Rail Fares

Caroline Lucas Excerpts

Wednesday 5th September 2012 Commons Chamber

[Maria Eagle]

The hon. Lady makes a strong point. I agree that varying the fare cap on the basis of specific local investment promises in the rail network, which is what lies behind that issue, is not how we should set rail fares. Let us be clear, however: the Government are proposing a 3% above-inflation fare rise for the whole country, regardless of whether any additional investment is planned locally. Today’s motion, if supported across the House, would impose a clear national cap of 1% above inflation, so I hope that she will consider joining us in the Lobby to support it.

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

I very much support Labour’s motion, although it is a bit timid. Given that privatisation has left us with a costly, fragmented and dysfunctional railway, and given that increasing evidence shows that reuniting railways under public ownership could save us up to £1 billion a year, would the hon. Lady not agree to go further and bring all the railways back into public ownership?

[Maria Eagle]

At this stage, that would go well beyond the motion before the House, but I hear what the hon. Lady says. Given that she is now no longer the leader of the Green party, however, I wonder whether it is Green party policy—no doubt we will find out in due course.

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[Caroline Lucas]

Will the Secretary of State give way?

[Mr McLoughlin]

I should like to make a bit of progress first.

The best way of securing long-term value for money is to ensure that the rail industry plays its part in delivering lower costs and sustainable railways. That will require all those who are responsible for track and trains to work more closely together. It will require a more responsible approach to pay and modern ways of working among all who are employed in the industry, from the platform to the boardroom. It will require longer franchises, providing greater flexibility, longer contracts and a sharper focus on cost, and it will require smart technology to reduce the cost of selling tickets. We are challenging the industry to deliver efficiencies that will put our railways on a par with the best in the world, and we will pursue the delivery of those savings with the Rail Delivery Group, train operators and others. Let me address the main point made in the motion by saying that our relentless focus on efficiency will help us to put an end to above-inflation increases at the earliest opportunity.

[Caroline Lucas]

I congratulate the Secretary of State on his new post. I wonder what he would say to one of my constituents who told me a few days ago that he had had to give up his job in London because he could no longer afford the rail fare. How is the Government’s policy of encouraging people to look further afield for jobs consistent with pricing them off the railways that could enable them to do so?

[Mr McLoughlin]

More people are using the railways now than at any time since 1929, on a lesser network. However, the hon. Lady is right to express concern. I too am concerned about people who are having to spend such a large proportion of their income on transport. I hope that we shall be able to look at that, and that in due course we shall see improvements in some areas.

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[Dr Huppert]

I thank the hon. Lady for her comments. She has been fairly consistent on this issue, which is not true of all those in her party. I was interested to note that the shadow Secretary of State carefully avoided making commitments on how the railway system is operated. At the time of privatisation, I was concerned about some aspects. For example, if I want to travel from Cambridge to London, I do not care if it is cheaper to go to Liverpool because I am trying to go to London. It may be cheaper—or wonderful—to go to Liverpool, but it is not the trip I wish to make. Having said that, renationalising now would create a huge amount of complexity in trying to move to that new world. I am not persuaded that it would be the right thing to do, but I would be happy to discuss it further with the hon. Lady.

[Caroline Lucas]

rose—

[Dr Huppert]

I will take one last intervention on this point and then make progress.

[Caroline Lucas]

The hon. Gentleman suggests that it would be too difficult to bring the railways back into public ownership. If it were done on a case-by-case basis as the franchises came up, as with the west coast main line right now, there would not be any extra cost to the public purse; in fact, there would be a reduction in cost.

[Dr Huppert]

I thank the hon. Lady for her comments. I congratulate her on her new-found freedom and hope that she will enjoy not having the responsibilities of party leader, with the flexibilities that that brings. I suspect that she will continue to be very influential on future leaders of her party. I am happy to talk to her in more detail about how such an approach would work, but I do not think that it is as trivial as she suggests. We must avoid doing something that seems very good on the face of it but does not deliver an improved rail system. For example, passenger usage numbers went up quite significantly at the point of privatisation. I would not want to do anything that jeopardised the growth in the number of rail passengers, and I am sure that she would not want to do so either.

So what can we do to bring down rail costs? We need a more modern and more efficient system. That is why I was so pleased that despite the huge public deficit and the ongoing problems in the eurozone, this year over £9 billion of investment was announced for our railways in the next five-year period. The Liberal Democrats and I were delighted to endorse that. The coalition has committed to electrifying over 800 miles of railways across the country, as well as to making a huge range of other improvements that will make a huge difference to passengers and to business. I was interested that last year’s autumn statement announced £1.4 billion of investment in our railways because, crucially, that provides £400 million more for railways than for roads. I cannot remember the last time any Government took the correct decision to prioritise expenditure on railways over roads.

