Oral Answers to Questions

Andy McDonald Excerpts

Thursday 19th April 2018 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

The Secretary of State is supporting the sale of Network Rail’s property assets. The Federation of Small Businesses says that this will put small companies out of business because the new private owner will rapidly rack up rents, which will restrict key developments in places such as Chesterfield. Does he not see that the sell-off will lose the railway valuable and vitally important income?

[Mr Speaker]

Minister.

--- Later in debate ---

[Mr Speaker]

Let us hear it again.

[Andy McDonald]

The Secretary of State is supporting the sale of Network Rail’s property assets. The Federation of Small Businesses says that this will put small companies out of business because the new private owner will rapidly rack up rents, which will restrict key developments in places such as Chesterfield. Does he not see that the sell-off will lose the railway valuable and vitally important income?

[Ms Ghani]

I thank the hon. Gentleman for repeating himself. The Secretary of State met the FSB yesterday and discussions on negotiations are ongoing.

[Andy McDonald]

In 2015, the DFT accepted Sir Peter Hendy’s plan to sell £1.8 billion of Network Rail property. These assets are now worth only £1 billion but generate £90 million of revenue each year. How can the Secretary of State still argue that this sell-off of the family silver makes sense? Is it not clear that his plan will cost Network Rail and British taxpayers dearly?

[Ms Ghani]

The Secretary of State will continue to realise assets when he can. We will then reinvest them in the railway network.

Laser Misuse (Vehicles) Bill [Lords]

Andy McDonald Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Wednesday 18th April 2018 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

Labour fully supports the Bill. Our concerns about it were addressed as it made its way through the other place. However, this is not the first occasion on which I have had a strong sense of déjà vu when discussing legislation introduced during the current Session. The issues dealt with in this Bill, along with those in another two Bills that have been presented since June last year, were first put before the House more than a year ago as part of the Vehicle Technology and Aviation Bill. The Prime Minister’s gamble in calling a snap election not only demolished her majority in this place, but had the knock-on effect of disrupting much of the business of Parliament. A host of important Bills, including the Vehicle Technology and Aviation Bill, were dropped ahead of the election.

Having expended a great deal of parliamentary time and effort debating issues like those contained in this Bill, we were surprised to note that there was no reference to the Vehicle Technology and Aviation Bill in the Queen’s Speech. Instead, the Government decided to take up even more parliamentary time by fragmenting the previously proposed legislation, splitting it between what became the Air Travel Organisers’ Licensing Act 2017 and the Automated and Electric Vehicles Bill. In fact, the Queen’s Speech made no mention of laser misuse, and it was only after Labour raised the issue with the Government during the debate on the Air Travel Organisers’ Licensing Bill that they introduced this Bill.

While Labour Members are happy to see these measures finally making their way into law, it is disappointing to note that 50% of the Government’s transport programme during the current Parliament has consisted of clauses taken from the Vehicle Technology and Aviation Bill, which should already have passed into law. Moreover, having introduced three separate Bills, the Government have yet to include a number of clauses from the Vehicle Technology and Aviation Bill that should be on the statute books by now. There has been no legislation on diversionary driving courses, and the clauses relating to air traffic services appear to have been axed as well.

All those facts only go to show that this minority Government are utterly out of ideas and cannot competently deliver those that they attempt to recycle. It is astonishing that they are willing to take up so many hours of Parliament’s time with business that should have been dealt with a year ago, when such a vast number of pressing transport issues require our immediate attention. For example, we have heard nothing from them about what action they will take to address the crisis in local bus services, the collapsing rail franchising system, the huge disparities in regional transport investment, or the air pollution that is causing 50,000 premature deaths each year. This Bill could have given them an opportunity to legislate on drones. There were 70 reported near misses with aircraft in 2016, and the number is rising year on year, but they simply have not addressed the problem at the required pace.

While it is disappointing to see the Government drag their feet on important problems relating to the transport sector, it is nevertheless a good thing that they are listening to the Labour party and legislating on laser misuse. Worryingly, we have seen a sharp rise in the misuse of lasers in recent years. According to figures released by the Civil Aviation Authority, between 2009 and 2016 there was a 70% increase in the number of incidents in which a laser was shone at an aircraft in the UK. The British Transport Police reported 578 laser incidents between April 2011 and November 2017, an average of 96 each year.

It is currently an offence only to direct or shine any light at any aircraft in flight so as to dazzle or distract the pilot of the aircraft, with a maximum penalty fine of £2,500. A suspect can be imprisoned for up to five years under the Aviation Security Act 1982 if intent to damage or endanger the safety of aircraft can be proved. The Bill will extend the offence to other vehicles, remove the cap on the amount that offenders can be fined and make it easier to prosecute offenders by removing the need to prove an intention to endanger a vehicle.

The Government have taken on board the points raised by my Labour colleagues in the other place about the definition of “laser beam” and the types of vehicles covered in the Bill, as well including a new clause making it an offence to shine a laser directly towards an air traffic control tower. The Opposition would like to put on record our gratitude for the work of our colleagues in the other place, particularly Lord Tunnicliffe, to make those significant improvements to the Bill. It is with pleasure that Labour can take responsibility for a piece of legislation that the Conservatives omitted from their programme for government and only introduced after heeding our calls. Indeed, when they did so, the work of Opposition spokespeople in the other place was required to get it into its current shape. If we were in government, we would have passed this legislation into law a year ago, and we would now be getting on with the business of implementing our policies to save local bus services, fix our railways, equalise the disparities in regional transport investment and address the air pollution crisis.

All the Conservative party has to offer are recycled bits of legislation and sticking plasters for an ailing transport system that is in need of major medical assistance. While I reiterate Labour’s full support for the Bill, the transport needs of the nation are many and varied, and, sadly, the totality of the Government’s legislative programme is utterly deficient in addressing them.

Oral Answers to Questions

Andy McDonald Excerpts

Thursday 1st March 2018 Commons Chamber

[Chris Grayling]

We certainly keep the franchise process under continual review to work to improve it but, as I said a moment ago, a public railway is not the panacea that everyone on the Opposition Benches claims it is. I intend to do two things: to take the right decisions for the taxpayer and the travelling public on that route, which is really important, and to act within the law, which is also important.

[Andy McDonald (Middlesbrough) (Lab)]

On Monday, the chief executive of Stagecoach said that he knew there was a problem with the east coast franchise’s finances just weeks after taking over the contract in March 2015, and that he had been talking to the Department about it for two years. Given that the Department was in dialogue with the operator about the difficulties, why did the Secretary of State not put together a contingency plan for the route? The Secretary of State has had two years to sort out this mess; is it not simply incredible that he still does not know what to do?

[Chris Grayling]

The shadow Secretary of State clearly cannot do his sums, because I have not been Secretary of State for two years. We have been planning—

[Andy McDonald]

From 2016 to 2018.

[Chris Grayling]

I have been Secretary of State for 18 months; the shadow Secretary of State cannot do his sums. Since I became aware that there was a problem on the east coast route, we have been doing careful contingency planning, so we have a long-term plan and short-term options for the route. We cannot put those short-term options into place until the appropriate moment arises at which they are necessary. We are prepared for when that moment arises and will deliver the alternatives.

[Andy McDonald]

Given that the taxpayer has already lost out on more than £2 billion of premium payments, can the Secretary of State advise the House as to whether the financial ramifications of the termination of the franchise are now completely known and concluded? If not, what sums of money are earmarked to settle any further system-gaming demands from Messrs Branson and Souter through litigation or arbitration?

[Chris Grayling]

Again, the Labour party cannot do its sums. We have no more written off £2 billion than Labour wrote off £1.4 billion when National Express collapsed. The reality is that the east coast is and always has been in recent times a profitable railway. Whatever happens, it will continue to generate a substantial return for the taxpayer. It is about time that Labour did its sums properly, rather than misrepresenting the reality.

