Confidence in the Secretary of State for Transport

Alan Brown Excerpts

Tuesday 19th June 2018 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Obviously, I echo the sentiments expressed by the two Front-Bench spokespersons about the accident yesterday and the workers who helped to keep people safe.

Another week, and here we are having another transport debate or statement. I am a little unsure of the Labour party’s tactics in trying to shift the Transport Secretary from his position, because it seems to me that the longer he stays in post, the more incompetent he shows the UK Government to be—and they, unlike the franchises, have real competition. He finished by saying there was a lot of political point scoring and that we should all work together, but it would be best if he took on board some of the criticisms. Any criticisms made—or even valid observations—are dismissed out of hand as political point scoring, when they are not, especially given that the franchise system is on its knees.

We have seen time and again that the Secretary of State is blinkered and ideological. He is a hardcore Brexiteer with the mantra, “Everything will be just fine. We just need to get on with it”, as illustrated by his proclamation that there will be no border checks post-Brexit and that lorries, just like on the US-Canada border, will not need to be stopped and checked. I have pointed out several times that that is wrong, but I have never had an admission of wrongdoing from the Secretary of State, and that is part of the problem.

The Secretary of State’s ideological zeal is at its most visible when it comes to the railways—private sector equals good, nationalisation or public ownership equals bad and inefficient—yet, under the current set-up, state-owned railway companies from all over the world run franchises in the UK. The UK franchise system, based on the premise that public ownership is bad, is subsidising railways across the world. Chiltern Railways, CrossCountry, Northern, and Wales and Borders are run by Arriva, which is owned by Deutsche Bahn. Essex Thameside is run by Trenitalia UK, which is owned by the Italian state railway. Greater Anglia and ScotRail are run by Abellio, which is owned by NedRailways, and Abellio is also involved with the West Midlands franchise, along with the East Japan Railway Company. Southeastern, Thameslink, Southern and Great Northern are run by Govia, which includes Keolis, which is owned by the French state rail operator, SNCF. Keolis is also involved in TransPennine Express and will be part of the re-let Welsh franchise later this year.

Italian, French, German, Dutch, Hong Kong and Japanese state rail companies are running franchises in the UK. When I weigh this up, I start to wonder whether the UK franchising system should be classed as foreign aid—because that is what it seems like. Money is flowing out of the UK to these other countries. It illustrates perfectly the pig-headed attitude of the Secretary of State and Tory Back Benchers.

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

Is the hon. Gentleman aware that many British firms operate railways in other countries? For example, National Express has just won a contract to run some railways in Germany.

[Alan Brown]

That misses the point. The German state railway company can bid for its own work in Germany. The whole point is that the UK Government refuse point blank to allow UK companies to bid for the franchises.

As I have said time and again, when it comes to the merits of privatisation and franchising, the Transport Secretary wrongly connects cause and effect. He has always played up the increase in investment in the railways since privatisation, along with the subsequent increase in passenger numbers, as if all that had happened magically just because of the sell-off and break-up of British Rail.

We know that British Rail had been struggling and had poor rolling stock, and that much of it was outdated, but that was because of the constraints imposed on British Rail by the UK Government, who did not allow any borrowing or investment. Once the Major Government had sold it off, the franchising allowed private borrowing to be levered in—borrowing that could be recovered only through fares or a Government subsidy. The fact that the current Secretary still does not acknowledge that shows a lack of understanding or an ideological blind spot. The fact is that the original sell-off was the private finance initiative on tracks, and that remains the case to this day.

Another myth, which we have already heard today, is that somehow the taxpayer pays no money to the franchises. According to the recent library briefing on rail franchises, all but two received Government subsidies in 2016-17, amounting to £2,330 million in that year alone.

A further indication of the failure of the franchise system to which the Secretary of State still adheres is the fact that by 2020, 12 of 16 franchise allocations will be direct awards. Where are the innovation and competition when three quarters of the franchises are direct awards to the companies themselves?

The Secretary of State’s blinkered attitude also permeates the failed East Coast franchise. He more or less shrugs his shoulders and says “Stuff happens: some franchises fail.” The reality is that private investors and companies either make money or they walk away. It has been argued there has not been a £2 billion bail-out of Virgin Trains East Coast, but the fact is that VTEC has walked away with a £2 billion IOU to the Government in its back pocket. It has not had to pay the money back, so if the Government do not want to call that a bail-out, it must be called a write-off. The Government have not tried to chase up the money, and it has not reached the stage of being a bad debt. The Government have simply let VTEC off straight away. I only wish that the Department for Work and Pensions and Her Majesty’s Revenue and Customs would do the same when things go wrong for my constituents. Those bodies are relentless, so why should VTEC walk away owing £2 billion?

