Network Rail

Anne Main Excerpts

Thursday 2nd February 2012 Westminster Hall

[Mrs Anne Main (St Albans) (Con)]

It is a delight to serve under your chairmanship this afternoon, Mr Amess, for what I am sure will be a lively and engaging debate. I thank the Backbench Business Committee for providing the time and all colleagues who added their support to the proposal for the debate when it went before the Committee, in particular my hon. Friends the Members for Suffolk Coastal (Dr Coffey) and for Ipswich (Ben Gummer), the vice-chair of the all-party parliamentary rail group the hon. Member for Luton North (Kelvin Hopkins), the Chair of the Public Accounts Committee the right hon. Member for Barking (Margaret Hodge) and many others.

The debate is timely and much needed. Many colleagues have expressed concern that Network Rail has been failing on so many levels. It has failed to deliver a successful, well-run system that is value for money, transparent, accountable, open to scrutiny and fit for purpose. Network Rail has been subjected to serious criticisms in a recent Select Committee on Transport report and in the media. The White Paper expected in 2011 has been delayed, the McNulty report in 2011 raised major issues about Network Rail and I, too, have expressed concerns over failing performances on dozens of occasions in the House. As I said, the debate is topical and, indeed, overdue.

It is a simple premise that to deliver an efficient, mobile work force, we need a decent, well-run and affordable rail transport service. People of all ages expect a rail service fit for the 21st century. The travelling public are being asked to pay ever more for their rail fares, and we must ask serious questions about the services they are experiencing up and down the country. In my constituency of St Albans, passengers are heartily fed up, because commuters pay the highest fares in the country and routinely experience a dismal, erratic service with regular delays. In January 2010 the service was appalling, prompting me to call for an urgent question in the House. Without notice, overnight and at a stroke, the timetable was cut by 50% because the rail company could not deliver a full service schedule. Much of the problem was directly attributable to Network Rail which was leaving trains stranded south of the river and not investing in dealing with frozen rails and overruns. My constituents were angry, and it was a miserable time. Things have improved since, but they still receive a service that falls far short of what they deserve. Commuters tell me that, at a rail cost of 30p per mile, they are seriously considering going back to their cars, and who can blame them?

Sixty-four per cent. of delays to my service over the past year were directly attributable to Network Rail and its failings, with a massive impact on the passenger experience. According to recent data, the overall customer satisfaction on my First Capital Connect line, FCC, was the lowest in the country, including value for money, punctuality, sufficient room on trains, satisfaction with the stations and how the train operating companies, or TOCs, dealt with the delays. As I am sure many other right hon. and hon. Members present do, I monitor the rail service and its failings in my constituency, and I am in close contact with my train operator, FCC. I get updates, which do not always make good reading. Almost weekly, I get e-mails from FCC and from my constituents about signal failures and other problems associated with Network Rail once again causing severe delays to the line. The train operators are not without blame but it is impossible to improve a service substantially if Network Rail is at the root of so many delays and overruns—as I said, 64% in my case alone.

On a related issue, rail freight company HelioSlough is trying to cram a strategic rail freight terminal on to my green belt, in a highly contentious proposal. Numerous concerns were expressed about whether the east midlands line could cope and had the capacity. At the inquiry, my TOC asserted that the proposal would decimate passenger services; FCC illustrated its point with comprehensive data, showing that it was highly questionable whether the freight paths would truly be available, in particular after the implementation of the high-speed Thameslink project. FCC chose to attend the inquiry for several days to outline its engineering and logistical concerns, and its representatives were cross-examined by the inspector, who was extremely knowledgeable about rail. Network Rail, however, did not bother to send anyone to the inquiry or subject itself to any cross-examination of data, but just blithely asserted in a short letter—only one side of A4 paper, I think—that everything would be fine. The inspector said that he and indeed FCC must take those at Network Rail’s word for it—as “the experts”.

I wish to put on record that if the decision that currently rests with the Secretary of State is for a rail freight terminal to go ahead, the project will devastate my constituency with all the heavy good vehicles accessing the site through village roads. Network Rail did not even have the confidence to appear at the inquiry and to defend its views with the back-up of data, which I suspect would not have stood up to rigorous scrutiny or to the questioning of the inspector as experienced by my TOC. Network Rail presides over a shambolic railway, misses most of its targets for both passenger and freight and yet is still regarded as “the experts”. As the Member of Parliament for St Albans, I urge the Secretary of State, even at this late hour, to reject the unsubstantiated assertions of Network Rail on the project. They are not to be trusted. Network Rail has told me that, if enough paths for freight cannot be found, it will of course prioritise passenger services, so I should not worry. That would still leave St Albans with a massive road-to-road freight depot in my green belt, and my constituents deserve better from a body funded with taxpayers’ money.

We must ask whether there is a better way to run the railways. The debate has the simple title of “Network Rail”, and colleagues may focus on different aspects of Network Rail and its impact in their own constituencies. The areas of concern that the debate should cover, however, include costs, executive pay, the total lack of accountability, the role of the Office of Rail Regulation, and service failures and their impact on the TOCs. I hope we will then hear from the Minister about a way forward for our railways.

Network Rail accounts for 28% of the Department for Transport’s budget until 2013-14. Network Rail is a chimera, basking in the notion that it is a private company, but it is dependent on massive handouts from the British taxpayer. It was described by my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) in the Select Committee as

“neither fish nor fowl...neither a private business...nor…a public business.”

Network Rail has a financial indemnity in place, so its debt is entirely supported by the Government. As of 2009-10, that debt was £23.8 billion, and it is set to rise to £31.5 billion by 2013-14. Network Rail’s debts, however, do not appear on the Government’s balance sheet. Somehow, it is classified as a fully private company, a private firm simply backed by Government, but many would question that classification. It has no shareholders and pays no dividends, but it pays itself very well. The Government seem relaxed about that debt, and the Secretary of State for Transport said in July that it was a matter of “complete indifference” to the Government whether Network Rail’s debt came on to or off the Government’s balance sheet. The taxpayer might beg to differ.

The structure is highly questionable; it was, sadly, devised under the previous Government, and it has allowed a culture of high pay and large bonuses to prevail for many years. Network Rail is reliant on the public purse but lavish with executive remuneration. One has to ask why the previous Government did not choose to tackle the issue since it created the monster. Network Rail was apparently set up with no mechanism in place to control the level of financial rewards or bonuses, which is topical, because there was a question today for the Leader of the House on that very matter. The situation is a disgrace and should be rectified.