Rail Update

Andy McDonald Excerpts

Monday 5th February 2018 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

I would like to thank the Secretary of State for advance sight of his statement, but as I was given it just 15 minutes before he started to speak, I am not sure that I need to be over- grateful. Given the content of his statement, I am not surprised at his reticence. Let us see whether the markets deliver the sort of share value boost that his last statement secured.

Today’s announcement is yet another monumental misjudgment to add to a growing list of miscalculations by this Secretary of State. It is increasingly clear that he does not care about taxpayers, rail passengers or the rail industry itself, but will do everything in his power to protect and support Virgin, Stagecoach and their ilk, and the failed franchise system.

Members on both sides of the House can be in no doubt: the bail-out culture at the Department for Transport is alive and well—it has never been better. Virgin-Stagecoach failed to deliver on its contract on the east coast route. No problem—the Government will step in and bail it out, kissing goodbye to the £2 billion that Virgin had previously agreed to pay. But, guess what? Let us just give both companies a new contract to run the west coast line as well.

Listening to the Secretary of State’s statement, I did not know whether to laugh or cry. His argument that a direct award to Virgin-Stagecoach for the west coast and east coast represents a good deal is truly laughable. The idea of more profits and less risk for those companies is an insult to Members and their constituents. What makes me want to weep is that he is giving yet more gifts to Richard Branson and Brian Souter. What is more, he is using our public money to fund his failure. Let us not forget that Virgin and Stagecoach are companies that extracted hundreds of millions of pounds in rigged compensation payments from taxpayers during the upgrade of the west coast main line between 2002 and 2006—£590 million to be precise. [Interruption.] Similar tactics are now being deployed on the east coast, as the companies blame Network Rail for their failure to deliver on their contract.

Virgin Group games the system in rail and Virgin games the system in health. It has done it before, and it is doing it again: Virgin Trains is a company that shakes the system down. The Secretary of State’s failure to stand up to Virgin and Stagecoach is a disgrace. He is supposed to protect the taxpayer interest, not to sacrifice it to Branson and Souter, yet he stands by this model. Companies are not bidding for franchises, which makes a mockery of competition, and his taxpayer bail-outs make a joke of train operating companies paying premiums to the Treasury. What does this Secretary of State do instead? He just gives train operating contracts without competition. Since 2012, there have been more contracts directly awarded than franchises let after competitions. Why? Because he is ideologically opposed to running the railways in the public sector. He just will not do it. He cannot do it, even when the clear majority of the public are in favour of bringing the railways into public ownership. His solution is more taxpayer support and ever higher fares for passengers.

The Secretary of State refused to answer my questions about these contracts in a debate in this House on 10 January. He does not do long-term thinking, only crisis management. Franchise failure should mean forfeit. If a private train company cannot deliver on the contract, it does not deserve the contract. That was what the Labour Government did in 2009 with the east coast line. This Government’s failure to grasp reality is costing passengers and taxpayers dear. That is why a Labour Government will bring in a railway for the people and businesses that it is intended to serve, and put a stop to this appalling, profiteering racket.

[Several hon. Members rose—]

--- Later in debate ---

[Chris Grayling]

As we were caught short by the speed of the urgent questions, I know that the hon. Gentleman did not have as much time as he might have wished to prepare, but I am not sure that he listened to a word I was saying. He talked about a bail-out culture, gifts and standing up to people, but I have just announced that we will terminate a contract and that we may bring the operation of this railway back into the system of operator of last resort, which is, if I recall correctly, what Labour did in 2009.

I intend to ensure that I do what offers the best value for the taxpayer and the best option for the passenger at a time when exciting things are happening on this railway. New trains arriving in the coming months will transform the journey for passengers on the route, and that is long overdue. In the next control period, there will be investment in different parts of the route in order to improve performance in places where it is desperately overdue. The future is promising for the passengers on this railway, as they will have a better travel experience in the months to come.

The hon. Gentleman talked about long-term thinking, which is precisely what the east coast partnership is about. It is about unifying track and train in a way that I believe the public of this country want, and people on the railway believe that this will lead to a more efficient railway. The more that we can reunite the day-to-day operation of the track and trains right across the network, the more reliable a railway we will have.

[Andy McDonald]

Nationalise it.

[Chris Grayling]

The hon. Gentleman says from a sedentary position, “Nationalise it” but this country has done that before. It was called British Rail and it became a national laughing stock. Whatever else we may do, I have no intention of leading our railway system back into the days of British Rail, when lines were closed, routes were axed and the system received a lack of investment year on year because it was competing with schools and hospitals for the capital available. I have no intention of recreating British Rail, although Labour may do. I have a strategy that involves bringing together track and train, a long-term vision of investment, expanding our network and new trains. That is what passengers want.

--- Later in debate ---

[Chris Grayling]

We are going to hear a lot today about the public versus private argument. What SNP Members, and indeed Labour Members, have not remembered is that if the investment has to come from the public sector, it competes with money for schools, hospitals and the armed forces. That means that, as happened in the days of British Rail, our rail network is starved of investment, and we saw the consequences. By contrast, the new trains that are shortly going to be arriving in Edinburgh Waverley and going up the east coast to Aberdeen are paid for by the private sector.

[Andy McDonald]

They are paid for by the customers!

[Chris Grayling]

Of course they are paid for by the customers. The private companies make the investment and they make the return on that investment because the passengers pay for fares. That is the way that business works. Perhaps Labour Members do not understand the way that business works. Customers buy something they want to buy. I am absolutely certain that customers want to travel in brand-new trains. That is long overdue on the east coast main line, where they have regularly failed to do so. However, there are clearly lessons to learn on this. That is why we have moved much more towards a quality basis for new franchises. I want an increased quality of service delivered to be the basis for the allocation of new franchises.

The hon. Member for Kilmarnock and Loudoun (Alan Brown) asked about the west coast main line direct award. As I said, it will run for between one and two years. It will finish as soon as possible. I want this up and running. We are going to issue the ITT for the west coast partnership very shortly.

The hon. Gentleman raised the issue of staffing. The private sector-run east coast main line is today employing more people than it did in the public sector. As somebody who believes passionately that we need more customer service staff on the railway rather than fewer, I think that is a good thing.

The hon. Gentleman asked again about the devolution of Network Rail. I simply reiterate that I think that the SNP Government have quite enough to do without going beyond the devolution recommendations that we have put in place.

As regards the travelcard, it is being issued by the industry, which is moving ahead quickly with preparations for it.

--- Later in debate ---

[Chris Grayling]

Absolutely, and indeed, that has already happened. I am absolutely clear that Virgin-Stagecoach will fulfil this contract to the letter.

[Andy McDonald]

What about the £2 billion?

[Chris Grayling]

The shadow Secretary of State has failed to understand what I keep saying, which is that this railway every year continues to generate a substantial contribution to the taxpayer, and that will continue right the way through until 2023 and beyond.

High Speed Rail (West Midlands - Crewe) Bill

Andy McDonald Excerpts

2nd reading: House of Commons & Allocation of time motion: House of Commons & Carry-over motion: House of Commons & Money resolution: House of Commons & 2nd reading & Allocation of time motion & Carry-over motion & Money resolution
Tuesday 30th January 2018 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

I am pleased to stand here today to support a project which was instigated by the last Labour Government. National infrastructure investment is too important to be left to the vagaries of the election cycle. It is to the Government’s credit that they have continued to back both HS2 and Crossrail since 2010. Labour has always maintained that HS2 must be built as a network rather than a standalone piece of infrastructure. It is this approach which will deliver the maximum economic benefits. Both main parties can agree that HS2 is about more than transport. High-speed rail is about unlocking the economic potential of the north and the midlands. It will drive a rebalancing of the UK economy by improving connectivity between the north and south.

