Rail 2020

Caroline Lucas Excerpts

Wednesday 3rd July 2013 Commons Chamber

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

I am pleased to have this opportunity to debate the Transport Committee’s “Rail 2020” report, which we published in January. The report sets out our vision for the railway to the end of the decade. Our main focus was considering the Government’s plan to achieve efficiency savings of £3.5 billion by 2019, and its implications for passengers and taxpayers. Currently, the railway costs the taxpayer around £4 billion each year. These issues are highly relevant to today’s consideration of the departmental estimates.

It is important to put today’s debate into context. In many ways, the railway has been a success. The number of passenger journeys has almost doubled since privatisation from 735 million in 1994-95 to 1.6 billion in 2011-12; passenger miles travelled have doubled over the same period to 35.4 billion; and rail freight has expanded by over 60%, with 11.5% of freight now conveyed by rail. There has been investment in major projects such as Crossrail and Thameslink in London, with more ongoing or planned work to electrify 800 miles of track and improve rail services in the north with the northern hub.

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

Can the hon. Lady tell me whether she or her Committee have made any assessment of the “Rebuilding Rail” report, which says that we could reduce fares if we could reduce the fragmentation of the rail system by bringing the rail back into public ownership?

[Mrs Ellman]

Addressing fares is an important matter, which I shall refer to later, although we have not specifically considered the report that the hon. Lady mentions.

An important aspect of our inquiry examined Government policy on franchising, particularly in relation to securing value for money. During our inquiry, franchising policy was thrown into disarray when the competition for the inter-city west coast franchise was cancelled as a result of major errors made by the Department for Transport. We published a report on that issue earlier in the year.

A number of serious mistakes were made by officials, but there were also policy failings for which past Ministers were ultimately responsible. The review of franchising that Richard Brown undertook at the request of the Department concluded that it was not sensible to let a 15-year contract for the west coast franchise without a break clause. He also drew attention to the difficulties caused by cutting back on resources while attempting to meet an ambitious timetable. The Department has now published a new timetable. The postponement in tendering for new franchises means a delay of 26 years, with consequential uncertainty for the industry and potential financial implications. I will return to that issue later.

Rail poses a number of policy challenges. Increasing numbers of passengers have led to overcrowding on some routes, and capacity constraints can rarely be resolved quickly or cheaply. It is also important to remember that rail investment is vital for regeneration as well as for relieving overcrowding. The provision of rolling stock is complicated and expensive. Fares are often too high and difficult to understand, and a wide variety of fares are often available for the same journey, from heavily discounted “advance purchase” tickets to very expensive “anytime” walk-on fares. The structure of the industry is complex, and there is suspicion that it creates opportunities for money to leak out of the system, some of it in the form of unjustified profits.

The rail subsidy peaked at £7 billion in 2007-08, and the previous Government asked Sir Roy McNulty to consider how to secure value for money. His report was published in 2011. His most striking conclusion was that there is a 40% efficiency gap between the UK railway and four European comparators: France, the Netherlands, Sweden and Switzerland. Reasons given for that disparity include the fragmentation of the rail industry, poor management, problems with franchising, and cultural factors. He made a wide range of recommendations aimed at achieving a 30% cost reduction in the industry by 2019.

Although the rail subsidy has fallen in recent years, it is higher now than in the years before privatisation. In real terms, the passenger railway costs 50% more than in the early 1990s, and there are a number of reasons for that. Increased demand has led to new capital projects and rolling stock.

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[Mrs Ellman]

Having considered all the evidence before it, the Committee decided that McNulty’s proposed methods of achieving efficiencies should be given a chance, although some concerns were expressed. We felt that if the McNulty savings did not materialise, the arguments for more far-reaching structural changes would be compelling.

We have identified a number of issues that the Government must get right if the railway is to continue to grow and become more efficient. The McNulty recommendations include calls for ticket office hours to be reduced, for driver-only operating to be the norm, and for salary restraint. The Committee considers that any changes in staffing, terms and conditions and salaries should be made in the context of a wider programme of changes made throughout the industry and after full consultation with trades unions. Any changes in the numbers and duties of station staff should not be pursued solely to reduce costs, but should reflect changes in passenger ticket-buying behaviour, and should be designed to improve passengers’ experience at stations, including their perception of safety. We were very concerned about the possibility that reducing staffing at stations and on trains would make the railway less safe, particularly at night, and would deter women and vulnerable users from travelling by train.

[Caroline Lucas]

Given that the train operating companies depend on public subsidies, does the hon. Lady agree that it is entirely wrong for those same companies to hand over an estimated 90% of their operating profits to shareholders, rather than reinvesting them in the staff and safety provisions to which she has referred?