As well as investing in lower fares for the future, we have to invest in lower fares now, as the excellent Campaign for Better Transport has pointed out. Over the next year, wages are set to rise by 2%, but fares could go up by as much as 3% above inflation—over 6%. Coalition means that one does not always get everything that one would most like to happen. I was pleased that last year the Government moved to RPI plus 1%, which is exactly in between our position and that of our coalition partners, but I cannot support the Conservative proposals for a rise of 3% above inflation for next year, nor the proposal in the Labour motion for above-inflation rises indefinitely. Liberal Democrats want a rate of RPI minus 1%, with fares coming down in real terms from now on. A lot of that would come from the 30% efficiency savings identified by the McNulty review. A previous Secretary of State announced that that money would be split between investment and money going back to the Treasury. We think that more of it should be used to bring rail fares down now and give the money back to people who pay. We would go further to simplify the fare structure and make it much more transparent, and make rail companies put forward the cheapest fares possible and pay refunds when services are below par. The Government are making some progress on that, but we will continue to push for more.

I am delighted that the Government have taken the difficult decision to invest in railways for the future. That is not an easy thing to do when times are tight; it would have been far better to invest more during the boom years. However, if we punish commuters and other travellers now, it could put people off railways altogether, especially those who are just starting work and those who are hardest hit by the ongoing squeeze. That would send out a terrible message about the affordability of public transport, drive down passenger numbers, and put our network on an unsustainable path. As the Campaign for Better Transport says, we cannot allow our railways to become a rich man’s toy. We need to find an agreement again over rail fares that will last for the rest of this Parliament. I strongly urge the Secretary of State to take up this cause strongly, as his predecessor did.

I hope that the Government will continue to look at the long-term strategic projects that are happening. To restore our railways to their Victorian zenith, we need a Victorian level of investment, and a vision to match. That is why I am delighted that the coalition is not only spending more on the railways than any of its predecessors since the Victorian era but committing to projects such as HS2. I am delighted that that is finally happening, but I am disappointed that, for decades, so many opportunities have been missed for greater improvements like that. Our lack of high-speed rail epitomises what has gone wrong in our railways in recent years, why fares are now so high, and why we face such capacity constraints. For years we watched European neighbours and Asian partners develop and build a comprehensive high-speed railway network. They have extended capacity, supported rail freight, released space on roads and reduced congestion. Despite calls over many years from Liberal Democrats, including my hon. Friend the Under-Secretary, British Governments felt that the cost of doing so was too high. Why invest the money when there is nothing to be gained in the here and now? Transport investments take time to deliver.

Those Governments, over many decades, were wrong. We have waited so long that we absolutely have to go ahead with it now. The west coast main line will have already reached capacity before the new high-speed line can be finished, and the costs now have to be borne in a downturn rather than during the growth years, when money was more plentiful.

It is right that we are putting our railways on a sustainable footing. They need investment and they need it for the long term. The burden cannot be taken by fare payers. Constant, year-on-year fare rises are utterly unsustainable; they will ultimately force people off the railways and bring down revenues. Governments have found it much easier to just patch up old lines and force passengers to deal with the same old problems and pass on the cost of an inefficient system. That was a terrible waste of the boom years.

I am delighted that by the end of this Parliament, Liberal Democrats in government will have made some of the tough decisions to make sure that we will have the efficient and sustainable railway network we deserve, but it has to be affordable to people. I hope that over the coming months we can reach an agreement with our coalition colleagues to prevent an RPI plus 3% rate; otherwise, a long-term investment could be utterly undone as we drive people from our railways irrevocably.

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[Mr Mark Spencer (Sherwood) (Con)]

I am grateful for this opportunity to speak. Like many colleagues, I wish the Secretary of State well, although he is not in his seat at the moment. It was great to see him back at the Dispatch Box. In taking interventions from Opposition Members, he was generous, flexible and accommodating—characteristics that he did not always demonstrate in his previous role.

This debate is simple for me. Although the railways are a complicated issue, the fundamental question is, who will pick up the tab of improving our railways? I am pretty disappointed by this debate because it is almost blatantly politically opportunistic. This is such a serious issue and it affects so many of our consumers and constituents that we should have more grace than to bat it about in this way and try to score cheap political points.