[Michael Fabricant]

The hon. Gentleman talked about HS2 being an integrated network, but one of my criticisms of HS2 is that it is far from integrated. The original plan was for it to go direct down through the channel tunnel and into continental Europe and I can give other examples—I will probably will do so in my speech—but this is far from integrated: it is stand-alone, meets at Crewe and does not actually go into Birmingham New Street. Why is this?

--- Later in debate ---

[Andy McDonald]

I am grateful to the hon. Gentleman for that intervention, and it is key that HS2 integrates. We have just heard words from the Secretary of State about the need to ensure that it does connect with our northern cities, but we are yet to see those plans unfurl. We have heard about Transport for the North’s aspirations, but this cannot be a stand-alone project; it is essential that it links into our great towns and cities throughout the nation.

Linking the great cities of the north and midlands is equally important and will bring much-needed economic benefits to those regions. Labour supports the nearly 30,000 jobs the construction of HS2 will deliver and the huge uplift it will give to apprenticeships and training, particularly outside London. It is not too early to consider how we will retain and develop those skills in the future in other infrastructure projects both at home and abroad. I would be interested in any comments the Secretary of State has on this point, particularly with regard to Northern Powerhouse Rail and Crossrail.

I also make a plea that we must not repeat the catastrophe of the Carillion experience with apprentices. Apprentices in my constituency are being left flapping in the wind, not knowing whether they are going to be paid. We hear today that their employment will come to an end at the end of this month. It is a disgrace that £6.5 million of public money has gone into an apprenticeship programme that leaves our apprentices short of their qualifications and without employment. The Government should intervene now to guarantee that those apprentices will receive that assurance from this Government today.

[Chris Grayling]

I am grateful to the shadow Secretary of State for giving way, and he and I share that view. I can assure him that, on the HS2 project, the apprentices who were employed by Carillion are migrating to work for Kier and those employed by Carillion have been moved on to the project with the other two partners. So not only should there be no hiatus in the work taking place, but, more importantly, the people on those projects are moving to different companies involved in them. There are obviously some very difficult circumstances elsewhere as a consequence of the collapse of Carillion, but I have been very keen with this project to make sure we have the seamless transition we contracted for last summer, and I am delighted to see the apprentices move on in a way that enables them to carry on with their apprenticeships.

[Andy McDonald]

I am grateful for that reassurance in the context of these projects, but I am particularly concerned about these apprentices in the here-and-now; there are 100 out of the 1,400 who have been prejudiced in my community and we want to see this Government respond by coming to the table and making sure those young people have a future. It is difficult enough to encourage people into these industries in the first instance without leaving them high and dry, as has happened on this occasion.

I welcome the commitments contained in HS2’s environmental principles. It is imperative that environmental standards and air quality are at the forefront of the project. Many of the arguments about why we need HS2, and why we do not, have been well rehearsed in this House over many years: passenger rail numbers have doubled since 1995; rail freight has grown by two thirds over the same period; and the existing network has been operating at full capacity for years. No amount of timetable-tinkering can change this; I trust that all Members are in agreement about that.

Although it is important to maintain our vital road network, there is an urgent need to secure modal shift across transport: we cannot build our way out of congestion on our roads, and we must be watchful about the sustainability of domestic air travel. In addition, we face the prospect of the population of Britain reaching 70 million by the end of the decade. So the question is: how are we going to move our people around our nation? It is no exaggeration to say that the very economic and social livelihood of this country is at stake. Our capacity to move people by rail and bus is therefore crucial.

[Mr Robert Goodwill (Scarborough and Whitby) (Con)]

Given those circumstances and the pressure on the system, does the hon. Gentleman agree that the last thing this country needs is the nationalisation of our rail system?

[Andy McDonald]

I am grateful to the former Minister for his intervention. If he will be patient for just a few more minutes, I will happily address that point in full detail.

I was proud that Labour forced the Government to introduce much tougher reporting on HS2 spending through an amendment to the High Speed Rail (Preparation) Act 2013 before the previous Bill came to the House in 2014. I pay tribute to my predecessors, my hon. Friends the Members for Wakefield (Mary Creagh) and for Nottingham South (Lilian Greenwood), in that respect. We also amended that Bill to improve integration with existing transport networks and the specific reporting of the jobs and skills created by the project.

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

I do not want to digress too much, but this is all relevant. We only need an incident on the west coast main line for everything to stop, and that certainly needs to be looked at. Also, I have constituents who will not qualify for compensation as a result of this project.

[Andy McDonald]

One of the main points about this project is that it will allow us to build resilience into the network. That is not an either/or; this is not simply about building HS2. My hon. Friend is right say that we need to build greater resilience into our network. On the point about compensation arrangements, it has been noted on both sides of the House that we need to ensure that proper compensation is paid. These are really sensitive issues, and people should not be left wondering whether compensation arrangements will come forward. My hon. Friend is right about that as well.

I am keen to hear the Minister’s views on striking the right balance between HS2 services and freight on the parts of the network where high-speed trains will run on conventional tracks. HS2, the Department for Transport and Network Rail need to resolve the important concerns that are being expressed by freight operators. Elsewhere, there are significant questions to be answered about how the new high-speed railway will integrate with the existing rail network. During the Second Reading debate in 2014, the previous Secretary of State for Transport boasted that

“upgrading Britain’s rail infrastructure is a key part of this Government’s long-term economic plan”.—[Official Report, 28 April 2014; Vol. 579, c. 567.]

He also said:

“we will be electrifying more than 800 miles of line throughout the country”.—[Official Report, 28 April 2014; Vol. 579, c. 561.]

It is quite clear that the Government have broken those promises over the past four years. They made commitments on rail ahead of the 2015 general election, only to break them days later. The reality is that the last two Transport Secretaries have cut upgrades to rail infrastructure and cancelled the electrification of rail lines. Of course, HS2 is but one piece of the jigsaw. I am therefore concerned that if the other pieces are not right, the whole thing will not fit together properly.

The current Secretary of State for Transport came to the House in November to announce his strategic vision for rail. The problem was that his plan was neither strategic nor visionary. It was a smokescreen to cover up a blatant multibillion pound bail-out of the east coast main line franchise. It is clear to passengers and taxpayers that this Government are defending a broken franchising system. Under this Government, protecting private companies comes before the public interest. Giving Carillion a contract for HS2 last July while that company was imploding was an appalling decision, and the Minister’s legal justifications for that decision were risible. His bail-out of Stagecoach-Virgin on the east coast was yet another serious misjudgement in which his dogma won out over pragmatism and common sense.

[Mr Bob Seely (Isle of Wight) (Con)]

I think the hon. Gentleman has wandered into the wrong debate. We are talking about HS2, not about Carillion. Can we stick to the subject, please?

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. That is a matter for me, actually.

[Andy McDonald]

Thank you, Madam Deputy Speaker. The hon. Gentleman will find out what HS2 has to do with the east coast and west coast main lines if he can be patient just a little longer.

The Secretary of State’s promised east coast partnership between track and train by 2020 is unworkable and undeliverable. No one in the rail industry believes that it is actually going to happen. Another of his pet projects is the west coast project—perhaps the hon. Member for Isle of Wight (Mr Seely) will want to pay attention to this—which is going to be awarded later this year. The winner of that contract will run services on the west coast main line and oversee the introduction of HS2 services. The Government have a track record of accepting bids from the private sector that are either too high or too low, and the Department for Transport has proved unable to manage such projects. Given that the Secretary of State has been found wanting so often, what makes him think that his west coast partnership will work any better than his east coast partnership?

