South West Trains

Dominic Raab Excerpts

Wednesday 29th October 2014 Westminster Hall

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

It is an enormous pleasure to serve under your chairmanship, Dr McCrea, for what I think is the very first time. I would certainly remember if I had served under you before. May I take this opportunity to welcome the relatively new Minister to her job? I am sure she will bring her characteristic gusto and gumption to the role.

I raised the issue of value for money on South West Trains with the Minister’s predecessor in a similar Westminster Hall debate in March 2013. I have to say with an element of regret that the service is not getting significantly better 18 months on. I say that not only from the clear data available, but as a commuting MP. I stand on the platform with my constituents, directly accountable to them, paying an ever-increasing fare both for the service on the train and for the parking at the station. Together we have experienced the steadily increasing overcrowding of a prime commuter route.

Based on the 2013 data published last month by the Department for Transport, I was not surprised to learn that one particular service that I regularly use—the 7.32 am from Woking to Waterloo—has the largest number of passengers in excess of capacity of any service in the entire country. By the time it arrives at Esher at 7.52 am, it is packed to the gunnels. According to the official data from the Department, it has 540 passengers over the specified maximum capacity limit, amounting to a 73% breach of the ceiling. It is little wonder the Daily Mail has dubbed the service the “sardine express”.

It is not just one train or some extraordinary occurrence. The 7.32 am has consistently appeared in the top 10 overcrowded peak services in recent years. Nor is it a particularly freak time. For example, the 7.02 am service is almost as packed. My experience as a commuter tells me that acute overcrowding is a serious problem for at least half an hour at peak commuter times in the morning. I get on the service at Esher station. I know first hand how rammed the carriages are. Occasionally—I saw it recently—it is sometimes even impossible to get on the train, which has all sorts of implications. It is not only inconvenient, but there are economic costs to businesses and to people in their personal lives. Clearly, the Surrey network feels the pressure of a very high volume of commuters.

[Caroline Dinenage (Gosport) (Con)]

I congratulate my hon. Friend on securing this important debate. Does he agree that overcrowding is not the only problem? The Minister might be surprised to know that I never get complaints about the quality of the railway in the Gosport peninsula, because we are the largest town in the UK not to have any railway or indeed any station. However, we do get complaints about the Portsmouth service, which is not only overcrowded, but inadequate. It has slow journey times on a 1930s infrastructure, and eye-watering prices.

[Mr Raab]

My hon. Friend has raised her point with typical cogency and precision. I do not know all the facts of the case of that line, but I am not surprised, given my experience of South West Trains. She is certainly right that overcrowding is not the only problem, and I will come to some of the others. The overarching point, as my commuters tell me, is value for money.

[Caroline Nokes (Romsey and Southampton North) (Con)]

I, too, congratulate my hon. Friend on securing this important and, it appears, annual debate. He is moving on to an important point. One of my constituents said to me this morning that they would accept consistently increasing prices if the quality of service improved, and concluded by saying, “That is not the case currently.” Does my hon. Friend agree that the nub of the problem is that commuters are paying more for what they see as a worse service?

[Mr Raab]

My hon. Friend is absolutely bang on. That is the crux of the matter. We have heard interventions already about other parts of the country. I can speak for Elmbridge and for Surrey, but it is interesting to hear that the problems are systematic and not parochial.

Clearly, the Surrey network feels the pressure of a high volume of commuters. In Elmbridge borough alone, some 12 million people use our stations. The number of recorded journeys almost doubled between 2002 and 2010, so demand is high and increasing. Fares will rise by 2.5% again in the new year. The Minister will say that that is not a real-terms increase, so we thank heavens for small mercies, but none the less it is an increase. The fares are already some of the most expensive in Europe. A season ticket for the 25-minute journey from Esher to Waterloo currently costs just under £2,000, and many pay a good deal more.

What is hard to explain, let alone justify, to many passengers—I think my hon. Friends were making this point—is the enormous subsidy that they pay as passengers for other lines across the country. That is largely hidden from view. Of course, redistribution of wealth is a natural function of general taxation—it is the stuff of politics and Parliament to debate how much or how little there should be—but I doubt that many are aware of quite how stark the impact is. Certainly, in my area, Surrey residents contribute £6 billion to the Treasury, and we get back less than £1 billion in services. The point is that, on top of that redistribution of wealth via general taxation, Surrey rail passengers, through their fares, are not just paying high fares for the services that they use. They and many others using South West Trains are paying a whopping subsidy for investment in the rail network across the rest of the country.