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

It is a pleasure to follow, for the second successive Wednesday, the hon. Member for Liverpool, Riverside (Mrs Ellman), Chairman of the Transport Committee. Last week our discussions were about high-speed rail; this week’s discussions will be at a slightly more sedate pace.

These are encouraging times for railways in the United Kingdom. As the hon. Lady mentioned, since privatisation passenger numbers have doubled and freight is showing a healthy increase of about 60%. That compares very favourably with our counterparts on the continent. I believe it is fair to say we have had the fastest growth in rail usage.

We are also seeing a substantial programme of investment in our rail network, with large projects such as the electrification of the great western line and the midland main line and the opening of new rail lines, including, I am pleased to say, the east-west line through my constituency to connect Bedford, Milton Keynes, Oxford and Aylesbury, and, it is to be hoped, in due course going further east towards Cambridge and the East Anglian network.

[Caroline Lucas]

The hon. Gentleman made some comparisons with the rest of Europe in terms of railway passenger numbers. Would he also make some comparisons about the levels of fares in this country and many other European countries?

[Iain Stewart]

I will happily do that. Indeed, I looked into this matter for a previous debate, as it is often claimed that our rail fares are the highest in Europe. Certainly if we compare immediate, walk-up, any time fares, we are comparatively more expensive, but if we look at the whole basket of fares, we compare very favourably. I urge the hon. Lady to look at an independent website compiled by regular rail users called “The Man in Seat Sixty-One”. It compares similar journeys on the continent and here, and for even very short-time advance fares we compare very favourably, so I do not accept that across the piece it is more expensive to travel by rail in this country than on the continent.

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[Ben Gummer (Ipswich) (Con)]

When Thomas Telford was invited at the end of his career to help with the engineering of some new railway projects, the inventor of this country’s modern road network declined the offer, not because he did not admire railway engineering and the extraordinary speeds that these amazing new machines could achieve—he admired them very much—but because he understood that the railway itself had a necessary monopoly that the road did not. Part of the attraction of the road to Thomas Telford was that once it was built, it allowed someone to travel at any time they pleased in their chosen method of transport, but the railway, for all its brilliance, did not.

That is not to say that the railway is not a useful or brilliant invention. It has been central to the progress and advancement of our country and all developed countries across the world. However, the railway has an intrinsic problem—this is recognised by Sir Roy McNulty’s report, the various commissions instigated by the Department for Transport and, indeed, the Transport Committee report—namely its inability to get the market to work in the normal, functioning way that it would elsewhere.

The interesting thing about the railway is that, over time, it has found different competitors. Despite the fact that its technology is intrinsically the same as that it began with 200 years ago, it continues to compete with road—over the past 50 or 60 years it has competed with it on speed—and increasingly with flight. Rail, as well as its regulation and franchising arrangements, must therefore be seen in its wider context as a competitor with other modes of transport around the country.

It is important to understand why the Government are progressing with the reprivatisation and refranchising of various lines. Ideology is important and has been brought up by several Opposition Members, but privatisation has worked not because of ideology but because it is the most practical and pragmatic way of getting the railways to work. In fact, the entire railway system, which was instigated by the Victorians and which spread around the world to America, France and elsewhere, was a product of private enterprise.

[Caroline Lucas]

Will the hon. Gentleman give way?

[Ben Gummer]

I will in a moment.

The system would not be with us today were it not for the massive investments—many of which failed as a result of the risk of capitalism—that made this extraordinary invention possible. Before I allow the hon. Lady to intervene, I recall that in a previous debate she told me about the efficiency of the German railway system, but when I reminded her afterwards that it is now a private system she could not believe it. One of the reasons this country is having to rebuild the railway network is the decades of underinvestment. That is not necessarily a product of various Governments; it is the natural result of a nationalised system whose control rests in the Treasury’s hands.

[Caroline Lucas]

On that very point, there is still significant state involvement in German railways. What does the hon. Gentleman have to say about the fact that 60% of Britain’s rail operators are owned by European state rail arms? Our high rail fares are being used to subsidise rail services in Germany and beyond, which seems crazy to me.

[Ben Gummer]

The hon. Lady did not admit to the role of the private sector when I spoke to her about German railways. Of course, there is a role for the state—that is what we are discussing. Any railway has a necessary monopoly: only one train can travel at a time and it has to be owned by somebody. Unlike road, it is not possible for two trains to travel on the same track at the same time, so the state has to intervene at some point in order to regulate and subsidise, as it does with road travel.

We have seen the results of privatisation since 1995. Rail travel has increased by 133%. It is at a higher rate than in the 1920s in absolute numbers. Rail freight has also increased to a point that would have been impossible to imagine in the 1960s and 1970s.