Rail Infrastructure Investment

Daniel Zeichner Excerpts

Thursday 17th January 2019 Westminster Hall

[Lilian Greenwood]

The hon. Gentleman is a very valued member of the Select Committee. While new traction, hydrogen and battery potentially have a place on our railway, it is clear that they are not sufficiently developed to be a proper replacement for electrification. There is some doubt about whether they will ever be a suitable replacement for electric trains, particularly on inter-city journeys operating at higher speeds. He is right to raise concerns about the time that might be taken for parts of the country to see improvements to their services, particularly if there is a continued aspiration to use bi-mode technology. While that can provide some benefits, it undoubtedly also has a significant impact on operating costs. When passengers are very concerned about their fares raising, building in long-term costs seems a wise approach.

While it is now clear that the electrification schemes that had been planned were undeliverable, the Railway Industry Association and others were convinced that, for now, electrification remained the optimal solution to train traction. The case for electrification is particularly strong on heavily used routes, balancing significant benefits to passengers with the wider environmental benefits and long-term cost efficiency. Our report called for electrification to be delivered through a long-term rolling programme in which the Department, Network Rail and the wider industry learn the lessons of earlier schemes and strive to reduce costs. Do not throw the baby out with the bath water.

A key driver of Government investment in the rail network is their commitment to reduce carbon emissions. In February 2018, the Government called on the industry to produce a vision for how it will decarbonise with an initial response due in September last year. The Government response to our report confirmed that an industry taskforce, led by Malcolm Brown, is taking this forward. Have the Government received this taskforce’s report on how to decarbonise the rail system? If so, what does it say and what are the Government doing with it? David Clarke, technical director of the Railway Industry Association, has said that to achieve the Government’s aim of decarbonising UK railways by 2040,

“electrification must be one of the prime options for intensively used routes”.

The Government accepted our recommendation that it should engage with RIA’s electrification cost challenge initiative. The Department committed to producing a report on cost-effective electrification by this summer, but has said that it will remain agnostic about the best means of securing rail enhancement and that it does not expect proposals for new enhancement to begin with a predefined solution such as electrification. I am afraid it is clear that the Government have no plans for the future electrification of the railways.

I ask the Minister to update us on the Government’s work to produce a report with the industry on cost-effective electrification. When we conducted our inquiry, we heard that there was considerable interest in third-party-funded electrification schemes on the midland main line. We recommended that those proposals should be fully considered as an alternative to the proposed bi-mode solution.

The Government accepted our recommendation and said that they would fully consider

“Any proposals made to government or Network Rail about private sector solutions on the Midland Mainline that could provide benefits in addition to the passenger benefits that are being secured by the Government.”

What discussions have the Government had with third parties about proposals for electrifying the midland main line, and how will the improvements for passengers of the enhancements that will be going ahead compare with the improvements that would be delivered by electrification?

Some hon. Members present represent areas of the north covered by the transpennine route. The upgrade of that route is expected to include some electrification, but those enhancements have been considerably reduced since the then Chancellor announced in 2016 that the Government were

“giving the green light to High Speed 3 between Manchester and Leeds”.—[Official Report, 16 March 2016; Vol. 607, c. 961.]

There are serious concerns that the upgrade will not be fit for purpose for freight trains, and that because only part of the line will be electrified, the route will need bi-mode trains, which will build in higher operating costs for years to come. Are the current proposals for the transpennine route upgrade in line with the advice from Transport for the North? If not, why not? I note the letter to the Secretary of State for Transport from the operator of Humber, Mersey and Tees ports on 7 January, which says:

“It is of increasing concern that the Department for Transport and Network Rail are undervaluing our industry in the North and undermining the economic goal and objectives of the Northern Powerhouse; it will only make the productivity gap between the North and South of England even greater and devalues further the role of Transport for the North.”

It is concerning when the industry feels that the transpennine route upgrade, as it is currently considered, will lead

“to an utter dependence upon the M62 for Transpennine freight traffic for at least another generation.”

We have talked about some of the problems experienced as a result of planned railway improvements in the past five years, which have triggered successive reviews of the planning and delivery of enhancements and led to a substantial change in the way future investment in the railways will be considered and delivered. The next five-year control period will focus on operations, maintenance and renewals, the volume of which will increase substantially, not least because of the number of renewals that have been postponed from the current control period.