In 2013-14, South West Trains passengers paid the Department for Transport the highest premium for their rail service at 5.2p per passenger per kilometre. That compares to the 13.1p subsidy doled out by the Government to Arriva Trains Wales, or the 2.8p subsidy received by London Midland, and the 2.2p subsidy received by Southeastern. Some train companies are therefore paying an inordinate amount for the right to run the service while others are effectively receiving a subsidy.

Over the past four years up to 2013-14, South West Trains passengers have effectively coughed up the largest subsidy to Government coffers of any train operating company, totalling just over £1 billion. That is the scale of the subsidisation of other lines by my commuters and other passengers using South West Trains. That is more than £1 billion over and above what is redistributed via general taxation. It is a staggering amount.

Aside from the scale and the volume or the amount, no one can explain to me how this allocation of premiums and subsidies across the train operators is calculated. I have looked at the franchise contracts for the train operating companies. They do not disclose the information. We are told it is too sensitive, and the Minister’s predecessor could not explain what the allocation or criteria are. It looks arbitrary in terms of the relative wealth of the areas concerned. For example, Southeastern received £97 million in 2013-14 to run the service, compared with South West Trains, which paid £312 million for the right. Will she, if she can, explain in plain language that my constituents can understand how the allocations—the premiums and the subsidies—are worked out? How are they calculated and how are they justified? In particular, how can they be justified given what we have heard about overcrowding, particularly on South West Trains?

I referred to the sardine express earlier, but that is just one service. In 2013, average overcrowding on South West Trains was the joint third highest in London and the south-east. Overcrowding increased in each of the preceding four years. South West Trains services featured three times in the top 10 most overcrowded services across England and Wales for 2012, and twice again in the Department’s spring 2013 data. To put those raw numbers into perspective, EU rules stipulate that calves, adult goats and unshorn sheep must be transported by train in an area of space of at least 0.3 square metres per unit of livestock, but the new Government standard for commissioning commuter services for humans is now 0.25 square metres, which is significantly less. I understand that the only train company operating to that standard is—you guessed it, Dr McCrea—South West Trains. Can the Minister explain why my constituents, who are paying ever-rising fares and doling out more than £1 billion to improve rail services for the rest of the UK that they will rarely use, do so for the privilege of travelling at one grade below cattle class on South West Trains?

The Minister will understand immediately why in Passenger Focus’s 2014 national survey, South West Trains passengers ranked their service the third worst in the country on value for money, with a bare 37% saying that they were getting bang for their buck. That dropped to 28%—barely a quarter—for peak-time passengers. Just in case anyone thinks that all passengers and commuters grumble, that compares with approval on value for money of 78% with Grand Central passengers and 61% with Virgin Trains passengers. It is not beyond the wit of man or woman.

I recognise that South West Trains will argue that it is playing the hand it was dealt by Government in the franchise agreement. That is the line, and there is obviously some truth to it. The Government ultimately decide on the premium or grant, and that very much conditions and influences the nature of the service that can be run and the resources available. That might, however, be a little easier to swallow if director remuneration at Stagecoach Group, which is the operating company, had not doubled between 2010 and 2014, just as these developments were taking place.

Nevertheless, with the fragmented nature of responsibility for rail services, it has got difficult to get straight answers to straight questions. As an MP, I find it difficult to explain to commuters and constituents why the high fares they pay deliver so little in return. My hon. Friends have made that point. What action has been taken to deliver a fairer deal for my constituents and the many others using South West Trains who feel as though they are treated like a cash cow, despite travelling in sub-cattle class conditions?

In particular, what progress has been made on expanding the platforms available at Waterloo into the international terminal that used to service the Eurostar routes? I understand from the managing director of South West Trains that that, at least in the short term, offers the greatest scope for lengthening platforms and trains, thereby easing overcrowding along the lines I have mentioned. Does the Minister agree with that analysis? If so, what is holding up progress in that direction? Will she update me on the options for Crossrail 2? I understand that her officials are looking carefully at the so-called regional option, which would link to the metro option, servicing south-west London, Surrey and Hertfordshire. That would substantially alleviate pressure on existing services, as well as carrying a multitude of other regional benefits. What is her view on the regional option?

Finally, we have been sweating under the franchise agreements signed off by the Labour Government. I have always argued that they bear the responsibility for the framework in which we are operating, but an extension to the South West Trains agreement was agreed in 2013, taking it to March 2019. I am sure the Minister’s Department looked carefully at the terms of the extension. Will she help me explain to my constituents what the premium or subsidy will be between now and 2019? What criteria are being used for that? What are the objective grounds justifying the different rates at which operating companies are being charged or paid?

