Rising Cost of Transport

Lord McLoughlin Excerpts

Wednesday 9th January 2013 Commons Chamber

[Maria Eagle]

I want to make a little progress, but I might allow the hon. Gentleman to intervene a little later.

The pain is not over yet. This year is set to see even greater pressures from the rising cost of transport as the Government unveil their rail fares and ticketing review, with proposals for even higher fares at the times when most people need to travel. Ministers are to reform bus funding in a way that, deliberately it would seem, will penalise transport authorities that seek to regulate bus fares in the way they are regulated in London.

In contrast, as we set out in our motion, Labour would be taking steps now to ease the pressure on those who rely on our public transport system, standing up to the train and bus companies on behalf of commuters. We would be on the side of passengers, not vested interests.

Last September this House debated rail fares, and to the frustration of commuters—and many on the Government Benches, judging from what they told their local papers—the Prime Minister marched his MPs through the Lobby to oppose Labour’s motion to cap fare rises at 1% above inflation. Of course, Liberal Democrat MPs were marching alongside them. Yet within a month of Tory and Liberal Democrat MPs voting down Labour’s attempt to help commuters, we had a U-turn. On the eve of his party conference, the Prime Minister finally said that he agreed with Labour, and pledged to cap the annual fare rise at 1% above inflation. As commuters found when they returned to work this month, however, that was yet another broken promise from this Prime Minister and this Government, because fares were capped not at 1% above inflation, but at 9.2%. The reason the Prime Minister could not honour his pledge to commuters is clear: he was simply unable or unwilling to stand up to the vested interests in the private train companies. They had lobbied hard before the last election to get an agreement that the Conservative party would give back to them a power that had been taken away by the Labour Government when times got tough—the right to turn the annual cap on fare rises into an average, turning a cap of 1% above inflation into fare rises of as much as 9.2%.

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

I am surprised by what the hon. Lady says. She said that the previous Labour Government took that power away from the train operators when times got tough. Will she confirm that times got tough in 2010, which coincided with a general election?

[Maria Eagle]

No. There was a rule change that would have applied each and every year after the decision was made. Lord Adonis, who was in post at the time as Transport Secretary, took that decision and had been absolutely clear about it. If anybody in the House doubts that, they can read the Select Committee on Transport report on rail fares and franchises, published in July 2009. Lord Adonis told the Committee:

“The Government's intention is, therefore, that in future the cap should apply to individual regulated fares, not just to the average of each fares basket.”

He did not say “for one year” but “in future.” As Lord Adonis reaffirmed last year, when the issue came up:

“It was my firm intention to continue the policy for subsequent years, and I was mystified when…my successor”—

that is, the right hon. Member for Runnymede and Weybridge (Mr Hammond)—

“reinstated the fares flexibility. The only people who supported this change were the train companies.”

I do not therefore accept that the cap was a one-off or that it would not have continued into the future under a Labour Government.

How have the Government reacted? The Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), told passengers to stop complaining because fares are

“not nearly as expensive as is being presented”,

and then told peak-time commuters that they were paying for a premium service. I assure the Under-Secretary that many passengers do not feel that that describes their experience in getting to work in the morning on an overcrowded train. They do not agree with him that fares are not expensive.

Meanwhile, it was revealed that the hon. Gentleman’s colleague, the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns), was avoiding taking the train altogether, and had a chauffeur bill to and from his constituency—a commute that would take just half an hour by train on a season ticket that would cost taxpayers not £80,000 a year but £4,500 a year. Transport Ministers—

--- Later in debate ---

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

I start on a bipartisan note by joining the hon. Member for Garston and Halewood (Maria Eagle) in wishing her colleague the hon. Member for Barrow and Furness (John Woodcock), whom I see in his place, a speedy recovery and return to the Front Bench. We all wish him well and understand why he has taken the decision that he has in the short term.

