Driver and Vehicle Licensing Agency

Lord McLoughlin Excerpts

Tuesday 13th November 2012 Written Statements

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

The Driver and Vehicle Licensing Agency (DVLA) has recently run a competition to procure a front office counter service provider for its face-to-face motoring services from next April.

I can today announce that the DVLA will award Post Office Ltd a contract to build on the existing counter operation to provide a wider range of services and better accessibility for motorists. The contract will run for seven years with an option to extend for up to another three years. This contract will allow the Post Office to fully develop better services with the requirements of customers at the heart. Under the contract, Post Office Ltd will offer DVLA services at over 4,700 outlets for road tax and vehicle transactions, 750 of which will also cater for driver licensing.

This new contract provides value for money for the taxpayer resulting in savings of between £13 million and £15 million a year. The contract also gives scope for the Post Office to provide front office counter services for other Government Departments, to increase efficiencies across Government and provide better value for the taxpayer.

Airports Commission

Lord McLoughlin Excerpts

Friday 2nd November 2012 Written Statements

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

On 7 September, the Government announced their intention to create an independent commission, chaired by Sir Howard Davies, to identify and recommend to Government options for maintaining the UK’s status as a global aviation hub. Following discussions with Sir Howard, the Government are now in a position to announce the full membership and terms of reference for this body, which will be named the Airports Commission.

In selecting members of the Airports Commission, the Government worked with Sir Howard to identify individuals with a range of skills, backgrounds and experience. The commission also intends to appoint a panel of expert advisers, to enhance its capability to address issues that fall outside of the direct experience of the commissioners.

In addition to Sir Howard Davies, the full membership of the commission includes:

Sir John Armitt, the former chairman of the Olympic Delivery Authority and former chief executive of Network Rail.

Professor Ricky Burdett, professor of urban studies at the London School of Economics and director of the LSE cities research centre.

Vivienne Cox, the former CEO and executive vice- president of BP alternative energy and a former member of the BP executive management team.

Professor Dame Julia King, vice-chancellor of Aston university and a member of the committee on climate change, with a background in the aerospace industry.

Geoff Muirhead CBE, the former CEO of the Manchester Airport Group.

The commission’s terms of reference will be as follows:

The commission will examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe’s most important aviation hub; and it will identify and evaluate how any need for additional capacity should be met in the short, medium and long-term.

It should maintain a UK-wide perspective, taking appropriate account of the national, regional and local implications of any proposals.

It should engage openly with interested parties and members of the public, providing opportunities to submit evidence and proposals and to set out views relevant to its work.

It should seek to engage with a range of stakeholders, including with local and devolved Government as well as the Opposition, to build consensus in support of its approach and recommendations.

The commission should report no later than the end of 2013 on:

Its assessment of the evidence on the nature, scale and timing of the steps needed to maintain the UK’s global hub status; and

Its recommendation(s) for immediate actions to improve the use of existing runway capacity in the next five years—consistent with credible long-term options.

The assessments and recommendations in the commission’s interim report should be underpinned by a detailed review of the evidence in relation to the current position in the UK with regard to aviation demand and connectivity, forecasts for how these are likely to develop, and the expected future pattern of the UK’s requirements for international and domestic connectivity.

Its assessments of potential immediate actions should take into account their economic, social and environmental costs and benefits, and their operational deliverability. It should also be informed by an initial high-level assessment of the credible long-term options which merit further detailed development.

The commission should report no later than summer 2015 on:

Its assessment of the options for meeting the UK’s international connectivity needs, including their economic, social and environmental impact;

Its recommendation(s) for the optimum approach to meeting any needs; and

Its recommendation(s) for ensuring that the need is met as expeditiously as practicable within the required time scale.

The commission should base the recommendations in its final report on a detailed consideration of the case for each of the credible options. This should include the development or examination of detailed business cases and environmental assessments for each option, as well as consideration of their operational, commercial and technical viability.

As part of its final report in summer 2015, it should also provide materials, based on this detailed analysis, which will support the Government in preparing a national policy statement to accelerate the resolution of any future planning applications for major airports infrastructure.

West Coast Main Line

Lord McLoughlin Excerpts

Monday 29th October 2012 Commons Chamber

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

With permission, Mr Speaker, I would like to make a statement on the progress we are making to put right arrangements for the west coast main line and rail franchising. First, I will update the House on the Laidlaw inquiry. Secondly, I will explain how we will ensure not only continuity of service on the west coast line after 9 December, but an enhanced service.

On 3 October I announced the cancellation of the competition to run the inter-city west coast franchise because of the discovery of unacceptable flaws in the procurement process run by the Department for Transport. I made it clear at the time, and do so again today, that this was a very regrettable decision prompted by mistakes that should never have happened. I also launched two independent inquiries, one of which has reported its interim findings to me, and which I am today delivering to the House.

I asked the first inquiry, led by Centrica chief executive Sam Laidlaw, to look into what happened and why, with the aim of establishing the lessons to be learned. I also asked the second review, led by Eurostar chairman Richard Brown, to focus on any lessons to be learned for the future rail franchising programme. I promised that both would conduct their investigations thoroughly, independently and urgently.

Given the public interest in this matter, the Laidlaw inquiry was asked to deliver an interim report to me by 26 October and a final report by the end of November. I am grateful to the inquiry for meeting the first deadline and for working tirelessly to meet the second. I stress that today’s findings are precisely that: an interim report. There is more work to do. These findings are clearly a first stage. As Mr Laidlaw explains, they set out what went wrong, and from that basis he will now carry out further investigations into why this happened.

From the start, my aim in dealing with this situation has been to be open and to come forward with information for the House at the earliest opportunity. It is in that spirit that I make this statement today. In the interests of complete transparency, I am publishing this interim report with its provisional findings, and placing copies of it in the Libraries of both Houses.

To be blunt, these initial findings make uncomfortable reading, but they provide a necessary and welcome further step in sorting this situation out. The Government will need to see the full and finished report before we can comment in detail on any conclusions. That is crucial because of the independent nature of the Laidlaw inquiry and the need for the Government not to prejudge its eventual findings, but it is clear that the inquiry has identified a number of issues that confirm that my decision to cancel the franchise competition was necessary. These include a lack of transparency in the bidding process, the fact that published guidance was not complied with when bids were being processed, inconsistencies in the treatment of bidders, and confirmation of technical flaws in the model used to calculate the amount of risk capital bidders were asked to provide to guard against the risk of default. The Laidlaw inquiry also mentions factors that

“appear to have caused or contributed to the issues raised”.

We will look at them with interest and care, although, once again, we will need to see the final report before we can comment further.

Secondly, I would like to update the House on the progress we are making to ensure continuity of service on the west coast main line once the current franchise expires on 9 December. As I have said previously, we will ensure that passengers continue to be served by the same trains with the same front-line staff, the same services and using the same tickets, and, I am pleased to say, with enhanced future timetables.

The Department is making good progress in its discussions with Virgin on how it will operate the line for a short period of up to 14 months while a competition is run for an interim agreement. We are discussing its proposals for improved services over this period and an enhanced compensation scheme for delayed passengers.

In dealing with this matter, my Department has been frank and open about its mistakes and is absolutely determined to find out exactly what happened. In the meantime, we will keep delivering for passengers, and continue with the unprecedented levels of investment in trains, stations and railway lines.

Combined with our decision to limit train fare rises to an average of inflation plus 1%, instead of RPI plus 3%, for the next three years, this demonstrates this Government’s total commitment to Britain’s railways. I commend the statement to the House.

--- Later in debate ---

[Mr McLoughlin]

For the hon. Lady’s information, the Department is based in Horseferry road, not Marsham street.

Let me draw the hon. Lady’s attention to the final line of Mr Laidlaw’s letter to me today, which states:

“Firm judgments should not be made based upon what are provisional findings or wider conclusions drawn at this stage.”

I have been very open with the House about the problems we have encountered. She accuses the Government of wasting money, but she should perhaps look back at the previous Government’s record, particularly the decision by the then Deputy Prime Minister that wasted some £469 million on the flawed procurement of regional fire stations. I see that the shadow Minister, the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), is rather amused by that, because he was directly involved.

I have come to the House and I have been open with the House. As far as the money is concerned, I talked about the £40 million that related to the bidding process and there will be some other costs. When I have those costs, I will inform the House. I will not judge them or estimate them; I will give the House the information when I have it.

The last time I gave a statement, the hon. Lady attacked us for not getting external advice. As the answers given by my right hon. Friend the Minister of State show, we did get external financial advice where necessary. Yes, some changes were made to the Department but they were well under way and being planned for before May 2010.

On the question of Virgin’s position, I made it perfectly clear the last time I made a statement that I intend to enter into an interim contract with Virgin until we can do a longer franchise. That first franchise will last up to 13 months. I did check it out, and have obviously had discussions with, the commission.

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

May I congratulate my right hon. Friend on coming to the House and being so transparent and open about what is obviously a very painful part of the Department’s dealings? Will he now translate that openness and transparency across all the modelling that is being used either by the Department for Transport or its subsidiary, HS2 Ltd, for HS2? Will he now put his words into action and publish the Major Projects Authority’s report on HS2, showing that he really is a transparent Secretary of State?

[Mr McLoughlin]

As I think I said to my right hon. Friend the last time we discussed this matter, a lot of work is being done on the planning of HS2 and there will be a number of opportunities for wide-ranging debates when we discuss that Bill, but today I am dealing with the west coast main line and franchising.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

Will the Secretary of State tell us whether Mr Laidlaw considered the implications of the decision to make this a 15-year franchise? He will know that when I had his job I reduced the franchises to seven years, because after that time trying to speculate on the state of the economy, and therefore on what fair revenue is, becomes increasingly difficult, if not impossible. The problem is that the further out we go, the greater the probability is that the risk will fall back on the Government. Does not that policy decision, taken, I think, by some of his predecessors, need to be reconsidered if we are not to repeat some of the procedural problems that he has outlined today?

[Mr McLoughlin]

I am grateful to the right hon. Gentleman for that question. He has a distinguished record of being one of the longest-serving Secretaries of State for Transport, so I listen to him with the care and attention he rightly deserves. He raises a couple of points. He might not be aware that at the tail end of the previous Government they also talked about extending the franchises up to 20 years, which was seen to be a way of getting a better return overall for the huge investment from the taxpayer that goes into the railways. He makes an interesting point. As I said in my initial statement, I have asked for two reviews and I think that that is something that Richard Brown, the chairman of Eurostar, will be considering in his report, which I expect to see before the end of the year.

[Mr John Redwood (Wokingham) (Con)]

In the appraisals of the new competition being held for the west coast franchise, what will the role of Ministers be in setting the terms of the competition, supervising the arithmetic and making sure that a fair assessment is made?

[Mr McLoughlin]

I hope Ministers set out the policy. I am not sure that we are there to check every line of every spreadsheet. That is something that we should rightly expect officials to do for us at the request of Ministers, to ensure that we get the best value for the taxpayer out of what has been a huge amount of investment on this railway line, which has been made on behalf of the British public. It is one of the most important lines that serves the United Kingdom so I will certainly bear in mind what my right hon. Friend says, but part of the point of going for longer franchises was to try to deliver better services to the passenger.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

The Secretary of State will be aware that the Transport Committee may have a few questions to ask him on Wednesday. Perhaps he could tell the House today why, if it is important that the outcome of the review should not be prejudged, he suspended three civil servants.

[Mr McLoughlin]

I am sure the Transport Committee will have a number of questions for me on Wednesday. I think I am looking forward to coming. The decision on suspensions of staff is not made by a Secretary of State; it is made by the permanent secretary. I have had no involvement with that process and it would not be right for me to do so.

[Mr John Leech (Manchester, Withington) (LD)]

Does the Secretary of State agree that one of the lessons that should be learned in relation to future franchising is the need to ensure that good performance as well as poor performance by an operator can be taken into consideration as part of the franchising process, notwithstanding the need for fair competition?

[Mr McLoughlin]

I entirely agree. That should certainly be taken into account, but so should the return to the taxpayer. The taxpayer has invested a huge amount of money in the line, which must be borne in mind as well.

[Mr Jack Straw (Blackburn) (Lab)]

Successive reports this year from the Transport Committee and a National Audit Office report last week have indicated that the Department is running a huge underspend on its capital programme. The NAO report last week talks about addressing

“£1.7 billion unexpected funds for infrastructure”.

I realise that the Secretary of State has been in office for only a few weeks, but can he say to what extent the slimming down of the Department and its preoccupation with the issue of rail franchising has meant that it lacked the capacity to ensure that funds properly allocated to it—for example, for road repairs and desperately needed regional rail infrastructure improvements—are spent, and what he is doing to address that?

[Mr McLoughlin]

The right hon. Gentleman’s question goes slightly wider than my statement this afternoon, but I point out that I made an announcement just a few weeks ago about a pinch-point plan to relieve certain areas of road congestion, which will cost £170 million. Wherever money is spent, I am determined to ensure that good value is obtained and that we do not waste public money. That is more important to a Minister than making sure he spends the money, come what may.

[John Stevenson (Carlisle) (Con)]

I congratulate the Secretary of State on the speed of the work that he is doing and his approach to this very difficult issue. My concern, however, is the potential loss of investment and innovation in the rail service in the short term. Will the Secretary of State assure me that everything will be done by his Department to ensure that no investment opportunity is lost and that any improvement to the service will go ahead if at all possible?

[Mr McLoughlin]

My hon. Friend make a good point, because the line is very important for his constituency. I know that he has already had a meeting with my right hon. Friend the Minister of State about rail investment in his constituency. I am keen to make sure that the benefits that people will get from the franchise are realised as soon as possible. There has been a necessary delay and I very much regret that.