High Speed 2 will be the jewel in the crown of Britain’s rail network when it begins operations in the next decade. It will be a shining example of Britain’s capability and talent, and it will encapsulate our technological and engineering prowess. However, I can tell the Secretary of State that there will be uproar across the land, should this piece of the family silver be handed over to Virgin Trains, Stagecoach or others of their ilk. I can tell the House today that there will be no gift of HS2 to Richard Branson or Brian Souter under the next Labour Government. HS2 will be built with public money and it will stay in public ownership.

[Sir Patrick McLoughlin (Derbyshire Dales) (Con)]

I congratulate my right hon. Friend the Secretary of State on bringing forward this Bill. I also congratulate all those people in the Department for Transport and in HS2 who are working to finalise these proposals. It is a pleasure to follow the shadow Secretary of State, the hon. Member for Middlesbrough (Andy McDonald), although I think he slightly spoiled his speech by going off piste and talking about electrification. We will take no lessons from Labour on electrification, given its record between 1997 and 2010, during which time it electrified 10 miles of railway. I would like to say that that was a snail’s pace, but I think that a snail would have travelled further in 13 years than Labour did with its electrification.

[Andy McDonald]

The former Secretary of State seems to have totally forgotten the 67 miles of HS1 that were electrified then. Those 67 plus 10 miles add up to a lot more than this Government have ever electrified.

[Sir Patrick McLoughlin]

I think that HS1 was operating before Labour came into government.

Automated and Electric Vehicles Bill

Andy McDonald Excerpts

3rd reading: House of Commons & Programme motion: House of Commons & Report stage: House of Commons
Monday 29th January 2018 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

Mr Deputy Speaker, I do not know whether you remember Raymond Baxter and James Burke all those years ago on “Tomorrow’s World”, saying that vehicles would connect and talk to one another—you are too young, I am sure, but seemingly that day is dawning.

I thank the Government Front-Bench team for the spirit of co-operation in which they have handled the Bill. Had the right hon. Member for South Holland and The Deepings (Mr Hayes) been in his place, I would have thanked him and told him that if Carlsberg did legislation, they would probably do it this way. However, I cannot say that to him because he has gone for his dinner.

As these clauses were largely included in the Vehicle Technology and Aviation Bill, which was dropped following the Prime Minister’s decision to call a snap general election, they have been scrutinised in Committee in the Commons twice. I place on record my thanks to all those who have been involved so far in improving the legislation. The Transport Secretary is correct when he describes the potential for electric and automated vehicles to transform transport in the coming years. It is right that a Bill is brought forward to allow those technologies to be facilitated and encouraged.

It is necessary to address certain issues successfully, including questions of insurance and what powers are necessary for the development of charging networks, for the UK to stay ahead of the curve on transport. It is right to legislate to encourage research and innovation that will shape how we travel in future and create the highly skilled jobs that our economy needs, as well as tackling the environmental and climate change challenges that confront us. Sadly, road deaths are at a five-year high, but there is considerable potential for automated vehicles vastly to improve road safety, not just by avoiding the errors that lead to so many crashes, but by using the information gathered to aid the design of safer roads and infrastructure in future.

The UK is in the midst of an air pollution crisis that the Government have failed to address. Recent studies show that 50,000 deaths in the UK last year were attributable to air pollution. This is a higher proportion than in Germany, France, Spain and many other European countries. For that reason, I welcome the Government’s commitment to an electric charging infrastructure, as announced in the autumn Budget, and the continuation of limited subsidy schemes for ultra low emission vehicles. The UK is also in a strong position to become a world leader in the production of automated and electric vehicles and to enjoy the greater economic benefits that will flow therefrom, although we may have to cope with the new condition of range anxiety.

The Bill alone does not add up to the wider policy framework that is required for the UK to take advantage of the opportunities presented to us, but it is an important Bill, which we support. Labour wishes to continue to work constructively with the Government in pursuit of these objectives. Creating the insurance frameworks needed to allow automated vehicles on our roads is a necessary step but not itself sufficient. The Transport Secretary has announced that driverless cars will be in operation on UK roads by 2021. Although the Bill is needed if that is to be the case, it is the pace at which the technology develops that will determine whether that target is met.

It is disappointing that the Government chose not to support our amendment in Committee to require a consultation prior to devolving the definition criteria for automated vehicles, which we regard as an unaddressed issue with the Bill. Although road-ready, fully-automated vehicles are still some years away, there has been a significant increase in assistance systems and partial automation over recent years, and those advances are in operation currently. The Bill assumes a clear distinction, but it is not apparent that one exists, and it is important that the Government draw on the available expertise to avoid inaccurate or confusing definitions in the future.

We are also concerned that the Bill does not require the provision of charging points to be distributed across the country more evenly, but I welcome the Minister’s commitment to publishing the Government’s strategy by the end of March—I just hope that that is March of 2018, not of some future year. As my hon. Friend the Member for Kingston upon Hull East (Karl Turner) stated earlier, however, the Government have acknowledged the need to monitor closely how charge points are rolled out and the need to get a clear view of where the concentrations of charge points are and what needs to be done to fill in gaps that emerge.

To conclude, when the Bill is debated further in the other place, the noble Lords will in all likelihood look for greater clarity from the Government on their strategy for electric charging infrastructure and how they will ensure a fair geographical spread, so that the benefits of these technological developments can be felt across the country. If we are to secure the opportunities that these exciting technologies present, this is a necessary Bill, and we are happy to support it.

Oral Answers to Questions

Andy McDonald Excerpts

Thursday 18th January 2018 Commons Chamber

[Chris Grayling]

My right hon. Friend will be relieved to know that the demise of Carillion, a tragic event for this country and for corporate Britain, will none the less not affect the HS2 project. The existing contract is part of a three-company consortium, and the other two companies, Kier and Eiffage, are taking over responsibility for the project. The apprenticeships are being transferred, the staff are being transferred and the project will continue uninterrupted.

[Andy McDonald (Middlesbrough) (Lab)]

On 17 July last year, the day on which Carillion was confirmed in the HS2 contract, I asked the Secretary of State about the financial instability of the company. He declared himself to be confident that the expected results would be delivered. Given the unfolding events of the last few days, has he now reflected and does he now accept that he got it spectacularly wrong and that his judgment and confidence were disastrously misplaced?

[Chris Grayling]

I do not accept that at all. The hon. Gentleman referred specifically to the HS2 contract. At the time, I reviewed those carrying out the contracting very carefully, and I have carried out due diligence since. As I said a moment ago, the HS2 project will not be affected by this, even to the point, I am pleased to say, that the apprentices working with Carillion on the project are being transferred to one of the other two partners. The work will continue uninterrupted. There is no delay and there are no cost implications.

[Andy McDonald]

On Monday, The Times newspaper said:

“The transport secretary’s decision to award lucrative contracts to an ailing Carillion is only the latest worrying misjudgment to come to light.”

It highlighted his trip to Qatar on the day of the biggest rail fare hike in five years, the notorious £2 billion east coast bail-out and his dysfunctional dealings with trade unions in the private sector, saying that the Prime Minister

“needs to consider whether it is time that this transport secretary left the station.”

Has not The Times got it absolutely right?

[Chris Grayling]

The only station that I am going to be leaving is Euston station for a visit to the midlands this morning. There has been no £2 billion bail-out of Virgin Trains East Coast. The contracting with Carillion was actually not with Carillion, but with a consortium of companies that are equally responsible for delivering the contract and will do so. I am happy to stand here to defend the record of a Government that have done more for our transport system than has happened in decades. That is in sharp contrast with what the Labour party did over 13 years in government, which was very little indeed.

Rail Franchising

Andy McDonald Excerpts

Wednesday 10th January 2018 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

I beg to move,

That this House believes that rail franchising is failing to provide adequate services for passengers or value for money for taxpayers; notes that regulated rail fares have risen by 32 per cent since 2010 while planned investment has been cancelled; opposes the recent bail-out of Virgin Rail Group East Coast; and calls on the Government to run passengers’ services under public sector operation.

