East Coast Main Line Franchise

Lord Jackson of Peterborough Excerpts

Thursday 20th June 2013 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

I beg to move,

That this House has considered the matter of the east coast main line franchise.

I thank the Backbench Business Committee for giving us this debate. When I spoke to the Committee in support of the debate, I acknowledged that we had a 90-minute Westminster Hall debate on the subject on 5 June which was led by my hon. Friend the Member for Middlesbrough (Andy McDonald), but on that occasion there was great demand to speak. Many Members were limited to interventions. More importantly, there were many issues which the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns) did not address in his response. I intend to make that the focus of my speech today.

I declare a family interest in the railways. My grandfather was a railwayman and I am sure he would be delighted to see me here today speaking up for the railways. Of course, he was a railwayman in the pre-British Rail days, let alone the post-British Rail days. In fact—this will probably give away my age—he was working on the railways in the first world war in what was then a reserved occupation. He recalled being approached occasionally by people with white feathers because he was not fighting. He worked in the railways after the war when it became British Rail, and as a long-term railwayman he would have been proud to see British Rail and to see that the railways are still such an important element in our transport system. At various times in the past 50 or 60 years there have been suggestions that railways were the past and we would move beyond railways, but here in the 21st century it is true to say that railways are back as a hugely important part of our future, not just of our nostalgic past. It is therefore particularly important that we get it right for the next 50 years.

The other interest that I have to declare is as a frequent traveller on the east coast main line, spending nearly 10 hours a week travelling on that line when Parliament is sitting. Since I started that regular commute, I have been extremely impressed with the service provided by the current operator. That is not to say that it is perfect. I do not think any provider would have been able to tackle, for instance, the day that the line was completely flooded north of Newcastle, when I ended up having to spend the night in Newcastle. I do not believe that even a private operator could have held back the waves of water that fell on the Newcastle area that night, and I know that several Members present experienced that personally.

I was perplexed when, following the fiasco of the west coast main line refranchising, the Government’s new schedule of competitions prioritised getting East Coast out of the door by February 2015, three months before the next general election. Some cynics have suggested that what motivated that proposal and the timing of it was the fact that my hon. Friend the Member for Garston and Halewood (Maria Eagle), our shadow spokesperson on transport, had been raising the issue and challenging the Government on the proposals, given what had happened with the west coast main line. The next thing we heard was that the Government were to refranchise East Coast within a very short time scale. That was to be done at the expense of giving extensions to two other long-distance operators—Virgin on the west coast and First on Great Western—because the investigation into the franchising fiasco suggested that not more than one main line franchise should be dealt with at one time. Even on that basis, though, why the east coast line and not one of the other lines? It makes no sense to reprivatise a successful public sector operator while neglecting the other services.

[Mr Stewart Jackson (Peterborough) (Con)]

I am following the hon. Lady’s speech with great interest, but I always think it better to focus on cock-up in politics, rather than conspiracy. In that respect, would she like to explain why, on 21 January 2010, under a Labour Government, the Department for Transport consultation on franchising made a commitment from her party to reprivatise the east coast main line?

[Sheila Gilmore]

I am glad the hon. Gentleman made that intervention, because it enables me to say that one of the most important things for all of us in politics is to experience, to look at the evidence, to learn and to come to a view based on that evidence. No doubt he would be interested to read an article published in The Northern Echo today in which Lord Adonis is reported as saying that, on the basis of that experience, his view is that the line should not be refranchised. If we could not learn from our experience and change our politics, it would be a sad thing indeed. I hope that, having heard that people who previously held that view have changed their mind, the present Government will be prepared to follow suit.

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[Sheila Gilmore]

Indeed. I am not saying, and I do not think any Opposition Member would say, that there is nothing that needs to be improved. Track and rolling stock can always be improved, and the current state of the track and overhead cables is a problem, but I would argue that it would be a problem for any operator. That is not what lies behind the Government’s proposal.

There is also the question of the premium payments. Again, I quote the Minister, this time at Transport questions on 25 April, when he said that

“the premium that the east coast main line pays to the Treasury is less than that paid by the west coast main line.”—[Official Report, 25 April 2013; Vol. 561, c. 995.]

In fact, a recent report from the Office of Rail Regulation suggests that, in 2011-12, the Government received £156 million in net franchise payments from the operator of the west coast main line and £177 million from East Coast—the opposite of what the Minister asserted.