We must now look to the future and ask for changes to be made. If we are to be seen as a Government wishing to tackle fat cats, their bonuses and lavish pay in what I believe to be the public sector, Network Rail must come under scrutiny. Until this year, the chief executive of Network Rail was the highest paid public sector employee, earning over 10 times more than the Prime Minister. In 2009-10, Iain Coucher, the chief executive at the time, had a salary of £613,000, a bonus of £641,000 and a pension payment of £178,000. I believe that he was extremely overpaid, despite delivery of poor performance; I cannot think of a bigger reward for failure.

The new chief executive of Network Rail, David Higgins, receives, according to an article in the Evening Standard—it has been hard to track down the exact figure—a salary of £560,000. However, only three days after publicly apologising for the failings of Network Rail that contributed to the deaths of two teenagers, Mr Higgins and other top executives appear to be going to their board to ask for a six-figure bonus. For Mr Higgins alone, that will be £336,000. For 2010-11, board members were all receiving salaries above £300,000 and up to £440,000, with what are deemed incentives ranging from £62,000 to £91,000. In light of such poor—indeed, abysmal—performances, one may ask what those incentives were for.

Network Rail presides over a shambolic, poorly delivering system. Top executives appear to be comfortable in the knowledge that they will collect annual bonuses regardless of poor performance. Does the Minister think it appropriate, in light of their performance, that Network Rail should pay large bonuses to top executives? If not, what mechanisms can we put in place to stop that happening?

Given the amount of taxpayer support, it would be reasonable to assume that we could know how the money is being spent, whether we are getting value for money, what the project costs are and whether they are reasonable. However, Network Rail is currently not subject to the National Audit Office, freedom of information requests or even market forces. It has been asked whether it will endure such scrutiny. The new Network Rail chief executive, David Higgins, said that he would welcome freedom of information requests. However, he also said:

“That is a decision for Ministers, and I think it is on hold until after the value for money and the White Paper…it is not a decision of Network Rail, but it is a decision that the Government and Ministers need to make. If they…do it, I welcome it. I have operated under FOI for years and I don’t have any problem with it at all.”

I am so pleased to hear that. I hope that the Government are considering taking the decision to subject Network Rail to freedom of information requests if it is in their ownership to do so. Will the Minister tell us at the end of the this debate whether he intends that Network Rail will be subject to freedom of information requests?

[Sir Roger Gale (North Thanet) (Con)]

On that issue, when Network Rail fails a train operating company, it has to pay compensation to the train operating company. The train operating company does not pass that compensation on to the passengers who are in turn being failed. When we ask Network Rail for the figure, we are told that we cannot have it because it is in confidence. My hon. Friend is absolutely right in her request.

[Mrs Main]

I thank my hon. Friend for his intervention. The passengers are compensated to an extent, but it is a very limited form of compensation. Believe me: First Capital Connect was paying out tons of it as of 2010. As my hon. Friend will hear me go on to say, it is our money paying the fines. That is ridiculous. I hope that freedom of information requests will be allowed. It seems that that is within the Minister’s gift.

Network Rail is not audited by the National Audit Office. It is audited by PricewaterhouseCoopers, but that is simply to check whether the accounts are in order. It is not audited on the basis of value for money. The National Audit Office remarked that the Department’s

“understanding of the relationship between cost and value was weakest in rail”.

It also says that a

“lack of transparency on Network Rail’s costs is consistent with our past reports on the Department and the Office of Rail Regulation.”

That has been highlighted for a significant period; there is a long-standing concern about a lack of transparency on costs. Can the Minister tell us today whether we can expect Network Rail to be subject to auditing by the National Audit Office? I ask that because I would like clarification. The National Audit Office is saying that it cannot gain an understanding of the position because Network Rail’s own figures are vague. Will the Minister clarify that we can strengthen the role of the National Audit Office?

The Public Accounts Committee has been especially damning of Network Rail’s accountability. In a 2011 report, it said:

“Network Rail has no accountability to shareholders, nor does the National Audit Office have full access, so Network Rail is not directly accountable to Parliament.”

It went on to say that it

“unfortunately won’t be able to give a clear opinion on the whole-of-Government accounts

until Network Rail’s status changes. That could well be the crux of the debate: how we change the status of Network Rail. Does the Minister accept the need to change the status of Network Rail? Does he share the concerns of the Committee that Network Rail is not accountable to anyone, particularly its paymasters in Parliament?

The Office of Rail Regulation is not holding Network Rail to account in any meaningful way. Anyone who watched the “Panorama” documentary last month will have seen Cathryn Ross, director of railway markets and economics for ORR, giving her responses. She confirmed that ORR has to be given the information by Network Rail in order to regulate it. However, as we have seen with the National Audit Office, getting any detailed information out of Network Rail is well nigh impossible. When pressed, she appeared totally unable to detail in any meaningful way any scrutiny that had been carried out on behalf of the regulator. Does the Minister find it unsatisfactory that ORR must rely on information supplied by Network Rail in order to act?

Only this week, Network Rail has been found guilty of serious failings that led to the tragic deaths of two teenagers—Olivia Bazlinton and Charlotte Thompson. There were not only failings in health and safety, but suggestions of a cover-up within Network Rail at the highest levels, aimed at concealing its mistakes. The families said in the media that they felt “lied to”, so can we really rely on Network Rail to give accurate information to anyone, even ORR?

The rail regulator is looking to expand its role. Given its mixed record on regulating Network Rail alone, its expansion is highly questionable. Michael Roberts, chief executive of the Association of Train Operating Companies, said in December:

“Train companies recognise they need to be held to account but plans to expand the ORR’s role to include more oversight of operators must be rigorously tested. The regulator needs to continue focusing on doing a better job of holding Network Rail to account, particularly on performance and cost-efficiency, before taking on new responsibilities.”

The Public Accounts Committee said in relation to ORR’s performance that

“we do not believe that the Regulator exerted sufficient pressure on Network Rail to improve its efficiency, and that there is an absence of effective sanctions for under-performance in the system...We doubt whether the Regulator is able to exert sufficient pressure on Network Rail’s performance”.

