Open Access Rail Services

Alex Sobel Excerpts

Tuesday 10th July 2018 Westminster Hall

[Martin Vickers]

I thoroughly agree. My hon. Friend’s experience as a former Minister makes that a particularly relevant point.

We are currently experiencing record private investment in UK rail. In 2016-17, that investment totalled £925 million—the highest since records began. The vast majority—£767 million—was spent on rolling stock. Some of that went to Hull Trains.

Given the other demands on the Budget, the idea that more taxpayer investment would go towards the railways was a myth. I know the Opposition’s policy is to renationalise the railways, but those of us who remember the nationalised system know that, in fact, it spiralled down because of a lack of investment. The reality is that there are so many calls on Government investment that transport does not get what it deserves. If the Government have a choice between investing in the health service and improving the rail services to Cleethorpes, I rather suspect that the rail services to Cleethorpes would suffer.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

On that point, I am a Labour and Co-operative Member of Parliament, and there are proposals for the co-operatisation of the railways. An open access operator—Go-Op—is developing a route in the south-west. Diversifying rail ownership is a big priority for the Co-operative party and for me as a Member of Parliament. Does the hon. Gentleman agree that we need diversity of ownership in the system?

[Martin Vickers]

I am perfectly happy to have diversity of ownership—that is what the free market would most likely deliver. Sadly, the history of British Rail did nothing to encourage my enthusiasm for a nationalised system. Indeed, British Rail ended the direct service to Cleethorpes in 1992.

There has been record investment and record numbers of journeys in recent years. Passenger numbers fell under British Rail but, since privatisation in 1994, the numbers swelled to 1.65 billion in 2015—almost triple the low point of 1982. Although there have been clear failings by Virgin Trains, it is vital to look beyond the headlines. Thanks to the Transport Secretary’s efforts, rail efficiency has been improved, ensuring that passengers and taxpayers get maximum value. On average, 97% of every pound of passengers’ fares goes back into the railway, which is very welcome.

Since Virgin took over its franchise in 2015, it has contributed more to the taxpayer than when the service was publicly run. Refurbished trains, additional services and improved ticketed access are just a few of the benefits that passengers have experienced. Of course, Virgin is not blameless in the debacle, but it is not alone. Network Rail, the publicly owned element of the railways, failed to deliver the promised improvements on which Virgin based its final projections.

I have been reassured by the Transport Secretary’s commitment to a new approach from 2020, with the first regional public-private partnership on the route. The partnership will have one brand, one management team and one leader, which will ensure that it is transparent and accountable to both Parliament and passengers.

A privatised franchise system on the east coast is preferable to the publicly owned system that preceded it. It has also been improved dramatically by the advent of open access operators, which provide constant competition to drive up standards and outcomes for passengers. The main problem is that the rail industry has been reformed to an unsatisfactory halfway house between nationalisation and privatisation. The solution, contrary to what many in the Opposition would argue, is not to nationalise the whole system—the experience of British Rail shows where that will take us—but to push ahead with privatisation and extend the market by allowing open access on other lines which could benefit so greatly from it. The hard left so often tell us that true communism has not been tried, but in actual fact true competition has not been tried on our rail network.

Open access could be a logical component of the Prime Minister’s mission, which she set out at the party conference last year, saying of free markets that she was

“prepared to reform them when they don’t work.”

The rail service is a prime example of a market underperforming. The solution, rather than to take the market out of the picture altogether and reverse all the progress made over the past few decades, is to reform the market, taking on the monopolies so as to expand it and allow it to flourish.

Competition must extend beyond the bidding stage to avoid the winner being granted a complete monopoly. The message to existing franchise operators and bidders should be clear: expect competition in future.