[Mr Stewart Jackson]

The hon. Lady is making a typically eloquent speech, but does she not agree that it is apposite to mention, in the spirit of fairness and transparency, that the track access charges for National Express were significantly higher—£210 million, I understand, rather than the £92 million now charged to the operator?

[Sheila Gilmore]

I think the important thing to bear in mind is that the service is not failing in the ways the Minister said it was. If a Government propose a policy, it has to be based on the right evidence and not on an inaccurate interpretation of the situation.

Let me now talk about what East Coast does with its profits. In the previous debate, my hon. Friend the Member for Middlesbrough pointed out that whereas private operators are obliged to pay dividends, public operators can reinvest all their profits back into the service, which in East Coast’s case has amounted to more than £40 million since 2009. One of the criticisms that has been made in the past and might still be levelled now at a public operator is that, because the dead hand of bureaucracy lies on it, such an operator cannot be as efficient and as fleet of foot as a private sector operator, but it is true to say that East Coast is organisationally distinct from the Department for Transport. It is staffed by railway professionals and is therefore able to take the best of a private sector company in terms of efficiency, innovation and entrepreneurialism, but because it is in the public sector, any profits it makes are available to the Treasury and all of us as citizens of this country and taxpayers.

I am concerned that talking down East Coast to justify the proposed refranchising will damage morale at the company. That is most unfair, because staff and management have worked extremely hard and achieved good results, with 1 million extra passengers carried in 2012 compared with 2009 and record passenger satisfaction. I hope that, when he responds to the debate, the Minister will correct his remarks on punctuality and premium payments; acknowledge that East Coast reinvests all its profits and can emulate private sector efficiency; and congratulate staff and management on East Coast’s success. I think that that will be an important message to send back to the work force.

Given East Coast’s success, it makes no sense to prioritise its reprivatisation while other long-distance operators are being offered long extensions. Under the Government’s initial franchising timetable, the new west coast main line contract was due to start in October 2012. Under the new timetable, and as a result of prioritising East Coast, the current operator of the west coast main line, Virgin, will be offered a total of four and half years of extensions up to April 2017. Similarly, for the new Great Western contract, which was meant to start in April this year, the operator, First Group, is being offered three years of extensions up to July 2016.

Let us look again at another reason the Minister gave for prioritising the east coast main line over others. He said that the line

“connects industries in the north with commerce in the south, provides cross-border services to Scotland and helps to drive the development of tourism and the success of Edinburgh and Leeds as key financial centres outside London. That is why it is at the forefront of our new rail franchising programme”.—[Official Report, 5 June 2013; Vol. 563, c. 252WH.]

I accept all those things, although many of them can be said about other rail lines.

It is important for business that we have a good, strong railway service on the east coast main line. I am regularly accompanied on my weekly commute by an increasing number of business travellers, many of whom work in my city’s sizeable banking sector. Those people have often been attracted away from short-haul flights by East Coast’s excellent new first class offer, which in the long term could benefit our environment. Business travellers are also attracted by the new services that have been introduced, including a later evening service and an earlier morning service, which enable people who want, or have, to travel to London for business meetings to do so by rail in a way that was not possible before.

However, the west coast main line and the Great Western line are also important for business. The west coast main line connects five of the seven largest conurbations in Britain, and Great Western serves Bristol, Cardiff and the prosperous Thames valley, so the claim that the Government have decided to prioritise the east coast main line because of its importance to business does not really stack up—at least, it is not a reason for prioritising the east coast main line over the other services that were previously due for refranchising.

By deferring proper franchise competition on these other lines in favour of extensions, the damage done to business on those routes could well outweigh any benefit accrued by prioritising the reprivatisation of the east coast main line, because extending those franchises involves little or no competition. It is likely to cost franchises a lot while failing to deliver any improvements in service.

It also leaves the Government in a weak bargaining position with the franchise operators by offering them those franchises without competition. After all, one of the reasons the Government would no doubt give for wanting to franchise is to have competition that would drive innovation and improvement. However, as far as the other lines are concerned, it is more or less a case of giving the operators an extension.

The only bargaining chip that the Government appear to have is to call in East Coast’s parent company, Directly Operated Railways, presumably as some kind of threat to the franchise operator, so that if it does not settle for a reasonable sum the line might be given over to Directly Operated Railways. That seems rather odd, from a Government who are telling us that they do not want rail lines to be operated in that way.

