South West Trains

Debate between Damian Hinds and Dominic Raab

Tuesday 19th March 2013 Westminster Hall

[Mr Dominic Raab (Esher and Walton) (Con)]

It is a great pleasure to serve under your chairmanship for the first time, Mr Hollobone, especially as you are fresh from your doughty defence of parliamentary prerogatives in the main Chamber yesterday.

My constituency is home to a large number of commuters. Every day, more than 22,000 residents of Elmbridge commute to London for work. That represents roughly 38% of the borough’s work force—no small proportion. Many rely on the rail network, which means travelling with South West Trains. As a commuting MP, I know first hand what the service is really like.

The number of people using the railway has increased sharply in recent years. Reflecting national trends, the number of recorded journeys to and from stations in Elmbridge rose by 78% between 2002 and 2010. The most recent figures from the Office of Rail Regulation reveal that, in the financial year 2010-11, 11.6 million passengers used the various Elmbridge stations.

With that in mind, the quality of the service provided by South West Trains is an important issue for local residents. The latest figures published by the consumer watchdog Passenger Focus are disappointing. In autumn 2012, it received 31,500 responses to its national passenger survey. South West Trains was rated the joint-worst train operating company for providing value for money, with just 37% of respondents expressing satisfaction. By contrast, Merseyrail achieved a 70% rating for value for money, and Grand Central achieved 73%.

There are various reasons why so many passengers do not feel they get value for money. For one, overcrowding has worsened. In 2011, the most recent year for which information is available, the company’s morning services ran at 4.1% over capacity, up from 2.8% in 2008. In the evenings, they ran at 2.4% over capacity, up from 1.7% in 2008.

Some services are much worse. According to Department for Transport data, the South West Trains 7.32 am service from Woking to London Waterloo, which I regularly take, is the second most overcrowded service in the whole country. It normally runs at 64% over capacity, carrying 471 more passengers than it is meant to.

The punctuality of South West Trains services has stayed flat over the past five years. On average, a commuter will experience at least one late train per week, and far more at certain times. On top of that, a spate of signalling problems has caused longer delays. The service is also often unable to cope with what must be described as relatively minor snowfall. Of course, some of that is Network Rail’s responsibility. Unfortunately, Network Rail is pretty hopeless too.

It remains to be seen whether the new alliance between South West Trains and Network Rail—the train company and the infrastructure operator—makes a significant difference in practice. I hope it will. We should bear in mind that, in 2012, 4,232 trains were cancelled, up 39.5% on the previous year.

[Damian Hinds (East Hampshire) (Con)]

Does my hon. Friend share my hope that the alliance between South West Trains and Network Rail will, among other things, elicit some co-operation on looking in depth at some of the capacity issues, particularly on trains into Waterloo? That might be fundamental to addressing some of the overcrowding and overcapacity issues.

[Mr Raab]

I thank my hon. Friend for his intervention. He is spot on. Too often, there has been something almost like buck passing on the issue between the train company and infrastructure operator. It is to be hoped that the alliance allows a slightly more coherent, joined-up approach, although I suspect there are limits to what even a more integrated approach can deliver.

The company’s wider performance must be set against a backdrop of sharp increases in fares. Further analysis by the Office of Rail Regulation reveals that season ticket costs for companies operating in London and the south-east rose by 46% between 2004 and 2012, which was just above the national average. Currently, a season ticket between Guildford and London Waterloo costs £3,224 every year. That does not take into account the rising parking charges at stations, an issue that is also the responsibility of South West Trains. Frankly, it is difficult for me to stand on the platform with commuters and residents and to tell them they are getting value for money. I am just not convinced that they are.

Despite rising fares and low customer satisfaction, remuneration at Stagecoach Group, which runs South West Trains, increased between 2010 and 2012 by 8.2% for directors and by 9% for executive directors. The dividends rose by 44% between 2008 and 2012, to 7.8p per ordinary share. That was dwarfed by the one-off dividend issued in 2011, when Stagecoach Group completed a return of value to shareholders of 47p per share. That was worth a grand total of £340 million, including a reported £51 million for the chief executive, Sir Brian Souter.

I appreciate that South West Trains is just one part of Stagecoach Group, but when the performance of South West Trains has been so underwhelming, such figures smack of complacency, if not outright reward for failure. What levers do the Government have under the franchise agreement to press South West Trains to do more to improve the quality of the service and value for money for customers?

Then there is a whole series of questions about the role played by central Government. Under the terms of its franchise agreement, South West Trains pays a premium to the Government for the right to run its services. That was worth 4p per passenger kilometre in 2011-2—the second-highest rate paid by any train operating company to the Treasury. The subsidy paid by South West Trains can be contrasted with the subsidy of 11.4p per passenger kilometre received by ScotRail and the 12p per passenger kilometre subsidy paid to Arriva Trains Wales. Altogether, over the three years to 2011-12, South West Trains paid a whopping £544 million in subsidy to the Treasury— £140 million more than any other train operating company. That is inevitably reflected in fares paid by South West Trains users.