I could not help but think that the hon. Member for Garston and Halewood and myself must have lived in different countries. From listening to her speech, it was almost as if there had been utopia until the general election, with everything fine and wonderful and the train companies bowing to the wishes of the Government and always doing what was right by consumers and the Government. Then I read a few Select Committee reports from the last Parliament to put me on the right track. I could not help but be struck by a report of the Transport Committee from 2006, when it had a Labour majority and a Labour Chairman. It stated:

“Both the Department for Transport and the train operating companies quoted growth and the fact that ‘the UK has the fastest-growing rail patronage in Europe’ as reasons not to be overly concerned about price levels. Indeed, the Government demonstrated breathtaking complacency”

about fares and ticketing. The hon. Lady should not imagine that the problem of fare rises is new. She said that there was no recession then, but we were about to go into one of the biggest recessions that this country has ever suffered. I will come to that a little later, but I am conscious of time—although you did not tell me to be brief, Mr Deputy Speaker, I am aware of the fact that you said there will be a time limit on speeches. I will try to be a lot briefer than the shadow Secretary of State was in her 30-minute opening speech.

I am afraid that a lot of what the hon. Lady said was a mixture of the ill informed and the inaccurate. The motion does nothing to help passengers or investment, and it says all that we need to know about the Labour party. Let us be plain about some of the facts, which might help the Opposition. The motion calls on the Government to cap regulated fares at 1% above inflation. We have. It was the last Government who planned for 70% of costs to be met by fare payers in 2013 and 2014, which would mean fares rising this year not by 1% above inflation but by double that. The fare rises are lower than they would have been under Labour’s plans. That would have been an additional tax on hard-working commuters that we have not been prepared to impose.

I do agree with the shadow Secretary of State on some things. She has said that

“we should reduce the public subsidy to the rail industry”.—[Official Report, 19 May 2011; Vol. 528, c. 522.]

I agree. She has also said that if she were running the Department’s budget now,

“we would have to make difficult and painful decisions in respect of cutting the deficit”.

Indeed, and Labour did make some of those difficult decisions. She talked about ticket office opening hours, and it is a fact that in the last five years of the Labour Government, Ministers approved cuts in opening hours at approximately 300 stations. Now the Opposition seem to think that that is wholly wrong, but they were only too aware of the need for it when they were in government.

I agree with the hon. Lady, too, that it is right that we have a record level of investment in our railways at the moment, and that railway passengers have to contribute to that as well as the taxpayer. We have more trains and better services and we are delivering new lines. We are also delivering for passengers by capping the average increase in regulated fares at RPI plus 1% not just this year but last year and next.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

I note that my right hon. Friend and his fellow Ministers have a long-term aim of reducing the cost of railways to both passengers and taxpayers, and therefore ending the era of the above-inflation rail fare increase. Will he therefore reassure me that he will not look to the taxpayer and the fare-paying passenger to bear the £33 billion cost of his plans for the High Speed 2 railway?

[Mr McLoughlin]

I am grateful to reaffirm to my right hon. Friend the Government’s commitment to adopt what was Lord Adonis’s plan for HS2, and I pay tribute to the former Secretary of State. My right hon. Friend and I disagree on HS2. I believe that it is vital for future investment and opportunities for the whole country. I will say more about that in the House in a few weeks’ time.

[David T. C. Davies (Monmouth) (Con)]

Will my right hon. Friend also mention the rise in transport costs for users of the Severn bridge and say whether there is any possibility of capping those increases when the bridge returns to public ownership in 2017-18?

[Mr McLoughlin]

If I am still Secretary of State in 2017, I will have been the longest serving Transport Secretary. If my hon. Friend will forgive me, I have enough problems on my plate without making commitments for 2017. I look forward, however, to a Conservative Government making that decision—that is as far as I will go towards meeting that commitment at the moment.

The fact that we have capped fares to RPI plus 1% will benefit more than a quarter of a million annual season ticket holders by around £45 a year, and some commuters will be more than £200 better off over the two years. The motion before the House is confused in another way. It attacks the flexibility that allows operators to increase some regulated fares by more than RPI plus 1% if they cut other fares by an equal amount—for example, on Virgin Trains the Rugby to Euston season ticket has increased by almost 1% less than inflation. Today, the hon. Member for Garston and Halewood tried to claim that it was not the last Government who introduced that flexibility, or that such flexibility existed for more than one year. The changes to the agreement, which I can read to her, make it clear. The deed of amendment states:

“With effect from 00.00 on 1 January 2010 Schedule 5.5 of the Franchise Agreement will be amended as set out in the Appendix to the Deed…From 00.00 on 1 January 2011”.

