Railways: East Coast Main Line

Baroness Sugg Excerpts

Tuesday 13th March 2018 Lords Chamber

[Lord Beith]

To ask Her Majesty’s Government what arrangements they propose for the continuation of train services on the East Coast mainline.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, the Government are currently reviewing two options for the continuation of services on the east coast. Our priority is the continued running of the line for passengers. The first option is to allow Stagecoach to continue operating the service under a very strictly designed short-term contract. The second is for the franchise to be directly operated by the Department for Transport through an operator of last resort. We will choose the best option that protects the interests of passengers and offers value for money.

[Lord Beith (LD)]

My Lords, the fact that we are on the third failed franchise is down to incompetent franchising, fanciful overbidding by operating companies and a failure of the publicly owned Network Rail to deliver the track and overhead improvements on which the bids were based. What is the plan now? Are there only two options or more than that—a rerun franchise competition, a new type of franchise combining track and train operation, a nationalised operator or a sweetheart deal for Stagecoach/Virgin to run the trains without taking the risks? When will we know?

[Baroness Sugg]

My Lords, we expect to make an announcement on the two options in the coming months. From 2020 there will be a new east coast partnership as part of our reform of track and train to ensure that they work together better to deliver the services that passengers need.

[Lord Cormack (Con)]

My Lords, my noble friend may know that Lincoln, which has an appalling service from London, has been faithfully promised five direct trains a day as from 2019. Can she give me a confident assurance that that promise will be kept?

[Baroness Sugg]

My Lords, we are in discussions with Stagecoach to ensure that the needs of passengers and taxpayers will be met in the short term while laying the foundations for the introduction of the east coast partnership in 2020. We expect to provide additional services between Lincoln and Harrogate, Bradford and London from May next year.

[Lord Beecham (Lab)]

My Lords, as a reluctant passenger on Virgin trains I refer to my interests—doing so, in this case, is almost as slow as the train service. Will the Minister look at the laughably misnamed TransPennine Express and the service it purports to offer between the north-east and the north-west. Will she also look at the need to radically improve the rail connection between the north-east and the north-west and not simply rely on some future date when maybe a new national train line will surface?

[Baroness Sugg]

My Lords, I will certainly look at that in more detail. We are working closely with Transport for the North to understand the priorities of the north and where best to invest. We are committed to improving journeys on the trans-Pennine route. We are bringing in state-of-the-art trains, longer carriages and more frequent services to give passengers the services they want. We are going further. We plan to spend around £3 billion to upgrade the key route between Manchester, Leeds and York to give passengers faster and more reliable journeys.

[Lord Palmer (CB)]

My Lords, does the Minister agree that reaching yet another impasse is very worrying for all of the staff who work on the east coast main line? They have now had about half a dozen different employers, and it is very demoralising for them.

[Baroness Sugg]

My Lords, of course I understand the position of the staff. It is important that they have confidence in their jobs, and that is why we are looking through two options for the continuation of services up to 2020, and why, from 2020, we will be introducing the new public/private partnership.

[Lord Shutt of Greetland (LD)]

My Lords, we are promised that on 20 May we will have the biggest timetable change in 10 or 15 years—this is a mere 67 days hence. I looked at the east coast website this morning, and there is no detail about this timetable. Is the change dependent on whoever gets the franchise, or will we have the timetable that Virgin Trains may have speculated it could run from 20 May?

[Baroness Sugg]

My Lords, the timetable is not dependent on the decision made between the two options. I understand there has been a delay to the timetable, for which I apologise. The operator and Network Rail are working through the options and are looking to publish it as soon as they possibly can.

[Lord Popat (Con)]

My Lords, will the Minister please tell us what will happen to the premium payments from future operators of the east coast franchise?

[Baroness Sugg]

My Lords, whichever option for running the franchise to 2020 is chosen, the Government will continue to receive premium payments. As I have said, from 2020 there will be a new public/private partnership on the east coast. That will be subject to a competitive process and will include appropriate contributions paid by the private partner to the Government. The Government will continue to receive premium payments but I am afraid I am not able to give an exact figure at this time. It is important to reiterate that this is a successful and profitable line, and it will continue to deliver revenue to the Government.

[Lord Snape (Lab)]

My Lords, does the Minister accept any responsibility for this latest farce on the east coast main line? Does she not think that accepting an outrageous bid, which suggested an 8% growth in passengers every year of the franchise, was ridiculous to start with? Bearing in mind that the Treasury has frozen fuel duty for coming up for eight years, while insisting that rail fares go up in accordance with the RPI, does the Minister not feel that the Government’s so-called green policy is rather shot to pieces?

[Baroness Sugg]

My Lords, of course there were some errors in the granting of this franchise, and the suggestion concerning passenger numbers was indeed incorrect. We have learned some lessons and introduced new measures to deter overbidding, and have improved our financial modelling and stress testing. With this added testing, the department can forecast bids which are likely to default and exclude them in the future. On fares, the Secretary of State for Transport has underlined our aspiration to move from RPI to CPI but we must manage this transition properly and take into account staff costs, which are a third of operating costs.

[Baroness McIntosh of Pickering (Con)]

Will the Minister join me in congratulating the east coast operator on taking brand new trains into service in 2019? These are built locally to a very high specification, and will reduce the journey time to London considerably.

[Baroness Sugg]

My Lords, I certainly join my noble friend in congratulating east coast on this, which again will not be affected by the decision on who is to run the franchise. As my noble friend has said, the Azuma trains are due to start being introduced on the east coast network from the end of this year, and I am sure that passengers will enjoy the benefits.

[Lord Foulkes of Cumnock (Lab)]

My Lords, I too am one of the passengers who the Minister referred to in her first Answer. I have travelled on this line when it was run by GNER, now by Virgin, and in between when it was publicly owned. That period produced by far the best service. Would it not be much quicker, cheaper and better for the Government to decide now that the service should continue as a publicly owned, efficient railway?

[Baroness Sugg]

My Lords, I am afraid that I have to disagree with the noble Lord. We are currently going through the process of analysing which is the best option for passengers going forward. On his point about the service being better under DOR, I am afraid that we received 20% more income when it was run as a franchise, with higher satisfaction rates.