I welcome the hon. Members for Orpington (Joseph Johnson) and for Wealden (Ms Ghani) to their new ministerial positions and wish them success in their new posts. I also pay tribute to the right hon. Member for South Holland and The Deepings (Mr Hayes) for his 18 years of continuous Front-Bench service. He was a pleasure to work with, and I would like to think that we can continue the sort of relationship that we had in non-contentious areas, where the result was improved legislation. I also congratulate the Secretary of State for Transport on his superb stewardship of the Conservative party. There has never been a finer record: no elections lost; no major scandals; and membership maintained at around 70,000—not bad for 27 seconds’ work.

I am delighted that the Secretary of State is in the Chamber to provide answers to a number of questions that I and other Members have for him. Unfortunately, no Minister was available on 2 January to explain the highest fare increases in five years, so I hope that he will provide us with some clarity today. Sadly, the entire rail debate is characterised by a lack of candour and transparency from both the Government and some quarters of the rail industry.

[Paula Sherriff (Dewsbury) (Lab)]

Does my hon. Friend share my concern that my constituents who use Northern saw fare increases of nearly 5%—the biggest in the country—and that we are still having to use Pacer trains? They are virtually as old as me: 42 years old.

[Andy McDonald]

I agree entirely with my hon. Friend. It just adds insult to injury when such hikes in rail fares go alongside appalling services.

It is time that Secretary of State woke up from his state of denial. It is time for him to come clean and admit that he has made mistakes. No one is perfect, but he should acknowledge his failures, and take responsibility for the decisions he has made, the policies he has pursued and their consequences. I urge him to be entirely unambiguous with the House today. The Government’s defence of their rail franchising system is totally indefensible, and this is not the first time that the Government have been in the Chamber this week to defend the indefensible.

[Mrs Madeleine Moon (Bridgend) (Lab)]

In south Wales, First Great Western reduced and cancelled services over Christmas and new year—there was chaos—yet it has been handed a franchise extension. Is it not time we had performance-related franchises and performance-related franchise extensions, rather than franchises being extended automatically no matter what the service?

[Andy McDonald]

My hon. Friend makes a good point, and I will return to those themes.

The Government are unable to accept that the franchise model, which is demonstrably failing, is a betrayal of the public who plough billions of pounds of taxes into the railway. It is a betrayal of the passengers who face eye-watering fare rises year after year. It is a betrayal of the hundreds of thousands of dedicated and passionate people who have worked in the rail industry for decades.

[Huw Merriman (Bexhill and Battle) (Con)]

I thank the hon. Gentleman for his kindness to me just before Christmas. Will he confirm whether fare rises have been faster under this Government or the last Labour Government?

[Andy McDonald]

Labour’s position is that if we were in power, we would not raise fares by the retail prices index or by RPI plus 1. We would save each member of the travelling public £500 during this Parliament.

[Several hon. Members rose—]

[Andy McDonald]

I will make a little progress, but I will take interventions later.

In 2016, the Department for Transport set out that its aims and objectives for rail franchising were

“to encourage a flourishing, competitive passenger rail market which secures high-performing, value for money services for passengers and taxpayers whilst driving cost effectiveness.”

The Department has clearly failed to meet those objectives. The latest collapse of the east coast franchise, which was announced in November, makes a mockery of the Department’s 2016 aims. Virgin-Stagecoach did not deliver and defaulted on their contract, and the Secretary of State has given them a gift.

[Hilary Benn (Leeds Central) (Lab)]

Given that this is the third occasion in just over a decade that a private contractor has announced that it wishes to hand back the keys to the east coast franchise, was it not a fundamental mistake for the Government not to allow East Coast, which successfully ran the franchise for more than five and a half years and paid back £1 billion to the Treasury, to continue its good work? Instead, the Government ideologically said that anyone could bid to run the franchise except the state-owned company that had run it so successfully.

[Andy McDonald]

My right hon. Friend makes a perfect point. I have no doubt that that will be a consistent theme throughout this debate.

The Government should have followed Labour’s example. When the operator defaulted in 2009, Labour took the contract back into the public sector. If a company defaults, it does not deserve a contract. Taking a contract back into the public sector would mean that there is no reward for failure, and other companies in the industry would not expect the same treatment. In the light of what happened with the east coast franchise, what plans does the Secretary of State have to renegotiate the TransPennine Express, Northern and Greater Anglia franchises?

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

The hon. Gentleman makes a valid point. Is not the biggest danger of the Secretary of State’s decision that other franchisees might come looking for a handout?

[Andy McDonald]

Indeed. That point is entirely consistent with the issues I am putting before the House.

Labour would not have let Virgin-Stagecoach off the hook on the east coast franchise. To return to what my right hon. Friend the Member for Leeds Central (Hilary Benn) said, did the Secretary of State consider taking the east coast franchise into the public sector following the default—yes or no? Does the Secretary of State not worry that, because he refuses to use a public sector operator even as a last resort, struggling train companies now know he has no option but to bail them out in the event of a failure?

Such failures are not confined to the east coast franchise. Today’s National Audit Office report highlights a litany of errors in the Government’s planning and management of the Thameslink, Southern and Great Northern franchise. Those blunders have caused misery to millions of people, and it is the Government’s disastrous handling of the franchise that led to industrial action on the line.

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

Does my hon. Friend accept that this morning’s report was scathing about the dreadful performance of Northern rail? My constituents are not as dependent as I am on the east coast franchise to get up and down the country, but the local franchises are how ordinary people get to work.

[Andy McDonald]

My hon. Friend makes his point powerfully.

[The Secretary of State for Transport (Chris Grayling)]

I will not respond in detail until I make my speech, but it is important to put on record that this morning’s report had nothing to do with the Northern rail franchise. I hope the hon. Gentleman will confirm that to the House.

[Andy McDonald]

I will do that very thing. I will confirm that the damning report was about Thameslink, Southern and Great Northern, not Northern, and showed that that franchise has been appallingly managed.

[Gloria De Piero (Ashfield) (Lab)]

Rail companies could do more to make passengers’ lives easier. Many local stations, such as Langley Mill in my constituency, do not have a ticket machine, so people cannot collect pre-paid tickets. Should it not be a condition of any franchise that passengers travelling from such stations can use email proof, instead of their facing this “computer says no” attitude that we get from so many rail companies?

[Andy McDonald]

We do have to think about much more flexibility across our railway, as well as greater accessibility for people from not only every walk of life, but all different localities, as some facilities are not as they should be.

Some industry commentators have said that the Secretary of State accepted rail franchise bids that were excessive and unrealistic. Can he confirm that winning bids are accepted in the expectation that they will be paid in full? Does he anticipate that the premium payments on the South Western Railway, Greater Anglia, Northern and TransPennine Express franchises will be made in full? Several other franchises look vulnerable in the light of the east coast decision. Passenger growth is slowing across the railway amid weaker consumer confidence, rising fares and changing work patterns. Rail passenger usage has fallen for consecutive reporting periods, and that has included a stark decline in season ticket purchases, which are the core business of rail companies. The fact that passengers are being priced off the railway is threatening the sustainability of the network as a whole.

[Dr Rosena Allin-Khan (Tooting) (Lab)]

Since Southern rail fares went up in the new year, three quarters of rush-hour services between Balham and Victoria have not arrived on time. If the delays we have seen so far are replicated throughout the year, Balham commuters will waste a total of 30 hours stuck on delayed trains. Southern rail is not fit for purpose. Does my hon. Friend agree that it is time for action?