It has also said:

“The Office of Rail Regulation does not have a grip on Network Rail’s efficiency and appeared remarkably relaxed about the continuing gap in performance between Network Rail and international comparators.”

Those are hugely damning observations; they are damning in so many different areas. They question the ability of ORR to deliver on any meaningful level. Should the Government be allowing ORR to expand its role when it so obviously cannot do the role that it already has? Does the Minster share those concerns? Will he consider ways to improve the rigour of ORR’s role?

Network Rail can be financially punished by ORR through fines. However, Network Rail is financially supported by the Government. As my hon. Friend the Member for North Thanet (Sir Roger Gale) pointed out, fines go to the Government from Network Rail, which receives Government money. That is a ludicrous circle. Highly paid executives are paying for failures with public money.

ORR can also impose enforcement orders on Network Rail if it misses its targets, which it does on numerous occasions. That may sound impressive, but it amounts to Network Rail having simply to suggest plans to meet targets. We have spoken about the current targets. There is already an admission that Network Rail is highly unlikely to meet the new targets. That is disgraceful. The organisation is a toothless tiger. That has to change.

The “members” of Network Rail, the stakeholders, are also meant to hold Network Rail to account, but they, too, rely on Network Rail’s own disclosure of the figures to do that. We keep coming back to the fact that no one can hold Network Rail to account unless Network Rail wishes to hang itself with its own figures. It simply chooses not to do so, or puts them in such a way that it is impossible for anyone to hold it to account.

The question that must be asked, and the real point of the debate, is this. What incentive is there for Network Rail to improve? I argue that, under the current system, there is none. Does the Minister believe that he can put in place mechanisms to oblige Network Rail to deliver significant improvements? I hope that today he will be able to outline some of those for us.

We have the highest track-access charges in Europe. Those costs are inevitably passed on to the travelling public. Sir Roy McNulty said in his report that running the rail network here was 30% more expensive than in comparable European countries. I admit that I do not know how that figure was arrived at, but I have not noticed anyone saying that it is inaccurate or giving a different figure. Does the Minister agree with the 30% figure, and what can his Department do to make Network Rail bring down its track access costs and other costs? On reading the details surrounding that figure, it could as easily be higher as well as lower.

The scale of the problem that faces Network Rail, which it recognises but chooses not to deal with, is illustrated by the fact that it employs 600 delay attribution staff. If anyone has talked to their own train operating company, they know how important it is to be able to attribute blame for a fault because it makes a difference as to who pays the bill. If the delay in operations is Network Rail’s fault, the fines are paid by Network Rail. If it is the fault of the train operating company, it goes on the performance data of the TOC and it has to pay the fine. As Members can imagine, the squabble can be pretty unedifying. Network Rail spends its entire time, and our taxpayers’ money, divvying up the blame and fee penalties among the train operating companies, and then using taxpayers’ money to pay the fines for any delays.

You could not make this up, Mr Amess. I am amazed that we have all decided to accept this appalling situation for such a long period of time. Network Rail has presided over a litany of high-profile failures. Some have resulted in criminal prosecutions. I do not wish to go into too much detail here, because the hon. Members representing those areas may be present in the Chamber. However, the Virgin train derailment near the Cumbrian village of Grayrigg was one such incident. Such failures are causing deaths and significant injuries, and Network Rail’s declining performance has put it in breach of its licence. Despite being “the experts”—as I said earlier, Network Rail’s expert opinion is heavily relied on—Network Rail has presided over a system in which rail freight delays are 32% worse than the end-of-target year. Long distance punctuality stands at 87%, which is well below the target of the Office of Rail Regulation. Delays have risen, which proves that the network has become less resilient to disruptions. That is important. Some workers have said to me, “I don’t want to lose my job, but I have serious concerns about the work that is being done by Network Rail on maintenance and oversight of engineers.” That is a serious issue. People within the industry feel that they must keep their mouths shut about the things that they can see not being done correctly. Network Rail does not give the travelling public any confidence that its rail service is as safe as it should be.

[George Freeman (Mid Norfolk) (Con)]

My hon. Friend is making a very powerful case, which many of us sympathise with; my constituents certainly will, too. She says that we need to consider new models. Does she agree that we should be really bold and radical in tackling this problem, which is a legacy of some of the mistakes of privatisation compounded massively by a botched renationalisation under the previous Government? In my own region of East Anglia, rail has a crucial role to play in driving a rebalanced economy, innovation and investment. Does she think it might be sensible for us to consider—possibly in areas such as East Anglia—putting track and train operating company back together, thereby creating a regional rail company that has full integration, a long-term franchise and the ability to invest and plan for future services?

[Mrs Main]

That is an extremely valuable contribution. This debate is not simply about reading out a list of failures and then going away and allowing the situation to continue. If we were to do that, we would be failing the public again and again. Indeed, some of those tragedies that have occurred may happen again somewhere else. We must be radical. I do not wish to take up too much time at the beginning of this debate saying what we should be doing. My hon. Friend is absolutely right though. There are innovative methods. One thought is to have 10 regional areas operating on a system of alliancing. That is a phrase that I had not heard before, but it means having a deeper and more meaningful relationship with the train operating companies. Such a system relies on companies having longer franchises. Many ideas should be considered. None the less, significant issues need to be tackled. We are left with a structure that is patently not fit for purpose. I would like us to say that we will not accept a tinkering around the edges with this. I do not want us to say, “We will just remove one chief executive and stick another one in.” If we do that, we are basically left with all the same people, in the same place, presiding over yet another set of failures. Radicalisation is the only way forward. I am sure that we will hear different suggestions from hon. Members today. We need to sweep out the Augean stables of Network Rail. There are no two ways about it; we are talking about not tinkering but a fundamental change.

I wish to give other colleagues a chance to speak. As I have said, the list is long and damning. Network Rail has been fined for so many project overruns. On “Panorama”, we heard about the major investment in Reading. It is impossible to find out what the project was supposed to cost in the first place to know how much it has overrun.

Chiltern Railways wanted to have a station built. Network Rail estimated the cost at £13.2 million. Chiltern managed to build it itself for £5.2 million. One has to ask how Network Rail carries out its costings. One has to ask whether there is money washing about in the organisation in what can only be described as a negligent way. There are people who should stand before the Government to justify how they are spending our money, because it seems to be highly questionable.