The answer to who will pick up the tab is, ultimately, the taxpayer. If we all agree that the railways need improvement and investment, and that the cash has to come from somewhere, ultimately the taxpayer has to pay the bill. The question is how to strike the balance between the ordinary taxpayer and the individual taxpayer who makes use of the service and rides on the trains. I put it to the House that someone working in the former coalfields of Sherwood, where rail services are pretty sparse, who earns less than £20,000 a year should not be put under pressure to pay taxes to give a banker who lives in Surrey a subsidised ride into the City. That is a difficult problem to solve, but we have to get the balance right between the ordinary taxpayer and the commuter. I am not sure that we have got the balance right today.

Standing at the Dispatch Box today, the Secretary of State inherits a situation that I do not envy: he comes to his role in the middle of a global financial crunch; he inherits a railway system that has faced enormous under-investment from a series of Governments; he faces the global price of energy going through the roof; and he has inherited a deficit from the previous Government that is difficult to solve.

[Caroline Lucas]

The hon. Gentleman talks about the importance of getting the right balance. Does he think the right balance has been struck given that, since rail privatisation, there has been a 7% drop in the cost of motoring and a 17% rise in rail fares?

[Mr Spencer]

I do not know what sort of car the hon. Lady drives, but I certainly have not seen a 7% drop in the cost of my motoring. I do not think we have got the balance right at the moment, but we have heard a series of speeches by Opposition Members about how nationalisation could improve the railways. I wonder whether people’s memories are so short that they forget how poor British Rail was. The Government who privatised the railways did not do it because British Rail was so fantastic.

[Mr Spencer]

I would be very grateful to the hon. Gentleman. I accept that this is a complicated issue, but when British Rail ran the railways it was not a panacea or a fantastic system. There were enormous delays for commuters, and the railway carriages were cramped. The service provided to commuters was shocking.

We could argue that there has not been enough progress, which I accept to a certain extent. Like the Secretary of State, I travel on the midland main line. It seems simple to say that capacity on that line could be improved just by making the trains a little longer, but the situation is much more complicated than that. The trains are already too long for people who want to get out of certain carriages at Loughborough station, so they have to move down the train to get off. Enormous investment is required in the midland main line, which is one of the most under-invested railway lines in the country, and I am delighted that the Government are putting in the cash to improve it by moving electrification further up towards the midlands and Yorkshire. It has been a long time coming.

I return to my constituents in Sherwood, who are not blessed with wonderful railway connections. If a resident of the town of Ollerton is employed in the city of Nottingham, their only option is to use buses or get in the car and drive. Public transport provision in my constituency is shockingly poor, and with the exception of the town of Hucknall, railway provision is pretty much non-existent. A taxpayer in Ollerton has to get in their car, for which they have paid road tax, and fund their journey by paying for petrol and the tax on it. They drive to the city of Nottingham and pay the workplace parking levy introduced by the Labour-controlled city council to earn their wage to pay taxes to support a banker in Surrey by cheapening his journey into the City of London. To someone working in Sherwood and earning twenty thousand quid, that does not seem acceptable. We sometimes need a bit of a reality check. I have heard a lot of complaints from colleagues in the south-east. I understand that they feel under pressure because of the increases in the cost of their rail tickets, but there is not a great deal of sympathy from hard-pressed, hard-working people in the coalfields of Nottinghamshire who are on low wages.

How will we solve the problem? Frankly, I am not sure that I have all the answers, but I would be delighted to work with the Secretary of State and the transport team to try to solve it. I believe that the answer is for the price of railway tickets to creep up, so that people can adapt and adjust, and for us to find ways of being more efficient. My hon. Friend the Member for Northampton South (Mr Binley) talked about efficiency savings, which will be the key to solving the problem. We must not only make use of taxpayers’ money for investment but find ways of spending it in the most efficient way possible. It is not tolerable or acceptable to my hard-working, tax-paying constituents that they have to keep dipping their hand in their pocket only for that money to be wasted rather than spent in the most efficient possible manner. If efficiencies are made, they will be able to benefit when they make use of the trains if they have the opportunity to come to London or to commute across Nottinghamshire. They cannot keep paying indefinitely without efficiency savings.

Probably the most shocking statistic that I have heard today is the comparison between the cost of flying and using rail. It is now cheaper to fly from Edinburgh to London than it is to go on the train. It seems bonkers that we find ourselves in that position, but it demonstrates how efficient the private sector can be in providing air journeys.

