Rail Infrastructure Investment

Debate between Jim McMahon and Andrew Jones

Thursday 17th January 2019 Westminster Hall

[Andrew Jones]

How individual operating companies wish to own and run their rolling stock is up to them, but the point is that private investment and the private sector, whether it pays for a lease or for ownership, is delivering, and the public sector did not, which is why we have the long-standing Pacer trains on our network. The no-growth franchise was a significant feature. I am sure that those who let that now think that that was a mistake, because of course we have had significant growth in the north and we are playing catch-up.

It is fair to say that we had a difficult year on our rail network in 2018, as many colleagues here have said. We all know that performance declined, never more so than around the introduction of the timetable in May. But it is also fair to say that we have seen a doubling of passengers across our rail network over the past 20 or so years, which shows it is a ringing success, demonstrating the success of the public and private sectors working together to deliver significant and sustained improvement.

[Jim McMahon]

I accept that passenger numbers have increased, but the truth is that the summer delays and the autumn cancellations were not a surprise. The timetabling was agreed by Northern. It designed it, crafted it and failed to implement it properly. The delays in the autumn were down to autumnal weather, which obviously takes everybody by surprise. It is not as though it happens every year when leaves come off the trees and fall on tracks. The basic management is poor, and surely not fit for purpose.

[Andrew Jones]

We have had autumn leaves falling since time began, and whichever rail company has been operating—including nationalised ones—they have found them quite difficult to manage. To suggest that it is suddenly a bigger problem is a mistake.

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[Andrew Jones]

We have received a further draft within the past few days. It is not the absolutely final version of the report, but I understand that we are very near it. I hope to read it, but I think that I should read it when it is finished, rather than in draft form—to be fair to Mr Brown. As soon as we have more information, I will keep the hon. Lady posted.

Regional spend has been a concern in this debate and more broadly. The hon. Member for Kingston upon Hull North (Diana Johnson) kindly said that I was definitely listening—to confirm, I am definitely listening, and definitely Yorkshire. The Government are clear that there should be a balance of rail investment across the whole network, to the benefit of the whole country. The Government and the Select Committee alike agree that capital spending in one part of the network can deliver benefits further afield.

I must stress, however, that the Department for Transport does not allocate funding on the basis of per head of population. Our railway is a network, with spending in a particular area benefiting users up and down the country.

[Jim McMahon]

Does the Minister agree that part of the problem with how schemes are assessed is that heavy consideration is given to economic return or gross value added? A mile of track in London will therefore always deliver more economic return than a mile of track in Manchester, Wales, Scotland or anywhere else, simply because of that economic assessment. Surely, to rebalance the UK, there has to be a levelling up in addition to that economic criterion.

[Andrew Jones]

I understand the hon. Gentleman’s point, and if that were the only consideration I can see how it could lead to inappropriate decisions, but that is not entirely the case. For example, the transpennine rail upgrade, which will be the biggest enhancement on our network over the next five years, would simply not be happening if we accepted his point. But I understand where he is coming from: we have to balance not only economic return and national efficiency, but the possible role in rebalancing our national geography. The lack of investment in some parts could easily be seen as a factor in economic performance.

Our decisions follow a rigorous and fair appraisal process that ensures spending goes to the projects and programmes where it is needed, delivering value for money for taxpayers and passengers. Sometimes that means that spending appears higher in some areas than in others. We cited various figures, but the numbers quoted are frequently from the IPPR. I have some reservations about the IPPR reporting, because it simply adds up future spending regardless of how far it extends. For example, its analysis includes 16 years of planned expenditure on HS2, where the most costly sections—because of land prices—are in London, but only five years of planned spending on maintenance for the other parts of our network. It includes locally funded spending by TfL, but not local, equivalently funded spending in other cities, which will result in a poor sample.

We look at data in a number of different ways. Investment in Birmingham, for example, could benefit users in Penzance, Edinburgh—anywhere across our network—and, of course, the west midlands. We look at two measures: where the investment is made and where the benefits will be felt. The numbers quoted so far on where spending is taking place largely have not taken into account where benefits are felt. However, spending figures going forward, as shown by the national infrastructure and construction pipeline, show that the Government expect to spend £248 per person in the north, compared with £236 in the south. There is an element of the phasing of schemes driving the individual spend in an area.