Following those postponements, the greater focus on maintenance and renewals in control period 6, which starts in April, is necessary and welcome, but there are long-standing concerns in the industry that investment in renewals has been lumpy, stop-start and boom and bust. We have heard that the level of uncertainty about upcoming spending could have knock-on effects on the wider industry’s confidence to invest in its workforce, skills and innovation.

In our report, we called on the Government to work with Network Rail, the regulator and the industry to look at the ways in which investment could be smoothed out from the start of control period 6, throughout that period and beyond. The Government accepted that recommendation, so I ask the Minister, how has the Department worked with the industry to smooth out investment for the upcoming control period?

Instead of forming part of the five-year control periods for Network Rail investment, future enhancements of the rail network are now subject to a separate process. The new rail network enhancements pipeline is intended to support a continuous planning approach and move away from the overly rigid five-year cycle that was linked to railway control periods.

The Government have signalled that they expect more railway enhancements to be market-led proposals brought forward by third parties. We heard that there was likely to be interest from third parties in bringing forward such proposals, but it was not clear to us that Network Rail had the structures or culture in place to support such third parties to engage and participate in the planning, delivery, funding or financing of the railway.

[Daniel Zeichner (Cambridge) (Lab)]

I echo the earlier comments of my colleague on the Transport Committee, the hon. Member for Bexhill and Battle (Huw Merriman), about my hon. Friend’s skill in presenting her arguments and chairing the Committee. Does she share my concerns about the market-led proposals? In my part of the world, we have had some major proposals for east west rail, which has been promoted by the National Infrastructure Commission, but there is considerable confusion about whether that railway will be privately run, as the Secretary of State has suggested, or whether there is a plan B. I am not convinced that there is and I am interested in my hon. Friend’s views on that.

[Lilian Greenwood]

It is wonderful to see so many members of the Select Committee here. My hon. Friend raises an important point about what will happen if market-led proposals do not provide the opportunities that the Department hopes. I will touch on that in a moment.

In November, the Government said that they had received 30 responses to their call for ideas for market-led proposals to enhance the railway, but that they could not make an announcement about individual schemes because the proposals had been submitted in confidence. How have those market-led proposals progressed since November, and do the Government expect any of them to be delivered, including the one referred to by my hon. Friend the Member for Cambridge (Daniel Zeichner)?

There was significant support for moving enhancements planning away from the control period process, and we support the intention behind the rail network enhancements pipeline, which should ensure that the planning mistakes made over the past five years are not repeated. However, we also found a substantial risk that the rush to deliver poorly planned and scoped schemes in the current period could be replaced by a different problem—a slowdown or interregnum in new enhancement projects.

That is why we called on the Government to provide a clear set of strategic priorities for rail infrastructure investment in each region, and to outline the specific projects likely to be available for third-party investment. The Government refused to set priorities for each region, so I ask the Minister today to set out the Government’s priorities for rail enhancements over the next five years.

We were also concerned that the process outlined by the Government did not provide the reassurance and certainty on future investment that the rail industry is looking for. We said that more transparency about the enhancements pipeline and decision-making processes in the Department was needed. That is particularly true if the potential for a substantial increase in third-party investment is to be realised. The Government accepted that recommendation and said that they are

“committed to transparent policy making and intend to make clear public statements”

as investment decisions are taken at each stage of the pipeline. So far, however, we have seen no such statements.

The Railway Industry Association has said:

“The visibility of enhancements remains a major concern for rail suppliers. There is now a lack of an obvious enhancements pipeline, with no construction-ready schemes in the Rail Network Enhancements Pipeline…published in 2018.”

Last week, I asked the Department how many rail enhancement schemes were being considered as part of the rail network enhancements pipeline, and what stage each proposal was at. Again, the Minister told me that the Government

“are committed to transparent policy making”,

but failed to answer any points of my question. That means that, almost a year after it was set up, the Department has yet to reveal a single proposal being considered as part of the pipeline. We are none the wiser about what, if any, future enhancements the Department is considering, let alone planning.

In response to my question, the Minister also said:

“Network Rail…will continue to provide public updates on the progress of enhancements in the portfolio”,

but it is not clear at what stage of the pipeline proposals will enter the portfolio. Can the Minister confirm at what stage enhancements will be included in Network Rail’s enhancements delivery plan? It seems to me that it is only those that have reached the delivery section of the pipeline that will be exposed in that way, and we will not know what is in the development and design parts. Will there be any transparency of proposals before the decision to deliver them?