Therefore, the agreement was amended for just one year.

[Maria Eagle]

Is the Secretary of State saying that Lord Adonis, whom he just praised, misled the Transport Committee when he said that he intended the agreement to go into the future and that it was a permanent change? Does he realise—he will find it out in 2014—that the year before an election, the limits of how far into the future one can go in the time of one’s successors are set by Whitehall and are different from those for the beginning of a Parliament?

[Mr McLoughlin]

I am not accusing the noble Lord of misleading anybody; I am informing the House of what he did as Secretary of State. He may have wished his changes to last longer, but they did not and were solely for that one year. Indeed, when the 5% flexibility was introduced in 2004 it led to some increases of 11% under the previous Labour Government in 2009 alone. That flexibility was suspended for one year—an election year.

However, that is not Labour policy now. How do we know? Well, let us look at Wales where this year under the Labour devolved Administration fares went up by RPI plus 1%, with flexibility of 5%.

[Henry Smith]

My right hon. Friend is right. Labour says it has changed its policy on fare flexibility, but in Wales, where it is in charge of the devolved Administration, it has agreed flexibility of up to 5% on train fares.

[Mr McLoughlin]

Indeed; I am grateful to my hon. Friend. I hope no Welsh Labour MPs support the motion tabled by the shadow Secretary of State. If they do, not only will they back up my argument that we are having a synthetic debate introduced by an Opposition who have synthetic policies on transport costs, but they will not mean what they say. When Labour is in a position to change the rules, it does not do so. In Wales, it has accepted the flexibility it believes it needs to provide a proper service; the Labour Government in Wales have acted in exactly the same way as the UK Government.

[Richard Burden (Birmingham, Northfield) (Lab)]

Will the Secretary of State give way?

[Mr McLoughlin]

I will, but unfortunately Birmingham is a few miles away from Wales.

[Richard Burden]

Indeed it is. The Secretary of State says that the debate is synthetic, but the anger of my constituents and many others at the performance of London Midland in the past year is not synthetic. He has recently dumped the deal with London Midland. The good news is that that provides some pre-concessions to passengers, but it is also said that he has not actioned a break clause in the contract. That could have happened at the end of this year, but it has been extended to 2015. It is also unclear what milestones and review mechanisms will be in place to hold London Midland to its word. Will he clarify whether his measures give London Midland more of a free rein or whether he will introduce a measure that forces it to do what it says it will do?

[Mr McLoughlin]

The Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), has made a statement on that, in which he also outlined some of the requirements we expect of London Midland. He and I will be watching the performance of that franchise very carefully. It is important that we give passengers the service they rightly expect and demand. We have put in place a number of measures that will cost London Midland considerable money to put into operation, and I expect it to do so.

I am conscious of the time—time moves on when I am continually trying to help colleagues to understand where their policies have gone wrong in the past. We are looking at ways to improve our railway services. As I have said, the Labour party, which is in control in Wales, has kept exactly the same flexibility on rail fares that the UK Government have retained.

In 10 years, the Labour Government electrified only 10 miles of railways; this Government will electrify 850 miles, including the midland main line, for which my hon. Friend the Member for Loughborough (Nicky Morgan), the Whip, who is sitting on the Front Bench, has campaigned so hard.

[Julie Hilling (Bolton West) (Lab)]

Will the Secretary of State give way?

[Mr McLoughlin]

I will give way only briefly, because I am conscious of the time.

[Julie Hilling]

Does the right hon. Gentleman remember the amount of money the Labour Government had to put into the railway to rebuild it after 18 years of no investment under the previous Tory Administration?