[Mr George Howarth (Knowsley) (Lab)]

In his statement the Secretary of State referred to discussions that he is holding with Virgin about extending its involvement for a short period of 14 months. Can he give some reassurance to travellers and also to the staff who work on the west coast main line that if it becomes necessary to extend that 14-month period, there is no in-principle reason why that should not happen?

[Mr McLoughlin]

Over the next eight months, which we are talking about as the extension to the franchise, and the following five-month changeover period, if that is necessary, we will obviously be talking with Virgin and other companies interested in running the interim two-year contract, but I think that the jobs of the people who operate the trains will remain the same under any operator.

[Christopher Pincher (Tamworth) (Con)]

Commuters in Tamworth will be relieved to hear that at least my right hon. Friend knows where his Department is. Will he make clear the steps he can take to ensure that the next round of franchises are not unduly delayed? In particular, can original requests for proposals made by bidders who choose to tender again be requested again so that that the review process is expedited?

[Mr McLoughlin]

I can assure my hon. Friend that I am very keen to get on with franchising, but he would expect me to wait for the recommendations of the Brown report and the Government to respond to it in a measured and appropriate way. I can give him the assurance he seeks: I am very keen to get on with franchising.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

I join those Members who have complimented the right hon. Gentleman on his openness in coming to the House and his readiness to come here frequently. Is he aware that, as is shown in the book “How to be a Minister”, the incompetence, errors and blunders he listed in his statement should end up in the lap of his predecessor and that the Government should admit that? Will he also accept that those of us who travel twice a week on the west coast main line have seen the cloud that has hung over the train crews during this period lifted? It is up to him to ensure that the cloud does not return.

[Mr McLoughlin]

I am not sure who wrote “How to be a Minister”, but the right hon. Gentleman might like to inform me privately afterwards. I refer him to Sam Laidlaw’s letter, which I mentioned earlier. The fact is that this is an interim report and nowhere does it criticise Ministers.

[Mr Brian Binley (Northampton South) (Con)]

I welcome the Secretary of State’s willingness to update us on the continuity of service on the west coast main line once the current franchise expires on 9 December. Has he noted recent reports suggesting that capacity could be reached well before 2026, undermining continuity of service? Consequently, will he bring forward plans for HS2, even though he said he would not talk about them today?

[Mr McLoughlin]

I am interested in the representation my hon. Friend has made, but perhaps we could leave it at that.

[Mr Frank Field (Birkenhead) (Lab)]

Why does the Secretary of State think that he will ever be best placed to decide competition between these companies? Does he not realise that we, the consumers and travellers, would like to decide competition between the companies ourselves? When will he realise that we are in a better position to decide which trains we would like to travel on, that those who are bidding for the contracts have huge skills in fixing them and that no amount of skill from the Secretary of State can overcome them fixing the market in the way they have succeeded in doing up to now?

[Mr McLoughlin]

I am not sure that I completely agree with the right hon. Gentleman, but I might want to reflect a little on what his question is in the longer term. The Government, on behalf of the taxpayer, have invested a huge amount of money in the west coast main line—some £9 billion—so it is right that the people who are served by the line get a good service, and we are trying to find how best to achieve that.

[Mr Marcus Jones (Nuneaton) (Con)]

Over the past eight years, passenger numbers from Nuneaton station have increased by 77% to just under 1 million. On the basis of that growth and the huge growth in railway usage that we have seen across the country, does my right hon. Friend agree that it would be complete folly at this stage to revert to a nationalised railway, as has been alluded to by some Labour Members over the past week? May I also appeal to him to consider better off-peak fast services to Nuneaton station when he deals with the re-timetabling?

[Mr McLoughlin]

I am grateful to my hon. Friend. Requests for improved services often come my way whenever I appear at the Dispatch Box. That shows, to a degree, the importance of the rail industry to all our constituents and the demand that exists whereby people will use a service if it is available, so I take his representations very seriously. As for nationalisation, the railways could have been nationalised by the previous Government—they were in power for 13 years—and they decided not to do so, for very good reason.

[Ann Coffey (Stockport) (Lab)]

I know that the Secretary of State is aware of the urgent need for improvements to Stockport station, so will he tell me whether capital projects are to be included in the interim agreement?

[Mr McLoughlin]

I cannot yet go into the full details of what will be in the interim two-year agreement. However, the hon. Lady has made the case for Stockport station not just today but on other occasions, and, knowing her, I have the feeling that she will continue to do so every time I appear at the Dispatch Box.

[Jeremy Lefroy (Stafford) (Con)]

Stafford station is to receive a welcome £3 million upgrade, and my constituents are looking forward to several other improvements in fares and services, particularly—here is another bid for my right hon. Friend—later departures from London and Liverpool in the evening. Can he confirm whether these improvements will be possible under the two shorter franchises?

[Mr McLoughlin]

I am very pleased to hear that my hon. Friend’s station is being improved. I should like to point out that Derby station is being improved as well, but that was agreed some time before I arrived at the Department. On his request for further services to Stafford station, which I know well, I will certainly try to ensure that when the enhanced services are negotiated, Stafford also gets the benefit.

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

The Secretary of State mentioned the Brown review on more generalised lessons for franchising. Is he aware that some urgent lessons need to be learned and acted on straight away, particularly regarding routes to and from the west coast main line? I refer, of course, to the literally hundreds of train services that have been delayed or subject to cancellation by London Midland. The Secretary of State says that his officials are in daily contact on this. What are they doing? Will the problem be resolved? How did we get to the situation whereby London Midland appears not to have forward planned its driver requirements? What penalties are available to him and his Department?

--- Later in debate ---

[Mr McLoughlin]

I congratulate the hon. Gentleman; I think there were about six questions there. However, I will give him only one answer, which is that the Under-Secretary, my hon. Friend the Member for Lewes (Norman Baker), spoke directly to the managing director of that rail line. We are concerned about the deterioration of services, and I hope that measures will be put in place quickly to put them back to an acceptable level.

[Andrew George (St Ives) (LD)]

Notwithstanding my right hon. Friend’s reply to the hon. Member for Tamworth (Christopher Pincher) about the Brown inquiry, is he prepared to go a little further in outlining the consequences for other franchises and their timetabling, particularly the First Great Western franchise, which many hon. Members are very concerned about?

[Mr McLoughlin]

Yes; the hon. Gentleman’s points are well taken. However, I do not want to prejudge the Brown inquiry, nor the final Laidlaw inquiry. It is better that I wait for those reports to see whether they have any read-across. I assure him that, as I have said throughout the statement, we are very keen to see good, reliable railway services across the country.

[Iain Stewart (Milton Keynes South) (Con)]

I thank my right hon. Friend for his comments about the continuity of services on 9 December. He also said that he is in discussion with Virgin about enhancing services in December and an improved timetable. Can he give any more details about those discussions?

[Mr McLoughlin]

I am afraid that I cannot give those details at the moment, because we are in negotiations. I know that my hon. Friend wants a better service for Milton Keynes, because every time he talks to me he talks about exactly that. As a member of the Transport Committee, he is one of those people who keep an incredibly close eye on this issue and he will no doubt pursue me at every opportunity.

[Guy Opperman (Hexham) (Con)]

I welcome the speed and transparency of the interim Laidlaw report and endorse the calls of other hon. Members for lengthier franchises. Today the all-party group on rail in the north looks forward to meeting the Minister of State.

[Guy Opperman]

Yes, and I am sure that my right hon. Friend will be coming back.

Will the Secretary of State confirm that this Government’s increased investment in things such as the northern hub and the expanded service for the north will continue in the long term?

[Mr McLoughlin]

I am grateful to my hon. Friend for his question. My right hon. Friend the Minister has just told me that he looks forward to going back to the all-party group. My hon. Friend makes a very important point. Just before the summer recess we announced our plans for the railways from 2014 to 2019, which ought to have some very beneficial effects for all constituents. They include the largest electrification ever seen in this country—we are planning to electrify some 850 miles, which is a lot more than the previous Government achieved in 13 years.

EU Transport Council

Lord McLoughlin Excerpts

Thursday 25th October 2012 Written Statements

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

I will attend the first Transport Council of the Cypriot Presidency (the presidency) in Luxembourg on Monday 29 October.

The presidency hopes to achieve general approach on three proposals:

The first is a proposal for a regulation of the European Parliament and of the Council on common rules for the allocation of slots, repealing Council Directive 95/93/EC. The proposed regulation has been subject to intense official-level scrutiny by Council working groups and these discussions are ongoing. Progress to date has been mixed, but the proposition remains acceptable from a UK perspective. I believe that the resulting regulation could help promote the most effective use of airport slots and build on the existing transparent, market-based approach to encourage the more efficient use of scarce capacity at congested airports, while minimising administrative and financial burdens for industry. However, at this stage, it remains unclear whether or not it will be possible to seek a general approach at the October Council.

The second is a proposal for a directive of the European Parliament and of the Council on the enforcement of certain provisions of the maritime labour convention by flag states. The proposed general approach represents a satisfactory outcome for the UK and I will support it as it allows appropriate flexibility to member states, and will not require the UK to make any substantive changes to its proposed implementation of the provisions of the maritime labour convention on flag state responsibilities.

The third is a proposal for a directive of the European Parliament and of the Council amending Directive 2009/16/EC on port state control. I will support the proposal which will not require the UK to make any substantive changes to its proposed implementation of the provisions of the maritime labour convention on port state responsibilities.

An orientation debate will be held on a proposal for a directive of the European Parliament and of the Council on roadworthiness testing for motor vehicles and their trailers (First Reading). The UK strongly supports the ongoing roadworthiness testing of vehicles as a worthwhile contribution to road safety.

However, the UK is very concerned by the potential cost burden of the European Commission’s proposal as it is currently framed. The UK alone has identified costs of over €1 billion without any discernible benefit in road safety. We have also identified significant administrative burdens embedded in the proposal that similarly would produce no road safety benefit. In the current economic climate the UK does not wish to see any additional cost to European citizens, businesses or Governments unless clearly justified by road safety benefits.

The presidency will be seeking a political agreement on the proposal for a regulation of the European Parliament and of the Council amending Council Regulation (EEC) No 3821/85 on recording equipment in road transport and amending Regulation (EC) No 561/2006 of the European Parliament and the Council (First Reading). The UK supports the proposal which strikes a sensible balance between improving the security of the tachograph while ensuring that additional burdens on industry and enforcement authorities are minimised.

The Council will be expected to adopt a proposal for a Council decision on the signing, on behalf of the European Union, and provisional application of the agreement providing a general framework for enhanced co-operation between the European Union and the European organisation for the safety of air navigation (Eurocontrol). The UK supports the proposed agreement. It is important that the significant work Eurocontrol performs on behalf of the European Union is put on a sound contractual and financial basis to help ensure value for money from the proposed €40 million expenditure over four years.

High Speed Two

Lord McLoughlin Excerpts

Thursday 25th October 2012 Written Statements

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

In January the Government announced that we would proceed with plans to build a high speed rail network linking London with Birmingham, Leeds and Manchester. High Speed 2 (HS2) will have a transformative effect on Britain, bringing cities closer together and providing the new transport capacity we need to meet the challenges of the 21st century.

We need to drive forward with this vital national project. In doing so we need to provide support for those facing the disruption that the plans for the railway are causing, while also protecting the interests of taxpayers who will ultimately pay for compensation. We have been clear throughout that we are committed to providing appropriate compensation and assistance for those affected by the building of HS2.

The statutory system of compensation already provides fair compensation for the vast majority of infrastructure schemes. However, given the particular circumstances of HS2, in this case I believe it is right to go above and beyond what is required by law. Today I am launching a generous proposed compensation and support package for public consultation.

Under the proposals set out today all those living closest to the route of HS2, in the so-called “safeguarded area”, will be able to choose to sell their home to the Government—whether it is required for construction or not—at any time after the HS2 route is safeguarded, which is currently expected to happen in spring 2013. Those choosing to sell their homes will receive its full unblighted value (that is, what the property would have been worth had there been no plans for HS2), a home loss payment of 10% of the value of the property (up to a maximum of £47,000) and be reimbursed for reasonable moving costs, including stamp duty on the purchase of a new property of equivalent value.

In rural areas we will establish a “voluntary purchase zone”, extending out from the boundary of the safeguarded area up to 120 metres either side of the line, within which homeowners will have the option to sell their homes to the Government at their full unblighted value at any time after the HS2 route is safeguarded.

For those living beyond both the safeguarded area and voluntary purchase zone but who need to move house during the development of HS2 and find they are unable to sell their property, there will also be a “long term hardship scheme” under which the Government will buy the homes of successful applicants at their full unblighted value.

In addition, under the new sale and rent back scheme, homeowners whose property will need to be acquired will have the option to sell their homes to the Government early and stay in them as tenants until the properties are required for the railway.

We recognise that the owners of properties above tunnels may also be concerned about the potential impact of HS2 and therefore we are bringing in a series of measures designed to provide confidence in these properties.

Finally, we will work with local authorities, housing associations and affected tenants to agree a joint strategy to replace any social housing which is lost.

I must stress that we have already written directly to all those whose homes we currently expect to need to buy in order to build and operate HS2 on the London—west midlands route. The wide-ranging proposals set out today reflect the significant nature of the concern that currently exists in the property markets near the HS2 line of route, they are not a reflection of what the Government believe the long term impacts of HS2 will be. We fully expect that the impacts of HS2 will be considerably less than feared and that property prices will recover over time. However, we recognise that the current property markets near the HS2 line of route may not reflect this.

HS2 will be the backbone of a new transport system for the 21st century, offering the new railway capacity that our country will need to compete and grow. However, we fully recognise that the line will have unwelcome impacts on people living close to the route and I believe that this package of compensation demonstrates the strength of the Government’s commitment to provide the right compensation and assistance to those affected.