I want to give other colleagues a chance to speak. As I have said, the list is long and damning, and I am sure that Members will add to it. I hope that we will explore all of the issues, including the way forward, because we need a way forward. I look forward to hearing answers to some of the questions that I have posed to the Minister.

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

I congratulate the hon. Member for St Albans (Mrs Main) on securing this debate. She raises some extremely important issues. I know that the points that she has made will be repeated by other hon. Members who have similar experiences.

This debate takes place at an interesting time. Although we are focused on Network Rail, we are awaiting the Government’s proposals on the future of the whole rail system. Network Rail is an intrinsic part of that system; it has to enable the train operating companies to work and ensure that there is safety on the line and that trains are punctual. None the less, it cannot be considered entirely in isolation from the whole rail system. We must therefore look at how the train operating companies operate and at the role of the Department for Transport.

We must not forget that, over the past decade, rail has been a success story. More and more people use rail, which brings its own problems of overcrowding and how to address increased capacity. We want to encourage more freight on to rail. Again, that leads to discussions about how more capacity can be provided and whether that can be done without crowding out much-needed passenger services as well.

There can be no dispute over the fact that the rail system costs a lot more than it should. The McNulty report is the latest one to draw attention to that. It says that our rail system as a whole costs around 30% more than comparable European rail systems. Much—not all—of that can be attributed to Network Rail.

[Mrs Main]

The hon. Lady is absolutely right to expand that point. Not only is access more expensive, but the licences are more expensive for the train operating companies and they pass on the cost to the travelling public. Network Rail’s high costs mean that passengers are paying too much.

[Mrs Ellman]

I thank the hon. Lady for her comments. She is correct. However the service is organised, it is a public service and it has to be so run. Whatever money is in the system ends up costing the taxpayer or the fare payer. Over recent years, there has been a shift in who pays for using the train. I am talking about the shift from the taxpayer to the passenger. Whatever money is in that system eventually comes out in the cost of the ticket, which is causing so much concern at the moment.

Network Rail says that it is addressing the McNulty recommendations, looking at being more competitive and reorganising itself. It is far too soon to say whether that will be sufficient, or indeed whether it will address the most important issues that have been raised. Some action has been taken in relation to the train operating companies. There will be longer franchises. For example, the franchise for the west coast main line will be for a much longer period. That could be part of the solution, but we need to see the Government’s proposals and vision for the whole rail system before it can be considered.

The hon. Lady referred to this week’s court case when Network Rail admitted its liability for two tragic deaths in 2005, when Olivia Bazlinton, aged 14, and Charlotte Thompson, aged 13, were killed on a level crossing. It emerged only last year that Network Rail had had a risk report in 2002 recommending the installation of new gates that would lock automatically when a train approached. That in itself is bad enough, but it seems that the documents had been suppressed and not made available to the police previously. Network Rail has now admitted liability. It is being charged, and it has admitted guilt. Those tragic deaths should not have happened. They were terrible, as was the cover-up afterwards. I hope that in its statement now Network Rail is more open and that it will change to a new approach.

The Office of Rail Regulation strongly criticised Network Rail and is considering whether lack of punctuality and more late trains have been a breach of its licence. It has already raised safety issues, particularly the lack of adequate reporting of safety incidents on lines. Network Rail points to cable theft as a reason for delays, and that is a factor, but it is not the only one. Only last week, the Transport Committee published its report on cable theft on the railways, and said that Network Rail could do more to make such thefts more difficult, so it has some responsibility there.

The hon. Lady made many valid points about Network Rail’s accountability. However, I recall how Network Rail came to be set up. I remember clearly that it was preceded by the conventional private sector company, Railtrack, which went into administration. It collapsed after absorbing endless amounts of taxpayer’s money and paying out bonuses to its private shareholders while letting the nation down. Structure and ownership are relevant, and we must remember that the wholly private sector company did not deliver. We must consider how the present company operates and how it could operate better.

There has been much criticism about lack of accountability in Network Rail. It has a board of around 100 members, which is not a good way to secure accountability. Efforts have been made to change how it is organised to introduce more accountability. For example, the Co-operative party’s people’s rail campaign is trying to involve more members of the public and users of the service with a much smaller board to which Network Rail would have to answer. That is one option. Certainly, the way in which it operates now is not satisfactory and must be re-examined.

The next spending period is 2014 to 2019, and we will know in July what rail projects have been proposed or agreed for investment. There are long lists of necessary investment projects from different parts of the country, including the northern hub, which is badly needed, the electrification programme and many others. If we do not secure value for money from investment, we will not receive the maximum investment in rail. That is extremely important.

The Transport Committee invited the new chief executive of Network Rail, David Higgins, to the Committee when he was first appointed, and we asked him questions about value for money, accountability, safety and other matters. We intend to repeat that, and to recall him in the near future, when we will raise issues of accountability, value for money and how Network Rail invests in the public interest. We will certainly take note of the points made today by the hon. Lady and other hon. Members.

[Mrs Main]

I am extremely pleased that the Select Committee will call David Higgins back. During his “Panorama” interview last month, he said that he would release more figures and data by the summer to show Network Rail’s transparency. Is she aware of that, and will she be recalling him before or after that?

[Mrs Ellman]

A date has not yet been fixed, but all the issues will be taken into consideration. It is important that hon. Members recognise that, whatever an organisation’s structure, Select Committees perform an important role in trying to bring accountability to people who are in charge of public services. We have stated that we think that Network Rail should be subject to freedom of information requests. We will pursue matters of public concern and matters that hon. Members raise today and on other occasions, and we will do so to the best of our ability.

--- Later in debate ---

[Kelvin Hopkins]

It is not my experience. I have had many contacts with those who have worked in the rail industry over the past 15 years and before, and I have heard a stream of criticism from people fearful of being exposed because they would be victimised if their names leaked out. To illustrate that point, I deliberately forget their names, but I have heard a lot of very disturbing details.

I have a passionate interest in railways and have supported them since I serviced the TUC transport committee in the 1970s. I have been a rail commuter on Thameslink for 43 years, and have travelled through St Albans in that time. I have always believed that railways are the transport of the future, which was not the view of the Department for Transport until recently—quite unexpectedly as far as it is concerned, there has been an enormous surge in rail passengers in recent years. Despite higher fares and travel problems, people have chosen to use the railways, which confirms my view that they are the transport mode of the future. There has been much investment over the past 15 years, which has been expensive, but we need a lot more of it.