[Andy McDonald]

I could not agree more. It is fascinating that we still await the revelation of appendix 9 of the Chris Gibb report, which detailed the future of that franchise. We have not seen it. That report was commissioned by Southern, which set the terms and conditions. [Interruption.] The Secretary of State is muttering from a sedentary position, but that is the reality. Southern set out what that report should be about and it has not published the very kernel of that report, which was on the future of that service.

[Kate Green (Stretford and Urmston) (Lab)]

I congratulate my hon. Friend on the case he is making. He mentions the cost of season tickets. My constituents are also served by appalling services from Northern. It is hardly worth their investing in a season ticket, given that trains are often either cancelled or so crowded that they cannot get on to them. Does he agree?

[Andy McDonald]

I do agree. The great concern about all that is that it is not achieving the modal shift we all want. It brings people to the point where they say, “The railway is not for me. I may as well get back in my car.” That is the opposite of what we should be doing.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

My hon. Friend is making an excellent case. Does he agree that, given the widespread evidence of the lamentable failure of some of the rail companies—consumer dissatisfaction, price rises and so on—there is a strong case for developing models of ownership that involve the users of the railways, those who work on the railways and investors in the railways? Such a form of co-operative and mutual ownership may well operate effectively and efficiently, with enormous public support.

[Andy McDonald]

I am grateful to my hon. Friend for making that point. It is important that the voices of passengers and those who work in the railway industry are heard, because they are the people who not only use the service but are committed to making it work.

[Caroline Lucas (Brighton, Pavilion) (Green)]

My constituents in Brighton will certainly agree with the hon. Gentleman 100% when he criticises Govia Thameslink Railway/Southern; it is adding insult to injury to put prices up when the services that people in Brighton are getting are so awful. On the issue of cost, rail fares have gone up by 23% over the past 20 years and the cost of driving has gone down by 16%. Does the hon. Gentleman agree that privatisation is absolutely failing passengers, and that instead of lining shareholders’ pockets we should be investing in our railways?

--- Later in debate ---

[Andy McDonald]

I could not agree more. In fact, we have seen prices rise by 32% since 2010, which underlines the hon. Lady’s point.

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

The hon. Gentleman and I have enjoyed cordial exchanges on many issues, but I suspect this will not be one of them. The point has been made about rail fare increases under privatisation. I did a little research into fare increases under nationalised British Rail over the same length of time for which the private companies have operated. In 15 of 22 years there were above-inflation increases, and over that period rail fares were 60% higher after inflation was taken into account. Why would nationalisation automatically lead to lower fares?

[Andy McDonald]

I like to think that the hon. Gentleman and I can disagree with one another without being disagreeable. He has a good memory and is going back rather a long way. The Conservative party has been in power since 2010—eight years—and we are concerned today with the record of the current Government. We are not going back through all our yesterdays.

[Anna Soubry (Broxtowe) (Con)]

The hon. Gentleman is two years younger than I am, so he will well remember the state in which the railways used to be. Does he not agree that we have seen a terrific improvement in the quality of the trains, the service and the attitude of the staff? An excellent service has been developing; would he agree that that is because of privatisation? Would he further agree that investment in our railways is at a record high?

[Andy McDonald]

I regret that many passengers’ experiences do not match the right hon. Lady’s experience. The evidence is that people are dissatisfied with the services they receive throughout the country. I respectfully suggest to her that going back over things in the way she is doing is not helpful. Had British Rail received public investment at the rate at which the Treasury has poured investment into the private operators, we would have had a gold-standard railway in this country.

[Anna Soubry]

rose—

[Andy McDonald]

I really want to make progress because a lot of people want to speak.

All the factors I have described undermine the growth forecasts that are so central to the Government’s model and the undeliverable bid assumptions of operators. FirstGroup won the TPE—TransPennine Express—franchise in December 2015 based on revenues increasing by 12% a year. In one of his first acts in office, the Secretary of State awarded the Greater Anglia franchise to the Dutch state-owned rail company Abellio in August 2016. The deal commits the company to paying the Government £3.7 billion to run the line for nine years. That is more than the east coast franchise. Reports suggest that Abellio’s bid was £600 million more than the next bidder. Like the TPE and east coast bids, Abellio’s bid was based on double-digit annual revenue growth. The company’s boss described the £3.7 billion price tag as “scary”. Does the Secretary of State guarantee that the Treasury will receive the full premium payment of £3.7 billion from Abellio Greater Anglia by 2025—yes or no?

[Dan Carden (Liverpool, Walton) (Lab)]

My hon. Friend is making an excellent case. Is not one of the problems that these companies make such commitments and then set about destaffing and deskilling our railways to make more profit, so that they can pay back the Government?

[Andy McDonald]

The whole issue of overbidding and making promises that cannot be kept is a consistent characteristic of the modern rail environment.

If the Government’s rail franchising system cannot deliver competition and payments to the Treasury, what is the point of it? The Secretary of State will no doubt be able to give a clear and straightforward answer to that.

[Sir Patrick McLoughlin (Derbyshire Dales) (Con)]

rose—

[Andy McDonald]

As I allow an intervention for the last time, perhaps the former Secretary of State can give us some indication of the point of a franchising system that does not deliver the promised premiums.

[Sir Patrick McLoughlin]

Will the hon. Gentleman tell us, during the course of his speech, how franchising changed between 1997 and 2010, when it was defended continually by the previous Labour Government as the best way to see extra investment in the railways? While he is telling us that, will he also confirm that there are actually more people employed on the east coast main line than there were under the previous people operating that line? Will he welcome the fact that the Pacer trains, which were referred to earlier, will actually go as a result of the new Northern franchise, that the Secretary of State has brought in?

[Andy McDonald]

Let me take the last point first. The European Union dictates that persons with restricted mobility are not served by the Pacers. The time of the Pacers has been up for a long time, and I am glad to see the back of them. I am glad that plenty of people work on the railways, and delighted that the previous Labour Government went about making the railways safe, given the disaster that was Railtrack, which delivered us Potters Bar, Hatfield and Paddington. That was the legacy that the previous Labour Government inherited, and we turned our railways into the safest in Europe, so I am very proud of what we did.

Direct awards and franchise extensions in the rail industry have been overlooked in many of the rail debates. These are contracts that the Government cannot or will not refranchise, and which they are ideologically opposed to running in the public sector. The train companies name their price to the Government for running these hand-to-mouth contracts, which simply keep the trains running in the short term and provide no long-term benefits or investment.

The west coast route has operated on a series of direct awards since 2012, with reports of another extension beyond 2019. Another key inter-city franchise, Great Western, has been operating under a direct award since 2013, when the Government cancelled the franchise competition. Scandalously, Great Western may run as a direct award for 10 years until 2023. The Government cannot refranchise the rail operation because their management of Network Rail has been so poor and the Great Western electrification programme has been such a shambles.

I predict that there will be more direct awards and contract extensions to rail franchises announced by the Government. The east midlands franchise is already on an extension to 2019 and will probably get another one. I also predict that the Secretary of State will need to give Virgin and Stagecoach a direct award on the east coast because he will not be able to deliver on his east coast partnership by 2020. It is simply inconceivable that he will be able to establish a framework, gain regulatory support, put the idea out to tender, receive and evaluate bids, and award the contract within the timeframe he has set out. A direct award to VirginStagecoach on the east coast will allow the companies to continue to profit from the line while they invest even less.

Once again, the Secretary of State needs to be entirely candid with this House: does he, or does he not, anticipate giving Virgin-Stagecoach a direct award to run rail operations on the east coast while he sets out his east coast partnership? Can he confirm whether that will take place? If he does, can he tell the House how much less the value of premium payments to the Treasury would be under this arrangement than under the original franchise?