Alongside the property consultation published today, we are also publishing a consultation on safeguarding directions for HS2. This will set out the proposed area of land considered necessary to protect the line of route from conflicting developments, that is to say planning permission being granted for developments on land that will be required for the construction or operation of HS2. This will also set the “safeguarded area” within which compensation measures will apply.

Both consultations will close on 31 January 2013.

Oral Answers to Questions

Lord McLoughlin Excerpts

Thursday 18th October 2012 Commons Chamber

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

2. If he will consider abandoning the planned privatisation of the East Coast Mainline rail service.

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

Following the tabling of this question, I considered what the hon. Lady is asking me to do, but I have decided to follow the policy set by the previous Government, who believed in franchising.

[Chi Onwurah]

Since 1997 we have seen Great North Eastern Railway fail and National Express fail, but now we have East Coast trains returning £187 million to the taxpayer. Why on earth would the Minister want to swap that for the unmitigated disaster of the west coast tender? Is not that free-marketism gone mad?

[Mr McLoughlin]

I draw on what the shadow Lord Chancellor, the right hon. Member for Tooting (Sadiq Khan), said when he was a Transport Minister:

“The rail franchising system was examined by the National Audit Office last year, and was found to deliver good value for money”

and “steadily improving” services. He continued:

“Passenger numbers are at their highest levels since the 1940s,”

and

“punctuality is more than 90 per cent.”—[Official Report, 1 July 2009; Vol. 495, c. 425-6.]

I agree with what the right hon. Gentleman said then, and I think it is the right way forward.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

I congratulate my right hon. Friend on continuing the policies of this Government as well as the last, but there are lessons to be learned for both the east coast and the west coast franchise. Will he ensure that the product of the east coast main line service will remain the premier service in the land?

[Mr McLoughlin]

I want all services to be good services and to serve hon. Members’ constituents, but of course we have lessons to learn—lessons from the way in which certain franchises were unable to continue under the previous Government. I made a statement to the House on Monday in which I said that we would learn those lessons. Two reviews are being undertaken, and I look forward to receiving their representations.

[Lilian Greenwood (Nottingham South) (Lab)]

The Secretary of State continues to claim that privatising the east coast rail service is necessary to deliver new investment, but he knows full well that both the planned improvements for the line and the new generation of inter-city trains are being funded by the taxpayer. In the light of the west coast fiasco, will he rethink his opposition to allowing the east coast line to be run as a not-for-private-profit service, not least since, as my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) said, it returned £187 million to taxpayers last year—money that, from next year, will have to be split with shareholders?

[Mr McLoughlin]

The hon. Lady is rewriting history: the simple fact is that the previous Government were committed to franchising on the east coast main line—[Interruption.] The hon. Member for Bolsover (Mr Skinner) says he is not bothered about that any more; I shall remind him of things that he supported in the past but now attacks.

[Mr Dennis Skinner (Bolsover) (Lab)]

Who supported the nationalisation of rail?

--- Later in debate ---

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

The Government are committed to an extensive rolling programme of electrification; by the end of the decade, around three quarters of passenger miles travelled in England and Wales will be on electric trains. Electrification will deliver trains that are cleaner, quieter, faster and cheaper to operate, with more capacity for passenger and freight customers.

[Mr Buckland]

Electrification of the great western line through Swindon and beyond will allow increased train capacity. Will my right hon. Friend ensure that the need for more seats to allow more passengers to use the service in comfort will be at the heart of the greater western franchise process when it is reopened?

[Mr McLoughlin]

Indeed it will. I know that my hon. Friend has campaigned for greater capacity on that line for some time. I believe that electrification will lead to an increase of 20% in seating capacity on the line by 2018.

[Mr Clive Betts (Sheffield South East) (Lab)]

I welcome the Secretary of State to his job. As he will know, I welcome the go-ahead for the tram train pilot project between Sheffield and Rotherham. The trams will not be delivered until 2015 and there will probably then be a couple years of evaluation. If the scheme is successful—I am sure that it will be—rolling it out will depend on having underused heavy rail lines that are electrified. Will he bear that in mind when considering future electrification?

[Mr McLoughlin]

I will certainly bear in mind the hon. Gentleman’s comments. He has always fought hard for an improved service for his constituents and in the Sheffield area. I will look closely at what he has said.

[Ian Swales (Redcar) (LD)]

14. Does the new Secretary of State recognise the need for electrification in the Tees valley so that we can have a metro service to connect the large conurbation together?

[Mr McLoughlin]

I take that as a bid, and it is one that I will look at in more detail. I am sure that I will hear much more about it from my hon. Friend.

[Chris Bryant (Rhondda) (Lab)]

We in the south Wales valleys are delighted that those lines are to be electrified, but can the Secretary of State tell us when that work will start and how much faster journey times between Treherbert, Llwynypia and Cardiff will be? If he is unable to pronounce those place names or tell us today, will he please write to me?

[Mr McLoughlin]

I pay tribute to my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) for managing to get electrification for Wales into the original programme, and I am very glad that that is something that this Government will—

[Chris Bryant]

I welcomed it.

[Mr McLoughlin]

I know that the hon. Gentleman welcomed it. I am glad that this Government will give us something that he never managed to achieve when he was in government. I think that it will start in 2015.

[Neil Carmichael (Stroud) (Con)]

18. In view of the need for strategic planning, will the Secretary of State bear in mind that everyone would like electrified railway lines and that provision should be made to give comfort to investors and for infrastructure developments?

[Mr McLoughlin]

As I said earlier, electrification brings many advantages to the rail network, so what my hon. Friend asks for will be delivered by electrification. The plans we have put forward are the most ambitious put forward by any Government.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

South-west MPs met yesterday to discuss the pause in the greater western franchise. One of the concerns raised was the impact of the current ring-fenced electrification programme, which had been built into people’s bid plans. The issue was whether we would in fact see a worse service as a result of those electrification plans, as we have been unable to take the franchise bid forward and there are new timetables because of the works required for electrification.

[Mr McLoughlin]

As with any major infrastructure project, there will be delays while that is taken forward, but ultimately there will be a far better service.

[Nick de Bois (Enfield North) (Con)]

4. What recent representations he has received on investment for a third railway track between London, Liverpool Street and Brimsdown.

--- Later in debate ---

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

8. What the cost to the public purse has been of cancelling the award of the west coast main line rail franchise to date.

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

Spend to date on contingency planning by Directly Operated Railways is about £1 million. The cost of reimbursing bid costs to the four bidders is estimated to be about £40 million.

[Luciana Berger]

I thank the Minister for his response. He used the word “estimated”. How much does he intend to pay to First Group, whose shares have fallen by 20% since this fiasco began? How can he be sure that he will be able to protect taxpayers from further and significant liability?

[Mr McLoughlin]

I referred in my answer to the estimates that I gave to the House on Monday. They are the best available estimates at the moment, and that is why I will stick by them.

[Sir Tony Baldry (Banbury) (Con)]

Should not the Opposition be enjoined first to cast the beam out of their own eyes, so that they are better able to take out the mote from their brother’s eye? From the way they bang on about this, one would have thought that Labour in government never wasted a single penny, but the National Audit Office found that it wasted £40 million on an asylum accommodation centre in my constituency where a single sod was never turned and a brick never laid, and we never had a single apology for that.

[Mr McLoughlin]

rose—

[Mr Speaker]

Order. Let us stick to the west coast main line.

[Mr McLoughlin]

In the light of that direction, Mr Speaker, I am not sure how to answer the question. I am responsible for what goes on at the Department of Transport, but if I moved on to the money that was wasted by the previous Government, I think I might need an Adjournment debate.

[Derek Twigg (Halton) (Lab)]

I welcome the Secretary of State and the new members of his team; I am sure that they will do a very conscientious job.

What has been the cost of the consultants and legal advisers employed by the Department in the run-up to the legal case?

[Mr McLoughlin]

I do not have the exact figures at the moment. My right hon. Friend the Minister of State answered some written questions on the matter yesterday, and a wide range of figures are available. The figures I gave in response to an earlier question are £40 million and £1 million.

[Nigel Mills (Amber Valley) (Con)]

Will the Secretary of State confirm what the cost would have been of proceeding with a flawed tendering process and awarding that contract? On the same basis, will he also reconsider the Thameslink rolling stock contract, to make sure that there has been no mistake with that either?

[Mr McLoughlin]

I assure my hon. Friend that I asked those questions rigorously in the Department and I have been assured that this was a wholly different process. As I have said, I am awaiting the outcome of the two inquiries that I have set up.

[Maria Eagle (Garston and Halewood) (Lab)]

Will the Secretary of State admit that taxpayers are set to be stung for far more than the £40 million he is paying back to bidders for the west coast franchise, because what he has not included in that figure is the cost of paying back bidders for the suspended Great Western, Essex Thameside and Thameslink franchises? Will he now come clean to taxpayers about exactly how much of their money will be poured down the drain as a result of his franchising fiasco?

[Mr McLoughlin]

I have given the figures that are available to the House. The other contracts to which the hon. Lady refers are on hold—they have not been let.

[Maria Eagle]

Is it not the truth that the cost to taxpayers is likely to be tens of millions of pounds more by the time the Secretary of State has Britain’s rail services back on track? He will hand millions over to private train companies; millions will be spent running three competitions for this franchise when he should have been running only one; and millions more will be lost if companies decide to sue the Government for the losses that his Department’s incompetence have caused them. Instead of the Department for Transport’s own board investigating itself, do not taxpayers deserve a truly independent inquiry into what went wrong and who was to blame for so much of their money being poured down the drain?

[Mr McLoughlin]

When I was told about this incident and the mistakes that were made, I ordered two immediate inquiries. I wanted to get to the bottom of it as quickly as possible, and that is what I have done. I am sure that we will not be short of a number of inquiries, which will take place subsequent to the Laidlaw and Richard Brown inquiries. I expect that the Public Accounts Committee will want to look at the issue.

[Karen Lumley (Redditch) (Con)]

10. What recent assessment he has made of the potential benefits of High Speed 2 to businesses in Birmingham and its surrounding areas.

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

HS2 will transform journey times, capacity and connectivity between the Birmingham stations and Leeds, Manchester and London, and will release substantial capacity on the existing rail network. This will help the wider west midlands area to fulfil its economic potential.

[Karen Lumley]

Will my right hon. Friend tell the House how many jobs will be involved in the construction and operation of the first phase of the railway to the midlands?

[Mr McLoughlin]

A number of opportunities will become available as a result of HS2. We expect there to be 9,000 jobs during construction and 1,500 permanent operational jobs, as well as a huge amount of regeneration in the areas served by HS2.

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

HS2 is important to Scotland as well as those places south of the border mentioned by the Secretary of State. Will he update us on what discussions he has had with the Scottish Government on the plans for HS2 to provide benefits to Scotland as well?

[Mr McLoughlin]

I am due to meet Scottish Ministers in the not-too-distant future, and I have had one phone conversation with the First Minister. Last week I announced that we will undertake a study to take HS2 further north into Scotland.

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

On 7 July 2011, in a letter on transparency to all the Secretaries of State, the Prime Minister wrote:

“As you know, transparency is at the heart of our agenda for Government.”

The Department and the Cabinet Office are currently concealing information and refusing to publish the Major Projects Authority report on HS2. Will the Secretary of State now show that the Prime Minister’s words are not meaningless when it comes to HS2 and publish that report immediately?

[Mr McLoughlin]

HS2 will be the subject of a huge amount of parliamentary time as we prepare the hybrid Bill and bring it before Parliament in the next Session.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Arguably one of the benefits of HS2 is that it will create extra capacity on the conventional network. However, these services are highly unlikely to be profitable and will require extra subsidy. What calculations has the Department made about the extra cost of that subsidy and the subsequent Barnett consequentials that the Welsh Government will be entitled to?

[Mr McLoughlin]

We are some way off getting to that stage. I am dealing with a number of other figures at the moment, so I will take away the hon. Gentleman’s question and think about it a little more deeply, rather than give a rushed answer at the Dispatch Box.

[Andrea Leadsom (South Northamptonshire) (Con)]

Is my right hon. Friend aware of the concerns of constituents up and down the route of the line who have been unable to access the exceptional hardship scheme? When will he start his consultation on fair compensation? We said that we would not allow anybody to have to pay with their own assets or in terms of their own life, and yet that has proven to not be the case.

[Mr McLoughlin]

I well understand that point and the opposition that HS2 has generated. Any major infrastructure brings about a lot of opposition. I hope to be able to publish the Government’s consultation on compensation in the not-too-distant future.

--- Later in debate ---

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

In addition to my recent statements on franchising, last week I announced that passengers will benefit from a reduction of up to 2% in the planned rises in many train fares. That will benefit more than a quarter of a million annual season ticket holders and more weekly and monthly ticket holders. I also announced £170 million for 57 vital road schemes to boost the economy, reduce congestion and improve safety. Earlier this month the Minister of State, my right hon. Friend the Member for Chelmsford (Mr Burns), announced the introduction of new rules better to protect holidaymakers from losing out if their travel company fails, giving UK holidaymakers a simple, straightforward way to know what the financial protection for their holiday is.

[Craig Whittaker]

Metro in west Yorkshire has commissioned a bus service for the upper Calder Valley, a rural community, which for the past year has been served by an incredibly unreliable and poor service. Can the Secretary of State confirm whether there is a process in place for holding a commissioner to account when they do not take action on poor performance against contracts?