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[Mr Stewart Jackson (Peterborough) (Con)]

I speak not only as the representative of the fine railway town of Peterborough, but as a member of the Public Accounts Committee, which has looked at different aspects of rail travel in recent years, including most recently the west coast main line franchising process, and as a commuter. Like the hon. Member for Edinburgh East (Sheila Gilmore), I travel frequently, although I am not always as familiar with the timetables as I should be. One Wednesday a few weeks ago I was running very fast through the brand spanking new, recently refurbished King’s Cross station in order to catch the 8 o’clock train. I clambered on board only to find after it departed that it was a fast service to York. I passed various Labour MPs in first class, while holding my standard ticket in hand, and then saw my hon. Friend the Member for York Outer (Julian Sturdy). He asked what I was going to do, and I said I would have to get off at York and go back to Peterborough. With typical sympathy and pithy Yorkshire wit, he said, “I hope you’ve written to me to say you’re going to be in my constituency”—although I think it was probably the constituency of the hon. Member for York Central (Hugh Bayley) that I was visiting.

This debate gives us an opportunity to look specifically at the major infrastructure challenges facing the east coast main line. I will focus not on a sterile argument about private being bad and public being good, but on the challenges and opportunities we face in looking at public policy on that line. In the past 10 years we have seen a 43% rise in passenger demand. By 2031 there will be a capacity gap of 1,500 seats in the busiest morning hour on suburban services into King’s Cross. Indeed, journeys from Peterborough and Cambridge are expected to rise by as much as 20% by 2016. I think it is fair to say that, irrespective of our party or our views on the debate about rail privatisation, we all have a common interest, on behalf of our constituents who commute, whether from Scotland, Yorkshire or Cambridgeshire, in safer, cleaner and more punctual trains and in value for money.

It would be unfair and churlish not to concede the progress we have seen in Peterborough. New work has begun and is due to be completed next year. We have three new platforms and platform extensions for the new Thameslink trains and the new inter-city trains. We have a new island platform and a new freight loop. The station has been remodelled over the past few years, and we have 150 new, safe and secure cycle racks to help to develop Peterborough as a local transport infrastructure hub.

It is vital that I make the point that Peterborough is dependent on the railway. Indeed, it is integral to the financial and economic viability of my constituency, given that it is 47 minutes away from central London and King’s Cross. I was delighted to welcome the Minister to Peterborough station last autumn to open, with Network Rail, the reconfigured, remodelled station.

We have to concentrate on value for money, which is a very important issue in the private-public debate. An East Coast train season ticket costs my constituents £6,888 a year—£7,472 with a travel card—which is about 25% of the average annual salary in Peterborough. A First Capital Connect season ticket costs £5,800 a year and £7,000 with a travel card.

Putting partisanship aside, the current provider of the service has done a good job, and I think that the Minister and the Secretary of State have conceded as much. It would be unfair not to concede that it has returned £640 million to the Exchequer by way of premiums since 2009—£187 million in the last financial year. The staff on East Coast trains at Peterborough do a superb job and I know many of them. They are hard-working, decent people with a public sector ethos and a commitment to doing a very good job. I am very proud that we have people who do that, even when the things that go wrong are not their fault, but that of Network Rail. They always smile and try to explain what has happened.

Nevertheless, the situation is not perfect. It is only fair to say that East Coast is the worst performing train company in terms of punctuality. [Hon. Members: “No!] It is true. Only 82.8% of East Coast services arrived on time in the period up to 31 March 2013, compared with 97% of services provided by c2c, which is owned by National Express and is the best performing train operating company. Hon. Members may groan, but those are the facts and we have to agree on them in order to improve the service.

[Hugh Bayley]

The hon. Gentleman will know that the Government’s official timing period does not pick one month or two months as he has done, but considers the situation over one year, and over one year East Coast has performed substantially better than the operator on the west coast, which is the best comparator.

[Mr Jackson]

I think that is semantics. I made it clear that I was talking about the 12 months to 31 March 2013. If the hon. Gentleman wants to write to me to take issue with me, that is fine.

[Andy McDonald (Middlesbrough) (Lab)]

Will the hon. Gentleman give way?

[Mr Jackson]

No, I want to make some progress, but I will give way later to the hon. Gentleman, whom I know has a special interest in the subject.

The Labour Government accepted that public service provision by this train operating company was always going to be a short-term expedient because of a special set of circumstances on the east coast main line. As the Minister has said, in order to leverage key, private sector capital, it is important that we have a new, long-term private partner to innovate and drive up standards on the east coast main line.

