, because I have only six minutes.

We have ensured that the delivery of the key inter-city franchises, both on the east coast and the west coast, is staggered so that they are not let at the same time in the economic cycle. The east coast is the first of those franchises to be let, and it is being returned to the private sector, as hon. Members know, after an extended and successful period of public ownership through force of necessity because of the fiasco with National Express. No one doubts that.

Oral Answers to Questions

Ian Mearns Excerpts

Thursday 25th April 2013 Commons Chamber

[Ian Mearns (Gateshead) (Lab)]

Scandalous!

[Mr Burns]

Notwithstanding the hon. Gentleman’s cry, that was, of course, the intended policy of the previous Labour Secretary of State and the previous Labour Minister for Transport. We anticipate that the line will return to a franchise operation by February 2015.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

I thank my hon. Friend for that question. She will know that the criteria for pinchpoint funds were set out with regard to the first three rounds. They fall under a certain financial limit and are completed by March 2015. We are in discussions on how further tranches will work in terms of the extension of the date of completion. I am convinced that given the record of the A64—one of the criteria is safety—it will be looked on favourably.

[Ian Mearns (Gateshead) (Lab)]

The east coast main line has returned £640 million to the public purse since 2009. Sadly, private ownership has failed the travelling public of the east coast franchise. What possible public benefit can be gained by another wasteful and expensive round of refranchising, when east coast is already where the vast majority of the public want it, in public ownership?

[Mr McLoughlin]

I point the hon. Gentleman to what was said by the last Labour Transport Secretary, the right hon. Member for Tooting (Sadiq Khan) who now sits on the Opposition Front Bench. It is worth pointing out that National Express paid £185 million in 2007-08, £145 million in 2008-09 and £8 million in 2009-10, which is when the franchise ended. The way that the track excess charges were calculated was then changed, so direct comparisons are not valid.

Rail Franchising

Ian Mearns Excerpts

Tuesday 26th March 2013 Commons Chamber

[Mr McLoughlin]

I am grateful to my hon. Friend, who follows this subject particularly closely, not just for his constituents but as a member of the Select Committee on Transport. I know that he sent me and my right hon. Friend the Minister of State, Department for Transport a fairly comprehensive letter, which I hope to respond to shortly, and I will see what can be done.

[Ian Mearns (Gateshead) (Lab)]

This morning, a statement by the Secretary of State’s own company, Directly Operated Railways, on the east coast main line said:

“Since 2009, the East Coast business has been transformed. The Company has returned more than £640 million in cash to the taxpayer”.

That is not because of privatisation, but because the public sector bailed out the private sector. There is huge support for continued public ownership. The private sector has already let down the travelling public on this route twice. Why risk it again when we are returning so much money to the taxpayer?

[Mr McLoughlin]

I was simply referring to what was said by the Secretary of State in the previous Government. It was a short-term measure. By putting out the franchise to the private sector, there will be better services. That is what I am interested in. I am not particularly interested in who owns it. I am interested in getting better services to the hon. Gentleman’s constituents, who want to take advantage of them.

High Speed Rail

Ian Mearns Excerpts

Monday 28th January 2013 Commons Chamber

[Mr McLoughlin]

The hon. Gentleman makes a tempting offer. We are committed to the electrification of the midland mainline, which will have substantial benefits for Leicestershire. I would add that East Midlands airport was built by the three counties—Leicestershire, Derbyshire and Nottinghamshire—and is situated at the north of Leicestershire, which the county at that time felt was beneficial to it. The Toton sidings are basically not far from the north end of the county, so I think they will have benefits for Leicestershire as well.

[Ian Mearns (Gateshead) (Lab)]

Twenty years ago, I could travel from Newcastle to London in 2 hours and 38 minutes. In his announcement today, the Secretary of State said that in 20 years’ time we will be able to do it in 2 hours and 18 minutes. Does he think that 40 years is enough for 20 minutes, given the importance of connectivity for the economic regeneration of a place such as the north-east of England?

[Mr McLoughlin]

I imagine that I would need to check out the timetable that the hon. Gentleman has just alluded to, because it is not unknown for Opposition Members to look on the past through rose-tinted glasses. Part of the problem might be that more people are now using the railways so there are more stops, which means that his journey is perhaps taking a little longer than it used to. However, I am very much minded to ensure that his region, like every other region in the north of the country, can benefit from the proposals I have brought forward today.

Rising Cost of Transport

Ian Mearns Excerpts

Wednesday 9th January 2013 Commons Chamber

[Ian Mearns (Gateshead) (Lab)]

I welcome the opportunity to speak in today’s debate, which is extremely timely, given the news in today’s newspapers that once again the north-east is to lose out on vital rail infrastructure investment. I want to draw some important links between fares paid, the turnover of rail operating companies, the profits they make and levels of investment.