[Mr McLoughlin]

The hon. Lady is a sadly missed member of the Transport Committee, and was there when I first appeared before it. She should be careful, however, because she was probably a member of the Committee during its inquiry on “Rail 2020”, which quite clearly shows that the worst year for subsidising the railways was 2000-01. I cannot remember what party was in government at that time, but it is true that investment went up afterwards—[Interruption.] She is looking for the page number. Page 9 simply and straightforwardly sets out the record.

[Julie Hilling]

Will the Secretary of State give way?

[Mr McLoughlin]

I must press on. I am sorry I cannot give way to the hon. Lady. The facts I have pointed out are in the report. I will try to make progress and give other hon. Members the chance to contribute to the debate.

We are putting record investment into the railways. In the 19th century, our railway was a symbol of Britain’s innovation—including London’s underground, the first anywhere and 150 years old today. Now, the railway is experiencing an extraordinary renaissance. Last year, the number of passenger miles travelled was almost 50% higher than it was in 2000. More people are travelling by rail today than at any time since the 1920s, and rail freight has grown by more than 60% since privatisation. We have soaring demand, but limited space. Regular passengers on busy lines know only too well what that can mean—overcrowded carriages and uncomfortable journeys. That is not good enough and we are going to sort it out.

In July, we announced £16 billion of funding for the network between 2014 and 2019. Inter-city travellers will benefit from the completion of the northern hub in Manchester, a £240 million investment on the east coast main line and a further £300 million for high-value, small-scale schemes in other parts of the country. We approved a £4.5 billion contract to build a new generation of inter-city trains in County Durham, creating some 900 jobs, and we are procuring thousands of new carriages for Crossrail and Thameslink. We are also getting cracking with HS2, the biggest new transport scheme since the building of the motorways. Meeting demand, however, is only part of the problem.

While the previous Government blew the budget, the railway was allowed to grow wasteful—up to 40% more expensive to run than those of our European competitors. We have therefore had to take a hard look at the industry and have a rail reform programme to tackle the £3.5 billion annual efficiency gap identified by the McNulty report in his rail value-for-money study. Already, major savings are being found. Ultimately, this focus on efficiency will help us to deliver our goal and put an end to above-inflation fare increases at the earliest opportunity. A railway that is efficient and modern is a railway that is affordable to use.

[Nia Griffith (Llanelli) (Lab)]

May I ask the Secretary of State whether, in his drive for efficiency and savings, he can give assurances to the steel industry that it will not be penalised by rail freight charges?

[Mr McLoughlin]

I will look at the hon. Lady’s point, but I hope she will make representations to the Welsh Assembly following the motion that the hon. Member for Garston and Halewood has tabled. Perhaps the hon. Member for Llanelli (Nia Griffith) will consider not voting for the motion in light of it being in direct competition to what the Welsh Assembly, which I understand is Labour controlled, is doing.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I am conscious that the Secretary of State has not yet referred to bus services. My constituents rely entirely on bus services, as they do not have the luxury of a rail link. Does he agree that it is entirely wrong for operators such as Stagecoach to scaremonger about the introduction of quality contracts in Tyne and Wear and to threaten to sack staff and pull out of the region? Should the Government not back up integrated transport authorities, such as mine, which are making decisions that are in the best interests of local people?

[Mr McLoughlin]

I am coming on to say something about bus companies, but I will not comment on individual contracts that are being negotiated, as it would be wholly wrong of me to do so.

I want passengers to get the best deal from a ticket system that is easy to understand, and that is why we have set up the fare and ticketing review. This is not about higher fares; it is about simpler fares. It is not about catching out passengers who have to travel when trains are busiest, but getting good deals for people when there are seats to spare. Taxpayers, whether they use trains or not, all contribute to the cost of running the railway. I know that when people face big bills and tough times they really feel the pressure of higher fares. That is why we are looking at ideas such as smart ticketing and more flexible season tickets, so that they only have to pay when they actually need to travel. The way we work is changing and it is right that tickets change too.