[Mr McLoughlin]

I sympathise with the obviously frustrating experience that my hon. Friend’s constituents are having. I know that he has been in correspondence with the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), who leads on the matter in the Department. The Government have provided an extra £10 million of funding this year to help kick-start the development of community transport services in rural areas, and west Yorkshire received £385,000 of that. I am interested in hearing about the experiences of my hon. Friend’s constituents, however, and we will look into the matter.

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

On Tuesday the Road Safety Foundation, chaired by Lord Dubs, launched its annual report. It stated:

“Simple attention to safety engineering detail has resulted in extraordinary cuts in road deaths and serious injuries”.

Other leading countries in road safety are committed to improving the safety star rating of their national road networks. What emphasis are our Government placing on that?

[Mr McLoughlin]

We place a lot of emphasis on it. I spent a morning a few weeks ago with road traffic officers in the west midlands, looking at how they operate their managed motorways. They have had great success in reducing accidents on the M42 since it has become a managed motorway. Road safety is incredibly high on our agenda, and as I said, we have announced £170 million for relieving pinch points, which I hope will also help safety.

[Mary Macleod (Brentford and Isleworth) (Con)]

T2. I welcome the Government’s decision to set up a commission on aviation capacity. I hope that it will create a new, innovative solution to capacity needs and realise that a third, fourth and fifth runway at Heathrow is not the answer. May I urge my right hon. Friend to encourage the commission to report as quickly as possible?

[Mr McLoughlin]

I believe that setting up the commission was the right way to move forward. I hope to be able to announce the rest of the commission’s membership in the not-too-distant future. My hon. Friend will be able to make recommendations to the Davies commission, which will bring interim recommendations to the Government in 2013. Although some people say that it will take rather a long time, it will not take that long once it gets under way.

[Heidi Alexander (Lewisham East) (Lab)]

T3. Given the Department’s abject failure to manage the franchise process for the west coast main line, what are the Secretary of State’s views on the possibility of Transport for London being the franchising authority in future for the London parts of the south-eastern network?

[Mr McLoughlin]

I am due to meet the Mayor of London in the next few hours, and that may be one issue that he wants to bring forward to me. People will have different views about whether that would be the right way forward.

[Mark Garnier (Wyre Forest) (Con)]

T6. When addressing the thorny issue of airport expansion, will the Minister look carefully at the huge economic benefits that can be offered at Birmingham airport? Not only is there extensive local support for expansion, but it is an excellent airport.

--- Later in debate ---

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

To return to the subject of the west coast main line, when the Secretary of State made a statement on Monday, I made him aware of a figure given to me by insiders in the industry that suggested a cost of at least half a billion pounds as a result of this debacle. Has any application to the Treasury for additional contingency funding been made as a result?

[Mr McLoughlin]

No.

[Zac Goldsmith (Richmond Park) (Con)]

British pilots in my constituency are concerned that EU proposals on pilot flight time limitations will weaken the current rules and that, as a result, flying will become less safe. Instead of lowering our standards to harmonise with the EU, should not the EU be raising its standards to harmonise with ours? Failing that, will the Department at least explore with the British Air Line Pilots Association additional safety measures to cover those areas that would otherwise see standards drop?

[Julie Hilling (Bolton West) (Lab)]

As a directly operated railway, the east coast main line returned £187 million to the taxpayer last year. How much money will Virgin pay to the taxpayer during the period of extension to its west coast main line franchise?

[Mr McLoughlin]

Negotiations are ongoing.

The Minister for Women and Equalities was asked—

West Coast Main Line

Lord McLoughlin Excerpts

Monday 15th October 2012 Commons Chamber

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

With permission, I would like to make a statement on the west coast main line. On Wednesday 3 October, I announced the cancellation of the inter-city west coast franchise procurement. This decision was taken as the result of significant flaws found within the procurement process undertaken by my Department. These made the continuation of the competition and the award of the franchise untenable.

I know how important the west coast main line is to the economy of this country and to the constituents of Members. This franchise operates more than 300 train services a day, carries more than 26 million passengers a year and employs more than 3,000 staff. This is a regrettable outcome caused by unacceptable mistakes made in my Department during a complex procurement process. It has also meant that I have paused the ongoing franchising programme, including live competitions on Essex Thameside, Great Western, and Thameslink.

I would like to reiterate that there is no suggestion that FirstGroup or any of the other bidders, including Virgin Trains, acted in anything other than good faith during the bidding process. FirstGroup is a great British company and a leading transport operator both here and in the United States. It provides jobs for 13,000 people across the UK and operates four railway franchises, which together carry more than 300 million passengers a year. I want to make it clear today that the cancellation of the west coast competition should not be seen as a comment on FirstGroup, its bid, or its approach to running rail franchises now or in the future. Furthermore, as I have said to the Select Committee on Transport, Virgin has also made a fantastic contribution to both the railways and aviation in this country.

It would be premature at this stage to speculate on where and how the errors in the process emerged. That is why, when I announced the cancellation of the procurement, I also asked for two urgent investigations to be carried out. Both reviews are now well under way. The first of these is an inquiry led by Sam Laidlaw, the chief executive of Centrica. He is the lead non-executive director on procurement across Government and the lead non-executive director of the departmental board. His review is examining what happened during the west coast procurement and why. It will establish the lessons to be learned. I have asked for the initial findings of the review by the end of October and expect the full report by the end of November.

The second review is looking at the implications of the flaws on the west coast procurement for the rest of the franchising programme. This review is being led by Richard Brown, a highly respected industry figure and the chairman of Eurostar. My expectation is that the Brown review will report no later than the end of the year on lessons for the future franchising programme, so that it can be resumed as soon as possible.

I am today publishing the terms of reference for both reviews, and these have already been laid in the Library of the House. Before these reviews have been completed, and particularly before the findings of the Laidlaw review have been published, any speculation as to the nature of the flaws is just that—speculation. I will of course report to the House on the findings of these reviews at the earliest opportunity.

I would like to take this opportunity, however, to restate the Government’s commitment to ensuring that we continue to have private sector innovation and investment in the railways. Since privatisation, the number of passenger miles travelled has nearly doubled. This growth brings significant benefits to the country’s economy and to the environment, relieving congestion and improving connectivity for businesses, commuters and leisure travellers. Passenger satisfaction is up, and so is punctuality. I want to see these benefits continue, which is why I want this pause, while the reviews are carried out, to be as short as possible. We will restart our refranchising programme, including the competitions on Essex Thameside, Great Western, and Thameslink, as soon as possible.

I now turn to the future operation of the west coast main line. I am committed to ensuring that passengers will see no impact as a result of these mistakes. Passengers will be able to make the journeys they have planned, with the tickets that they have bought. Clearly, we will need to learn lessons from the two reviews, and we will need to run a new competition for the west coast franchise. I want this to happen as quickly as possible, but we want to get it right, which will take time. It is also important that in the intervening period we secure a deal that secures best value for taxpayers, including the continual improvement of service quality.

For that reason, I am today announcing that we are commencing negotiations with Virgin Rail Group with a view to it remaining as operator of passenger services on the west coast main line. Subject to ensuring value for money for the taxpayer, I expect this to last for a short period of about nine to 13 months. In this period, we will run a competition for an interim agreement. This interim agreement, which will be open to any bidders, will then run until the new long-term west coast franchise is ready to commence. I will keep this approach under review so that it can be informed by the Brown findings and recommendations and so that it will ensure value for money.

I am grateful to the team at Directly Operated Railways for all their preparations so far. DOR will continue to stand ready should it be required. Britain’s railways are a great success, and I am determined that this incident will not get in the way of the Government’s record. We have launched the biggest programme of investment since the Victorian era and have just announced reductions in regulated fare rises over the next two years, recognising the importance of access to the railways for millions of commuters. I commend this statement to the House.

[Maria Eagle (Garston and Halewood) (Lab)]

I thank the right hon. Gentleman for advanced view of the statement. I well understand why, when he announced this embarrassing debacle earlier this month, he did so at one minute past midnight, when he hoped everybody would be asleep, because this is yet another staggering example of the monumental incompetence of this shambles of a Government. It is a failure of policy, a failure of process, a failure of ministerial oversight and a failure of ministerial leadership.

The Government’s new franchising policy, which requires risks to be calculated 15 years into the future, was designed by the current Secretary of State for Northern Ireland, announced by the current Secretary of State for Defence and implemented by the current Secretary of State for International Development; and it has shamefully been left to the former Chief Whip to try and deflect the blame for it on to three officials in the Department for Transport. It is just as well it has not been left to the current Chief Whip to deal with, or he would probably have blamed it on the police at the gates of Downing street.

The reality is that Ministers are responsible. It was Ministers who redesigned franchising policy to make it much more difficult to calculate which bidder should win. It was Ministers who slashed faster than any other Department the expertise and staffing available to carry out the task, including apparently making the director of procurement, the director of rail strategy and the director of rail contracts’ posts redundant along with those of senior finance staff; and it was Ministers who reportedly cancelled an external audit that was routinely done in other competitions to check the outcome of the franchise award ahead of its announcement.

It is incredible that Minsters continue to maintain that these problems only came to light late in the day, just before they made that midnight announcement less than two weeks ago. We know that Ministers were sent a report warning of precisely the problems that led to the competition being cancelled five days before the contract was awarded. Today was the opportunity for the new Secretary of State to begin to put things right, yet he has failed his first test and announced a way forward that adds to the chaos and confusion and risks even greater costs to taxpayers, replacing one franchise competition with three, opening up the prospect of three owners in three years, increasing the risk of further legal action and further costs to taxpayers, and adding to the uncertainty for passengers and staff.

Can the Secretary of State update the House on the likely final cost to taxpayers of the Government’s failure on franchising? If reimbursing bidders for the west coast will cost £40 million, what will be the costs of the stalled Great Western, Essex Thameside and Thameslink franchises? What legal advice did he receive on his decision to extend Virgin’s contract? Specifically, what advice has he received on EU competition law, procurement law and the impact on the fairness of future competitions for the franchise? In the light of this debacle, does he agree that it makes sense to maintain a public sector rail company that is equipped to step in at short notice in future, as well as providing a useful comparator? Will he therefore abandon the planned privatisation of the east coast service, which is delivering nearly £200 million back to taxpayers every year, which is profit that in future will be shared with shareholders?

Can the Secretary of State not see that it is completely inappropriate for a member of his own Department’s board, no matter what his other qualities are, to carry out an investigation that has to look at the decisions taken or approved by other members of that board, including Ministers? Will the Secretary of State think again and make his review truly independent? What impact has the 37% turnover of senior civil servants in the restructuring of the Department in the last two years had on its capability to conduct competitions such as this? As the Secretary of State mentioned his fares U-turn, will he now agree to make the train companies apply the cap to every route, so that passengers do not find, as they did last year, that fares may still rise by up to 5% above the cap?

This was a franchise fiasco made by Ministers—a policy scribbled on the back of an envelope in opposition; cuts that go too far, too fast, implemented in government. The result is chaos across the rail industry and tens of millions of pounds of taxpayers’ money down the drain—the direct consequence of decisions taken by Ministers. Now we have a proposal for an independent review that is not independent at all, while the Secretary of State’s solution to the west coast franchise fiasco is a decision to do it all over again—that is, twice in just two years. What an appalling waste of taxpayers’ money! What a shambles from this incompetent Government!

[Mr McLoughlin]

I thank the hon. Lady for her reasoned response to my statement.

The last Labour Secretary of State for Transport was not a Member of this House, but he said some very interesting things. Lord Adonis said:

“Ten year franchises, with the possibility of longer contracts should bidders make sensible and affordable proposals, will allow operators to invest and suggest new innovations.”

At that point the Labour party increased the minimum for franchises to run to 10 years, with an option of 22 years. There is therefore a long-standing position that longer franchises can work, including to the benefit of passengers, which it is important they should do.

The hon. Lady mentioned a number of points. One of the things that I was keen to do, on hearing of the problems we were facing in the Department, was to get to the answers as quickly as possible. That is why I set up the inquiries as quickly as I possibly could. I believe that Mr Laidlaw is perfectly capable of bringing his expertise to bear and showing us—[Interruption.] The hon. Lady ought to wait until he has done the inquiry before prejudging it, because at least we have taken the action to get the inquiry under way. I think that is the right way to go.

The hon. Lady talks about the reduction in members of staff in the Department. There has indeed been a reduction. Bearing in mind the economic climate in which we found ourselves, that was absolutely necessary and I make no apologies whatever for that. I am determined to see that the provision of services to the customers who use the west coast main line—of which there are many, with many constituencies involved—is carried out continuously, and that is why I believe Virgin are the best people to carry that forward.

[Sir George Young (North West Hampshire) (Con)]

The House is grateful to my right hon. Friend for coming here at the earliest opportunity to explain what has gone wrong and to describe the action that he proposes to take. I welcome that. Does he recall that, at the beginning, franchising was done not by his Department but by an independent, arm’s-length body? Twenty-four franchises were issued in some 18 months, none of which was subject to a legal challenge, and this led to the major investment in the railways to which he has referred. Franchising was subsequently brought in-house to the Department. Can he confirm that the Brown review will consider whether franchising should continue to be the job of his Department or whether we should revert to the initial model?

--- Later in debate ---

[Mr McLoughlin]

Given that my right hon. Friend was closely involved in setting up the original model, I should naturally defer to his great expertise in this matter. I do not want to prejudge the findings of any of the reviews that I have set up, but I am sure that Mr Brown will have heard my right hon. Friend’s comments and that he may well want to investigate that solution further.

[Frank Dobson (Holborn and St Pancras) (Lab)]

May I express my sympathy for the new Secretary of State’s having to deal with this mess? However, in view of the fact that the Department could not come up with figures that would be valid 10 years hence, how can he believe that the same Department, the same officials and the same advisers can come up with accurate predictions on passenger levels, and on inflation generally, in relation to High Speed 2, which does not exist and for which there is no evidence to draw on? I think he needs to look at that matter again. I will not say that he needs to go back to the drawing board; in the case of HS2, it is more a matter of going back to the ouija board.