It is all very well for Lord Adonis to have a road-to-Damascus conversion. Obviously, being in opposition concentrates one’s mind, but when he was a Minister he spoke out strongly for private sector provision on this particular line. I challenge the Labour party: is its policy now wholesale renationalisation of the railways, or is that just for the east coast main line? I know that the hon. Member for Blyth Valley (Mr Campbell) would definitely give me a clear answer, but I am not sure that he and the hon. Member for Nottingham South (Lilian Greenwood) would have a meeting of minds on the issue.

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

The hon. Gentleman is being generous in giving way. Although he is ridiculing us on the Labour Benches for supporting the concept of public ownership, most of the travelling public—70% of them—and even those of them who vote Conservative, support the idea of renationalising the railway industry.

[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.

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[Hugh Bayley (York Central) (Lab)]

Let me start by saying something that I think everybody in the Chamber will agree with. The east coast main line is an absolutely vital economic artery, pumping the lifeblood of our economy—jobs, investment and growth—through all the regions and cities that it serves from London to Edinburgh. That is why this debate is so important. It is not a technical or ideological debate about how the service should be run; it is a debate about how the railways can assist economic recovery in our regions. That is the question we need to debate today.

We had a similar debate in Westminster Hall two weeks ago, in which many hon. Members spoke. I have some sympathy for the Minister: he was left with absolutely no time to respond to the many questions that were asked. However, we have more time today. To recap briefly, I would like to pose two questions that I posed a fortnight ago to which the Minister was unable to respond.

First, if the Government go ahead with refranchising, will the headquarters of the new service be based in York? The headquarters currently provide over 200 jobs, but they act as a sheet anchor for thousands of other jobs with railway engineering companies, suppliers and for Network Rail’s operation of the east coast main line, which employs more people than the train operating company. The Government are legally able to make that a condition of the franchise and there is a precedent. When the train operating company last changed hands, I asked my right hon. Friend the Member for Tooting (Sadiq Khan), the then Minister, whether he would give a commitment to ensure stability by keeping the headquarters in York. He said:

“The headquarters to which my hon. Friend referred are in York. I can reassure him that when the holding company”—

that is, East Coast—

“takes over the running of the contract later on this year, the headquarters will stay in York.”—[Official Report, 1 July 2009; Vol. 495, c. 431.]

For the sake of stability for the business now at a time of economic fragility, will the current Minister make a similar commitment?

Secondly, I asked the Minister whether the Government will do what they say they will do and consult users of the service about what they want. It was reported in Modern Railways in May that the Department for Transport would take into account passengers’ views in relation to the train operating companies. Will the Department therefore commission an independent body to conduct a survey to see whether passengers want the service to be taken away from East Coast? A number of Members on both sides of the House have talked about the performance of East Coast, praising the company. We know that it has returned more money to the Government in premium payments—more than £540 million so far—than any other franchise holder on the line. We also know that it is more efficient than its predecessor and is providing value for money for the Government and the taxpayer.

The hon. Member for Peterborough (Mr Jackson) is a fair-minded man. He and I should sit down together and look at the statistics. However, to quote Alan Whitehouse, a former BBC transport correspondent, on the official measure of punctuality—the percentage of trains that reach their destination less than 10 minutes late over the period of a year—the east coast main line under East Coast’s management did better than the west coast main line under Virgin’s management. If we compare the two in terms of trains that actually arrive on time—that is to say, less than 60 seconds late—East Coast scores 61% for punctuality, whereas Virgin on the west coast main line scores 49%.

[Mr Stewart Jackson]

I had no wish to cast aspersions on the current operators, but the hon. Gentleman knows that Passenger Focus, for instance, said in response to the Brown review of franchising last year that the determinants of punctuality were too loose and should be tightened up anyway. However, I concede that there are extraneous circumstances under the auspices of Network Rail that affect performance—such as the gentleman on a bridge at Walton in Peterborough last night who detained me by half an hour.

[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.

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[Lilian Greenwood (Nottingham South) (Lab)]

I congratulate my hon. Friend the Member for Edinburgh East (Sheila Gilmore) on securing this important and timely debate, which builds on her strong campaigning work on behalf of passengers, and the many hon. Members who have supported the compelling case that she set out.