[Graham Stringer (Blackley and Broughton) (Lab)]

I agree with what the hon. Gentleman is saying. Does he agree with me that franchisees that walk away from a franchise should be banned from bidding for a significant period?

[Alan Brown]

Yes, I do. The Secretary of State says that there was a parent company guarantee of £165 million for VTEC, which is a lot of money, but if the parent company is picking up other money in franchises, including the direct award of the west coast main line, it is not actually losing that money. It should be penalised properly, and I agree with the hon. Gentleman that it should not be able to bid for other franchises. Its ability to bid for the east coast main line partnership has still not been ruled out.

The Secretary of State also justifies the predicament of the parent company by saying that it “got its sums wrong.” I remind him again that it is his Department that got its sums wrong when it carried out its due diligence and assessment. The Government are lucky that one of the other franchise bidders is not seeking redress from them, because they clearly got it wrong, and got the whole process wrong.

[Huw Merriman]

Will the hon. Gentleman bear in mind that private rail operators in Britain are paying money into the Exchequer, whereas in France, 20% of the running costs come from the Government? When it comes to sums, which other areas of public spending would he have cut in order to pay for the things that he is talking about?

[Alan Brown]

I do not think that the hon. Gentleman listened to the point that I made about the subsidy that is paid to the rail franchise companies. It is a circular process, which makes it more complicated and more expensive, because of the number of cost consultants involved, taking money from one direction and paying money in another direction, and then blaming Network Rail. All that money can then circulate, and there are still net subsidies for those companies, although they pay track rental fees.

As I have said before, Richard Branson came out fighting. He blamed Network Rail for the overruns, but we have heard that Network Rail was not really at fault. The Secretary of State should be more robust in attacking VTEC. Letting it walk away owing that money undermines his position.

In previous incarnations, the east coast main line service has proved that public ownership can work. When it was last in public ownership, it paid the track rental fees and made a nominal profit, which went straight to the taxpayer. That model can work, and it should be used again in future. The Secretary of State ought to consider that.

Also on this Transport Secretary’s watch has been the Southern rail shambles. He did not do enough to step in. When I highlighted some of Southern’s failings on another occasion, he intervened and said that he was not the Transport Secretary who had been responsible for the allocation of the franchise. That completely missed the point: he was simply saying, “It’s not my fault, guv.”

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Alan Brown]

I will, briefly, but I am pressed for time.

[Lloyd Russell-Moyle]

Does the hon. Gentleman not agree that the situation on Southern and GTR was so long-running that the Secretary of State should step in now, and that there should be not a review but an immediate revocation of the franchise, as happened with Connect Southeastern under Labour?

[Alan Brown]

I agree that the failed franchise should be addressed and immediate action taken. The Secretary of State has been too slow, and the ongoing review will take too long and kick everything into the long grass.

When Abellio took over the ScotRail franchise, there were teething problems, which made national news. Opposition politicians in Scotland were not slow in calling for the head of Humza Yusaf, the Transport Minister. However, he stepped in and agreed a detailed action plan with the Abellio-ScotRail franchise, which really turned things around. It was direct intervention that made the difference.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

More than 50% of the delays in Scotland are down to Network Rail, which the Secretary of State stubbornly refuses to devolve to Scotland. Does my hon. Friend agree that if he did that, it could make a big difference to rail travel in Scotland immediately?

[Alan Brown]

It could make a big difference to rail travel in Scotland, and it could also make a Treasury saving. The fact that the Secretary of State continues to refuse to do that defies logic.

We have also seen the railcard fiasco. The railcard has been put on hold because, apparently, no one wants to pay for it. Who would have thought the industry would not want to pay for a gimmick that the Government introduced in the Budget, when they said, “The industry will pay for it”? That is just another failure on the part of this Government.

GTR’s chief executive, Charles Horton, has resigned, Mark Carne and Network Rail’s chief financial officer are forgoing their bonuses, and we have seen plenty of other Government resignations. It is time for the Transport Secretary to consider his position, rather than awaiting the outcome of a review.

Commenting on delays in the Waverley station refurbishment, Ruth Davidson, the Scottish Tory leader, said:

“This cannot continue for much longer, and it’s not good enough for ministers to just shrug their shoulders and say they’re doing their best.”

Given the delays were the fault of Network Rail, will the Secretary of State do what the Scottish Tory leader thinks is correct, and what we think he should do?