Although the Government have accepted a number of our recommendations, as I have outlined, their response to our report was disappointing in several regards. It seemed to show an unwillingness to engage with some of our key conclusions and recommendations.

The Association for Consultancy and Engineering agreed with our assessment of the Government’s response, telling us that the Government had

“failed to meaningfully engage with the expertise provided by industry, and the practical recommendations outlined in the report”.

It told us:

“As evidence givers, it was disheartening for ACE to see the DfT and the ORR”—

that is, the Office of Rail and Road—

“pay such little attention to the solutions proposed by the committee, including dismissing some of them outright.”

I have asked the Minister to respond today on some of the points where we felt that the Government’s response to our report was less than satisfactory. I hope that he will take the opportunity to expand on the Government’s response, for the benefit of both this House and those in the rail industry who were as frustrated as we were by the Government’s response.

To conclude, although our report welcomed much about the Government’s—

--- Later in debate ---

[Priti Patel (Witham) (Con)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Evans. Out of courtesy, I must apologise to hon. Members in advance just in case—I emphasise “in case”—I need to leave before the conclusion of the debate, due to another commitment. I pay tribute to the Chair of the Transport Committee, the hon. Member for Nottingham South (Lilian Greenwood), for the case that she has just put, and to all other members of the Committee for their work on “Rail infrastructure investment”. I have a copy of the report and have looked at it, and it is fair to say that it covers a wide range of issues, which the hon. Lady spoke about in her very good and detailed speech.

As the Minister will know, rail infrastructure is incredibly important, not only to my constituents in Witham but to the entire east of England region. I will start by paying tribute to him, because he has recently become the Rail Minister. I had the privilege of working with him previously, in his other incarnation in the Department for Transport, so it is great to see him back there. I thank him and his officials for giving me some time recently, to discuss not only some of the issues that I will raise today, but some of my concerns, as well as the developments that are taking place on the Great Eastern main line and some of the big investment opportunities that we would like to see for the region.

The Minister will know from our recent discussions about the work of the Great Eastern main line taskforce, which I currently chair and which is putting forward the case for strategic investment in rail infrastructure. Back in 2014 we submitted to the Government a business case for a package of investments—I have it here: “exhibit A”—which I have no doubt the Minister is fully versed in, because I know he has seen copies of it. This business case from 2014 discussed the potential to deliver over £4 billion of gross value added to the economy, to support thousands of new jobs, and to help meet the transport needs of the population and housing growth in the region.

Of course, this business case was put together in 2014 by all the Members of Parliament from Essex, Suffolk and Norfolk. It received a great deal of Government interest and time, with interest shown by the former Chancellor, the former Prime Minister and various Ministers, including the former Secretary of State for Transport, my right hon. Friend the Member for Derbyshire Dales (Sir Patrick McLoughlin).

As we have seen in the east of England, and are still seeing, there is so much opportunity for economic growth in our area, with lower housing costs than in other areas. We are on a commuter line and we are accommodating a greater number of commuters and families who travel to London, and not only in Essex but across the eastern region. We are very proud of that. Families choose to enjoy the enormous benefits of living in the villages of my constituency and elsewhere in the region, while being able to work in London as well. I have to say that that is because of the Government’s wider investment in other sectors, including education—we have some amazing schools now—and quality of life is obviously a key feature too.

Of course, Essex and the east of England are fast-growing parts of the country, and they are strategically placed to deliver new jobs and economic growth. Look at what we have going on. We have world-leading businesses and centres of innovation: the Essex knowledge gateway, the University of East Anglia, Essex University and Cambridge University. They are all great hubs of intellect, innovation, jobs, economic growth and entrepreneurship. We have a diverse range of businesses, such as financial services, logistics, manufacturing, construction, modern bio-tech and science. We also have key international transport hubs, as my hon. Friend the Minister is well aware, including the key ports in London Gateway, Tilbury, Harwich and Felixstowe, and our airports at Stansted and Southend.

In Essex we have great business voices, which were instrumental in making the case for investment in our rail back in 2014. They include the Essex chamber of commerce, which made the business case, outlined the GVA of rail investment, combined the numbers and showed the economic growth that we can deliver outside London, and the new opportunities that will come our way. The Essex economy is already touching £40 billion in GVA, and obviously since 2010 the number of entrepreneurs has risen and we see business growth getting stronger and stronger. I see how much our businesses are already doing, and the jobs and prosperity they create. I am incredibly proud to see the enterprising spirit they have shown. Like me, they look forward to a future in which we can continue to build upon their contributions. They have a positive outlook for the future, not only for Essex but for the whole region.