My constituents have rather stoically endured the immediate frustration of high fares and acute overcrowding. We all know the financial situation the country faces, and that rising demand for rail services will continue for a range of demographic, economic and environmental reasons, but the raw truth is that, when I stand on that platform with my fellow constituents and take the sardine express up to Waterloo, I need to be able to explain in clear language how we will address over the long term the conditions of travel, which are often cramped and uncomfortable. I need to explain how we are going to deliver better value for money. I need to give them some light at the end of the tunnel. I hope the Minister can provide me with a degree of reassurance today.

[Dr William McCrea (in the Chair)]

I call the Minister to give a first-class carriage answer.

--- Later in debate ---

[Claire Perry]

As always, my hon. Friend hits the nail on the head. I have travelled that route, visiting one of her neighbouring constituencies, and I was struck by the pace at which some of those trains travel.

To return to the particular service mentioned by my hon. Friend the Member for Esher and Walton, the 7.32 train from Woking to Waterloo is, I think, the second most crowded passenger journey in the UK. I have been on that journey. I am in the process of mystery shopping the top 10 most crowded routes to see for myself what they are like. On that particular day, the operating company took four carriages out of the service for operational reasons, because of problems the day before. That meant that we were leaving passengers at the station pretty much all the way along the line.

It is incredibly important that the Government tackle these issues and deliver value for money in the eyes of passengers. My hon. Friends have alluded to that. The good news is that the Government recognise that. For the first time in a generation, we are reinvesting real money in the railways, with £38 billion being spent over this capital period to the end of 2019. That is the biggest investment in rail and rolling stock since Victorian times.

As my hon. Friend the Member for Esher and Walton pointed out, the franchise that we are debating was, like so many others, let under a previous Administration who thought that electrifying nine miles of track in 13 years was good enough. The franchises were let with no provision for growth and investment, which resulted in a huge squeeze for passengers. One of the things I am very proud of is that the Chancellor has for the second year delivered a real-terms freeze on fares, as well as scrapping the flex that enabled companies to put up their prices outside the regulated boundary willy-nilly. This Government understand value for money, unlike the previous Government.

The challenge that my hon. Friend outlined is how to pay for the investment, which gets to his point about subsidy versus premiums across the network. He does the analysis, as I do, so he knows that there are two ways to pay for investment in the railway: general taxation and a contribution from those using the railway. Only about 8% of commuters use the railway to get to work; twice as many take the bus and many more still walk, cycle or take their cars. Taxpayers of course contribute substantially to investment in railways through general taxation. In some cases, passengers contribute as well. Taxpayers and fare payers are often the same people, so they are right to feel aggrieved, particularly when their services are not running.

In general, the challenge as to which franchises are in receipt of subsidy and which are generating premiums is an operational negotiation at the time of letting the franchise and as patterns change as services unfold. Overall, however, the McNulty review found substantial operating costs right across the railways—far more than our European comparators—that need to be driven out, which we are working hard with Network Rail and the operating companies to achieve.

My hon. Friends each hit the nail on the head. Passengers often do not feel that they are getting value for money. They travel on slow, crowded trains and cannot understand why timetables get messed up and why the network’s resilience can fail if there is a fatality or some operational problem. All my hon. Friends will be delighted to hear that part of the £38 billion investment commitment is being spent on the South West Trains network. Just a few weeks ago, I was on the platform at Waterloo with South West Trains and its Network Rail alliance colleagues, Siemens and Angel Trains, to announce that 150 new vehicles are currently being made to be put into use on the franchise by the start of 2018. The introduction of the new trains will lead to the cascading of existing fleets, generating enough seats for 24,000 additional peak-time passengers. That is in addition to the carriages that are starting to arrive now which will also deliver additional seats.

My hon. Friend the Member for Esher and Walton made an interesting comparison with the rules for movement of livestock versus the space available for people. He and I have seen how crowded trains can be. It is not like being on a tube train, with another coming along behind. People are being made late for work if they cannot board their train. Part of calculating overcrowding is based on duration of journey. There is a strong expectation that nobody travelling for more than 20 minutes should be standing beyond that point. It is not always achieved, but that is the sort of standard that we seek.

My hon. Friend mentioned the work at Waterloo station, which is not only about new trains but about new platform capacity. Much of the network’s signalling needs to be renewed, which is happening. It is also important that the four unused platforms at the former Waterloo International Eurostar terminal are brought back into service. A few winters ago, I took my children to see the “The Railway Children”, which was a marvellous production featuring a steam train coming into the station. How strange it was that platforms at the busiest station in Britain were being used for theatre rather than letting people get on and off trains. That vital piece of infrastructure is now being restored for railway use and will be able to accommodate longer trains on platforms 1 to 4, removing a constraint that has bedevilled commuter journeys from my hon. Friends’ constituencies for many years.