Since the Government announced the reprivatisation of East Coast services in March, the decision has been fiercely criticised in Parliament and the country at large. Ministers have been pressed on numerous occasions in this House and through dozens of written questions, yet they have not produced a single credible reason for rushing through this costly and unnecessary privatisation—a point that my hon. Friend the Member for York Central (Hugh Bayley) made very eloquently, as did many others. Instead, one by one, the props supporting the Government’s argument have been kicked away.

We were told that the east coast main line had to be privatised because punctuality had plateaud; and perhaps it really had disappointed in four weeks out of 52. That was the narrow window that the Minister quoted when he appeared before the Select Committee on Transport. Indeed, he even described East Coast as the worst operator for punctuality. However, contrary to what the hon. Member for Peterborough (Mr Jackson) claimed, the annual figures show that over the last year the east coast main line has outperformed the west coast on punctuality, according to both the public performance measure and the narrower “right time” assessment. Punctuality is now better than under the previous, failed private operators and is at its best since records began.

[Mr Stewart Jackson]

I thank the shadow Transport spokesman for giving way, but I did not actually say that. I compared the performance with the performance of the best-performing train operating companies, rather than making a strict comparison with the west coast main line. That is an important distinction.

[Lilian Greenwood]

I shall have to refer back to the record, but it is my recollection that the hon. Gentleman described East Coast as the worst operator for punctuality, which is certainly not the case, so this privatisation cannot be about punctuality.

We were also told that the east coast main line must be privatised in order to attract private sector investment. The Minister told the Select Committee:

“I do not believe that keeping the East Coast Main Line in public ownership is the most effective and swiftest way of getting that investment.”

However, as he has confirmed in written answers to hon. Members, the cost of rolling stock procurement and track upgrades on the east coast main line will be met through public spending, just as the cost of the £9 billion west coast upgrade was borne by the taxpayer. If anything, the Government’s plans threaten investment. At the moment, all the east coast profits are invested in the service, instead of being split with shareholders. That would end in 2015 if the Government have their way, so this privatisation cannot be about investment either.

We were also told that privatisation would deliver better value for money. On that point the Government’s argument takes its final departure from reality. Since 2009, East Coast has returned £640 million to the taxpayer and invested £40 million of its profits back in the service. As the Office of Rail Regulation recently confirmed, East Coast receives virtually no subsidy and yet made the second highest premium payments of any operator in 2011-12. To put that into context, subsidy accounted for just 1% of East Coast’s income, compared with an industry average of 32%.

East Coast is also performing a vital role as a public sector comparator, especially as the Government seek to negotiate extensions with operators. This is an important point, and I shall return to it shortly. East Coast delivers good value for money, benefiting taxpayers and fare payers. Let us compare today’s situation with the instability and cost that resulted from the collapse of Sea Containers and the decision of National Express to walk away from the franchise. Against that backdrop, and taking into account ageing rolling stock and a route that was last upgraded in the 1980s, Directly Operated Railways has done very well to record such a strong financial performance.

East Coast’s improvements to financial and operational performance have also been reflected in better services for passengers. Since 2009, the operator has introduced a new timetable providing 19 more services per day and, far from lacking innovation, it has taken initiatives on customer services. For example, many train operating companies are encouraging passengers to print advance-purchase single tickets at home, but East Coast is the only operator that allows them to amend a print-at-home ticket up to the evening before departure.

The proposed privatisation is not about passengers. It is not about operational performance and it is not about value for money. It is about politics, and the determination of the Government to end a successful, not-for-dividend alternative to franchising. The taxpayer will end up footing the bill for this politically motivated decision. There will be the immediate cost of running the franchise competition. Will the Minister tell the House what the overall cost will be to the taxpayer of refranchising the east coast route?

That covers only the direct cost, however. As we seek to reduce inefficiencies on the railways, East Coast provides a useful public sector comparator—a benchmark against which we can measure the costs of franchised operators. That was certainly the position of the present local transport Minister, the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker). Perhaps he did not enjoy the support of the hon. Member for Argyll and Bute (Mr Reid) when, in 2009, he told the House:

“My view on the franchise agreements is clear…if a franchise is handed in to the Government—handed back—it should be held in the public sector as a public interest franchise, not least as a comparator for other franchise agreements currently operating.”—[Official Report, 3 June 2009; Vol. 495, c. 83WH.]

That was his view in opposition. I wonder whether it is still his view in power.

[Mr Jackson]

Will the hon. Lady give way?

[Lilian Greenwood]

I will not give way at the moment. I do not want to run out of time.