[Caroline Lucas]

The hon. Gentleman’s point is utterly specious. That situation has nothing to do with the effectiveness of a privatised airline and everything to do with the fact that airline fuel is subsidised whereas other fuel is not. If we subsidise domestic flights, it is not surprising that railways will be more expensive. Will he follow through on the logic of his argument and say that the Government will consider getting rid of the subsidy on domestic flight fuel?

[Mr Spencer]

I certainly think that we should examine how railways fund their fuel and energy supplies, and we are considering electrifying lines so that they are more efficient. I know that the hon. Lady is talking about aviation fuel, but I make the point that some rail lines, such as the midland main line, run on diesel rather than electricity. I am sure that the carbon footprint of those journeys will be of interest to her, and I wholly accept that we should continue to examine the matter.

I cannot reiterate enough the importance of getting the balance right between the commuter paying and the taxpayer paying. It is easy to forget that hard-working people doing fairly low-paid jobs are under equal pressure and also have to pay for transport to work. It is wrong to suggest that we can simply reduce rail fares.

I was aghast at some of the comments of my Liberal colleague the hon. Member for Cambridge (Dr Huppert), who is no longer in his place. He said that cutting the price of some rail tickets was Liberal Democrat policy. I hope that when the Minister responds, he will assure us, as a Liberal Democrat member of the Government, that the Liberal Democrat policy and the Government’s policy are fairly closely aligned. In the land of buttercups, rainbows and daffodils where my colleague seems to live, things do not seem to balance out as I understand them in the real world.

I look forward to the Minister’s response and hope that as the Secretary of State settles into his role he will consider the whole country, not just the commuters. They are obviously under pressure as they have to pay for their tickets, but he should also consider the hard-working taxpayers.They do not have a lot of spare cash and cannot keep dipping into their pockets for it.

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

People in my constituency have simply had enough of the rising cost of public transport, and the latest above-inflation rail fare increase is just about the last straw. Worried Brighton residents repeatedly tell me that they are already suffering from below-average earnings and simply cannot afford the proposed increases. As I mentioned earlier, one man told me how he had to give in his notice at his job in London because he simply cannot afford to get there. Now he is unemployed because he could not afford his rail fare.

Much has been said today about the impact of spiralling ticket prices on cash-strapped commuters, who are rightly furious that trains continue to be overcrowded and unreliable as well as overpriced; that public transport options are not fully integrated; that smart ticketing is not the norm; that trains are still too hot in the summer and too cold in the winter; and that the toilets do not work, or are simply non-existent on some train services from Brighton. That is a serious equalities issue. I have been contacted by many Brighton residents who want to be able to use the train but have health problems or are elderly. The fact that there are not toilets on the trains means that they can no longer use them. As a daily commuter between London and Brighton, I know only too well how accurate many of those complaints are. When we urgently need rail to play a role in reducing greenhouse gas emissions across the transport sector and contributing to improved air quality, the system should be better.

Fares should be managed as part of an overall strategy of making public transport more integrated, more comprehensive and more affordable, helping people to leave their cars at home and providing an attractive alternative to flying for longer journeys within the UK. Yet, since privatisation, the cost of train travel has risen by 17% in real terms compared with a 7% drop in the cost of motoring. Those higher fares mean that that gap will now widen. Moreover, the rail fare increases announced a few weeks ago represent an unacceptable tax on rail commuters, given that the percentage increase above the 1% written into the franchise agreements flows directly to the Treasury.

I welcome today’s motion as a step in the right direction, but I support the suggestion of the hon. Member for Cambridge (Dr Huppert) that fares should not be allowed to rise at all—if anything, they should come down. I regret that there is no Liberal Democrat amendment on the Order Paper to that end. However, we need to go much further. The controversy over the west coast main line franchise shows that what people want most is some kind of stability on the railways. They are not impressed by one unaccountable company snatching control from another with promises that they may never deliver. Nor are people happy that the cost to the public purse of running the railways has risen by a factor of between 2 and 3 times since privatisation.

The hon. Member for Hayes and Harlington (John McDonnell) has already mentioned the report “Rebuilding Rail”, which I warmly commend to the House. It makes cogent arguments explaining why, under privatisation, there are much higher costs to the public. As the hon. Gentleman said, they include higher interest payments to keep Network Rail’s debts off the Government balance sheet; costs arising as a result of the fragmentation of the rail system into many organisations; profit margins of complex tiers of contractors and subcontractors; and dividends to private investors.

[Mr Binley]

Will the hon. Lady give way?