What is the Secretary of State’s solution to his failing franchising model, as competition dwindles and premiums to the Exchequer reduce? It is quite simple: more taxpayer and fare-payer support for train operating companies. The next franchises to come up are Southeastern and west coast. Under his new revenue support arrangements, taxpayers will top up revenues if growth targets are not met. What is the point of franchising if the operators do not take any risk? In return, the Government will want close financial monitoring of the operators. Do we really want civil servants in Marsham Street poring over train company balance sheets? Is there not enough DFT interference in the railway already?

Rail privatisation’s vested interests have spent more than 20 years trying to get franchising to work. Despite the Government changing and tweaking the system for them time after time, all they have done in return is to reveal ever more and new sorts of failure, while the public continue to suffer substandard services and ever-higher fares. Enough is enough. We need to change the system entirely.

--- Later in debate ---

[Chris Grayling]

I make no apologies for the huge investment programme in the Thameslink network, the massive expansion of London Bridge station, which has just been completed, and the introduction of brand-new 12-coach trains across the network. What I do apologise for is that we were not able to avoid the extraordinarily ill-judged actions of the trade unions, which caused massive trouble for passengers. The hon. Member for Middlesbrough talked about the Gibb report. Chris Gibb had a simple conclusion, which was that although there were problems on the network—that is why we are spending £300 million on improving it—by far the biggest disruptive factor was the trade unions.

Of course, we want rail staff to be paid fairly, but trade union leaders such as Mick Cash drive up ticket prices for hard-working people. The same unions that want CPI increases on fares want RPI—[Interruption.] The hon. Member for Middlesbrough should listen. The RMT guidance to their negotiators is that

“any attempt by an employer to link a pay award to CPI…must be refused.”

Mick Cash wants bigger rises for his members and lower rises for passengers. Where is the money coming from? It does not add up. Labour’s policies do not add up, and the unions’ policies do not add up.

Of course, you will remember, Madam Deputy Speaker, who pays the Labour party’s bills. Even the shadow Secretary of State has received financial contributions from the RMT. The Opposition are in the pockets of the trade unions, and that is simply not acceptable.

[Andy McDonald]

I know it has taken 100 years for the Conservative party to realise it, but we are the Labour and trade union movement. The Secretary of State needs to understand that. It is the cleanest money in politics—I would rather take from trade unions than from hedge fund managers and private health companies, as some who populate the Conservative Benches do.

[Chris Grayling]

The hon. Gentleman is bankrolled by the people who are inappropriately disrupting parts of the network and are politically driven. They disrupt the lives of passengers for political purposes. The Labour party should disown the unions and their current action. The hon. Gentleman’s conduct on this is not acceptable,

[Huw Merriman]

On my daily commute, as I walked through London Bridge station—as I know my right hon. Friend does—where there have been a lot of difficulties for me and my constituents, I noted that it is now an absolute temple to travel. We should talk positively about our rail system and not just knock it.

[Andy McDonald]

On a point of order, Madam Deputy Speaker. I do not know whether you heard what I did, but I think that I have been accused of unacceptable behaviour. I really think that needs to be clarified. I have tried to conduct myself with all civility and propriety, and what the Secretary of State said is regrettable. I seek your guidance on that point.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

The Secretary of State did use a phrase that included the words “not acceptable”. He might wish to repeat what he wanted to say in slightly different words, because the shadow Secretary of State has a point about the precise use of words in the Chamber.

--- Later in debate ---

[Chris Grayling]

No—forgive me, but I am going to explain this in detail.

Passenger numbers are rising on this railway; customer satisfaction is up; and the line is generating a healthy and growing operating surplus that is providing a much greater return to the taxpayer than when it was in the public sector. It is also worth saying that it is running more services and employing more staff. The money that the franchise pays to the Government is today 20% higher than it was under public ownership. But Virgin and Stagecoach got their numbers wrong. They have been losing money steadily, and have now lost the best part of £200 million in the past three years. Despite that, I am holding them to their full financial obligations, taking every last penny of the £165 million guarantee that we insisted on when they took on the franchise.

[Andy McDonald]

rose—

[Chris Grayling]

I am going to finish this point, and then I will take the hon. Gentleman’s intervention, if that is okay.

That is a huge sum of money for a British business with a market capitalisation of under £1 billion pounds. It is also one of the biggest bonds of its kind ever provided in the rail industry. But despite Labour’s claims, this is not a bail-out. There is no viable legal mechanism through which I can extract any more money from the company. My Department is preparing contingency plans as we do not believe that the franchise will be financially viable through to 2020. I clearly have a duty to do that for passengers. When we reach a conclusion that works, I will come back to this House and make a statement. However, I do plan to go ahead with the east coast partnership, as I indicated in my statement a month ago. People in this country do not understand the separation of track and train, and as part of our reforms we are bringing the two together, as Sir Roy McNulty recommended in his report. I now give way to the hon. Gentleman.

[Andy McDonald]

I am grateful to the Secretary of State. Can he make this clear? He is talking about the parent company guarantee, which will be paid. What about the premium payments from 2020 to 2023, which amount to £2 billion? Is the company going to pay those premiums, or not?

[Chris Grayling]

As I have just said, we are currently not convinced that the franchise will make it as far as 2020, so we will put in place alternative arrangements. The hon. Gentleman was clearly not listening to what I was saying. However, this railway will continue to deliver a substantial operating surplus—a premium to the taxpayer—whatever the situation. Whatever happens, this railway will continue to deliver large sums of money to the taxpayer.

--- Later in debate ---

[Mr Alan Campbell (Tynemouth) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

Question agreed to.

Resolved,

That this House believes that rail franchising is failing to provide adequate services for passengers or value for money for taxpayers; notes that regulated rail fares have risen by 32 per cent since 2010 while planned investment has been cancelled; opposes the recent bail-out of Virgin Rail Group East Coast; and calls on the Government to run passengers’ services under public sector operation.

[Andy McDonald]

On a point of order, Madam Deputy Speaker. The motion has been passed unanimously by the House, demonstrating that the rail franchising system has failed and that the railways should be run by the public sector. When can we expect a statement from the Secretary of State to outline his plans for implementing the will of the House?

[Madam Deputy Speaker (Dame Rosie Winterton)]

The hon. Gentleman is quite right to say that the House has agreed to the motion. The Leader of the House has said that, following such occasions, the relevant Secretary of State will return to the House over the next few weeks to indicate what action the Government propose to take as a result of the motion being passed.

Oral Answers to Questions

Andy McDonald Excerpts

Thursday 30th November 2017 Commons Chamber

[Chris Grayling]

If the hon. Gentleman wants to meet the Government to discuss the removal of the Barnett formula and the move towards needs-based allocation of funding across the piece for Scotland, I am sure that would be a very interesting discussion; but in this country over the past few years we have tended to follow the Barnett formula. Most recently, we have provided additional funding to Scotland through the allocations in the Budget. Money has been spent on capital investment in England and money is to be spent based on the Barnett formula in Scotland. That is the way we operate.

[Andy McDonald (Middlesbrough) (Lab)]

We learned yesterday that the east coast rail franchise will be terminated in 2020—three years early—potentially forfeiting billions of pounds in premiums due to the Treasury, yet the Secretary of State told the House that Stagecoach will meet in full the commitments it made to the Government as part of this contract. So, can he confirm that the full £3.3 billion due from Stagecoach-Virgin will be paid to the Treasury, in accordance with the terms of the original contract?

[Chris Grayling]

Every time a franchisee takes up a new contract it makes a parent company commitment to the Government. That commitment will be kept in full.

[Andy McDonald]

Can we get to the heart of this? Will the premiums of some £2 billion due under that contract covering the years 2020 to 2023 be paid? Will they be paid—yes or no?

[Chris Grayling]

Self-evidently, given my announcement yesterday that we would have the east coast partnership in place in 2020, there will be new arrangements in place in 2020. As I have said to the hon. Gentleman, every franchisee makes a parent company commitment before taking out the contract and we will hold that that commitment will be met in full.