Directly Operated Railways has another function. It allows the Government a fall-back operator, should they fail in their current negotiations for franchise extensions. Indeed, earlier this month, the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns) told the House:

“The operation of train services by DOR is an essential part of the privatised franchising model.”—[Official Report, 5 June 2013; Vol. 563, c. 225WH.]

However, the Government are proposing to remove all operational responsibilities from DOR, leaving the body hamstrung. He cannot expect to retain the experienced and capable management team at DOR once the East Coast route is privatised. As the Department goes into negotiations for franchise extensions and direct awards, the train operating companies will know that Ministers are loth, for political reasons, to transfer operations to Directly Operated Railways. That must be dispiriting for those civil servants who are sent to negotiate the best possible deal for the taxpayer. As my hon. Friend the Member for Edinburgh East has noted, Ministers have taken their strongest bargaining chip and thrown it away. This mindset and this lack of imagination are compounding the costs incurred by the shambolic collapse of rail franchising on this Government’s watch. That collapse has cost the taxpayer at least £55 million, and the price is rising.

[Mr Jackson]

I have to ask the hon. Lady a straightforward question: in 13 years, why did not the Labour Government repeal section 25 of the Railways Act 1993 in order to facilitate the franchising regime that she and her hon. Friends think is the right way forward?

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[Mr Burns]

I accept the apology.

I have to say to the hon. Member for Nottingham South that that was an interesting and carefully worded response. I was not asking when she had a conversation since the last debate; I asked when she had the conversation in which Lord Adonis told her he had changed his mind. I am not going to get an answer, however, so we will make some progress.

[Mr Stewart Jackson]

Will the Minister give way?

[Mr Burns]

No, I want to make some progress.

By returning the east coast franchise to a private sector operator, we will provide certainty of ownership and much longer-term planning horizons that are not available to public sector operators. That is vital at a time when this Government are making significant investment in the franchise, both in the infrastructure through our rail investment strategy and in new rolling stock as part of the inter-city express programme. A strong private sector partner will be able to build on that investment and work with local stakeholders, the Department and the railway industry to ensure that the best possible deal is delivered for passengers and taxpayers.

I heard the concerns raised by a number of hon. Members about services along the line and what they would like to see for their constituents and the service in general in any future provision.

Rail Franchising

Lord Jackson of Peterborough Excerpts

Tuesday 26th March 2013 Commons Chamber

[Mr McLoughlin]

I would just point out to the hon. Gentleman, who has been in the House some time, that he was very happy to support a Government whose Secretary of State said:

“I do not believe that it would be in the public interest for us to have a nationalised train operating company indefinitely”. —[Official Report, House of Lords, 1 July 2009; Vol. 712, c. 232.]

I agree.

[Mr Stewart Jackson (Peterborough) (Con)]

The east coast main line is integral to the economy of Peterborough, and my constituents are concerned about value for money, punctuality and cleanliness. The Secretary of State rightly mentions the PAC report, which found that this Government inherited systemic lack of leadership and of oversight, miscalculation of risk capital and failure to heed legal advice. Is he absolutely convinced that, in respect of the east coast main line, we have learnt those lessons and that mistakes will not be made again?

[Mr McLoughlin]

I can certainly assure my hon. Friend that we have learnt a number of lessons as a result of what happened with the west coast franchise. I well understand the importance to his constituents of the service that is provided on the east coast main line. It will be one of the first lines to get the new intercity express programme trains, which are due to come into service in 2018-19.

Rail (East Anglia)

Lord Jackson of Peterborough Excerpts

Tuesday 3rd July 2012 Westminster Hall

[Dr Coffey]

That is a fair point. We have all been united in our vision of wanting better services for our constituents. We may have been less united, in our discussions with Network Rail and LEPs, on what that meant. I would like to think that the intentions of hon. Members across the counties have always been clear. This is not about trying to reduce services for our constituents, but improving them.

[Mr Stewart Jackson (Peterborough) (Con)]

I congratulate my hon. Friend on securing the debate. She has not mentioned the pre-eminent city in Cambridgeshire—Peterborough, as opposed to Cambridge. I jest. Does she agree that the great advantage of this prospectus, apart from its ambition, is that it is comprehensive and holistic? It integrates different modes of transport. It is not just a list of discrete transport schemes. There are references to the Felixstowe to Nuneaton freight corridor, taking the pressure off the A14 and the A11, and traffic movements to Stansted airport, all of which show that the prospectus is ambitious and, in the long run, will be good for the taxpayer as well as the local people in East Anglia.