[Mr McLoughlin]

I am interested to hear what the right hon. Gentleman says. A number of points have been raised since I made the announcement. The HS2 business case has undergone an extensive quality assurance process, and we are confident that it is accurate. The August 2012 update on the economic case was supported by a 400-person day of independent quality assurance, and HS2 Ltd has appointed independent auditors to undertake a line-by-line check of the analysis being prepared for the deposit of the hybrid Bill. This is all in addition to the existing quality assurance arrangements. I am glad to say that there was a commitment to these proposals in the right hon. Gentleman’s party manifesto to the country as well as in our own.

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

My right hon. Friend has come into the Department for Transport like a breath of fresh air. However, like the right hon. Member for Holborn and St Pancras (Frank Dobson), he must know that the failure of the west coast main line franchise process has really shaken people’s faith in the facts and figures that are being used by the Department. Notwithstanding the answer that he gave to the right hon. Gentleman, while he is in the mood for ordering investigations, will he now order a full review of the facts and figures that were used to justify HS2, in order to prevent the Department from making a serious mistake?

[Mr McLoughlin]

As I do not want to incur your wrath, Mr Speaker, perhaps I should refer my right hon. Friend to the answer that I gave to the right hon. Member for Holborn and St Pancras (Frank Dobson) a few moments ago. I also addressed this issue in one of my first major speeches, in which I outlined the importance of this particular piece of infrastructure to the United Kingdom.

[Mr Speaker]

I am always very interested to hear what the Secretary of State has to say on this subject, as he will readily appreciate.

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[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

The Secretary of State emphasised in his statement that he would seek “best value for taxpayers” in the interim arrangements. He will understand that there is a degree of scepticism in the House about his ability to deliver that. Will he please tell us how he intends to achieve that best value and what comparators he will use? How can he believe that a short-term, nine-to-13-month deal followed by an interim arrangement before the tendering process begins can possibly deliver best value for the taxpayer?

[Mr McLoughlin]

When we conduct negotiations with Virgin, that will obviously be one of the things that we will want to discuss. The right hon. Gentleman will have plenty of time to check whether we have done that.

[Tim Farron (Westmorland and Lonsdale) (LD)]

The short-term fix of asking Virgin to continue operating the west coast service will come as some relief and will provide some certainty in the short term, but how will the Secretary of State convince this House and, more importantly, passengers using the west coast main line, that the two-year interim franchise deal will not lead to a complete lack of investment, given that the new franchise holder will not have the confidence of a long-term deal?

[Mr McLoughlin]

I would say that the position in which we find ourselves is not the position I would have wanted to be in. What I am trying to do is to move forward with some certainty so that when we learn the lessons from the Brown review, they can be implemented and acted on. There is considerable interest in this particular line—it is very important—and I think we will see the sort of developments we want, with companies putting forward proposals, with respect to both the two-year contract that we are proposing to let and the longer-term one in due course.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I welcome the Secretary of State to his position. I listened intently to what he said in his statement, but he made no mention of any contingency funding that will need to be put in place as a result of this debacle. Is it proper to suggest that it is possible for this amount to be as much as half a billion pounds—half a billion pounds that taxpayers will have to pay?

[Mr McLoughlin]

I have read many figures, but I have not previously read that one. No doubt I am going to read a lot more in due course. I have already said that the estimated cost of refunding the franchises, which is the right thing to do, will be in the region of £40 million.

[David Mowat (Warrington South) (Con)]

This decision was one of the two or three major pieces of work done in the Department for Transport this year. If the permanent secretary will not hold himself accountable for this, what is he accountable for?

[Mr McLoughlin]

As I have said, I have announced two major inquiries. The permanent secretary took a decision to suspend certain members of staff. This is a suspension—not any prejudging—while these inquiries continue.

[Derek Twigg (Halton) (Lab)]

I would like to quote what the Under-Secretary of State for Transport, the hon. Member for Wimbledon (Stephen Hammond) said on behalf of the Government in a debate on 17 September, just a few weeks ago. He said:

“The Department is confident that we have taken the right decision in the interests of taxpayers and passengers. We expect to sign the contract soon, but we intend to defend the judicial process robustly.”—[Official Report, 17 September 2012; Vol. 550, c. 236WH.]

Given that the Secretary of State has been in the job for only a few weeks, is he confident that the financial information that he is getting throughout the Department for any major projects—including the Mersey gateway project—is robust and can stand up to scrutiny in the future?

[Mr McLoughlin]

Yes.

[Bill Wiggin (North Herefordshire) (Con)]

I congratulate my right hon. Friend on his decision and on his statement. In it, he said that he has paused the ongoing franchise programme. Will he use that pause to ensure higher minimum standards and that the Great Western franchise is not given to FirstGroup as a sop?

[Mr McLoughlin]

I can assure my hon. Friend that the pause is while we wait to see what the Richard Brown inquiry says and whether there are things that we need to put right in these live competitions. Obviously, there will be no sops to any organisations. These are very competitive bids and a lot of work and effort goes into them. Overall, we are seeing far better services for this country’s passengers as a result of franchising and of the very brave decisions taken by my right hon. Friend the Member for North West Hampshire (Sir George Young) some years ago.

[Albert Owen (Ynys Môn) (Lab)]

I genuinely welcome the Secretary of State to his position. The performance of his two predecessors has not set a very high bar when it comes to competence in this matter. [Interruption.] The Minister of State, the right hon. Member for Chelmsford (Mr Burns) is growling at me from a sedentary position, but it was his colleague who said that this was robust. The Secretary of State said that Directly Operated Railways is on standby. What does that mean, and will it be used for the three other franchises that he has suspended?

[Mr McLoughlin]

I have not suspended the three other franchises; I have put them on hold, which is quite an important differential. I thank the hon. Gentleman for his compliments. I am always cautious about compliments coming from the Opposition Benches, but who knows?

As I have said, the three franchises have not been stopped. They have been put on hold, and I hope very much that we can return to operate and lease them once we have learnt the lessons of the Brown report. I do not think that there is any need to contemplate using DOR on those services.

[James Duddridge (Rochford and Southend East) (Con)]

When the Essex Thameside franchise comes off hold, will the Secretary of State look again at the possibility of mandating the quality of the rolling stock that will be used to ensure that it is as good as the quality of the rolling stock that is used now, or, indeed, even better?

--- Later in debate ---

[Mr McLoughlin]

I well understand my hon. Friend’s wish to procure better services for his constituents, and I know that a number of other Members will be pushing me for the same thing. I will of course consider his suggestions and see whether we can adopt some of them.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

Now that the right hon. Gentleman has rightly put an end to the shambles that he inherited, will he bear in mind the watchword “If you are in a hole, stop digging”? Rather than engaging in an interim process that prolongs uncertainty, will he be fair to the marvellous train crews of Virgin Trains, who give extraordinarily good service, and tell them that their future is assured? Will he simply award the franchise to Virgin, which has carried it out brilliantly?

[Mr McLoughlin]

I am very pleased to hear the right hon. Gentleman give such a strong endorsement of the service that he already receives. However, what we are trying to do with franchising is improve that service, not just for his constituents in Manchester but throughout the line, and I do not think that it would be appropriate—in fact, it would not be possible—for me to do as he wishes. I think that what I have set out today is the best course for the next three years on that particular line.

[Andrea Leadsom (South Northamptonshire) (Con)]

I do not want to give my right hon. Friend cause to roll his eyes, so I shall not mention HS2. He can clap if he wants to.

I congratulate my right hon. Friend thoroughly on his decision to call a halt to the west coast main line franchise problem, but does he agree that now is the right time to start looking creatively at how to get fares right down and capacity right up? Perhaps he could consider introducing “standing room only” tickets for short journeys. That would both increase capacity and make journeys far cheaper for passengers who need to travel on a low budget.

[Mr McLoughlin]

I am not sure how popular that would be, but, as I have said in the House on other occasions, I am looking at the whole issue of fares and the way in which they are calculated.

[Mr Dennis Skinner (Bolsover) (Lab)]

What a way to run a railway! Now that we have seen this shambles, why do we not take the opportunity to stop the practice of lining the pockets of the railway bosses, and use the money to lower fares? We could do it through a “one nation” system of public ownership. Let’s start that: we have had enough of this business.

[Mr McLoughlin]

The hon. Gentleman obviously speaks from a past era when nationalisation was the apple of his eye. We have seen substantial changes and improvements in the whole railway system since we introduced the private sector to it. The right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) has just told us that he gets a fantastic service from a privatised railway, and I think that most people feel that they get a fantastic service too.

[Andrew Stunell (Hazel Grove) (LD)]

I thank the Secretary of State for his statement. May I remind him that when that train gets to Manchester, many people transfer to Northern Rail trains, and that the Northern Rail franchise will come up in 2014? There are some innovative proposals for work to be done on that with Greater Manchester and others. Can the Secretary of State assure us that the delay, the pause, or whatever the word is will not interfere with the development of those innovative and constructive ideas for the Northern Rail franchise?

[Mr McLoughlin]

One of the interesting things that I have seen since franchising began, and in how these franchises are being worked on, is the engagement with local stakeholders in local communities. They have all come forward with suggestions and ideas, a number of which can be incorporated in the franchise agreements.

[David Wright (Telford) (Lab)]

There is real concern in Shropshire that the interim arrangements that the Secretary of State has put in place will mean that we will not get back a direct service to London. Will he confirm that when he looks again at the franchise process at the end of his interim arrangement—however long that may last—he will write in services to Shropshire?

[Mr McLoughlin]

I will certainly listen to representations. I know that I will get many.

[Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)]

I welcome my right hon. Friend’s statement, and the candid and honest way in which he has handled this whole issue. I also welcome his comments about Virgin and FirstGroup. Will he confirm that Virgin, FirstGroup and the other bidders all acted with total propriety during the bidding process?

[Mr McLoughlin]

I can certainly confirm that, and I am grateful to my hon. Friend for asking me the question. That is wholly the case, and the mistakes we found were mistakes made in the Department.

[Mr Iain McKenzie (Inverclyde) (Lab)]

We have now witnessed two procurement fiascos from this Government in quick succession. We have seen that contracts are not being monitored and we are seeing tendering processes that are clearly flawed. One would think that the Minister would be well aware of these and that if he had been alerted to them, he would not have awarded this contract. The question therefore arises: why did he award this contract when he knew that it was flawed?

[Mr McLoughlin]

The contract was not signed.

[John Stevenson (Carlisle) (Con)]

May I extend my support to the Secretary of State for taking prompt action once he was aware of the problems with the west coast rail franchise? My concern now is about the length of the term of any new franchise, once it is finally in place, as that can affect the investment decisions of a rail company, particularly as regards stations such as Carlisle. Will the length of the new franchise be the same as that initially proposed?

[Mr McLoughlin]

I understand my hon. Friend’s point. What I do not want to do at this stage is prejudge what the Brown report may eventually say, but I will say that it was commonly accepted that longer franchises would lead to more investment and a better return for the taxpayer. We will need to look at this properly and to investigate what went wrong with this particular process before we come to long-term decisions. A number of people in the industry, including the former Secretary of State who sat in another place and not in the House of Commons, have also made that point.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

I want HS2 to happen, because it would be good for Birmingham, but I also want to ensure that it is based on accurate and reliable figures. Will the Secretary of State ensure that his review will identify any errors and miscalculations, and whether or not they relate to HS2, and will he ensure that this is a sound calculation?

[Mr McLoughlin]

I am grateful for the hon. Lady’s support for HS2. As I said a few moments ago, that is a separate process and a lot of work is going into the preparation for the HS2 Bill that will come before the House. There will be a lot of opportunities to debate that over the coming months.

[Michael Fabricant (Lichfield) (Con)]

Can my right hon. Friend, who is sorely missed as Chief Whip, assure my constituents that services will not be damaged by these changes and that stations such as Lichfield Trent Valley, which are badly in need of improvements for disabled access, will not have new works delayed as a consequence?

[Mr McLoughlin]

I hope we see no delays in investments as a result, and I am always grateful to my hon. Friend, who is always trying to be helpful.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

FirstGroup’s bid included a £190 million guarantee, which would in no way have been large enough to compensate the Government if its optimistic bid had failed to deliver the goods—in fact, it gave a strong financial incentive to walk away. Has the Secretary of State yet understood why that basic feature did not set alarm bells ringing before the bid was announced? Will he ensure that future contracts contain no financial incentives for bidders to walk away?

[Mr McLoughlin]

The time that bidders walked away was under the previous Government, when the operators on the east coast main line did so. There are lessons to be learned. I shall not prejudge what the inquiries might tell us, but I am looking forward to their results and hope that we can then move on based on a safer footing.

[Charlotte Leslie (Bristol North West) (Con)]

I welcome the Secretary of State’s announcement about the Brown review. Will he assure me that this pause will be an opportunity to ensure that on other franchises, such as the Great Western franchise, we seize opportunities when they exist? In my area, that would include a full Bristol metro with a full Henbury loop line to complete the circle line around Bristol.

[Mr McLoughlin]

I am not sure whether the second part of my hon. Friend’s question was a bid, but on the first part I can assure her that the reviews will inform us and that we will take note of them. I would not have set them up if we were not going to do so.

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

I came here today on the west coast main line; the train was late. May I ask the Secretary of State—[Interruption.] May I be the first to ask him to resign?

Let me say what I would like the Secretary of State to do. We will have the short period negotiation, the interim agreement and the long-term franchise. To ensure value for money, will he guarantee a public sector comparator for each of them?