Those figures raise a slew of questions. First, while South West Trains has been the largest net contributor to the Treasury through its premium payments in recent years, other train operating companies in the south-east region were still receiving a Government subsidy. Those included Chiltern Railways and Southeastern. Will the Minister therefore clarify what objective criteria are used to determine which travellers subsidise other lines, how that subsidy is calculated and what can possibly justify the stark discrepancies in the figures?

There is a second range of questions about the regional train companies group, which includes the five train operating companies that received the highest Government subsidy in 2011-12: Arriva Trains Wales, ScotRail, First TransPennine Express, Northern Rail and London Midland. In direct consequence, passengers who use those regional train companies, as classified by the Office of Rail Regulation, have enjoyed below-average increases in the cost of their season tickets.

Let me make a broader point. It is one thing for the Government to seek to control ticket prices in more remote destinations, to prevent them from soaring out of control. However, it is another thing altogether to ask passengers on South West Trains to subsidise below-average season ticket rises in the north, Scotland and Wales, when, as I have made clear, some passengers in the south-east have faced price increases above the national average for their season tickets, in return for crowded carriages and poor service.

That is not just a redistribution of wealth out of general taxation, which understandably and rightly takes place to a degree, but a massive redistribution of wealth from the fares paid by specific commuters using a specific rail service. Can the Minister understand why so many in my constituency, particularly those on low and middling incomes, will find being targeted in such a flagrant manner so unfair?

I suspect most MPs, let alone constituents, have little idea of how their rail services are funded, at least in detail—the mix between user-pays and general taxation—or the criteria being deployed and implemented for each. I wonder what steps the Government are taking to correct that frankly lamentable lack of transparency—which is inherited, I hasten to add—over a vital element of national infrastructure.

Furthermore, it seems reasonable to expect that at least some guarantee can be made that a certain proportion of the premium payments received from busy lines will be reinvested back into those routes. Can the Minister give me any transparency or clarity on that? What assurance can he provide passengers on South West Trains that the premium payments they make are properly reflected in Government investment in the line on which they travel?

Looking at the big picture, the independent review of the rail network by Sir Roy McNulty in 2011 highlighted the extent of the underperformance of the rail network nationwide. Its calculations suggested rail costs in the UK are 20% to 30% higher than they need to be. That is a major cause of concern. The report concluded that up to £1 billion of savings could be made by 2018-19, without any reduction in services. That echoed the analysis of the Office of Rail Regulation in 2010 that revealed Network Rail was up to 40% less efficient than the top European rail infrastructure managers.

I welcome the fact that the Government accepted the McNulty recommendations to end the micro-management of rail operations and give operators greater flexibility to meet passenger demand. I also welcome Ministers’ commitment to achieve the efficiencies McNulty outlined. I would like to ask for an update on the progress made in delivering—not just accepting—the McNulty recommendations. I think a lot of people listening to the debate will not understand why so much is being paid in rising rail fares when such an important element of national infrastructure is lagging behind that in Europe and, to some degree, other developed economies.

I raised the point about the impact on commuters and residents and the sense of value for money. However, there is a broader question about the competitiveness of our economy, in a vital area of infrastructure. There is a huge amount of emphasis and focus on airport capacity and there is some on roads. I fear we are failing to grasp the nettle on this important element of our national infrastructure, with serious knock-on implications for the economy.

Beyond the set of issues that the McNulty Report looked into, does the Minister have any wider views on whether and how more effective competition could be introduced, in order to promote the innovation and value for money that rail users want, and that Britain sorely needs if we are to compete economically in the 21st century, with rising competition from Latin America through to Asia?

To what extent are the changes in systems and the innovation that we want being stymied by militant union leaders such as Bob Crow, who periodically relies on brinkmanship and outdated strike laws to hold the system, and the public, to ransom? I know that Network Rail has quite a broad, serious and substantial programme of reform. I would be interested to hear the Minister’s view on the extent to which that is being held up by the National Union of Rail, Maritime and Transport Workers and other unions.

In conclusion, South West Trains provides vital services in Elmbridge, but also well beyond. I recognise that running a train service across ageing infrastructure in a time of rising demand is not an easy challenge. There is also the compound effect of rising fares on customers, commuters and residents at a time of rising energy prices and the standard of living becoming a real issue, particularly for the squeezed middle. There is not a huge amount of extra money in the pot. In fact, we are trying to be as frugal as we can, given the huge debt problem inherited from the previous Government.

However, it is important that the managers and directors of South West Trains hear the message loud and clear that their passengers demand better value for money. Commuters pay a substantial and rising share of their income to get to work. It is right and understandable that they expect a fair deal in return. That must comprise reasonable fares, trains that run on time and decent travel conditions. Government must also play their part by providing a coherent overarching framework that promotes innovation and productivity, and transparency in relation to the funding arrangements, in particular by ensuring that passengers on South West Trains are not treated—let us talk frankly—like a cash cow to subsidise other parts of the network, without getting a fair deal in return such as investment in the line and the level of fares.

To sum up, it will take a combined effort to ensure that my residents, all those travelling on South West Trains and the country as a whole get the rail network that we need for the 21st century.