[Dr Coffey]

My hon. Friend is absolutely right, and reinforces the point that investment in our rail infrastructure could mean that our region, rather than other parts of the country, can be a huge multiplier. The idea that people want to travel up to Lowestoft by car to have a look at investment is ridiculous. Along the east Suffolk line, sitting in a one-carriage train, perhaps after making the connection at Ipswich, is not always the most attractive way to arrive for an investors’ meeting.

For a quicker service on the great eastern main line, we need to speed up the trains. One way to do that is to focus on level crossings. I will refer to this again when I come on to the issue of branch lines, but we need to ensure that there are stretches where trains are unhindered. We also need to open up capacity at Liverpool Street station. Certain things have to happen before any of that can take place. Crossrail will have to be completed, which we hope will happen by 2018. We have to continue the work at Bow Junction to ensure that those lines can be used and that we get those slots. Peak services along the great eastern main line are already at full capacity. Although freight currently runs on the line, it does not do so during peak times. Extra capacity, therefore, is critical.

I do not pretend to be a rail specialist. I do not know the difference between four-tracking, the clever loops that Network Rail is now thinking about, or the extra bit of track that is needed in that stretch near Chelmsford. What I do know, however, is that there are clever brains working on solutions that will mean that we can open up vital capacity. By doing so, we can increase reliability and speed.

Amendment of the Law

Lord Jackson of Peterborough Excerpts

Friday 23rd March 2012 Commons Chamber

[Justine Greening]

Many people who see that the hon. Gentleman’s party’s strategy is to borrow in the middle of a debt crisis will wonder why he is asking that question. I presume it is because he thinks that borrowing is not high enough.

This Government ultimately have a laser focus on making Britain the best place in the world to start, finance and grow a business.

[Mr Stewart Jackson (Peterborough) (Con)]

On the subject of Labour waste and profligacy, is my right hon. Friend aware that the Institute for Fiscal Studies says that had Labour been re-elected, it would have borrowed an extra £200 billion, which would have had a huge impact on interest rates, in particular, and, given the debt legacy in households, a calamitous impact on the economy generally?

[Justine Greening]

My hon. Friend is absolutely right. Labour Members have learned nothing from the mess they handed over to us. They see us in a debt crisis and their solution is to keep on borrowing—keep on digging—and we all know who would pick up that bill.

--- Later in debate ---

[Mr Stewart Jackson (Peterborough) (Con)]

I believe that this is a courageous Budget. It is innovative and ingenious, notable for the steady stewardship of the Chancellor of the Exchequer. We need to take a strategic overview. The recession from which we have emerged is a deleveraging recession, a paying down debt rather than a destocking recession, so some of the normal policy prescriptions on fiscal and monetary policy have proved useless in the face of that. That makes the imperatives of long-term reform of the public services, particularly education and welfare, tax cuts and supply-side reforms, including the reduction in taxes and the regulatory burden, even more important.

[Dr Coffey]

My hon. Friend is making a strong point about deregulation. I would point to paragraph 2.238 of the Red Book, which shows that the Government are committed to scrapping or improving 84% of health and safety regulation. Does my hon. Friend agree that this is the right approach—focusing on what is most risky as opposed to applying all sorts of regulations that are no longer necessary, valid or helpful?

[Mr Jackson]

My hon. Friend makes a very good point, which explains why this Budget has had consensus support and been viewed from a positive perspective by business organisations across the country.

We should be talking a paradigm that involves tax and spending, not just tax. There has been too much focus in the last few months on cutting or increasing taxes, when we should be talking about expenditure. Are we really asking the public to believe that a net 6.8% reduction in public expenditure over the comprehensive spending review period is enough to rebalance the economy when we saw a 53% real-terms growth in public expenditure between 2000 and 2010? We were spending £450 billion just 10 years ago on public services, and we are now spending £702 billion. Are we getting value for money for our constituents and our taxpayers?

Of course, Conservative Members will not let the electorate forget the disastrous and poisonous economic legacy left to us by the Labour party—to the extent that we have to pay £120 million a day in debt interest and are £47.6 billion a year in debt this year. As I said earlier to my right hon. Friend the Transport Secretary, had Labour remained in office, they would have had to borrow another £200 billion. They left us a structural debt in a period of economic growth. They left us a situation in which individual net borrowing doubled in just six years, while we have massive sectoral imbalances and a systemic dependency on debt. That was Labour’s legacy.