We know that one of the key factors for growth is strategic investment in our roads and, in particular, our rail, so that we continue to grow and secure long-term investment. Of course, such investment means work on key roads and economic corridors, such as the A12 widening scheme and the dualling of the A120, but it also means investing in our rail network. Our rail network across the east of England has suffered from severe under-investment for many years. The Chair of the Transport Committee made some very important points today. She spoke about regional disparity with regard to the north of England, but of course my taskforce in the east of England has demonstrated that even notional calculations of regional finance mask regional disparities. Commuters on the Great Eastern main line, and particularly Greater Anglia commuters, are net contributors to the Treasury through their rail fares. Of course we want to see some of that money coming back out.

The Select Committee’s report quite rightly raised the whole issue of rebalancing rail investment to ensure that it is spread across the country, which I have consistently pushed for. I agree that we need to invest more widely and look at ways to support schemes in the regions and economic centres. Of course, our whole economy needs to become much more efficient, and investing in rail infrastructure across the country will help to deliver that.

However, I emphasise to the Minister that although it seems on paper that investment has been skewed towards London, partly because of the high cost of Crossrail, it is also important that we see a rebalancing exercise that does not come at the expense of excluding investment opportunities that would deliver high levels of value for money and help to drive billions of pounds back into the whole of the UK economy. Of course, we are set to benefit from approximately £2.2 billion of investment through the control period 6 process, but I stress that that investment is to cover maintenance, operations and renewal.

Paragraph 80 of the excellent report, on page 28, focuses on the historic lumpiness of renewals investment. Investment that covers maintenance, renewals, and so on goes to patch things up, and the graph on page 28 shows that the lumpiness of expenditure goes across the various control periods. We want to ensure a consistent level of investment that covers maintenance, so that we are not simply patching things up. It is a welcome commitment. From our perspective, the new refurbishment —new trains, funds for renewal, and repairs to bridges, embankments and signalling to deal with level crossings—will of course be beneficial. However, that is no substitute for a clear strategy of strategic investments in new infrastructure so that we can have a high-performing railway to support our region. That is the right thing, and it is what our commuters all want.

[Daniel Zeichner]

The right hon. Lady is making an excellent contribution on behalf of the east of England. I wonder whether she agrees that there are significant possibilities for bringing forward digitalisation of the railways. I am told that a huge amount could be done through digitalisation to better address capacity constraints, and that a relatively modest investment in global terms could be transformational in the east. My concern is that, looking ahead over these very long periods, we may well find that technology has moved much more quickly and we have not taken best advantage of those technological changes. Does the right hon. Lady share that concern?

[Priti Patel]

The hon. Gentleman is absolutely right. I was planning to touch on the significance of digital railway. I mentioned efficiency, and the whole point is how we can use new technology to drive efficiency. Everything is part of a process, and new technology can trump things that have previously gone on. There are also new opportunities for digital signalling. For example, on the Great Eastern main line we are working with the Department for Transport and the Minister to continue to make the case for digital signalling, and part of the case that the GEML taskforce is putting forward is compelling. I know that the Minister is looking forward to receiving the business case that we are currently working on. In previous discussions and meetings he has heard me speak about the pipeline business case that we are working on, and how we will build on the 2014 business case and enhance the numbers, the financials and the key programmes that we should be putting in place. We will revise that business case based on the latest figures for growth, the economy and business, and we will demonstrate that investing in rail in the east of England will help the Government to reach their ambitious targets, not just for housing but for economic growth and regeneration.

Those projects are going to be vast. They will include the introduction of a passing loop in the vicinity of Witham town, right through the heart of the Witham constituency; the redoubling of Haughley junction; improvements to the Trowse swing bridge; re-signalling south of Chelmsford; and improvements to Liverpool Street station. Combined, those investments will increase capacity on the network and—importantly for rail users in my constituency—reduce delays. Through the new franchise to 2025, we will benefit from a new fleet of rolling stock, and the first of those trains are due to enter service very soon. We want to make sure that when they come in we do not have disruption and can get the benefits of efficiencies. Over £1 billion of new investment has been secured following the recommendations of the GEML taskforce, which were actioned by the Government. Of course, we want that infrastructure to complement new trains and maximise the benefits, as well as include those key infrastructure projects.

