East Coast Main Line Franchise

Debate between Lord Jackson of Peterborough and Lilian Greenwood

Thursday 20th June 2013 Commons Chamber

[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?

Student Visas

Debate between Lord Jackson of Peterborough and Lilian Greenwood

Thursday 16th June 2011 Westminster Hall

[Mr Jackson]

The Chairman of the Select Committee makes his point in his normal charming and intelligent way. My wider point, which he anticipates, is that the former Government made no effort to anticipate EU and non-EU immigration. Indeed, it has recently come to light that they suppressed research commissioned by the Department for Communities and Local Government, which looked at some, although not all, of the negative consequences of large-scale migration.

All I am asking in considering the specific and narrow point about tier 4 student visas is that we genuinely look at the cost-benefit analysis for the wider community. Yes, we can argue about nuances and value judgments made by individual higher education institutions, but at the same time we must concede that within the wider policy framework, these decisions, which are essentially about large-scale migration, have wider ramifications. That is consistent with the Government’s view that we must move away from the inexorable conveyor belt towards a population that will be significantly greater within 25 years than the population of Germany or France, for example.

The policy has been flexible and there has been appropriate consultation. It is aimed principally at bogus students and overstayers. I would like to see the evidence that HE institutions will be adversely affected, because the level of graduate unemployment across all disciplines in the UK stands at something like 20%, which is pertinent when considering public policy on the recruitment of international students who might stay to work after the conclusion of their studies. That is fair. If we look at the fees regime and at how financial arrangements for universities will progress over the next few years and measure that against demand, we see that because of our reputation and because we have the kudos of being a principal centre of superb higher education in the world, the demand for people across the world will remain high, whether for chemical engineering, languages, dentistry or humanities.

[Lilian Greenwood]

Although many universities, including my universities in Nottingham, say that this will have a detrimental impact on their ability to recruit students and therefore on economic activity in the UK, the hon. Gentleman suggests that we must wait until that damage is done before the Government will act. That seems immensely short-sighted. Everyone is warning that this will cause damage and he wants to wait until the damage is done.