High Speed Rail (London - West Midlands) Bill (Third sitting)

David Anderson Excerpts

Thursday 3rd March 2016 Public Bill Committees

[Mr Goodwill]

I am pleased that the hon. Gentleman mentioned the Clapham omnibus. I had the great pleasure last week of visiting the Wrightbus factory in Northern Ireland, which builds the Boris buses that ply their trade so successfully around this city, although I must add that other double-decker manufacturers are available, including, dare I say, one based in my constituency.

May I allay some of the hon. Gentleman’s fears about the reasonableness of what we intend and the proportionality of what we are doing? It is reasonable for him to raise these issues, but I hope that I can allay his fears. Clause 40, to which the amendments apply, deals with the disapplication of statutory closure provisions and provides that the Secretary of State may, before phase 1 of HS2 is ready for commercial use, disapply the closure provisions of the Railways Act 2005 in the case of closures that are necessary or expedient due to the construction or operation of phase 1 of HS2.

London TravelWatch, the passenger representative body for the capital, asked for an explanation of the power and its expected use. We have already responded, stating that there are no station closures planned as part of the construction and operation of phase 1of HS2, and that the only line that would close is the eastern end of the Northolt and Acton line, known as the Wycombe Single, between Old Oak Common and Park Royal, which currently carries one weekday passenger service from London to West Ruislip.

The disapplied closure provisions set out what must be done in terms of notice, consultation and provision of information in the event of a proposal to close existing services, stations or parts of the rail network. There are services that may run with a reduced frequency as they are replaced by alternative services in phase 1 of HS2. The power in the clause does not apply to such services, as the Secretary of State may not exercise the power after he has notified Parliament that phase 1 of HS2 is ready for commercial use. Once it is commercially open, the Railways Act 2005 procedures come back into force.

The clause ensures that phase 1 of HS2 can be built efficiently, as the decision to construct phase 1 of HS2 will have been approved by Parliament. We believe it is reasonable to disapply the closure procedures during construction. The proposed closure of the “Wycombe single” and its impact were set out in the environmental statement, on which the public were consulted. The issue of the Wycombe single was also raised in petitions, meaning that Parliament had full opportunity to consider it. All of that means that going through the full closure procedures would be an unnecessary duplication. Phase 1 of HS2, of course, is about adding capacity to the rail network, not reducing it. The power can be used only for closures that are necessary for the construction and operation of phase 1 of HS2, and currently we have identified only one that is necessary.

Turning specifically to the amendment, as I said, clause 40 is essential if phase 1 of HS2 is to be delivered efficiently and effectively. However, I understand the importance of getting the clause right to ensure balance. As I mentioned, London TravelWatch asked for an explanation of the power, and I responded separately. It is important to remember that clause 40 as proposed would apply only during construction. When the line is operational, it will not apply.

As I said previously, we have sought not to legislate unless necessary. I do not believe that it is necessary to insert the word “reasonable” into the clause, as in amendment 17; it is inherent. Inserting “reasonable” in that context would cast doubt on other provisions of the Bill. Similarly, I do not feel it necessary to remove the word “expedient” as amendment 18 would do. We would still behave reasonably. As to amendment 20, the Secretary of State would need to be satisfied that any closure was appropriate, having worked closely with the relevant railway operators, so I do not think any such closures require a parliamentary process.

Amendments 18 and 19 would, in relation to the line and the stations respectively, limit the power to the closure of the eastern line end of the Northolt and Acton line—known as the “Wycombe single”—which currently carries one weekday passenger service, and remove the ability to close stations. I repeat that at present there are no station closures for the delivery of HS2, and the Wycombe single is the only line that we expect will need to close. That was outlined in the environmental statement. However, I must stress that the design of HS2 is at an outline stage, so we cannot guarantee that other closures will not be necessary. Therefore a level of flexibility is involved. Currently there are no stations that have been earmarked, or are being contemplated, for closure. The provision is purely about allowing some flexibility, should unexpected situations occur.

I hope that what I have said reassures the hon. Member for Middlesbrough that the amendments are not needed, and that in some cases they could not be passed if we are to deliver HS2, and that he will withdraw the amendment.

[Mr David Anderson (Blaydon) (Lab)]

To take the Minister back to what he said about flexibility, which I understand, if it were decided that some stations needed to go, what degree or level of consultation would take place?