Privatisation has been a hugely expensive mistake. Indeed, a Department for Transport official was heard to say privately at the time that privatisation was intended to facilitate the decline of the railways. That was the Department’s view then. It was thought that the railways were a diminishing form of transport and that eventually we would all move to our cars. The great mistake, of course, was to divide the railways between Network Rail and the train operators—to separate track and train. No other country in Europe has chosen to privatise their railways. They have seen the mistake that we made, and the problems that that caused. There have been accidents and there are serious safety problems, even now, and of course there has been a massive increase in costs.

As my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), the Select Committee Chair, said, Railtrack was an appalling organisation. In the foyer of its headquarters it had an electronic indicator showing its share price. That is what it was concerned about—not serving the public, or safety. Eventually, of course, the previous Government were forced to abolish it and to come up with another solution. I understand that a private conversation took place in Downing street for several hours, between Stephen Byers, Tony Blair and the then Chancellor of the Exchequer. Tony Blair got bored after a certain time and walked out, saying “Well do what you have to do, but no nationalisation.” So they came up with the strange beast called Network Rail, which is neither nationalised nor privatised, and has no effective accountability at all. We have had not just privatisation but fragmentation—but that fragmentation was based on some economic theory, which was once explained to me by an economist. I said, “Costs were supposed to go down, but they went up massively.” “Yes,” he said, “our theory didn’t work.” Well, why do they not just reverse what they did and reintegrate and renationalise the railways?

There has been a massive increase in costs, in both public subsidy and fares, and, as Sir Roy McNulty concluded, at one point, our railways were up to 40% more expensive than continental railways. I have said in the Chamber, and to Sir Roy, whom I have met twice with my hon. Friend the Member for Hayes and Harlington (John McDonnell), that the big difference between continental railways and ours is that the continental ones are publicly owned and integrated, while ours are privately owned and fragmented. I do not think that he was listening to me, because he clearly had his card marked, “Whatever you do, no public ownership: find another solution.” One of the things that he has done, which I completely disagree with—the railway unions have made the point—is to consider staffing cuts. The staff on the front line have apparently been judged very efficient. They are not the problem, or the ones who cause the costs, but they are the ones who will have to pay the price, because in place of a challenge to what Network Rail does, there will be cuts to staff in stations at night.

Network Rail is a dysfunctional organisation. It is expensive and bloated, and is a law unto itself. I have met David Higgins a couple of times, and I have a high regard for him. He is a decent person, but he has taken over an organisation that is out of control. He has had great difficulty in penetrating that appalling organisation. Network Rail is a rogue organisation, and impenetrable. I have described it as an entrenched management mafia. I understand that within the organisation David Higgins suffers a degree of hostility, because every time he tries to change anything he is resisted. That is not just within the management structures; even at board level he suffers from those problems. It is down to the Government to back him up when he wants to do things, and to break the stranglehold of the corrupt management that has been there so long.

The vice-like grip of the old guard stems back to Railtrack days, and even though it was abolished some of the same people—and the same practices and culture—carried on. As I have said, I have had dozens of conversations over 15 years with staff and former staff, and they are all fearful of being whistleblowers, and I can understand why.

[Mrs Main]

The hon. Gentleman is making a valid point. Some people have said to me that Network Rail is just Railtrack by another name, but with a large bung from the Government.

[Kelvin Hopkins]

Indeed, and without any proper accountability. As the hon. Lady has said, there is no means to control it.

The bullying culture in the organisation was appalling. Anyone who stood out against, challenged or criticised it, or said that things could not be done, was sorted out by a head of human resources, who has, I think, recently been paid off with a substantial sum, rather than sacked. For years he was protected by senior management. On several occasions he sacked people and, when threatened with a tribunal, settled out of court, eventually. Just to pay off staff whom he had sacked cost many millions of pounds. Eventually he was paid off to go elsewhere. He was symbolic of a culture that was about control and bullying, and making sure that individuals looked after themselves within the organisation.

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[Priti Patel (Witham) (Con)]

Thank you for your forbearance, Mr Amess, as I had to remove myself from the debate earlier. I congratulate my hon. Friend the Member for St Albans (Mrs Main) on securing this debate. I will declare an interest, because I used to live near my hon. Friend’s constituency when I lived in Radlett, which is close to St Albans. When I first started my working career, I used to commute along the line that she referred to, so I know exactly how expensive it was then, as it is now, and I know how unreliable it has become. I am grateful to her for securing this debate today, because in my constituency in Witham and in the county of Essex we have many problems with Network Rail, as well as with our train operating companies, so I welcome the opportunity to discuss the prospect of reform and improvements in relationships with Network Rail. We have heard a vast range of different experiences of Network Rail’s entrenched attitudes and lack of accountability to consumers. I hope that we will see improvements in the next few years, particularly with the change in management at Network Rail.

From a constituency point of view, I am now focused on the new long-term post-2014 franchise agreement for Greater Anglia. That follows the two-year franchise that has just been secured by Abellio, my new train operating company, which will run from this month until 2014. The longer franchising agreement—I hope the Minister will look into it going forward—is of real significance, because we are looking for greater integration, whoever the operator is, and a good relationship with Network Rail. Frankly, the two have been separate for far too long, and there has not been enough accountability and co-operation. National Express had the Greater Anglia franchise until 31 January.

We want improved relationships, partly because commuters in Essex and in my constituency pay a lot of money. My constituents pay more than £4,000 a year for their season ticket into Liverpool street, and £5,000 if it includes zones one to six. The service was appalling under National Express, but we have had much wider issues and challenges because of Network Rail. Our train line goes into Liverpool Street, which means we also go through Stratford. The Minister will be aware that Stratford has been going through significant changes, with welcome improvements in the line over the past few years for the great Olympics, which will be coming to our great capital in the summer. However, my commuters have been disproportionately affected. All the commuters along the Greater Anglia line have been badly affected, and that has to be addressed.

Rail services in Essex, in my constituency and along the Greater Anglia line need improvement to cope with the increase in rail travel as Essex faces a significant growth in population. It is currently 1.4 million and is set to rise by more than 14% over the next 20 years, and yet there has been no investment in our rail infrastructure, in the tracks that go through Essex and Suffolk, all the way up to Norfolk. The Minister will be aware that MPs from along the line have come together to consider how we can work to secure long-term improvements in the relationship with Network Rail and our new franchise holder, and hopefully influence how we can get proper inward investment in our line.