This morning, The Journal in Newcastle announced that Network Rail’s £37 billion five-year improvement programme looked set to snub a wish list of north-east track upgrades. The Secretary of State just trumpeted that 850 miles of line were to be electrified—well, not in the north-east of England, I am afraid. He also mentioned that £240 million was to be invested in the east coast main line. On the basis of current profits and the amount of money going back to the Department for Transport from the east coast main line, that is about one and a quarter years’ operating profit—so not much to be thankful for there. Rail passenger groups have warned that, although some east coast main line work will speed up connections, almost none of Network Rail’s refurbishment money will go to north-east England. Incidentally, the east coast main line is operated by Directly Operated Railways, which is owned, in turn, by the Secretary of State and the Department, so he has significant influence over the company—or certainly should have.

Lines in the region calling out for electrification, new passenger services or full-scale reopening have had their case turned down, as money has gone instead to improving services via Manchester and Leeds, as well as improving links to London. Of the £37.5 billion budget, only a pittance is earmarked for track enhancements in the north-east—mainly for the easing of the so-called pinch points between Northallerton and Ferryhill. From a north-east perspective, projects would help to boost mobility and connectivity in our region and enhance our prospects for economic growth.

This snubbing, yet again, of the north-east is particularly galling given the range of fare deals being offered to north-east customers, compared with our Scottish counterparts, by the east coast main line. We sometimes have to pay £100 more for a journey that is an hour and a half and a 100 miles less. I have no quarrel with my Scottish colleagues and their constituents getting good deals from east coast main line, but on behalf of my constituents, I have a duty to demand the same kind of deals and discounts for the travelling public in the north-east as those from which colleagues north of the border benefit.

The east coast main line is working at a significant profit and contributing those profits to the national pot.

[Ian Lavery (Wansbeck) (Lab)]

I had a look at the fares on the internet just before we came into the Chamber. A return fare from Newcastle to King’s Cross was £301. With the minimum wage at £6.19, that means that people have to pay 48.62 hours of work at the minimum wage for one journey from Newcastle to London return. Is that fair?

[Ian Mearns]

There is an awful lot about current fare structures that is desperately unfair, particularly for people on low wages and those trying to get jobs, and particularly in a region such as the north-east, where many have to travel to get work.

As the independent report stated in September, a railway company that was temporarily renationalised by the Government three years ago reported increased profits and an improvement in passenger satisfaction. DOR, which took over the running of the east coast line from National Express, said that its operating profit increased by 7% in the year to March to £7.1 million. Turnover for the year amounted to £665.8 million—an increase of £20 million—leaving a profit before tax and service payments to the Department of £195.7 million. That was an increase of £13 million. Putting that against the £240 million proposed investment in the east coast main line makes the amount look extremely modest indeed.

I have a great deal of respect for east coast main line as a franchise. I sympathise with its staff, who often work in difficult circumstances, dealing with the failures of creaking infrastructure and worn out rolling stock and equipment, yet an awful lot of what the travelling public have to put up with on the east coast main line could be avoided through some relatively modest investment, which would be entirely affordable given its profits.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

My hon. Friend mentions the east coast main line staff, who do indeed provide a good service to passengers. I am sure that he, like me, frequently comes across people who are confused about whether they have the right ticket for a journey—a train might be late or they might get on the wrong train. The poor staff then have to deal with the problems that that creates. Is that not an example of the kind of complication that drives away passengers and often makes them go for higher fares rather than cheaper ones?

[Ian Mearns]

Indeed, and one criticism I would make of the last Government is that they did not sort out the complicated franchising system, which has left us with a complicated rail ownership programme across the country.

The Chancellor of the Exchequer proudly announced investment in infrastructure as a means to unlock growth. However, analysis by the Institute for Public Policy Research shows a biased picture. The think-tank examined the data, detailing the projects to be brought forward as part of the national infrastructure pipeline. Of the projects that were identified as benefiting a particular region and where public funding was involved, it found that London and the south-east accounted for 84% of planned spending, compared with 6% in the north. That equates to some £2,700 a head for each Londoner, which is more than the total for all the other regions combined, which includes £201 a head for Yorkshire and Humberside, £134 a head for the north-west and just a fiver for the north-east of England. My constituents do not believe those figures, but they are absolutely right. Why, if we get a meagre £5 of investment per head, should we pay extortionate rises in rail fares, which have risen nearly three times faster than wages since the recession? In fact, between 2008 and 2012, average rail fares increased by 26.6%, with wages rising by just 9.6% over the same period. Recent research by the think-tank Transport for Quality of Life has shown that UK rail fares are the most expensive in Europe and that rail privatisation is costing taxpayers £1.2 billion a year, with train operating companies making large profits on the back of public subsidies.