This Government are on the side of passengers, whether they use trains or buses. That is why we have protected free bus travel for pensioners and are putting in place a level playing field so that operators can compete to bring fares down. The basic truth, however, is that the cost of bus travel has risen, including during the decade to 2010 under the Labour Government, and that is mainly due to higher operator costs, such as fuel.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Secretary of State give way?

[Mr McLoughlin]

I am sorry, but I must make some progress.

From the first day of the coalition Government, our priority has been to tackle the deficit that we inherited, to rebalance our economy, to get people back to work and to boost growth. Transport plays a key part in that process. This Government have capped fare rises. We are getting the investment in, tackling overcrowding, increasing seats and services, and delivering High Speed 2. It is the right deal for passengers and the right deal for Britain’s future.

[Mr Speaker]

There is a six-minute limit on Back-Bench speeches, and it applies with immediate effect.

--- Later in debate ---

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

Happy new year, Madam Deputy Speaker. I am grateful to my hon. Friend the Member for Garston and Halewood (Maria Eagle) for inviting me to deliver the winding-up speech for the Opposition. That was especially generous given yesterday’s front page on the “ConservativeHome” website and a lead article written by someone appropriately called Harry Phibbs—it was not spelled Fibs, although I am not sure what kind of future he thinks he has in politics. Mr Phibbs writes about a dozen politicians who he says should defect to the Conservatives, and he names me along with some other distinguished colleagues, including the former Transport Secretary, Lord Adonis, and my hon. Friend the Member for Glasgow South (Mr Harris). I am grateful that the shadow Secretary of State trusts me with this winding-up speech in the face of such provocation.

I understand Mr Phibbs’s confusion, because in the 21st century, party lines can blur on some issues, of which equal marriage and Europe are good examples. On transport, however, and the motion before the House, nothing could be clearer: as my hon. Friend the Member for Garston and Halewood laid out when opening the debate, bus fares are up twice the rate of inflation, services are disappearing and a prime ministerial promise of capping rail fares at 1% above inflation has been broken. Fares are increasing not by 4.3%—1% above inflation—but by 9.2%, and even worse, Government documents propose super-peak tickets that will cost even more. There are no problems with party lines on this issue. People are either with the vested interests—the train operating companies and the Government—or with hard-pressed commuters, the Transport Committee and the Opposition motion on the Order Paper. I will return to those issues shortly.

The Secretary of State generously joined the shadow Secretary of State’s tribute to my hon. Friend the Member for Barrow and Furness (John Woodcock), and—quite correctly—that was well greeted across the House. The Secretary of State has had difficult times during his short tenure. He is regarded as a honourable man but he has been picking up the pieces of the west coast main line franchise fiasco and the Davies commission signalled a Government U-turn—well, certainly a Conservative U-turn—on aviation policy in 2015. My hon. Friend the Member for Garston and Halewood is not the only Member critical of the delay in the announcement by the Davies commission, and she is joined by Mayor Boris Johnson and Lord Heseltine. In my view, however, the biggest mistake—

[Mr McLoughlin]

rose—

[Jim Fitzpatrick]

I hope the right hon. Gentleman will forgive me; he knows that time is very limited but I do not wish to be discourteous. I was about to pay him a compliment in saying that in my view, one of the biggest mistakes made by one of his predecessors, the right hon. Member for Runnymede and Weybridge (Mr Hammond), was scrapping road safety targets that had bipartisan support across the House for 30 years and massively reduced deaths and serious injuries on our roads. Indeed, I commend the Secretary of State because at least he has had the decency to bring in forecasts that acknowledge we need to measure such things and set an ambition to reduce the numbers of people killed and seriously injured on the roads.

We have heard a number of thoughtful contributions. My hon. Friend the Member for Gateshead (Ian Mearns) made relevant points about the east coast main line and local connections, as well as sharing disturbing data on staffing conditions. The hon. Member for Harrogate and Knaresborough (Andrew Jones), a former Department for Transport Parliamentary Private Secretary, mounted a sterling defence of the coalition, which was a good way to sweeten his special local pleading, which I am sure went down well.