[Mr Goodwill]

As I say, we are not proposing that. There would certainly be wide consultation. In this theoretical case that we cannot actually identify, there would need to be provision for the passengers who used that station. Indeed, if there were plans to build a new station, of course that would mean closing the old station that it was to replace.

As I have said, the provision is purely another example of braces and belt, in case we should find ourselves in the unexpected situation of needing to close additional lines or a station. The clause would allow us to do that, but I have not heard even a hint that we might need to close stations. Indeed, HS2 is about increasing capacity on the line, and people’s opportunity to travel. That is why it has been welcomed across the political divides in the House.

I hope that the hon. Member for Middlesbrough will withdraw his amendment and accept at face value my assurances—“reasonably” is my middle name, for goodness’ sake—that we certainly do not have a hidden agenda that the clause is intended to facilitate.

--- Later in debate ---

[Andy McDonald]

I can see that the right hon. Gentleman is content.

The amendment is about working in the best interests of taxpayers and to ensure that they are not sold short. The taxpayer is our concern, not the private entity that might have transferred to it property and/or property rights which of themselves had been the product of the taxpayer’s significant investment—the sum of £55 billion, or thereabouts. Calls upon the nation’s tax receipts are onerous and to be used wisely, so it is essential that we ensure that those moneys that have created such valuable assets—money that could have served other urgent and serious demands in our communities—are not simply siphoned off into the private sector.

Our concerns are not idle ones, but are extremely well founded. We are dealing with a potential asset sale as I speak, namely the announcement by Network Rail of its intention to sell some 18 railway stations on the existing network. It is of immense concern that, should any such sales go ahead, the receipts will be those of a fair market valuation and not simply from a fire sale to reduce Network Rail’s debts. In advance of the Nicola Shaw review, we hear that Network Rail is to sell off 18 major stations, including Waterloo, Reading and Leeds, in an effort to cut its £50 billion debt. If memory serves me right, Reading has benefited from public investment of some £897 million. I am sure that the public will be watching carefully what happens to the ownerships of those and other named stations.

The same concerns apply to HS2. I am afraid that the Government have form and that we have less than good experience, to say the least, of sell-offs of publicly owned assets that failed to secure fair or market value for the taxpayer. We need cast our minds back no further than the disastrous sell-off of the Royal Mail, which is still fresh in the minds of millions of voters. The Select Committee on Business, Innovation and Skills found that taxpayers may have lost out on about £l billion from the undervaluing of Royal Mail. Apparently, the Government feared failure and acted on bad advice over the Royal Mail stock market flotation. As we know, the shares fluctuated widely with an initial price of 330p which jumped as high as 618p and now stands somewhat lower than that. The then Business Secretary, Vince Cable, said:

“They”—

presumably meaning the BIS Committee—

“now have the benefit of hindsight, which we didn’t have at the time. We sold at a price that was regarded as the best that could be achieved in the context in which we sold it.”

But the Chair of the BIS Committee, my hon. Friend the Member for West Bromwich West (Mr Bailey), said:

“It’s very important that when the government does sell off a government asset, it does so through a process that quite clearly demonstrates that nobody selling it, nobody advising it, has a conflict of interest”.

We do not want a repeat of the conduct of the likes of Lazards who were working on the inside on the sale of Royal Mail as Government advisers and then, because of the erection of an invisible virtual Chinese wall, were able to fill their boots on the acquisition of Royal Mail shares from the profits they achieved in a few short hours after launch. A number of individuals, some with high-profile political associations, also personally cashed in. We simply do not want HS2 to be turned into a profiteering exercise at the public’s expense.

You will recall the evidence unearthed by the Public Accounts Committee under the expert chairing of my right hon. Friend the Member for Barking (Dame Margaret Hodge). It revealed that Lazards advised the Government not to increase the price of Royal Mail shares, despite widespread fears they were hugely undervalued, and made a profit of more than £8 million by immediately selling the company’s stock. My right hon. Friend the Member for Barking said that Lazards

“made a killing at the expense of the ordinary taxpayer that lost £750 million in one day”.

A subsequent report by the National Audit Office found that the Government decided against increasing the flotation price of Royal Mail beyond 330p a share because of warnings from Lazard & Co. Government advisers were asked point blank at the Committee chaired by my right hon. Friend the Member for Barking how they could get it so wrong that it cost the taxpayer £750 million on that one day.