Labour Members still have no economic credibility; if they were a party with a cogent and coherent narrative on the economy, they would pledge to reinstate the 50p tax rate and reverse the policy on freezing age-related allowances. They do neither because they are opportunistic and they know that if they were elected to government, they would need the money.

[Charlie Elphicke]

My hon. Friend is being far too generous in saying the Opposition are being opportunistic. They are going back to the 1970s class warfare old Labour that they used to be, and they have forgotten all the modernisation they achieved in 1997.

[Mr Jackson]

My hon. Friend is absolutely right. The Labour party will not make progress with the electorate until it does two things: apologise for the debt millstone they left to our children and grandchildren, and develop a policy that is not written on the back of a fag packet.

I welcome the cut in corporation tax, which gives us the fourth lowest such tax rate in the G20. I welcome the reduction in the top rate of income tax from 50p to 45p, too, as the 50p rate was damaging competitiveness and not collecting the sums it should have collected, and was an impediment to entrepreneurial activity and business growth in our country.

Let us nail the myth about taking poorer working people out of tax. It is a Conservative policy, enunciated by Lord Forsyth in the tax commission in 2005, and restated by Lords Saatchi and Tebbit. It is a Conservative policy to boost people’s incomes because we trust them to spend their money wisely.

I also support the policy on age-related allowances. There is consensus on the issue of generational fairness—even the hon. Member for Pontypridd (Owen Smith) will agree with me about that—and this Government have a very good record on provision for pensioners, including the largest ever cash rise in the basic state pension from April this year, the uprating of the pension credit guarantee, and the help with fuel bills for poorer pensioners. We have a much better story to tell on that than the last Labour Government had, with their ridiculous and insulting 75p pension rise in 2000.

[Owen Smith]

Does the hon. Gentleman agree, however, that the 4.7 million pensioners who will be impacted by the age-related allowances policy will not be pleased to learn that the House of Commons Library note on the Budget concludes that they will be between £80 and £280 worse off in real terms as a result of its provisions?

[Mr Jackson]

The independent Institute for Fiscal Studies disagrees profoundly with the hon. Gentleman, and believes that the proposals are both morally and financially right and progressive. The hon. Gentleman will therefore have to try again later.

I support the planning regime reforms and the liberalisation of the national planning policy framework. I was delighted to hear about the regional policy and the expansion of airports in the south-east as well. We are currently losing our competitive advantage to Schiphol, Frankfurt and Charles de Gaulle. I am delighted, too, that the Chancellor resisted the temptation to limit further tax relief on higher-rate pension contributions. That would have been an attack on thrift and prudence. We in Cambridgeshire are very pleased with the news about the A14 and the Get Britain Building and Growing Places funding. Moreover, I have been campaigning for quite some time for residential estate investment trusts for social housing, and the previous Government did nothing about that in 13 years.

It would be wrong to say that I am happy with every measure in the Budget. There were some missed opportunities and missed steps. Fuel duty is an issue that will return—as it would do for any Chancellor and Government. I understand why changes were not made this time, but my constituents’ petrol bills are hurting, and using a car is a necessity, not a luxury. Air passenger duty must be looked at again, too. It has increased 360% in the last seven years. Because of the major impact on transportation and tourism, I hope that the Chancellor will revisit that issue. I should declare an interest: Thomas Cook has a headquarters in my constituency.

The House will know that I had very serious concerns about the child benefit policy, but the Chancellor has listened and taken them on board. We have addressed the cliff-edge issue, although there is still the anomaly of the two earners as opposed to the one earner; we should regard that as a work in progress. My constituents are also asking why our European Union contribution has increased between the pre-Budget report and this Budget. It may be a function of reduced co-payment of funds for EU projects. If we are all in this together, however, that should include the European Union, so we must look at that issue.

I was very disappointed that, once again, the Budget did not contain a policy to recognise marriage in the tax system. For probably as little as £800 million—less than a third of the £3 billion we spent on taking people out of lower rate tax, in order to appease, as it were, our Liberal Democrat friends—we could have given a tax break to married couples with children under 3. I am sorry that that did not happen.

Things will be tough over the next few years. Restoring economic health after the 13 years of the last Labour Government—years of waste, profligacy and creating a client state—was never going to be easy. Once again, the job of getting the finances of this country straight and of building a great Britain and a strong economy falls to a Conservative Government, and I believe that this Chancellor has proved he is up to the task.