East Coast Main Line Franchise

Bob Stewart Excerpts

Thursday 20th June 2013 Commons Chamber

[Grahame M. Morris (Easington) (Lab)]

I congratulate those who managed to secure a debate that is very timely, given some of the announcements that have been made lately. I also thank the Backbench Business Committee for allowing us time to discuss this important issue.

The Government now have yet another opportunity to listen to the overwhelming majority of the British public, including people on both sides of the political spectrum. I think that the logic of the arguments for allowing the east coast main line to remain in public hands is powerful. The Minister likes to call me a dinosaur for believing that public services should be run for the benefit and in the interests of the public. [Interruption.] Members will see, if they check the record, that the Minister called me a dinosaur during a debate in Westminster Hall.

I support the renationalisation of the railways, especially when we see Directly Operated Railways delivering a better service and returning more money to the taxpayer than the private sector—which, let us not forget, has failed to deliver twice on the east coast main line. If that makes me a dinosaur, so be it. However, I think that we should look at the recent polling evidence. The average finding is that 70% of the public regularly support calls for the railways to be run publicly, although some polls produce larger percentages. I think that those people would be offended by the contempt and, indeed, total disregard that the Minister and his party have shown for their views and the concern that they have expressed about the failure of the privatised rail system. [Interruption.] It is certainly a failure when compared with the success that the publicly run public service operator has been able to deliver on the east coast main line. If the Minister will bear with me, I shall explain shortly why I think that the system has been a failure, not least on grounds of price.

As other Members have already pointed out today, Directly Operated Railways has returned £640 million to the Treasury in premium payments—I believe that £40 million of that has been invested in improving the service—and it is estimated that it will have paid back £800 million in premiums by April 2014. That is a tremendous success story, which should be noted by Government Members who malign the performance of public industries. Directly Operated Railways also receives the lowest net subsidy: 1%, compared with an industry average of 32%. We should not forget that a shining example of privatisation cost the public purse £4 billion a year in subsidy.

Let us consider the performance of National Express, the failing private operator. It returned only £370 million in premium payments before turning its back on the franchise, leaving the taxpayer to face not only the shortfall referred to by my hon. Friend the Member for Blyth Valley (Mr Campbell), but the disruption that it had caused. Incredibly, despite National Express having failed to deliver on its commitments, the Government will not stop it or other failed operators bidding for the rail franchise, should they decide to go ahead. In a written answer to my good and hon. Friend the Member for Islington North (Jeremy Corbyn), the Minister confirmed:

“National Express and its subsidiaries are permitted to submit for the pre-qualification process (PQQ) to run passenger rail services in all franchise competitions including the East Coast Main Line.”—[Official Report, 3 June 2013; Vol. 563, c. 970W.]

That is incredible.

[Bob Stewart (Beckenham) (Con)]

If the company is permitted to bid, surely its past record will be taken into account? Is that not the way it will work?

[Grahame M. Morris]

I suspect the Minister may be able to clarify the criteria, but judging by the answer he gave my hon. Friend the Member for Islington North, I suspect that will not be the case. Past performance does not seem to be an impediment, although perhaps it should be—and perhaps the Minister will take more notice of such a suggestion from his own side.

Whether in the public or private sector, companies that fail to deliver on their commitments or promises to the taxpayer should not be allowed to take over franchises that they have shown they are not competent to run. It is not that National Express failed on one franchise and is bidding for another; it has already failed to deliver on the east coast line.

The public understandably have concerns about the Government position in relation to this matter, and they must not reward failure. If the Minister goes ahead with the privatisation, how will he guarantee that any future operator awarded the east coast main line franchise will be able to fulfil its contract, and what assurances can he provide that the taxpayer will see a similar rate of return in respect of premium payments as they received from Directly Operated Railways? It has been said that DOR is a not-for-profit service, but that is not quite true, as it is hugely profitable, but all the profits go to the taxpayer. That is the position, and I am sure various private train operating companies would relish getting their hands on that level of turnover.