Speaking of profits, I was appalled to learn recently of a dispute over pay involving east coast main line and a subsidiary company called ISS—International Service System—which centred on its cleaning staff. Cleaners were being paid £6.08 an hour—a figure that is below the national minimum wage and is, I believe, illegal. On top of that, they got no pension scheme, no enhancements for unsocial hours, bank holidays or weekends, no sick pay above the statutory minimum and no travel allowances. The east coast franchise, which likes to promote itself as a first-class service, was treating employees of its contract cleaning company in a third-class way. ISS is a huge multinational company, with more than 500,000 employees worldwide, 43,000 of whom work in the United Kingdom. It is disgusting that it was able to do that to its hard-working employees. Indeed, following on from yesterday’s debate, this has a knock-on effect, as the Government have to fork out in-work benefits to many of these people to subsidise the industry.

Pressure must be put on Network Rail by the Government to ensure that north-east services get a fair allocation of resources. Connectivity, particularly by rail, is essential to the economic prospects of regions such as the north-east. Despite their stated commitment to reduce the deficit, the Government still find themselves, month after month, deepening the crisis yet further. When will they recognise the essential link between investment in growth, particularly in regions such as the north-east, and their prime aim of deficit reduction? The two are absolutely connected.

Transport and the Economy

Ian Mearns Excerpts

Tuesday 28th February 2012 Commons Chamber

[David Mowat (Warrington South) (Con)]

I, too, congratulate the Select Committee on their coherent report and I want to focus on one aspect of it, which is the issue of regional imbalances in spend and how they happen, and to give some of my thoughts on how we can avoid them. Those thoughts are about the appraisal mechanisms used in the Department for Transport and the Treasury, the approach to appraisal and the Treasury Green Book.

Let us get the facts out of the way first. Table 2 of the Committee’s report makes it clear that in the period under review—2008-09—one region received substantially more funding than any other, and that was London. In broad terms, London received about two or three times more per head than the English regions. That matters as billions of pounds of capital spend generate high-quality private sector jobs that translate, through the power of the economic multiplier, into prosperity. The effect is transformative.

I cannot be the only Member of the House who thinks that it is odd that under the previous Government, in 2009, the discrepancy in gross value added per head between London and the English regions doubled at a time when that capital spending was being poured into London. That discrepancy by a factor of two between the capital city and other parts of the country does not exist in any other European country; it is unique to Britain.

I had hoped that after the election we would get all that sorted out with the new Government, and I was confident that serious attempts would be made to use the power of capital spending to fix the north-south divide. I was disappointed, like others who have already spoken, to see that in the autumn statement 84% of the £30 billion accelerated capital spend was allocated to London. Let me put it in context: that is £2,731 per head in London compared with £150 per head in my region, the north-west, and £5 per head in the north-east. I have heard Ministers talk about and challenge those figures and I would like the Minister to address that specific point.

The difference in spend is partly but not entirely to do with Crossrail, Thameslink and the underground, but even after those projects are removed from consideration, London and the south-east still receive approximately double what is received in the north. This is very serious and makes a mockery of our attempts to use the regional growth fund, and previously the regional development agencies, to redress that balance. If we put capital spend of that quantity into one part of the country in that way, then giving £1 billion here and £1 billion there in regional spend does not make much of a difference. I am not a conspiracy theorist: I do not think that the Opposition, when they were in government, or my own Government have done that on purpose. There is a deeper issue here—a systemic bias that drives these decisions—and it is to do with the method of appraisal.

As far as I can make out, the mechanism that the Department for Transport uses—the new approach to appraisal—leans heavily on a system of multiplying small, incremental changes by the number of people involved to generate the business case. The system specifically is not allowed to take into account wider economic benefits. The consequence of that appraisal mechanism, which has been used both by the previous Government and by this Government, is that there is a bias towards the parts of the country that are most congested and where the greatest number of people will benefit from relatively small changes in journey times to create a huge economic benefit. As a consequence of that system, resources for projects are continually allocated to one part of the country.

[Ian Mearns (Gateshead) (Lab)]

I welcome the fact that the hon. Gentleman has brought to the House’s attention the disparities with proposed investment packages in transport. Ministers will try to argue this away but they cannot argue away the extent of the disparity when more than £2,500 per head of population is being spent in the south-east compared with just a fiver in the north-east.

[David Mowat]

The hon. Gentleman echoes the point I am making. Just to take the politics out of it, let me point out that broadly the same thing happened under the previous Government, so we go back to my previous point: something systemic is happening here in the way that projects are appraised within the Department for Transport. I do not believe that either the previous Labour Government or the current Government wished that to be the out-turn. Frankly, the resulting disparity is not even very good for London, because the consequence of having a mechanism that removes congestion is to enable further congestion to gravitate towards our capital city and we start all over again. Enough is enough—Ministers have to challenge the appraisal mechanism.

I have thought about how the system could work and I shall leave the Minister with my suggestion. We should allocate capital budgets by region as the starting point for where money is spent. Then we would not get the issue with the north-east getting £5 a head while London gets £2,700. I understand that one risk of such a system would be sub-optimisation and that there is a need to manage cross-regional projects, but that could be done—other organisations do things of that nature. It clearly is not satisfactory for things to carry on as they are. I would like the Minister to give his view on why the appraisal mechanisms used by the Department continue to give the answers they do.