It is fair to say that there are regular delays consistently across the line because of signalling problems, engineering works and congestion, particularly around Stratford and Liverpool Street, as I have already said. For my constituents, these journeys are nightmare journeys. Most of my constituents work in the City of London, so for them delays obviously have an economic effect in terms of their employment and what they contribute to our economy. We have severe issues with overcrowding, lack of seats and poor facilities. With the likes of National Express and Network Rail, the general customer satisfaction rating is abysmal, which is not sustainable. It must change and improve.

[Mrs Main]

Does my hon. Friend share my concern that High Speed 2 is being sold to the public on the grounds that people will be able to work on the train, which will be of benefit to the economy, and yet it sounds as though her constituents, like mine, regularly travel in cattle-truck conditions, and they certainly cannot work on the train? There could be an argument for putting the investment that is going into HS2 into improving our existing railways.

[Priti Patel]

I thank my hon. Friend for her intervention and for making very valid points. I am all for investment in our railways, which obviously comes at great cost to the public purse. I am also all for getting “bang for buck” for taxpayers—there is no doubt about that—but it seems somewhat disproportionate that we are spending a vast amount of money on one particular project when there are certain lines and services that need investment. They are crying out for investment right now.

In the south-east and in the eastern region of the country, we contribute a hell of a lot to the economy. Our commuters also pay a lot in rail fares and it is now incumbent upon the Government to listen to some of these points from across the wider rail network and to start securing some long-term and strategic investment because, as I say, our constituents contribute a lot to the economy.

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[Mr Binley]

We are on the other end of your line, mate, and I can tell you that the service is not as good as you argue. Otherwise, all my constituents would not be as up in arms and as dissatisfied as they are. My hon. Friend knows very well that we use quite a bit of the same line, and I do not believe that two towns so close together can have such differing views on the quality of rail transport in their area.

I turn to the problems specific to Northampton. The Government wish Northampton to be a growth area and have said that they want Northampton to build 56,000 extra houses by 2026, which will mean a population increase of 120,000—a 50% growth—yet where those people will work is a major question. Many of them will come from the south-east, especially London, thus alleviating the housing problems of that area. Consequently, commuting will become even more important. My guess is that there will be at least another 12,000 to 14,000 regular commuters on the link from Northampton through Milton Keynes down to Euston.

Commuting is becoming prohibitively expensive for the people of Northampton. As I have said, we will have 120,000 additional residents, at least 12,000 of whom will commute to London for work, yet the cost of an annual season ticket from Northampton to London is now £4,756, and a staggering £5,628 for those who need to go further on the underground. That does not take into account £815 in parking charges. All that is more than a quarter of the disposable income of a person on a £30,000 salary.

Many people will ask whether they can really afford to look to London to continue to provide them with employment. Many of them might even decide that it is not worth being employed at all, given the cost of commuting to a job in London. The major reason why people are moving to Northampton to fill the houses that I have talked about is that they cannot afford houses in London and the south-east. These people are the service workers of our great city. They provide vital services, but they are not highly paid. They do not work in the City, making millions on small money transactions—by small, I do not refer to volume, but to the difference between buying and selling. They are not those sort of people; they work in our restaurants, retail outlets and offices. Although £30,000 is a reasonably good salary in Northampton, if people have to pay a quarter of that to travel to their job, that is a pretty bad deal that needs to be looked at seriously.

Let me turn to the problem of the McNulty review. It seems that the Government for ever think that rail increases are a battle between the taxpayer and the consumer, but there is a third element: the service provider. McNulty was open about his concerns about the cost base of the rail providers and talked about prices being 30% more expensive per passenger kilometre than other rail systems in a comparative group. They ought to be out of business, for God’s sake! No business can operate effectively at a 30% higher cost base and expect its consumers to continue to support it. Usually, they would simply go to another supplier, but therein lies the problem.

[Mrs Main]

Does my hon. Friend agree that that is the real conundrum? How can it be regarded as a private company when no private company could possibly operate in such circumstances?

[Mr Binley]

Of course, that is right, but because Network Rail is a monopoly in some respects, it needs the Government and the regulator to be its friend and ensure that it operates competitively, but we know from McNulty that it does not. McNulty has also said that there is a subsidy of 31p per passenger kilometre at present, so there is 30% more cost and 31% subsidy. What would happen if those costs were reduced? In addition to the taxpayer and the consumer, there is a third factor in cost setting and cost payment—the train operators. Let a message go out loud and clear that they have a duty and a responsibility to care for their customers in a much more efficient way than at present.

I am concerned about Network Rail’s supply chains and the way in which it bids for jobs. When I was a managing director and wanted to get work done for my business, I would talk to a number of suppliers and ask, “What’s the best way of doing this? How do I achieve the most efficient answer for this job at the most efficient cost?” Are Members aware that Network Rail does not do that? It decides internally what it wants done and then goes to people to tender on the basis of its own decisions about how best to undertake the job. We have talked about the quality of middle management in Network Rail. No wonder that costs are so high when middle management is poor and does not even look for ways to be more efficient by talking to suppliers who know what they are doing in relation to a given task.

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[Dr Coffey]

The hon. Gentleman has more experience than me on those matters. Some interesting ideas are coming out today—I am sure that the Minister will take note of them—about building not just to spec, but being part of the design solution, and about other activities being constrained within a budget.

I should like to thank Network Rail, Suffolk county council and the Government for putting aside the money to ensure that we get the Beccles loop, which will reintroduce an hourly service all the way through to Lowestoft, as opposed to our only getting trains every two hours beyond a certain point. That improvement should be in by the end of this year.

Level crossings are a big challenge in my constituency. I respect the ambition of the hon. Member for Hayes and Harlington (John McDonnell) to see no level crossings at all, but I do not believe it is feasible. I live in a rural area with nine stations and 50 crossings, but many of those are bridges built a long time ago, back in Victorian times. Of the 27 level crossings in my constituency, only 11 have automated barriers. Eight have to be opened by hand. People drive up, get out of their car and walk to the gates, use the phone, open both gates, drive over, and then come back and close the gates. Those are the examples we could find; we have been doing a bit of research. I have used such a crossing and, as hon. Members can imagine, I have avoided using that route again.