The distinguished Chair of the Transport Committee covered the recommendation from the new Committee report, to which I shall refer in a moment. The hon. Member for Argyll and Bute (Mr Reid) reminded us how the Lib Dems are the honest brokers in the coalition. He even got the Scottish National party on side, albeit briefly. The hon. Member for Milton Keynes South (Iain Stewart) used his characteristic gentle aggressiveness and Transport Committee experience to criticise Labour’s record, and sought to use European comparisons to justify UK prices. My hon. Friend the Member for Bolton West (Julie Hilling) raised the question of overcrowding on her local trains, as well as high ticketing costs and local buses, and the hon. Member for Nuneaton (Mr Jones) majored on the question of costs. My hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) raised a number of local issues as well as discussing major infrastructure items.

To return to the substance of the motion, according to the Department for Transport’s figures—the annual bus usage statistics for England—there was an increase in bus fares of 6.5%, which means fares have gone up by, on average, twice the rate of inflation. They have gone up by 5.4% in London. As we have heard, research has shown that one in five council-supported bus routes were cut or reduced last year, and that 41% of local authorities have had to axe services. That is not a good record on buses.

As we have heard, on rail fares, the Prime Minister promised to peg increases at 1% above inflation. That is another broken promise to add to the 70 missed targets headlined in The Daily Telegraph today—although perhaps it is one of the 70. The target was not only just missed; fare increases of up to 9.2% have been registered. And it gets worse: the Transport Committee states in its “Rail 2020” report:

“We recommend that the Government rule out forms of demand management which would lead to even higher fares for commuters on peak times”.

Why does it make that recommendation? It does so because of a quote from the Government’s rail fares and ticketing review from last year. The scriptwriters from “Yes, Minister” could not have improved on this language, and hon. Members will need to concentrate on the words:

“To provide a stronger incentive for behavioural change and more even usage of peak capacity among existing passengers, a wider ‘menu’ of fares could…also include a ‘high peak’ fare priced higher than the current Anytime day fare, a season ticket priced higher than the current season ticket”,

which means higher prices on routes. Perhaps the Minister will comment on that, because the Secretary of State did not refer to it, even though my hon. Friend the Member for Garston and Halewood raised the super-peak ticket on a number of occasions.

Labour’s position is a total contrast. The noble Lord Adonis set out his view last year of the policy he followed as Secretary of State in 2010. He said:

“Prior to 2010, train companies had the right to increase individual fares by up to five per cent above the…RPI+1 per cent level. This was a legacy of the privatisation settlement. I scrapped this flexibility because I believed it was deeply unfair”.

Of his successor as Transport Secretary, the right hon. Member for Runnymede and Weybridge, Lord Adonis has said:

“It was my firm intention to continue the policy for subsequent years, and I was mystified when…my successor…reinstated the fares flexibility. The only people who supported this change were the train companies. It is the job of government to be on the side of the travelling public. Labour took this seriously, which is why we scrapped the fares flexibility. By contrast, the present government appears just to be on the side of the train companies.”

Government Members asked why the policy was introduced only in 2010. That is a legitimate question, but a better one would be: why has it not been repeated since 2010? We have had three years of coalition fares increases, but the policy has not been back.

The Prime Minister promised capped fares, but it has not happened, and the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), held out the prospect of the end of the era of above-inflation fare increases, but when asked by the BBC when that would happen, he could not answer. The Government are out of touch on rail. My hon. Friend the Member for Garston and Halewood quoted the right hon. Member for Runnymede and Weybridge, who said that rail is a “rich man’s toy”. The Under-Secretary of State—long-serving in the Government; long-suffering on the Opposition Benches—tried to claim over the new year that rail fares were

“not nearly as expensive as”

they were “being presented”, and that passengers were paying for a “premium service”. If by “premium service” he means paying more, getting less and standing for longer, I agree. Just this week, the rail Minister, the Minister of State, was bullied into using rail by the media, which was a sad passage.

Labour would put passengers first by banning train companies from increasing fares above a cap set by Ministers. Government Members have the opportunity to stand up for their rail and bus commuters by supporting our motion tonight in the Lobby. I strongly urge them to do so and I commend the motion to the House.