--- Later in debate ---

[Chris Grayling]

We have finished the design of neither Crossrail 2 nor northern powerhouse rail. My focus right now is on the projects that are under way, including electrification across parts of the north of England and a £3 billion upgrade to the trans-Pennine routes. We are already seeing better investment in the north. When we see the final shape of Crossrail 2 and northern powerhouse rail, we will see what the answer to the hon. Lady’s question is.

[Andy McDonald (Middlesbrough) (Lab)]

On a point of order, Mr Speaker.

[Mr Speaker]

I will take the point of order as I understand it flows from questions, but it had better be a genuine point of order and it had better be extremely brief.

[Andy McDonald]

I am grateful to you, Mr Speaker. I seek your clarification. Not an hour ago, I raised the question of the £2 billion that was due from Stagecoach to the Treasury. The Secretary of State said yesterday:

“let us be absolutely clear for the House that as we bring the east coast franchise to a close and move to the new arrangements, no one will get any bail-out”.—[Official Report, 29 November 2017; Vol. 632, c. 344.]

He clarified that by also saying that every franchise makes a parent-company commitment before taking out a contract and will be held to that commitment, to be paid in full. That is £232 million—

[Mr Speaker]

Order. The hon. Gentleman must resume his seat. I am extremely grateful to him for his attempted point of order, but it is not a matter for the Chair.

[Andy McDonald]

rose—

[Mr Speaker]

Order. It is not a matter for the Chair. If he wishes to, the Secretary of State can respond, briefly. The truth is that the hon. Gentleman is dissatisfied with the position that the Government have taken. If he wishes to explore the matter further, which of course he can and, I dare say, will do, he can do so through questions, the use of the Order Paper or further debates, but he cannot do it any further now.

There is substantial pressure on time today, as a study of the Order Paper will demonstrate, but I thought the House would want urgently to express support for the victims of racism and bigotry and to denounce their purveyors.

Rail Update

Andy McDonald Excerpts

Wednesday 29th November 2017 Commons Chamber

[Andy McDonald (Middlesbrough) (Lab)]

I thank the Secretary of State for advance notice of his statement, the contents of which have already been well trailed in the media.

The Secretary of State and I can be in agreement on rail’s need for investment and new capacity, and I am delighted that he has picked up Labour’s manifesto commitment to reopen branch lines. The problem is that the current system and the structure of the railways do not lend themselves well to the receipt of new investment or the delivery of new capacity. The majority of the recent problems on the railway can be traced back to the planning for control period 5, when the Office of Rail and Road said that Network Rail had to make efficiency savings of 18%. The ORR got this wrong, and the railway has suffered the consequences.

We are where we are on rail, and I am afraid that the Secretary of State has, frankly, now run out of ideas for what to do with the railways, but Labour has a solution, which I will refer to in a moment. The Secretary of State proposes an alliance on the east coast line between track and train. This was done only a few years ago between Stagecoach and Network Rail on the south-west franchise, but Stagecoach pulled out because it was too expensive. Trains on the east coast may be labelled Virgin trains, but they are actually run by Stagecoach. What makes the Secretary of State think that this alliance with Stagecoach will be any different?

The Secretary of State says he will break up the GTR’s southern and great western franchises. GTR was always going to be broken up at the end of the contract in 2021, so this is not new. His calamitous oversight of the contract only adds to the urgent need to put the whole thing out of its misery for the sake of the passengers.

The Secretary of State says he will reopen lines. He announced the Oxford-Cambridge line a year ago. His new, privately funded line will operate with polluting diesel trains. What about the air quality? Labour supports reopening lines, but, without financial backing, the Secretary of State’s proposals mean nothing in reality. It is all well and good to reverse the Beeching cuts, but what about reversing the Grayling cuts to the great western, the midland mainline and northern railways? The Department’s website hails the reopening of the line

“from Blyth to Ashington in County Durham.”

If it is all right with him, I would prefer Blyth and Ashington to stay in Northumberland.

The Secretary of State’s proposals offer nothing for commuters on overcrowded trains who are facing a fare hike of 3.4% in January on top of the 27% rises since 2010. The truth is that the rail system is broken. No amount of rearranging the furniture will change this central fact. I regret that the Secretary of State cannot recognise or admit this.

Today’s announcement is a total smokescreen. We can put all this to one side; the real issue is that the east coast franchise has failed again and the taxpayer will have to bail it out. Markets do not lie, and the Stagecoach share price has risen by 12% this morning following the news that the Secretary of State has let it off the hook for hundreds of millions of pounds by ending the current franchise early. He has moved the goalposts to suit Stagecoach. He is tough on everyone except the private sector. Labour took the franchise into public ownership in 2009, and it should have stayed there. Conservative dogma put it back out to the market in 2015, and it has now failed again.

The Government’s proposals are more window dressing that will solve none of rail’s urgent problems. Only Labour has the vision and the courage to deliver the railway the public deserves. The public want public ownership of the railways, and the next Labour Government will deliver it.

[Chris Grayling]

Fortunately, this country will be waiting a long time for that to happen. What Labour Members really want is to take us back to the days of British Rail, but they have not explained to us how they would pay for all the new trains currently funded by the private sector, or how they would pay for longer trains and better services all around the country. What they do not tell us is that, with a publicly run railway, trains would have to compete for capital costs with hospitals and schools and we would just not get the investment we are currently getting in our railways. Going back to British Rail is simply no solution for the improvements this country desperately needs.

The hon. Gentleman asked a series of specific questions. What is different is what is happening within Network Rail. The devolution within Network Rail—more of a local focus, local decision making, local budgets—is absolutely crucial in making local partnerships possible. We are driving through that change right now, off the back of Nicola Shaw’s report on Network Rail, and it is the right thing to do for the future.

The hon. Gentleman talked about GTR, but I remind the House that the independent Gibb report showed that the GTR problems were substantially down to the actions of the hon. Gentleman’s friends in the unions. Such conduct was unacceptable, and the Labour party’s continuing support for the disruption that unions are causing to passengers on the railways is utterly unacceptable.

The hon. Gentleman asked a question about the Oxford-Cambridge railway line. I did actually give an update on that. Last year, I said we were going to do it. This year, I am saying that we are now ready to start work on that route in the next few months. This Conservative Government are delivering real improvements and real investment on the railways.

The hon. Gentleman also asked about the finance for reopening lines. He may have missed these announcements in the Budget, but I can assure him that there will be £2 billion more for investment in transport in our cities, and there will be £47 billion for investment in the railways over the next five years. We will, indeed, be funding investment in the expansion of the railways, because that is what is needed.

The hon. Gentleman asked a question about electrification. I say again that in a world where we have more flexible technology, I regard it as more of a priority to provide more services and more routes for passengers than to save one minute on the journey time to Sheffield and no minutes on the journey time to Swansea. I am doing what we need to do, which is to deliver better journeys, better journey times and new trains for passengers, which is what they want above all. They are not worried about how the trains are powered, but about whether they will have a nice new train that gets them to the right place, and that is what we are doing.

The hon. Gentleman raised a point about the Blyth-Ashington line. It is one of the projects I am looking at seriously. I think it has real potential to expand the investment we are already making in the Metro in Newcastle upon Tyne, and it is another example of this Government’s commitment to the north-east.

The hon. Gentleman asked what we are doing for commuters. All around the country, we and the private sector, together in partnership, are delivering new trains and longer trains to create more space for people who travel on our crowded railway lines each day.

On the hon. Gentleman’s last point, let us be absolutely clear for the House that as we bring the east coast franchise to a close and move to the new arrangements, no one will get any bail-out at all. It is absolutely clear that Stagecoach will meet in full the commitments it made to the Government as part of this contract, and that is what will happen.