In eight places there are just lights, with no barriers at all. Two of those are on A roads, one with 15,000 traffic movements per day. There have not been that many accidents, but I am not sure whether that is due to the design or people’s patience. It is such a crossing that I have been chasing Network Rail about—the one that will cost £1 million for installing two barriers—and I am delighted to say that I was told that it would be done by 2013. I am delighted that Network Rail has committed to doing that, but its challenge is to try to do that more cheaply. I want the response paper to contain something about how we are going to tackle some of those matters. The example that I have mentioned is not the only level crossing that is needed.

In a rural area, I would rather have routes than roads blocked off. If there were an insistence on there being no level crossings at all—just an underpass or bridge—quite a lot of mobility within rural areas would be compromised. It is about taking a risk-based approach and seeing whether we can do something about some of the crossings where people have to get in and out of their cars, and so on.

I welcome the change in who can bid for work, which will be piloted. I understand that Anglia will be part of that pilot. However, it is critical that there is transparency. I want Network Rail to report on how many projects are internal and external. Starting to show value for money and the percentage, or value, of work being done externally would be a useful barometer.

[Mrs Main]

My hon. Friend is making a powerful speech. When I was looking to research this debate—I did not want to get too involved—I was amazed, in respect of contract tendering, that Network Rail’s costs for a job seem to be padded out with all the worst-case scenarios and it comes up with a massive figure and adds a bit on top for good luck. If everybody operated like that, nobody would be awarded the tender. Network Rail would be forced to produce a better set of figures if others were allowed to tender as well.

[Dr Coffey]

My hon. Friend makes another important contribution. I worked at the BBC for a short while, so I recognise that contingency can be a big part of any project cost. I also recognise that things sometimes go wrong and that people have to react quickly. I mentioned earlier an analogy with the Environment Agency. Some works were done by the internal drainage board. Funnily enough, the framework contractor for the Environment Agency cost about three times as much as other contractors. We do not want to fall into the trap of—I had better use my words carefully—the establishment figures being the only ones that end up doing the work, because they are almost part of the same circle. I think that that is the best way of saying it.

I welcome the closer collaboration. Abellio will be involved. There is a challenge for the industry. Things are already happening as a result of the McNulty review, before the Government have published the Command Paper. I am delighted about that.

Other things are useful, too, including technology. My remarks at this point may answer some points raised by the hon. Member for Hayes and Harlington, who mentioned checking activity. I understand that things can be added to train roofs so that, instead of a visual check happening however often, a constant check can be made every time a train goes up and down a line. Simple ideas such as that one, which may cost a bit of capital—I get that—will build in some resilience. Instead of people being paid, frankly, to walk up and down—I am not saying that that should be got rid of entirely—such technology could be used to judge more intelligently the schedule of maintenance that needs to be done.

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[John Woodcock (Barrow and Furness) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I add my congratulations on securing the debate to the hon. Member for St Albans (Mrs Main) and her colleagues. I echo the words of the hon. Member for Suffolk Coastal (Dr Coffey) in that, while it is always a delight to face the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), we hope that the Minister of State, Department for Transport, the right hon. Member for Chipping Barnet (Mrs Villiers), has a speedy recovery, hastened by not watching the debate and getting some rest.

The debate has been good and has included a number of powerful and well-informed contributions. I particularly enjoyed the Punch and Judy performance between the hon. Members for Rugby (Mark Pawsey) and for Northampton South (Mr Binley). On this occasion, I will resist the temptation to make another contribution about High Speed 2, leaving for another day the thuds that can be heard from the upper room of a home in the constituency of the hon. Member for Rugby.

The debate has rightly had a repeated focus on the performance and accountability of Network Rail. As hon. Members have pointed out, the debate is particularly timely given that, shortly before Christmas, the Office of Rail Regulation said that it considered Network Rail to be in breach of its licence for reliability in the freight sector and likely to be in breach for long-distance passenger services. In both sectors, performance is declining at a worrying rate. End-of-year targets for 2011 were missed and ORR remains to be convinced that Network Rail is doing all that it can to improve reliability. A striking fact that should be re-emphasised is that Network Rail has already admitted that it will not meet its 2012 target for punctuality, and yet we learn that that organisation believes that this is the right moment to put forward a fresh reward scheme worth up to 500% of salary over five years.

To state the blindingly obvious, the reliability of train service leaves a lot to be desired in so many parts of the country. The statistics are clear. In 2011, more than one in 10 long-distance services was more than 10 minutes late. Such underperformance is frustrating for passengers, damaging to business and, potentially, a real and significant drag on overall economic performance in the country and the regions. We need a railway that performs better, not least because hard-pressed passengers are being asked to pay fares that have recently risen by up to 13%.

The figures on the causes of delay are clear. A more reliable railway will require better performance from Network Rail. When our constituents complain to us about a delayed journey, the train operator as the shop front for the railway system tends to get it in the neck. Many operators, indeed, need to up their game, but month on month, year on year, the majority of delays are the responsibility of Network Rail. In the most recent period for which figures are available, the organisation was responsible for 646,000 minutes-worth of delays to trains, representing 59% of the overall total.

No one is pretending or should imagine that there is an easy solution. Network Rail, or whatever organisation or structure might be put in its place, is charged with operating a complex, extensive rail network that has seen differing levels of investment over many decades. There is more demand for rail travel now than in any peacetime period since the 1920s. Yes, some of the delays ascribed to Network Rail are largely outside its immediate control. In particular, as mentioned in the debate, cable theft has risen fast up the agenda in recent months. To dwell a moment on that, we now know that rising global metal prices have triggered an unprecedented level of theft of the more valuable metals, from the railways as from electricity suppliers, communications providers and, most despicably, churches and memorials. The theft of even a short stretch of signalling cabling from the railway can lead to the shutting down of huge sections of the network for hours on end, as we and our constituents have seen, causing immense disruption. In the current financial year, passengers are on course to suffer almost 7,000 hours-worth of delays because of cable theft, which would be a record.

[Mrs Main]

The hon. Gentleman is making a powerful point. Such cases are deemed to involve force majeure, however, and something over which Network Rail has no control, unless it was derelict in its duty to police the railway line. As such, Network Rail would not be seen to be failing, but I believe that it is failing on things over which it has control.

[John Woodcock]

That is an interesting point. We should examine repeatedly how such incentive mechanisms work.