As the hon. Member for Cambridge (Daniel Zeichner) has said, service improvements on the Great Eastern main line can be delivered through digital railway technology, along with the long-awaited development of Beaulieu Park railway station—Chelmsford parkway, as some call it—with three or four tracks and platforms to facilitate future growth in service opportunities. MPs, councils, businesses and commuters across the region are united behind that vision for rail service across the east of England, and I hope that the Minister and the Department will continue to work with us and back us, working with friends in the Treasury, the Department for Business, Energy and Industrial Strategy and the Ministry of Housing, Communities and Local Government to get that vision fully funded. It is about having an integrated approach across Government to delivering improvement in our rail service and our network, which matters when it comes to wider Government funding.

The Transport Committee’s report comments on the investment process and the enhancement pipeline, which was announced last year and which the hon. Member for Nottingham South spoke about. When the Minister replies, I hope that he will talk about how those schemes can go through that pipeline so that we can be efficient in getting the right kinds of decisions.

I will touch on a few other points very quickly. One—this will also interest the hon. Member for Cambridge—is investing in rail more widely in the region that covers Stansted. Stansted is the third busiest airport by passenger numbers in the country, and the second largest by freight. It has capacity for more flights, and given the capacity issues at Heathrow, we should be encouraging more travel to other airports. Of course, connectivity through the rail link from Stansted to London and further is a major barrier to growth, and our former colleague, the right hon. Sir Alan Haselhurst—now Lord Haselhurst, following his ascension to the other place—is working on proposals to improve connectivity through the West Anglia Taskforce. I commend his work on the issue. We often talk about Crossrail 2 presenting an opportunity for connectivity in that part of the eastern region, and I would like the Minister to provide any updates he can in his concluding remarks.

I thank the Chair of the Transport Committee for the opportunity to speak today off the back of the Committee’s excellent report. I also praise the Minister for his attention to rail, obviously from an east of England point of view. I ask him to bring together all the levers of Government—not just those in his Department—to catalyse funding across other Government Departments in order to unlock economic growth and opportunity across the regions of our country, so that we can use our rail much more strategically. Rail investments have been a catalyst for economic growth.

--- Later in debate ---

[Andrew Jones]

My right hon. Friend is as wise as ever. Once a Treasury Minister, always a Treasury Minister, I suspect. The point about bringing things together was, I think, at the heart of such things as the national productivity investment fund, which is about making sure we have, and control, the levers to drive economic productivity—productivity being at the heart of the UK’s future economic success. I see rail working alongside Departments to open up opportunity—commercial, residential, trade and so on. I see that future of collaboration as the way we will take forward some of our projects across the network.

[Daniel Zeichner]

In the interests of transparency, I am trying to understand the pipeline process. The Minister knows of the huge frustration in my region about the delays with the Ely junction. How do we find out where in the pipeline such a project stands now?

[Andrew Jones]

One simple way, of course, is to ask the Minister concerned. I will find out exactly where we are with the Ely junction and respond to the hon. Gentleman. Significant works are planned around Ely, but there are a number of junctions around Ely—I have reviewed a map of them in the past few weeks—and I will need to remind myself specifically which one that might be.

Let me go back to the changes to CP6 from CP5, which create a direct contrast. I think it is fair to say that in CP5 we overcommitted to projects at too early a stage, meaning that later we had to change the scope or cancel altogether, increasing the uncertainty and the impact on the industry’s ability to plan for investment and delivery. The RNEP sets out the Secretary of State’s four priorities for rail enhancements across the country, and we will not progress any enhancement that cannot clearly demonstrate how it meets at least one of them. It is important that those priorities remain applicable to the whole country so that the network can be improved fairly and as a whole.

I welcome the fact that the Transport Committee’s report shared a similar approach to our own in promoting engagement with third-party proposals for rail schemes. On 20 March last year the Department published its guidance for market-led proposals and launched a call for ideas for the same. That call for ideas ran between 31 May and 31 July last year. We received 30 responses. DFT officials have assessed all of them and will now work with promoters to move their schemes forward, although I stress that they will still be market-led. We will be transparent about schemes as and when they progress into the pipeline.

The question was whether this has stalled. No, it has not. We certainly want to see new entrants into the market and ideas being brought forward. I am absolutely clear that not all ideas to drive forward our network will come from SW1—that would be silly.