[Caroline Lucas]

I will not, simply because of time.

The only way to sort out the mess and waste, the rising fares and overcrowding is to take back control of the railways. I am not afraid to call that nationalisation.

It is time to make public transport a public service again, and to nail the myth that buying back assets that have been sold off would be too expensive. A step-by-step approach would allow the railway’s assets to be reacquired for the public at minimal cost and with substantial ongoing savings over time.

[Mr Binley]

On the basis that the hon. Lady will get an extra minute, will she give way?

[Caroline Lucas]

I have just remembered that, so I am delighted to let the hon. Gentleman speak.

[Mr Binley]

I am most grateful. Is the hon. Lady really saying that she wants to return to a nationalised British Rail? Is she also saying that privatisation is bad and that all the other privatised sectors have not cut costs? Or is the rail sector the only one that has not? How does she explain that?

[Caroline Lucas]

I refer the hon. Gentleman to Deutsche Bahn, SNCF and several railways in Europe that run perfectly good public sector railways with much lower fares than ours. I am not necessarily saying that we should go back to British Rail; I am saying that we should learn from that experience. We might in future have much greater democratic control, with passengers involved in the decision making. Far more of running the railways might be delegated to regional level. We do not have to go back to something—we can go forward to something and learn from the best of what is happening in many European countries and in the rest of the world.

The proposal that “Rebuilding Rail” and others are considering is a more or less cost-free process, whereby when the franchises expire or companies fail to meet the criteria, they could be acquired on a case-by-case basis. New rolling stock could be directly procured, making the process far cheaper than the current leasing arrangements, and fair price regulation could be introduced to bring down the cost of leasing existing rolling stock from its private sector owners.

We also need to bring Network Rail’s debt back on to the Government’s balance sheet. I appreciate that the Government will blanche at the very thought, but doing that would reflect the reality of the situation and result in much lower interest payments.

According to calculations from “Rebuilding Rail”, reuniting the railways under public ownership could save more than £1 billion a year of taxpayers’ money. To put that figure in context, the money that we would have saved if rail had not been privatised could have been used to cut fares by up to 18%. The matter needs to be properly examined, and I am deeply upset that the Conservative ideological position means that the proposal is dismissed simply because it contains the words “nationalisation” or “public ownership.”

[Mr Marcus Jones (Nuneaton) (Con)]

I think I am following the hon. Lady’s logic. However, if the perfect answer for the general public is to renationalise the railway, why is there such a large petition about the west coast main line, which supports the continuation of a private company’s running that route?

[Caroline Lucas]

I imagine that that is because there was no properly public option on the ballot paper, as there was with the east coast main line, which was taken back into public ownership. Plenty of polls show massive support for bringing the railway back into public ownership. A majority of people want that. I suggest that the hon. Gentleman consider that.

In Europe, passenger rail services are much cheaper and services are better, and between 80% and 100% of train services are run by publicly owned companies. Those two facts are not unconnected. Despite what some opponents claim, there is no EU requirement for the railways to be privatised. Other European countries have accommodated EU legislation, while largely or entirely retaining public ownership of their railways, by ensuring that there is separation between the body that is responsible for passenger train operations and the subsidiary company that is responsible for capacity allocation and access charges.

The Government should know that there is a problem, since the McNulty review, commissioned by Labour but delivered to the coalition, clearly highlighted excessive costs in the UK rail industry. That report also showed that privatisation’s promise of innovation simply has not materialised. Both McNulty and the Transport Committee noted that, in fact, innovation has been actively discouraged by the disjointed and complex nature of the privatised railways.

Genuine, at-risk private investment, as opposed to private capital expenditure that is underwritten by the Government, makes an insignificant contribution to the railways, representing about 1% of investment. That is substantially less than the additional costs that arise from a privatised structure. Nor has efficiency improved in the hands of the private sector—despite often being cited as another major benefit of selling off public services. In fact, there has been an increased number of administrators and managers, as well as duplication of functions in different private companies, and staff who have to be employed to ensure that everyone talks to one another and knows what is going on. It has been estimated that the cost of those back-room staff has increased by 56% since privatisation, measured per train kilometre—money that would have been better spent keeping rail fares affordable and investing in real improvements.

Britain was once world famous for its trail-blazing and hugely successful railway, but today, privatisation is failing passengers, the economy and the environment. Unless it returns to public ownership, Britain will struggle on with a disjointed, complex and often dysfunctional railway system that regularly makes commuting a miserable experience and puts us to shame internationally.