[Mr McLoughlin]

I heard one colleague shout out, “Not late enough.” Obviously, we have set up the two reviews and we will look at what they produce. When we have put such things out to franchise, we have seen huge competition and interest, and it is a matter of getting the best deal for the taxpayer in the longer term.

[David Tredinnick (Bosworth) (Con)]

I congratulate my right hon. Friend on his common-sense decision to keep Virgin running the west coast main line, particularly in the run-up to Christmas. There are concerns, however, about an interim agreement, which will surely prolong the process. Would it not be better to go to a final agreement and not make things more complicated?

[Mr McLoughlin]

I can understand my hon. Friend’s frustration, but there has been a huge amount of investment in the west coast main line and it is right and proper that after the initial nine months, during which we will set up the two-year interim contract, we should seek to get the best return for the taxpayer. I think that an open competition is the best way to do that.

[Gloria De Piero (Ashfield) (Lab)]

The Campaign for Better Transport has been quoted today as saying that operational changes in the Department have not been focused on passengers but have been all about the bottom line. Does it not have a point?

[Mr McLoughlin]

No.

[Alun Cairns (Vale of Glamorgan) (Con)]

I pay tribute to the Secretary of State for the way in which he has handled a very difficult situation, not only accepting responsibility for an error made by an officer in his Department but moving forward swiftly with the review. Will he reassure me that renationalisation is off the cards for a range of reasons, including financial ones?

[Mr McLoughlin]

I thank my hon. Friend for his kind words. The truth is that both parties have agreed in the past that franchising is the proper way to go and gets better returns for the taxpayer. This particular episode is not acceptable and we need to learn the lessons from it. I am determined to do that.

[Tony Lloyd (Manchester Central) (Lab)]

Does the Secretary of State not agree with the many people who use the line that a public sector interim arrangement would have been preferable as it would have given him control over pricing and quality? Will he explain how he will guarantee those things in the interim period?

--- Later in debate ---

[Mr McLoughlin]

Obviously, there is a difference in view between the hon. Gentleman and the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), who praised the current operators of the west coast main line. Indeed, a number of people have praised the operators so I am rather surprised that when I have made a decision to keep the service with them, some people have found a way to attack that decision. The short period involved means that the best way to ensure continuity of service is to do a deal with Virgin, and we are about to embark on that.

[Jeremy Lefroy (Stafford) (Con)]

Those bidding for the franchise offered a number of improvements that were welcome to my Stafford constituents, including fare reductions. Will my right hon. Friend see whether it is possible to introduce some of those improvements in the interim period, along with his welcome cap on rail fares?

[Mr McLoughlin]

I thank my hon. Friend. As I have pointed out, there will be a two-year franchise that will be negotiated some time next year, and I hope that some of the benefits that were initially to come from a longer-term franchise agreement can be replicated in it.

[Mr Jim Cunningham (Coventry South) (Lab)]

In an age of high food prices, high oil prices and high fares, will the Secretary of State, when he negotiates the west coast main line franchise both in the interim and in the longer term, put a special emphasis on fares, because they are far too high?

[Mr McLoughlin]

I am glad that we have been able to reduce the proposed increases from RPI plus 3 to RPI plus 1. I hear what the hon. Gentleman says about fares. Of course, some pre-booked fares can cost a reasonable amount, but others are very high, and that is something I think we should all look at.

[Jason McCartney (Colne Valley) (Con)]

What time scale implications will this all have for the east coast main line franchise? Will my right hon. Friend take note of the fiasco that occurred under the previous Government when two train operating companies on the east coast main line collapsed in only two and a half years?

[Mr McLoughlin]

I thought that it was a utopia under the previous Government and that nothing ever went wrong, but my hon. Friend is right to say that the only time a rail franchise collapsed was under the previous Government. The Opposition seem to have forgotten that today in their attacks on me. I hope that we can learn the lessons and move on and that this will not lead to too long a delay in any of the other franchises.

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

The west coast main line is obviously important to my constituents in Birmingham, but I am worried about the knock-on effects of this fiasco on other franchises coming up for renewal. I draw the Secretary of State’s attention to London Midland and the countless delays there have already been in the west midlands because of driver shortages. There is no long-term thinking on planning for new stations and ticket office hours are being cut, and that is because it is not looking at the long term. What impact will this fiasco have on trying to give passengers in the west midlands the kind of service they deserve?

[Mr McLoughlin]

I want all taxpayers and passengers to get the kind of service they deserve. There have been some specific cases of cancellations on the line, as the hon. Gentleman has just mentioned. I hope that the company will put that right and train more drivers, which I think it is in the process of doing.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

I echo what the hon. Member for Telford (David Wright) said. Shrewsbury is the only county town in England without a direct rail service. All the Shropshire MPs have campaigned very hard over the past year to ensure that that comes about, and both Virgin and FirstGroup have committed to it. Will the Secretary of State do everything possible to ensure that that vital service for our constituents is not delayed more than it needs to be?

[Mr McLoughlin]

I can give my hon. Friend that assurance.

[Mr William Bain (Glasgow North East) (Lab)]

The west coast main line matters hugely to the Glasgow and Scottish economies, but so does value for money for the taxpayer. Can the Secretary of State identify any previous franchising process that was not subject to external audit, and is it not the case that a decision made by his Department to save hundreds of thousands of pounds has ended up costing the taxpayer tens of millions of pounds?

[Mr McLoughlin]

The hon. Gentleman is seeking to prejudge the two inquiries I have set up, which is something I am not prepared to do.

[Rehman Chishti (Gillingham and Rainham) (Con)]

On train franchising, will the Secretary of State clarify when Southeastern’s franchise is likely to be concluded, because it is currently undergoing a process of renewal?

[Mr McLoughlin]

I have announced a pause on three franchises, and there are others that have not yet been concluded in the final bidding process. We will obviously learn lessons from the Brown inquiry and the Laidlaw inquiry, but I hope that this will not have a long-term impact that will delay any of the other franchises that are going to be negotiated.

[Joan Walley (Stoke-on-Trent North) (Lab)]

Is not the most shocking part of this the fact that had Richard Branson not made the legal challenge, we would not even have known about this fiasco? Given the importance of the train services through Stoke-on-Trent, the lifeblood of our local economy rests on the future of the west coast main line. Will the Secretary of State give an assurance that he will give Parliament the true costs of the fiasco, because it is likely to be far more than the £40 million he talks about? We need to ensure that those funds are safeguarded for transport.

[Mr McLoughlin]

The hon. Lady should just wait and see, because some of the things the reviews might lead to could provide a greater return for the taxpayer in the longer term. I am not for one moment dismissing the fact that this has been very expensive and unacceptable—it is and it has been—but the most important thing is that we learn the lessons in the longer term.

[Sir Tony Baldry (Banbury) (Con)]

Most of my constituents just want to ensure that the trains run on time and are affordable. Will the Secretary of State confirm that he has managed to cap rail fares for the next two years? I am not sure that that point has been fully understood.

[Mr McLoughlin]

I am grateful to my hon. Friend for that question. I can confirm that the Prime Minister announced a cap of RPI plus 1 for not only this year, but next year and the year after.

[Mr David Anderson (Blaydon) (Lab)]

In this House, we have become used to the Government’s incompetence. They could not privatise the forests properly and they made a mess of the NHS; with this, they have shown that they cannot even privatise what is already out there. The job is too big for them. Why do they not just give up—and give up now?

[Mr McLoughlin]

I am not sure, Mr Speaker, whether that was a question or a statement.

[Mr Brian Binley (Northampton South) (Con)]

Will the Secretary of State give a firm undertaking that none of the costs involved in this incident will be passed on to hard-pressed consumers on the west coast main line? Furthermore, will he reassure the siren voices calling for the scrapping of HS2 that that line is absolutely necessary because the west coast main line is under such pressure that it reaches capacity in a very short period?

[Mr McLoughlin]

What I would like to say to my hon. Friend is yes and yes.

[Emma Reynolds (Wolverhampton North East) (Lab)]

The Secretary of State is right to make this decision on the west coast main line, but it is unclear to me why his predecessor—who, after all, is an accountant by trade—did not hear the alarm bells ringing for quite some time. Will he reassure me that the review that he has announced today will consider that significant and unacceptable risks were being taken by allowing one of the bidders to backload most of the premium to the end of the franchise? Will he put in place measures to ensure that franchisees cannot simply walk away from a franchise before they make substantial payments?

[Mr McLoughlin]

My predecessor, like me, was given firm assurances at the Department that the competition was sound. That proved not to be the case. Once I knew and had the full facts, I made the statement that I made.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

I used the west coast main line today and my train was early, for which I thank the Secretary of State. Can he assure me that when making decisions about the new franchises, he will take every opportunity to incorporate both quality metrics and performance satisfaction ratings from customers?

--- Later in debate ---

[Mr McLoughlin]

I am grateful to my hon. Friend, who is also a user of the west coast main line. The answer to his question is “definitely”.

[Graeme Morrice (Livingston) (Lab)]

In view of this fiasco and other potential franchise debacles, will the Government now realise that the game is up and take the west coast main line back fully into public ownership, as is the case with the east coast service?

[Mr McLoughlin]

No.

[Mr Robert Buckland (South Swindon) (Con)]

In respect of the review of the process relating to the Great Western franchise, will my right hon. Friend ensure that the fundamental mistakes about capacity in the previous franchising round under the last Government will not be repeated?

[Mr McLoughlin]

I hope that the two inquiries that I have set up will help us through the unfortunate position in which we find ourselves and, in the longer term, lead to a much more robust franchising system.

[Rosie Cooper (West Lancashire) (Lab)]

I appreciate that assurances from the Transport Secretary, and Ministers previously, that the process was rigorous, detailed and fair were given in good faith. However, serious concerns remain that the incident was not isolated.

Bearing in mind some of the comments made about loading and how the contract was done, anyone with common sense knew that something was wrong. Will the Secretary of State categorically confirm that mistakes were not made by the Department when awarding franchises on the other routes, before the west coast main line franchise process? When did that analysis take place?

[Mr McLoughlin]

I am not sure that I am responsible for the franchising that took place under the previous Government, and this franchise was the first that would have taken place under the new system.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

I thank my right hon. Friend for coming to the House to make this statement. What impact will the reviews have on the Great Western railway? Is he willing to meet me and my fellow Plymouth Members of Parliament to discuss how we can improve connectivity to make sure that we have more three-hour train journeys coming into Plymouth and trains that get there before 11.17 am, as is the case at the moment?

[Mr McLoughlin]

Franchising gives hon. Members from all constituencies an ideal opportunity to feed into the process to say how they want services to improve; and where that can be done, it should be done. I am certainly willing to meet a delegation led by my hon. Friend.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Does the Secretary of State agree that the inquiry we really want is to have, say, the Public Accounts Committee look at all this, because it is far more important than just the chaos surrounding this particular contract? Right across Government, we see this incompetence in procurement time and again. Whether it is about the churn of Ministers or the churn of civil servants that we are all familiar with, there is something deeply rotten in the way that we run government in this country.

[Mr McLoughlin]

I think I need to pause before I respond to that question. The hon. Gentleman talks about the churn of Ministers under this Government, but he should look at the churn of Ministers in this Department under the previous Government, which was fairly substantial; I think that the former right hon. Member for Ashfield lasted eight months. As for what the Public Accounts Committee might look into, I have been in this House long enough to know not to tell any Select Committee what it might or might not look into.

[Neil Carmichael (Stroud) (Con)]

I welcome the Secretary of State’s obvious commitment to investing in infrastructure —whether new, like HS2, or old, like the Stroud and Swindon line. May I turn his attention back to tickets and urge that we have a ticketing system that is characterised by simplicity and transparency and produces more competition within it?

[Mr McLoughlin]

We are currently undertaking a ticketing review which I hope will address some of the points that my hon. Friend has made.

[Mr David Hanson (Delyn) (Lab)]

My constituents in Flintshire who use the west coast main line daily will be horrified by the potential £40 million-plus cost resulting from mistakes by the Secretary of State’s Department. This is now what is called in the civil service an unfunded pressure. Will he tell the House how he plans to fund it?

[Mr McLoughlin]

In due course, yes.

[Stephen Mosley (City of Chester) (Con)]

Those of us who use the west coast main line will appreciate that massive improvements have occurred since privatisation and welcome the improvements that were promised in the new franchise, including lower fares and more frequent services to Chester. Will my right hon. Friend ensure in the interim that those promised improvements are still delivered and not forgotten about?

[Mr McLoughlin]

My hon. Friend, like many colleagues, is calling for better services for his constituents, and I cannot think of a finer place than Chester that people want to go—

[Daniel Kawczynski]

Shrewsbury!

[Mr McLoughlin]

I had better be a bit careful, or we might get into a bidding auction. There are a number of places to which people want extra services. That shows that the railways are now held in high esteem by all, and it is very much my intention to try to provide the services that people wish for.

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

It will be some years before we know the identity of the long-term operator of the west coast main line. How can anyone have any confidence in the bids for the east coast main line franchise when we have no idea of the long-term plans of the long-term operator of its main competitor on the west coast? Is not that why we should keep the east coast main line directly operated for a good few years—preferably indefinitely?

[Mr McLoughlin]

That is not what the last Secretary of State who sat in the Cabinet for the Labour party said, and it is not what I want to happen.

[Ben Gummer (Ipswich) (Con)]

May I say how pleased I am by the candour and assured manner with which the Secretary of State has dealt with this matter? He will be aware of the enormous importance that travellers, commuters and businesses in the eastern region attach to the letting of the new 15-year franchise. He received a delegation from me and my hon. Friends the Member for Norwich North (Miss Smith) and for Witham (Priti Patel) with great enthusiasm. Can he give any assurances that the programme and timetable for that franchise will not slip as a result of the decision that he has notified to the House?