The rebalancing toolkit has been considered, which we have developed to support authors of strategic cases to assess how a programme or project fits with the objective of spreading growth around the country. I was asked whether it is being used. It is being used in the development of the transpennine rail upgrades and the Northern Powerhouse Rail business cases. The rebalancing toolkit is designed to help with the basic planning. It includes a checklist of questions to consider and potential evidence that can be used to help describe the rebalancing case for a project or programme in its strategic case. It is an ingredient. Does it need to be used in every single case? Given the amount of money we spend and the amount of time it takes us to plan our projects, I do not think it should be mandatory everywhere, but certainly it is an ingredient in making the right decisions. The toolkit’s objective is to make decision making more consistent by improving the focus, quality and transparency of the rebalancing evidence in the business case.

Let me answer some questions asked by colleagues. The transpennine rail upgrade offers the fantastic prospect of the north being the centrepiece of the next spending period. It is a £2.9 billion first phase of a scheme. Electrification will be a part of the proposals. It is phased to deliver the best benefits to passengers over the period. Freight will most certainly be considered; that is why we are also taking forward options for the development of the Skipton to Colne reconnection. It should be viewed as a phased activity.

The advice we have received from Network Rail is that if we spend any more money on that network during this period, with the amount of interventions required to deliver the schemes we will bring the northern rail network to a halt for just about every weekend over the next five years. We have taken the view that it would be an unacceptable price to pay, which would have a huge detrimental economic impact. We have listened to the industry experts and that is the advice they are giving us, so we are delivering this major project in phases. The criteria are about delivering the best benefits to passengers early, but our ambitions are not reduced at all.

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[Jim McMahon]

In the light of the comments by the Chief Secretary to the Treasury, what representations has the Department for Transport made to reassert the case for HS2? Is the Minister confident that if there were a value-for-money review, the project would make it through?

[Andrew Jones]

I could answer that in a few ways. First, it is clearly right that the Treasury takes a view on managing the efficiency and delivery of public projects, because so much money is involved. We are spending half a billion pounds a week more on capital projects than the last Labour Government. We are catching up on investment.

What representations do we make? Of course there is regular dialogue between Ministers from all Departments, and certainly between the Department for Transport and the Treasury at both official and ministerial level. The Government remain entirely committed to HS2, which is part of the rebalancing of our national network. We need capacity on the network, and HS2 will deliver it.

[Jim McMahon]

The Minister has given way extremely generously, and I am grateful for that. Has the Treasury initiated a review of HS2, or did the Chief Secretary’s comment just reflect her personal view?

[Andrew Jones]

I am not the Minister with responsibility for HS2, so the day-to-day correspondence does not come across my desk, but the Government are entirely committed to HS2. The Treasury is right to say that we will look at projects to ensure that they come in on budget and on time, and that we do not see project-creep in terms of cost. The Treasury has been sighted, for example, on the way we are re-planning our investment process to ensure that decisions are made in as informed a way as possible so that there are as few surprises as possible.

Let me be absolutely clear to everybody that HS2 is a critically important project. Work is already under way to deliver it. The hon. Gentleman made the point that the appetite for it grows the further north one goes, and I am happy to echo that entirely. HS2 presents fantastic regeneration opportunities, about which I have had conversations with Judith Blake in Leeds, Andy Burnham in Manchester and Andy Street in the West Midlands.

The hon. Gentleman also highlighted the industrial relations issues that blight some parts of our rail network. The Government are keen to see a second person on trains. Indeed, we have said that there will be no blockage from the Government if that is what everybody wants. We can make changes to any agreements. Indeed, we have gone further than that and said that we will provide financial support. I have made those comments to the unions and the company. The dispute is between those two parties, but the Government can play a role in creating an environment to help them get around the table and talk, and I think I have done that. I want to see them get around the table and talk and, as they do so, stop the strikes, which have had a detrimental impact on the economy of the north.

I have not yet addressed the comments by the hon. Member for Inverclyde (Ronnie Cowan) about devolution to Scotland. Rail is devolved to Scotland. The Scottish Government set their own high-level output specification. The statement of funds available is above the Barnett formula for CP6. Off the top of my head, having discussed Scottish rail issues with colleagues in the Adjournment debate on Monday night—that was very late, so I understand that not everyone will have been present—I think it is £4.85 billion. There is significant funding available for the Scottish rail network, and the Scottish Government have control over rail.