[Mr Raab]

The Minister will want to get through the rest of what she has to impart, but I have two questions. First, given the investment and work going into expansion at Waterloo, has she received assurances or projections from South West Trains that it will be able to alleviate overcrowding by a certain amount as a result of the extra capacity? Secondly, she said that the decision on subsidies and premiums was an operational matter. There must be a public policy on the criteria, rather than there just being a negotiation haggle based on the bids coming in at the time. It must be more than a purely commercial decision. I should be grateful if she could give me some more detail on how the subsidies and premiums are decided, as it is the Government who sign them off.

[Claire Perry]

The problem is that people can turn up and pay to travel on our railways. It is not like an airline, which shuts the doors once a plane is full. While we hope that additional capacity will immediately reduce overcrowding, if more people choose to travel by train, that capacity will continue to be filled. Part of the problem is that the railways have for too long been treated as something that is in steady state. As my hon. Friend the Member for Gosport (Caroline Dinenage) said, we had not realised the importance of the railways in generating economic growth or just how valuable the services are to people who travel in and around the south-west and other parts of the country. While I cannot absolutely assure my hon. Friend the Member for Esher and Walton that overcrowding will drop by X per cent, this is the biggest investment in platform capacity and rolling stock for a generation. I hope that when he and I again take the 7.32 train, the situation for all busy services on the network will have changed.

The issue of premiums and subsidies is complicated and relates to predicted cost bases and revenues. In some cases, franchises deliver far more in premium, because passenger numbers go up so the amount from fares goes up. In other cases, there are cost relationships with Network Rail, depending on delays and performance. It is a franchise-specific issue, but I agree that it can be difficult to understand the situation in relation to a specific area. The fundamental problem is that we need to keep investing in the railways right across the country and to ensure that we are driving down operating costs. I am sure my hon. Friend has found that if he explains to passengers on the 7.32 or other trains that a bit of their ticket price is going into reinvestment in the railways to give them a better journey experience, they will feel better about it. That is value for money. The problem is paying for something and getting nothing back.

[Mr Raab]

The Minister is being generous with her time; I know that she has other points to make. It seems to me that it is a raw commercial decision. The fact is that South West Trains passengers will keep paying more and more and South West Trains will keep paying more and more, because there is inelasticity in demand, which ties in with her earlier points. I like to be honest with my constituents and talk to them in plain language. Are the Government saying that the high subsidy—it is called a premium, but it is effectively a subsidy—is what it is because that is what the Government can get away with?

[Claire Perry]

No, I am not saying that at all. My hon. Friend and I both know that passengers also pay, as we all do, for the underlying improvements in track, stations and signalling through general taxation as, indeed, do all the people who do not commute via train. There is general investment in the railways from all of us, as well as specific investments. The idea that captive passengers are treated as a commodity is absolutely 180° opposite to how I feel. Passenger experiences and value for money should be at the heart of every franchise and direct award that we let. My hon. Friend will be pleased to hear that that view is shared strongly by my team.

To touch on one of the things mentioned by my hon. Friend, the alliance between South West Trains and Network Rail is crucial to delivering some of the capacity unlocking that we have talked about. It has been a great success and has delivered things quickly, and its maintenance until the end of 2019 has led us to extend the direct award until then. The alliance is working hard to continue to improve punctuality and performance on the Wessex routes.

Value for money is at the heart of the debate. It is great that the Chancellor has frozen fares again for all regulated passengers, many of whom are season ticket holders. Many more things can be done around promotional fares. I do not know whether my hon. Friend has noticed that South West Trains has brought in a whole series of good-value promotional fares for those who have some flexibility about when they travel during 2014, in particular to coincide with the school holidays. It cannot be a coincidence that when I was in Waterloo this morning, I met two of my former neighbours from Salisbury who had travelled up on those great fares and were visiting London as a result.

My Department’s priority has to be to continue to manage investment in the railways in a way that delivers maximum benefits to passengers and the economy.

[Mr Raab]

The Minister has touched on all the points that I made; I am grateful to her for assiduously doing that. If she can, will she give me her snapshot of Crossrail 2 and the regional option? Does she have a view on that, or would she like to take it away and write to me later? It is a long-term investment, but it would be good to know her view.

[Claire Perry]

Crossrail 1 is delivering a huge amount of connectivity and releasing some capacity on our hard-pressed inner-city and inner-suburban services. May I write to my hon. Friend or, indeed, meet him over a cup of tea to discuss Crossrail 2, which is very much in the planning stage?

We have to keep investing and delivering efficiencies and, above all, we have to put passengers and their journey experience at the heart of everything we do. We are not moving air, or lumps of steel, aluminium, titanium or ceramics; we are moving people. I know from experience how miserable it can be to try to get on an overcrowded train and not to be able to do so. That is unacceptable and we must all work towards a new future for the railways.

Question put and agreed to.