[Mr McLoughlin]

It certainly should not slip. I can say to my hon. Friend that the recommendations that he and a number of colleagues have made to me have been fed into the process, and will I hope be reflected in the franchise when it is finally awarded.

[Helen Jones (Warrington North) (Lab)]

My constituents will be horrified at the shambles that this Secretary of State has presided over. Warrington relies on its transport links to promote economic development. What action was taken by his Department on the Europa Partners report, which highlighted flaws in the franchise process five days before the announcement? Was that drawn to the attention of any Minister in the Department?

[Mr McLoughlin]

What I can say is that the flaws were found as a result of the Department preparing for a judicial review. When they were found and I saw the report and other information, I took the decisions that I announced on 3 October.

[David Rutley (Macclesfield) (Con)]

Like many other Government Members, I welcome the decisive action taken by my right hon. Friend in the face of unacceptable mistakes in the Department for Transport. Will he confirm that, during the interim period and the intervening period before that, passengers in Macclesfield will continue to experience the same high levels of service that they have come to expect in recent years?

[Mr McLoughlin]

I realise how very important the service on the west coast main line is to my hon. Friend’s constituency. That is why I am keen that, for the sake of continuity, we carry on with the present service operators until such time that we can re-tender for a short, interim franchise. I know he will insist that the service that his constituents get now will continue.

[Ian Lucas (Wrexham) (Lab)]

Will the Secretary of State ask his independent inquiries to consider a mutual model for the railways? Welsh Water in Wales has delivered a 6% reduction in charges since 2001, billions of pounds’ worth of investment, and stability for business. That is what we want on our railways. Why is he so wedded to a broken system?

--- Later in debate ---

[Mr McLoughlin]

I am not wedded to a broken system; I just look at the reassurances that previous Ministers gave on improvements to the railways since the present franchise system came into operation.

[Ann Coffey (Stockport) (Lab)]

I am very concerned that there will now be a long hiatus in investment in the west coast main line. Will the Secretary of State talk to Virgin about making some money available for long overdue improvements to Stockport station, which were offered by FirstGroup? Alternatively, perhaps he could find some cash from his departmental budget? It seems unlikely that those improvements will happen any time soon.

[Mr McLoughlin]

I understand that the hon. Lady wants improvements made to her station and I will consider carefully what she has said, but I am not sure that there is any spare money in the Department.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Secretary of State ensure that the Brown inquiry does not just tinker with franchising but considers other options? We have heard about the recent option on the east coast main line, but another is the concession process that was used for London Overground. Will the inquiry be able to consider that?

[Mr McLoughlin]

I will not tell the inquiry what to do. I have published the terms of reference and put them in the Library earlier today. They are comprehensive.

West Coast Main Line

Lord McLoughlin Excerpts

Monday 15th October 2012 Written Statements

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

On Wednesday 3 October 2012, I announced the cancellation of the inter-city west coast franchise procurement following the discovery of significant technical flaws in the way the franchise process was conducted by the Department for Transport.

I immediately ordered two independent investigations to be undertaken urgently. The first, led by Sam Laidlaw, who is the chief executive of Centrica, lead non-executive on procurement across the Government, and lead non-executive member of the departmental board is examining what happened during the west coast procurement and why, with the aim of establishing the lessons to be learned. The second review, led by Richard Brown, chairman of Eurostar, is focusing on any lessons to be learned for the upcoming franchising programme.

I also announced, that the ongoing franchising programme should be paused, pending the outcome of the two investigations. This included pausing the live competitions on Essex Thameside, Great Western and Thameslink.

This morning at 7 am, I have made a further announcement to the London stock exchange, that the Department for Transport is commencing negotiations with Virgin Rail Group with a view to them remaining as operator of passenger services for the west coast main line for a short period, of around nine to 13 months while we run a competition for an interim franchise agreement. This interim agreement, which would be open to any bidders, will then run until a new long-term west coast franchise is ready to commence.

I shall update the House further, later today.

Aviation

Lord McLoughlin Excerpts

Friday 7th September 2012 Written Statements

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

International connectivity is vital to support economic growth. This Government have made it clear that their priority is returning this country to sustainable economic growth and our aviation networks and infrastructure have an important role to play.

The UK is an island nation dependent upon its transport links to the rest of the world for its prosperity. The aviation industry in the UK is extremely successful. It is a significant economic sector employing 220,000 directly and supporting many more indirectly and it contributes more than £16 billion of economic output. Some 35% of UK non-EU trade by value enters or leaves the country by aeroplane. Importantly, the industry also provides this country with the global connections which our businesses need to sell their products abroad and which inward investors to the UK demand.

The Government recognise the importance of aviation to the UK. We are taking forward the Civil Aviation Bill to reform the economic regulation of airports, to further the interests of passengers and to create a better environment for investment. We are implementing the recommendations of the South East Airports Taskforce, including a trial of operational freedoms at Heathrow airport to improve reliability and reduce delay. In July the Government published a draft aviation policy framework (APF) for consultation; a framework which will set the high-level policy parameters within which any new proposals for airport development may be considered. The final APF will be adopted by the end of March 2013. Alongside the draft APF the Government announced a number of short-term measures to deliver operational improvements and boost economic growth within existing airport capacity constraints including £500 million towards a western rail link to Heathrow, a review of the UK’s visa regime and the recruitment of 70 additional border staff at Heathrow.

Today the UK is among the best-connected countries in the world. Our airports, particularly those in the south-east, deliver direct flights to over 360 destinations, including those of greatest economic importance. London has more flights to more destinations than any other city in Europe. More flights to the important trading centres like New York, Hong Kong, and Singapore. The Government are determined to deliver a solution which will continue to provide that connectivity in the short, medium and longer term.

This is a very difficult debate, but the reality is that since the 1960s Britain has failed to keep pace with our international competitors in addressing long-term aviation capacity and connectivity needs. Germany, France and the Netherlands have all grown their capacity more extensively than the UK over the years, and so are better equipped, now and in the future, to connect with the fast-growing markets of emerging economies. The consequences are clear. Our largest airport and our only hub airport—Heathrow—is already operating at capacity. Gatwick, the world’s busiest single-runway airport, will be full early in the next decade, while spare capacity at Stansted airport is forecast to run out in the early 2030s.

The Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to our long-term international competitiveness. But the Government are also mindful of the need to take full account of the social, environmental and other impacts of any expansion in airport capacity.

Successive Governments have sought to develop a credible long-term aviation policy to meet the international connectivity needs of the UK. In each case the policy has failed for want of trust in the process, consensus on the evidence upon which the policy was based and the difficulty of sustaining a challenging long-term policy through a change of Government. The country cannot afford for this failure to continue.

The Government have asked Sir Howard Davies to chair an independent commission tasked with identifying and recommending to Government options for maintaining this country’s status as an international hub for aviation.

The commission will:

examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe’s most important aviation hub; and

identify and evaluate how any need for additional capacity should be met in the short, medium and long term.

In doing so, the commission will provide an interim report to the Government no later than the end of 2013 setting out:

its assessment of the evidence on the nature, scale and timing of the steps needed to maintain the UK’s global hub status; and

its recommendation(s) for immediate actions to improve the use of existing runway capacity in the next five years—consistent with credible long-term options.

The commission will then publish by the summer of 2015 a final report, for consideration by the Government and Opposition parties, containing:

its assessment of the options for meeting the UK’s international connectivity needs, including their economic, social and environmental impact;

its recommendation(s) for the optimum approach to meeting any need;

its recommendation(s) for ensuring that the need is met as expeditiously as practicable within the required timescale; and

materials to support the Government in preparing a national policy statement to accelerate the resolution of any future planning application(s).

A decision on whether to support any of the recommendations contained in the final report will be taken by the next Government.

The Government intend this independent commission to be part of a process that is fair and open and that takes account of the views of passengers and residents as well as the aviation industry, business, local and devolved government and environmental groups. We would like, if possible, to involve the Opposition as part of our work alongside Sir Howard to finalise the arrangements for the commission. I will provide Parliament with further details on the full membership of the commission and the terms of reference for its work shortly.

Rail Fares

Lord McLoughlin Excerpts

Wednesday 5th September 2012 Commons Chamber

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

Before I address the motion, I would just like to tell the House what a great honour and privilege it is to return to the Dispatch Box in a proper speaking role after some 18 years, although I have to say to the hon. Member for Garston and Halewood (Maria Eagle) that I had not expected to be making my first speech as Transport Secretary quite so soon. When the Opposition Chief Whip informed me on Monday evening that there was to be a transport debate today, I thought that this would be either an opportunity or a great problem. I shall not decide which until I have sat down. I thank the hon. Lady for her warm welcome. I shall certainly consider some of the points that she raised in her speech, but I might need to take a little more time to do that, rather than responding to them all immediately this afternoon.

[Chris Bryant (Rhondda) (Lab)]

Will the Secretary of State give way?

[Mr McLoughlin]

I am going to regret this!

[Chris Bryant]

I, too, congratulate the right hon. Gentleman on his new post. As he knows, I have always thought of him as the General von Klinkerhoffen of the Government—but only in that he is much nicer than his party allegiance. May I add one thing to the list of things he should worry about? It is that we often think of commuters as wealthy people going from the commuter districts outside London to their jobs in banks, yet many in my constituency are people who are on the minimum wage. For them, the £5.10 or £5.20 a day that it would cost them to go to work can sometimes be prohibitive. Will he work closely with the Department for Work and Pensions to ensure that such people have a real opportunity to work?

[Mr McLoughlin]

I thank the hon. Gentleman for his intervention. I well accept that a lot of people who commute are on very low wages, and that their transport costs account for a very large part of their income. We do need to bear that in mind. The hon. Gentleman is, however, supporting a motion today that would remove the flexibility of the rail companies to adjust rail fares, which is something that the Welsh Assembly—which his own party runs—is not prepared to do.

[Sir Tony Baldry]

May I too congratulate my right hon. Friend and welcome him to his new post? He was a much-respected Chief Whip, and I am sure that he will perform this task very well. Was he not surprised that the hon. Member for Garston and Halewood (Maria Eagle) managed to get through her whole speech without making a single reference to Sir Roy McNulty’s report? It was as though his review had never taken place. An important part of the equation is surely the cost of the railway system, and Sir Roy’s independent report found that the system that we inherited from the last Government was so inefficient and expensive that we would have to reduce its costs by 40% to run a service comparable to those in France, Germany and Holland that the hon. Lady seemed to be disparaging.

[Mr McLoughlin]

I am grateful to my hon. Friend. I intend to come to that point later in my speech, as he can well imagine.

It is a great privilege to serve as a Secretary of State in this Government, and it is a task that I am incredibly proud to perform. I should like to take this opportunity to pay tribute to the diligence and skill of my predecessor, my right hon. Friend the Member for Putney (Justine Greening). She gave the go-ahead for the high-speed rail link—a new national rail network that will be crucial for keeping Britain moving and vital for growing our economy.

As a regular rail user myself, I know how concerned people are about rail fares. That is a fact that I fully understand and take seriously, but to do justice to this debate, it is vital to grasp the wider challenges that the Government face if we are to make our railways more efficient, more effective and more affordable. From day one in office, our priority has been to tackle the fiscal deficit that we inherited, and to put in place measures to rebalance our economy, get people back to work and boost growth.

The railways have, and will continue to have, a crucial role to play in that process. Not only do they provide the arteries through which the lifeblood of commerce flows, connecting key cities and markets, and linking communities with jobs but they receive a significant amount of funding from the state—more than £3 billion a year. It was absolutely clear when the coalition came to power in 2010 that the level of taxpayer and fare payer support for the railways had soared under the last Government, yet passengers had seen little reward for that investment. In short, the railways were providing poor value for money. We did not inherit just a budget deficit; we also inherited an infrastructure deficit—one that, left unaddressed, would mean a long-term drag on our economy. This infrastructure deficit was particularly acute on the railways.

[Mark Lazarowicz]

The Secretary of State mentioned that he was a regular rail user—I presume on the west coast main line, with which he will be familiar in any event. He said that the money invested by the last Labour Government did not lead to any obvious benefits for passengers. How does he think the investment in the west coast main line was paid for?

[Mr McLoughlin]

I am talking about the overall structure. My train service is East Midlands Trains, not the west coast main line. I look forward to gaining more knowledge of many more railway lines in due course.

[Ian Lucas (Wrexham) (Lab)]

Will the right hon. Gentleman give way?

[Mr McLoughlin]

Briefly.

[Ian Lucas]

I congratulate the right hon. Gentleman on his move to the Department for Transport. Does he believe that his rail journey improved or got worse between 1997 and 2012?

[Mr McLoughlin]

I shall come on to some of the things we are going to do to improve the railway line that I use, which were announced before I became Secretary of State. I am very pleased about them, one of which is electrification. The last Government had a particularly poor record on that. There was a change in the franchise owners during the period of the last Government and certain changes were made to the service on that line.

Soaring demand meant that our ageing rail network was struggling to cope. There are now many more people travelling on the railways than at any time since 1929, but on a much smaller system. What does that mean? It means more overcrowding, more standing on trains, and rail consumers demanding a better service. We had to find a way to invest in the railway to support the economic recovery and to deliver the quality of service that passengers have the right to expect. That was the reality we faced, and we are meeting it head on by investing in the biggest rail modernisation programme since the Victorian era, while at the same time reforming the railways and reducing costs.

[Maria Eagle]

Does the right hon. Gentleman accept that during this Parliament and this spending review period, his Government have cut investment in the rail industry? Yes, they have announced a lot of investment for the next Parliament, in control period 5, which will go ahead some time in the future, but in this Parliament investment and infrastructure have been cut.