In the case of cable theft, increased action and a tougher regulatory system are needed to enable Network Rail to perform better. Of concern is that it took so many instances of main lines and major stations coming to a halt before the Government were spurred to what we hope is greater action. Even though Ministers now seem prepared to legislate for a ban on cash sales of scrap metal, at the moment their actions fall short of what is required to end the scourge of thefts. Cashless transactions alone may prove too easy to circumvent. We need a licensing system for scrap metal dealers, strengthened police powers to enter premises that they suspect of selling stolen metal and to close such premises down if necessary, and a requirement to show verifiable identification, recorded at the point of sale, for all transactions.

Ministers still have an opportunity to put more comprehensive measures in the Legal Aid, Sentencing and Punishment of Offenders Bill. They would have cross-party support in doing so. I am talking about measures that would genuinely put an end to the spiral of delay, disruption and extra cost being experienced by passengers and freight customers across the network. I hope that the Minister will outline whether he is prepared, from a transport point of view, to put pressure on his Home Office colleagues to go further on the matter.

There is a need for improved performance from Network Rail in areas over which unquestionably it has control. Those areas include the reliability of signalling systems and better management of planned shutdowns to limit overruns having an impact on the next day’s passenger services. Performance is highly variable across the network. Far more needs to be done to ensure that good practice is learnt from by all Network Rail regions.

There is real scope to improve performance by reforming the artificial barrier between track and train—one legacy of the botched privatisation of the railways. However, there remains real confusion about where the Government are heading on that. Originally, Ministers proposed handing over infrastructure to the private sector, raising questions about whether they had truly learnt the lessons of the Hatfield crash. Will the Minister make it clear whether they have abandoned those plans? In the absence of the much-delayed Command Paper, the confusion drags on, so will the Minister tell us when we can expect to see that Command Paper?

We also have concerns about something that has so far not been brought to the House but on which newspapers have been briefed, which is the Minister’s new idea about creating single management companies out of Network Rail and train operating companies, starting with a potential partnership with South West Trains. The Minister needs to say how a level playing field will be ensured when such franchises come up for renewal. How will other train operators, both passenger and freight, that use that part of the network fit into the alliance? How does the balance between a for-profit train operator and the not-for-profit Network Rail work in that context?

Hon. Members are right to focus on the need to improve efficiency. As part of that, we need to make procuring and building improvements more efficient without compromising safety. I have spoken to train operating companies, and a number of them have expressed concerns that having to use Network Rail to procure improvements to the non-safety-critical parts of the railway system, such as station buildings and car parks, significantly pushes up the costs of and delivery timeframes for those improvements. Will the Minister expand in his winding-up speech on plans either to allow TOCs to procure such works independently, or to ensure that Network Rail improves its processes?

A number of hon. Members raised, quite rightly, the issue of investment in various parts of the rail network. However, the way in which we currently manage investment in the railway system and, indeed, across the transport network needs to change. We need longer-term thinking that goes beyond artificial five-year horizons. We have a reasonable idea of where the pinchpoints in the system will be in decades to come, the capacity challenges and the emerging markets for new or faster services. We have had, for example, welcome albeit piecemeal announcements of funding for electrification. So far, that applies mainly to schemes developed by the previous Government. However, the five-year horizon of planning means that the Government are hindered from creating greater certainty about a rolling programme of electrification, which, at its best, could guard against the resources and skills employed by schemes such as the Great Western and north-west wiring schemes being lost at the end of those programmes rather than being moved to the next area, such as the midland main line or the Great Western route through to Swansea.

Labour is not calling for extra spending on rail in this comprehensive spending review period, but we do want the five-yearly assessment of what is affordable to be part of a longer plan for what is desirable and likely, so that industry can plan and British manufacturing can have the best chance of winning contracts.

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[Mrs Main]

I thank the Minister for his rather rushed response. I accept that he was under pressure of time. I look forward to seeing his written response to any other points that were raised. This has been a valuable and conciliatory debate. As my hon. Friend the Member for Northampton South (Mr Binley) said, it is not about a blame game; it is about ensuring that we have the railway service that our constituents deserve and that the country deserves for its prosperity and future.

We have the weird scenario of a private company supposedly supported by taxpayer’s money. I hope that we will end up with something better in future, but I am not sure what the eventual and, we hope, better child will be following privatisation, then full access to public funds and now the chimera that I described earlier. My hon. Friend the Member for Reading East (Mr Wilson) was very defensive about Network Rail and praised it, but he started his speech by saying that 60.4% of delay attributions were its direct responsibility. He was very kind to Network Rail, but he recognised that it has some things to answer for.

My hon. Friend the Member for Northampton South made a powerful speech. I understand his passion for HS2, but he made a powerful business case for things to be much better than they are. I think that all hon. Members agree with that.

I thank my hon. Friend the Member for Suffolk Coastal (Dr Coffey) for her incisive view, particularly of level crossings. My mind was boggling that someone might have to walk through them and shut the doors after them.

Hon. Members today have raised serious concerns about Network Rail. I was concerned when the Minister said that the Office of Rail Regulation has been expected to do more, given that the Public Accounts Committee said in 2011 that it doubted whether the regulator could exert sufficient pressure on Network Rail’s performance. The Minister is optimistic and I am sure that he will be sitting on its back and beating it up when necessary, but the public’s perception is that it is a toothless tiger. I suggest that he does not give it too long to get its house in order. If it is not delivering, something else must be put in its place quickly. We cannot expect Network Rail to carry on as it is.

It was apt that bonuses were referred to; they were also referred to in the House, and I gather that there is a statement on them today. It may not be possible to prevent the directors of Network Rail from receiving bonuses, but they could stand shoulder to shoulder and decline them. I suggest that, if they are arguing vociferously for a new structure that awards bonuses of 500% of their salaries, they think again after this debate and the Prime Minister’s statement, which I cannot anticipate, but I know the views of many colleagues in the House and those who supported the early-day motion. I also know that the public are disgusted by reward for failure. If Network Rail turns itself around within a short period, the directors could expect to apply for bonuses, but now is not the time, and they should stand shoulder to shoulder with the travelling public and decline bonuses. Although they can have them, they should say that they do not want them.

This debate has been valuable. I look forward to the White Paper, and I hope that we will see a way forward for our rail services in the future.

Question put and agreed to.