West Coast Main Line

Debate between Lord Watts and Rosie Cooper

Monday 17th September 2012 Westminster Hall

[Rosie Cooper]

I am glad that the hon. Gentleman is here and is able to contribute to the debate. His colleagues, I believe, are away on business.

The Transport Committee is considering this matter through the work of its Rail 2020 inquiry. Several hon. Members from Lancashire, who are currently attending a meeting with Ministers on employment matters in their constituencies, wish, with your permission, Mr Bone, to speak later in the debate.

More than 170,000 people put their name to an e-petition, which was started by Ross McKillop, calling on the Government to reconsider their decision on the west coast main line franchise. That huge number of signatures, which was collected over a short period of time, reflects strong feelings and shows that the subject deserves to be debated in the House.

On the west coast main line, we are talking about 31 million passenger journeys a year and a £5.5 billion contract that will last for 15 years—that is this Parliament and the two that follow it. Hon. Members from all parts of the House have called on Transport Ministers to give Members an opportunity to scrutinise in more detail the actual process through which the decision was made. In August, my hon. Friend the Member for Garston and Halewood (Maria Eagle) wrote to the then Secretary of State for Transport, asking her to make a statement to the House. This will be the first opportunity for Members from all parts of the House, apart from the Transport Committee, to ask questions of the Minister, to begin to scrutinise the decision and to put their views and those of their constituents directly to the Minister.

A considerable amount of press coverage and opinion seeks to make the issue one of FirstGroup versus Virgin. Personally, I do not care much about the name of the company that provides the service. My priority is to ensure that the final decision, taken by the Department for Transport, is the best deal for taxpayers and fare payers. I hope to get from the Minister today the guarantees and reassurances necessary to be satisfied that the decision-making process is robust, so that the right decision is made with taxpayers’ money.

Given the determined efforts of Transport Ministers to avoid answering questions on this franchise decision, I do not begin this debate from a position of resounding confidence. We are told over and over that the process is rigorous, detailed and fair. It is as if by repeating that mantra we will all believe it. Yet there have been many complaints that the process does not even deliver against its own objectives.

The basis of the judicial review is that the Department for Transport broke its own rules when evaluating the bids, and we need to get to the bottom of that. There are those who argue that the entire franchise bidding process is flawed, and driven solely by the promise of large sums of money no matter what the cost, and irrespective of the stated objectives.

[Mr Dave Watts (St Helens North) (Lab)]

Does my hon. Friend share my concern that the Department for Transport officials, who looked at the Virgin contract when it was let, underestimated the amount of money that would be made by Virgin? Given that there is that lack of credibility, how much credibility does she place on the assessment of the First bid?

[Rosie Cooper]

I was not a Member of this House when that decision was taken, so was not in a position rigorously to examine it. Overall, though, I do not have great confidence in the various projections of the Department.

To continue, let us take, for example, the objective to achieve sustainable value for money. That is a stated objective, yet the process encourages risky bids because companies know that if their bid is £250 million more than any other bid their competitors’ bids do not go forward for further evaluation. I have deep reservations about a system that does not attempt to answer why one bid is so much higher than all the rest, and then does not quantify the difference.

--- Later in debate ---

[Rosie Cooper]

I agree, and again my hon. Friend raises points that I will return to later in my remarks.

It is absolutely for sure that we are dealing with risk—risk in the assumptions and economic risk. However, the only bidder for the contract that does not seem to have put up a lot of money is the company that has been awarded the contract. Again, I will return to that point later.

Economic assumptions are central to franchise bids. Governments expect rail companies to predict GDP trends over the lifetime of a franchise. As the Government cannot manage to predict GDP over the short term, how can we have confidence that any bids based on long-term projections have credibility? If an economist can tell me that those projections are credible, I suggest that the Government employ that economist as the current lot of economists cannot manage to.

[Mr Watts]

Is not the point that the Department for Transport has a long record of getting everything wrong? It gets it wrong on roads, on airports and on rail. The only thing that it seems will protect the Minister is that some penalties will be imposed if the contract is not delivered in the way that his officials propose. Should not we be transparent and absolutely clear about how this contract was let, know how any penalties are going to work and be quite clear that there will be no payment by the taxpayer if things go wrong?

[Rosie Cooper]

I absolutely agree with those comments, and those points are central to why I asked the Backbench Business Committee to allow a debate on this subject today. It is clear that there should be an open and transparent process. Perhaps we should be at the point now of comparing bids.

Let me return to my train of thought. There are other anomalies. For instance, the Virgin bid offers £133 million more in the period of the franchise up to March 2020. After that point, FirstGroup says that it will pay £1.23 billion more between March 2020 and March 2026. It does so based on a forecast of huge growth in passenger numbers, which comes at a time when there is no planned investment and when there will be huge disruption from the High Speed 2 rail project. So I ask again: how is sustainability at the heart of this decision?

Besides the computer modelling, there is also the anonymised scoring system, which I hope would prioritise sustainable value for money over high-value promises.

--- Later in debate ---

[Mr Watts]

One of the problems that we see daily is that companies can go out of business and then start again under a new name. If First did that, could it not overcome that problem by reorganising itself, developing a new company and then bidding for future contracts? I do not see how we could legally stop it from doing so.

[Rosie Cooper]

I think that is a real option. I understand from the grapevine that First does not intend to brand the west coast main line “FirstGroup”, but that there is a great possibility that it will be called Horizon. We might be in that kind of territory; I am not sure.

If there is a failure to reach an agreement before 9 December, it would mean instituting a directly operated railway service on the west coast, matching the current system on the east coast. The Government’s own guidance says that 120 days are required to get that kind of operation in place, and here we are 90 days away from the end of the current west coast franchise. Will the Minister enlighten us on how that will be achieved to ensure the smooth transfer of services to the DOR, if necessary? There is much to consider and address: safety matters; employment and contracting issues; even the simple thing of setting up a website to sell tickets. What would be the associated costs of the DOR in the initial set-up and the monthly costs thereafter? Those costs would be incurred by the taxpayer because of the Government’s failure to handle the situation adequately.

We must consider the staff. Come 9 December, they will have no idea for whom they will be working—FirstGroup, the DOR, or perhaps even Virgin. As part of any transfer of a franchise, there is a responsibility for the incumbent to work with the new operator.