[Mr McLoughlin]

I was just coming on to say that this July, we announced £16 billion of public support for the existing rail network between 2014 and 2019—I expect 2014 to be during this particular Parliament—which will support over £9 billion of enhancements, meaning more services, more seats and more capacity, especially for commuters to our largest cities. The tap cannot simply be turned on as far as the rail industry is concerned. Passengers will also benefit from the completion of the northern hub in Manchester, £240 million of investment in capacity and connection improvements on the east coast main line, and a further £300 million for high-value, small-scale schemes in other parts of the country.

We are delivering a rolling programme of rail electrification on the Great Western main line to Swansea, on the valley lines into Cardiff and on the trans-Pennine route connecting Liverpool, Manchester, Leeds and York. We are creating a new “electric spine” for freight and passenger services stretching from the south coast to the east and west midlands and south Yorkshire.

[Dr Huppert]

I congratulate the Secretary of State on his new post. How confident is he that during this Parliament this Government will be able to electrify more of the railways than the nine miles that were managed in three previous Parliaments?

[Mr McLoughlin]

The hon. Gentleman must not underestimate the achievements of the last Government. He said that they electrified nine miles, but he is wrong; they electrified 13 miles, and I shall come to that a little later in my speech. I shall also come on to announce the electrification that we intend to carry out.

[Mrs Main]

I offer many congratulations to my right hon. Friend on his new and challenging post. Does he share my amazement that Labour Members ignore the fact that Thameslink 2000, which serves my constituency, was kept on the buffers for seven years while they dithered, thereby denying the infrastructure improvements of extended platforms and longer trains, which would have made a huge difference to commuters yet have gone ahead only recently?

--- Later in debate ---

[Mr McLoughlin]

My hon. Friend is a tremendous advocate for the many commuters in her constituency who rely on this service. I hope they have already seen some improvements and will see further improvements as time goes on.

Electrification will not only deliver new fleets of cleaner and more environmentally friendly trains but will reduce the long-term costs of running the railways. The hon. Member for Cambridge (Dr Huppert) was just a little ahead in the timing of his question; the next part of my speech will put the record straight. I always try to be accurate. While in 13 years the previous Government electrified just 10 miles of railway—I got the figure wrong, too!—between Crewe and Kidsgrove, which is an important part of the railway network but not too widespread, we have set out plans for over 850 miles of electrification and investment of over £1 billion. It does not stop there, as we have approved a £4.5 billion contract to build a new generation of inter-city trains at a purpose-built factory in County Durham, creating 730 skilled jobs and a further 200 during construction. We are procuring around 1,200 new railway carriages for the Thameslink line and, with Transport for London, we are working on the procurement of new trains for Crossrail.

There is a lot more to do, but let me be clear. We are able to fund this massive programme to build a railway fit for the 21st century only because we have taken tough but correct decisions to cut spending elsewhere, redirecting our resources to boost growth and to get our economy moving. Of course, when it comes to resources, when we invest in our rail network, fare revenues are crucial in helping to fund the massive upgrade programme we are delivering. In fact, the previous Government set out plans to increase the share of rail funding paid by passengers. The alternative for us in 2010 would have been to slash investment. This would have been the wrong answer for the long-term economic future of this country and, indeed, for rail users themselves.

[Julie Hilling (Bolton West) (Lab)]

I join others in welcoming the right hon. Gentleman to his post. He talks about the passenger paying, but I could have a week in Benidorm with £80 spending money for the cost of my return travel between Wigan and Euston. One of the right hon. Gentleman’s predecessors, the right hon. Member for Runnymede and Weybridge (Mr Hammond), said he thought that the railways were already a rich man’s toy. Does the Secretary of State agree with that? If not, how is he going to enable ordinary people to use the railways—or should they just go to Benidorm instead?

[Mr McLoughlin]

It sounds as if the hon. Lady knows more about Benidorm than I do. I think there are a number of anomalies in ticket fares. I see them on the train service I use, in that it can cost £170 to use one train, but a train 20 minutes later is a lot cheaper. We need seriously to try to address a number of these problems and to look at how the fares and fare structures used by the rail industry are implemented. I do not accept that everything is fine and fair. In certain areas, consumers have strong cases to make; we should look at them, and I will do so.

[Iain Stewart (Milton Keynes South) (Con)]

Will my right hon. Friend give way?

--- Later in debate ---

[Mr McLoughlin]

Yes, I give way to a member of the Transport Select Committee.

[Iain Stewart]

I, too, congratulate my right hon. Friend. He makes an important point about reviewing the whole ticketing strategy. His predecessor announced a consultation on reviewing ticketing, and one proposal that will directly benefit my constituents is a plan to introduce a discounted ticket for passengers who travel frequently but not often enough to warrant a season ticket. There are proposals like this that will cut the cost of using the railways for many of our constituents.

[Mr McLoughlin]

I look forward to working closely with my hon. Friend and to discussing that issue with him.

[Tracey Crouch (Chatham and Aylesford) (Con)]

I am sure that I shall like my right hon. Friend better in his new role than in his last.

The shadow Secretary of State was kind enough to quote accurately comments that I made to my local newspaper reflecting my constituents’ concern about rail fare increases. I said that I would continue to make representations on the matter. Rather than succumbing to the political opportunism displayed by the Opposition, who imposed RPI plus 3% uniquely on Southeastern commuters, will my right hon. Friend meet me, and fellow Kent Members, to engage in a substantive conversation about rail fares and services for our constituents?

[Mr McLoughlin]

I should be delighted to meet my hon. Friend and the colleagues whom she wishes to bring to see me. As I have said, a huge number of people rely on commuting, particularly in areas such as Kent, and that is very expensive for them. I shall be more than happy to arrange a meeting in the not-too-distant future.

[Mr Sheerman]

Will the Secretary of State give way?

[Mr McLoughlin]

I am slightly conscious of the time.

[Mr Sheerman]

May I just apologise quickly?

[Mr McLoughlin]

There is a first time for everything. In fact, I think the hon. Gentleman has already apologised, but perhaps he now wants to say something else.

[Mr Sheerman]

I wanted to apologise for suggesting earlier that the Secretary of State was a Yorkshireman, but may I also make a serious point? People in my constituency of Huddersfield, and in west Yorkshire generally, are finding it increasingly difficult to afford the fares for journeys to this city, where much of their business lies.

[Mr McLoughlin]

I am sorry. I missed the point that the hon. Gentleman was making.

[Mr Sheerman]

Business people in Yorkshire have to come here to do business, but the rate at which the fares are increasing is making it very difficult for them to afford to do so.

--- Later in debate ---

[Mr McLoughlin]

I think I have already acknowledged that several times in my speech, but I do want to look into it, although the amount that we are investing in the railways should also be borne in mind. We need to address people’s concerns, but there is no easy answer. If we had inherited the economic scenario that the last Government inherited, many of the changes and difficult decisions that we are having to make in trying to rebalance the economy would not have been necessary. What the hon. Gentleman has said comes ill from a member of the party that spent all the money, when the present Government are trying to restore the economy to its previous state and balance the books.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Will the Secretary of State give way?

[Mr McLoughlin]

I must make some progress, but I will give way very briefly.

[Mr Brown]

I congratulate the Secretary of State on his appointment. Some passengers undoubtedly enjoy the benefits of a railcard, but what does he think about train operating companies that are seeking to tighten the restrictions, thereby preventing people from travelling early in the day or late in the afternoon?

[Mr McLoughlin]

We are considering that whole question in our fares and ticketing review. When there are announcements to be made, we will make them in the House, and we will be answerable for them in the House if they are our responsibility. However, I think that the situation in Scotland has quite a bit to do with the Scottish Government.

[Jim McGovern (Dundee West) (Lab)]

I welcome the Secretary of State to his new position. He said that he would try to iron out some of the anomalies, and I hope that he will deal with this one. If I want to travel from my constituency in Dundee to Glasgow, it is cheaper for me to buy a ticket from Dundee to Perth and another from Perth to Glasgow than to buy one from Dundee to Glasgow, and I do not need to get off the train at any point.

[Mr McLoughlin]

I do not think that we have changed the position in the last few years, and I do not know what the last Government did in 13 years. Again, I think that the issue raised by the hon. Gentleman has more to do with the Scottish Government than with us, but we will look at it nevertheless.

As previous Governments have shown, simply spending more on the railways does not necessarily bring value for money. For far too long the railways have relied on ever-increasing public subsidy and ever-rising rail fares. Enough is enough. If we are to invest in rail, we must ensure that we are getting value for money. That echoes the point made earlier by my hon. Friend the Member for Banbury (Sir Tony Baldry).

We have set out a comprehensive programme of rail reform to tackle costs and waste. That principle was at the heart of the Command Paper that my predecessor published last March, in which we explained how we wanted the industry to tackle the £3.5 billion annual efficiency gap identified by Sir Roy McNulty in his study of value for money on the railways.

[Caroline Lucas]

Will the Secretary of State give way?

[Mr McLoughlin]

I should like to make a bit of progress first.

The best way of securing long-term value for money is to ensure that the rail industry plays its part in delivering lower costs and sustainable railways. That will require all those who are responsible for track and trains to work more closely together. It will require a more responsible approach to pay and modern ways of working among all who are employed in the industry, from the platform to the boardroom. It will require longer franchises, providing greater flexibility, longer contracts and a sharper focus on cost, and it will require smart technology to reduce the cost of selling tickets. We are challenging the industry to deliver efficiencies that will put our railways on a par with the best in the world, and we will pursue the delivery of those savings with the Rail Delivery Group, train operators and others. Let me address the main point made in the motion by saying that our relentless focus on efficiency will help us to put an end to above-inflation increases at the earliest opportunity.

[Caroline Lucas]

I congratulate the Secretary of State on his new post. I wonder what he would say to one of my constituents who told me a few days ago that he had had to give up his job in London because he could no longer afford the rail fare. How is the Government’s policy of encouraging people to look further afield for jobs consistent with pricing them off the railways that could enable them to do so?

[Mr McLoughlin]

More people are using the railways now than at any time since 1929, on a lesser network. However, the hon. Lady is right to express concern. I too am concerned about people who are having to spend such a large proportion of their income on transport. I hope that we shall be able to look at that, and that in due course we shall see improvements in some areas.

[Mrs Main]

Will my right hon. Friend give way?

[Mr McLoughlin]

For the last time.

[Mrs Main]

One thing that has not been mentioned so far is the cost of parking. Many people feel that the cost of their rail journeys has been rising in a reasonable fashion, in the sense that the increases are predictable, but the cost of car parking at railway stations has leapt, and the time for off-peak parking has been pushed back to as late as four or five o’clock. The fact that the cost of parking at stations has not been addressed constitutes a flaw in the debate.

[Mr McLoughlin]

I am told that that is a matter for the rail companies, but I understand the concern about car parking, which, I believe, can be extremely expensive in certain areas.

The hon. Member for Garston and Halewood has asked specifically for an opportunity to address the cap on regulated fares, and the way in which train operators use what are known as flex fares, which the motion describes as “that strict limit”. As I said earlier, I do not believe that the current fares structure—which we inherited—is perfect, and that is why we are conducting a fares and ticketing review. The key issue today is the “flex” policy, which was introduced by the last Labour Government. The cap on regulated fares is implemented by train operators as an average across a “basket” of different fares. That flexibility allows some fares to be increased by up to 5% more than the average, provided that other price increases are kept below the average. It means that operators can manage demand more effectively and efficiently, which should achieve better value for money for fare payers and taxpayers overall. It also allows operators to keep fares in a logical structure and to address anomalies over time.

Let me stress again that when operators increase some fares by the maximum permitted, other fares must increase by much less or even be held flat to comply with the regulated average. As I have said, the system was introduced by the last Government.

[Heidi Alexander (Lewisham East) (Lab)]

Will the Secretary of State give way?

[Mr McLoughlin]

I will, for the last time.

[Heidi Alexander]

I congratulate the Secretary of State on his new post. One of the anomalies to which he has referred is the fact that fares in my constituency in south-east London are not fully integrated with the Transport for London price structure, and people pay more for a journey on the rail network than they would pay for a comparable journey on the TfL network. What are his views on that issue, and how does he plan to resolve it?

[Mr McLoughlin]

I look forward to reading the letter that I shall no doubt receive from the hon. Lady, and I will give a considered response then, as I will have had an opportunity to examine the background of these matters.

[Alison McGovern (Wirral South) (Lab)]

I welcome the new Secretary of State to his position. When he is familiarising himself with his new brief, may I ask him to take a look at the Wrexham to Bidston line? I raised that project with his predecessor on a number of occasions, and I think he will find it a fascinating subject.

[Mr McLoughlin]

Members will have plenty of opportunities to question me over the coming months, and after the hon. Lady has no doubt written to me about this line, I will perhaps have a little more to say about it—and I refer her to the very good line between Derby and Matlock.

We are building a modern railway network in Britain —one that plays its full part in connecting our communities, supporting our economy and safeguarding our environment. We are delivering this crucial work against the backdrop of an inherited debt and the most testing economic times for a generation. But investment by investment, upgrade by upgrade, project by project, we are making real and lasting progress. As we do, at the forefront of our thinking and the centre of our plans are the people and businesses that use, depend on and fund this country’s railways.

I am acutely aware of the concerns that passengers have about fares. That is why we are committed to ending above-inflation increases as soon as we can—once savings are achieved and the wider fiscal situation improves. It is also why we continue to keep the regulated caps under review. Every choice we make and every decision we take is about giving passengers the best railways and getting passengers the best deal. That is what the Government intend to do, and we are undertaking that task.