Vince Cable, the then Secretary of State for Business, Innovation and Skills, said that the postal service should,

“start its new life with a core of high-quality investors who would be there in good times and bad”.

So much for that hope, Mr Hanson. As you and I both know, the road to hell is paved with good intentions.

[Mr Anderson]

Will my hon. Friend also recall the fact that it is not only the Royal Mail? The coal industry was privatised in 1994. One of the arguments for privatisation was that it would transfer the risks from the public sector to the private sector. We had the situation where a company was importing coal from places like Colombia, which uses child and slave labour to dig coal out of the ground. The Government presided over the closure of the last deep mine colliery in Kellingley at the end of 2015, but the people who bought the coal industry have used assets in land and estates which have multiplied massively from what was paid for them in 1994.

[Andy McDonald]

I am grateful to my hon. Friend for making that point. It is absolutely imperative that we learn lessons from previous experiences, and that is what the amendment is intended to address. We do not want to keep repeating these errors and finding the taxpayer short-changed. Certainly, when there is something so prestigious and ambitious and it has widespread support, we do not want its reputation tarnished in any way. We want it to be sustained.

--- Later in debate ---

[Mr Goodwill]

If I may, I will turn to an example more closely allied to the matter before us today, which is the case of HS1. We sold a 30-year concession on HS1 to operate and maintain the infrastructure for £2.1 billion. The Ontario Teachers’ pension fund took that concession for a 30-year licence. After the 30 years, the HS1 line returns to the Government, and we will have the opportunity to sell another concession; to keep it, possibly within Network Rail; or to give it to another operator such as, as I have said, Network Rail. The sale of the HS1 concession involved a rigorous bidding process to ensure best value. No decisions have been taken on the commercial model for HS2. It should also be noted that if any transfer of assets, rights or liabilities occur, the Secretary of State can impose conditions such as restrictions on the sale of assets, which will protect assets if that is thought appropriate.

We would always seek to get best value in the sale of the concession, and the value of the concession will take into account the value of the assets being transferred as well as the liabilities and revenue, and this would therefore be priced in. I hope that that clarifies the position so that the hon. Gentleman understands the purpose of the amendment, but, given the political differences between us on this issue, I suspect that I will not be able to satisfy him and he will press his amendment to a Division.

[Mr Anderson]

The Minister talked about the issue of privatisation and how successful the businesses have been, but consumers might have a slightly different view about the prices charged by companies such as British Gas and British Airways and whether they are doing a great job. They might also have a different view on the fantastic performance of the Government. Figures released today say that the national debt is now £1,580 billion, having increased by 50% on his and his Government’s watch.

We can have the political debate later on about ownership, and I am sure we will, but what I am trying to get my head around is what the problem is with the amendment. What the Minister is saying is what we are asking for: automatic best value and so on. Is that not exactly what the words on the amendment paper say? I cannot get my head around why on earth we cannot just say that if and when it happens, the Government will get best value for the customer, the taxpayer.

If we leave the clause as it is, it more or less says that the Secretary of State has the power to give away parts of the system, or all of the system, to anybody, without any price whatever. I know—I hope—that that is not the intention, but the clause at the minute says exactly that, and the amendment tabled by my hon. Friend the Member for Middlesbrough would prevent that from happening.

[Mr Goodwill]

I will respond briefly to that point. This Government always seek to get best value for the taxpayer. There is an important debate to be had, although maybe not at this stage, about how the railway will be delivered—whether we operate a traditional franchising process, run the line directly for a while to demonstrate its ability to raise revenue for a future operator or let a concession, as we have done with HS1, to allow an investor to come in and benefit from the income from the operator. There are a number of issues that we should consider to ensure that we get best value, but those decisions need to be made at the start of the next decade, so I think we would be rushing our fences to do it now.

Once again, I underline that this Government will always seek to get best value for the taxpayer. The previous coalition Government’s record of doing so was a major contributor to the results we achieved last year in May, when the British people had confidence that a Conservative Government could be a sound custodian of the public finances and come to grips with the economic mess that we inherited in 2010. That is a debate for another day, but I assure the Committee that we will always seek to get best value, and the clause—without the amendment, which is superfluous—will do precisely that.