Railways

Fabian Hamilton Excerpts

Thursday 25th April 2013 Commons Chamber

[Lilian Greenwood]

My hon. Friend makes an important point. Of course, it is not just about the premium payments. At the moment, because the east coast main line is run by a not-for-dividend operator, not only is it making the premium payments to the Treasury, but the £40 million surplus has not been shared with private shareholders; every single penny has been reinvested in improving services. I think that is what UK taxpayers and passengers want.

[Fabian Hamilton (Leeds North East) (Lab)]

Following what my hon. Friend the Member for Glasgow South (Mr Harris) has just said, will my hon. Friend hold the Minister to account so that the Government ensure not only that the franchise delivers more to the Treasury than the Directly Operated Railways are currently delivering, but that the franchise can afford to do so, because we remember the National Express fiasco?

[Lilian Greenwood]

My hon. Friend has said exactly what needs to be said on the matter.

The European Commission’s case for extending competition in that way can be found in a recently published non-paper, or document for discussion, on the UK railways. Actually, the term “non-paper” covers it rather well. It implies that privatisation was responsible for improving safety, but in fact the infrastructure sell-off had the opposite effect and subsequent investment in safety was taxpayer-funded. It also claims that privatisation itself was responsible for increasing passenger numbers, but other countries that did not fragment their systems also experienced comparable levels of passenger growth, as the Transport Committee acknowledged this week.

Most remarkably, the non-paper suggests that privatisation has reduced subsidy. At the time, we were promised a more efficient railway, but subsidy rocketed. As the Office of Rail Regulation’s financial report last week confirmed, in 2011-12 train operating companies received more public funding than they paid back. They were paid £51 million more than they gave back in premium payments, while the Government paid almost £4 billion towards the cost of infrastructure.

--- Later in debate ---

[Fabian Hamilton (Leeds North East) (Lab)]

Before I begin my brief comments—I will keep them brief as we are running out of time—may I say I find it astonishing that over the past three years when the Government have sought to blame somebody for their appallingly failed financial and economic policy, they have blamed the previous Labour Government and not their own policies, yet when they want to take credit for investment in the railways that must have been made at least three years ago under the previous Government, they take credit for that? Such things cannot be done that quickly.

I have a couple of brief points that relate, believe it or not, to the east coast. I have used the east coast main line for the past 16 years to come to London and return to my Leeds North East constituency, and we have seen many changes during that period. Great North Eastern Railway operated that line as a private company extremely well, and led the field. Unfortunately, however, its parent company went into liquidation and the franchise was taken over by the disastrous National Express experiment. When that failed, it had to hand the franchise back to the Government because it could not keep up with the payments it had promised—that is why I made my earlier intervention. I hope the Minister will ensure that if the line is franchised, the franchisee can afford to pay the money it promised.

Since Directly Operated Railways has been running the east coast, it has been a superb service and I thank its staff and management for running that service so efficiently, excellently and profitably. We have heard time and again this afternoon that £640 million has been returned to the Treasury over three years, and it is estimated there will be at least another £160 million in the current financial year. Contrary to what the Minister said, my understanding is that Virgin Rail has returned just £200 million net to the Treasury in 15 years. How does it make sense to say that it will be more profitable and better for the public sector and the Treasury to return the east coast line to private hands for private profit to be paid out to shareholders? Will that improve the service? I would say no. It seems ideological and defies common sense.

Last year I believe that the Government, through Network Rail, gave £172 million to rail operators to compensate passengers for delayed or cancelled trains. East Coast trains paid £6.6 million of that, not because it was the worst performer but because it was the most honest. The average paid by the other companies was just £400,000. What have they done with that money? Why has that money not been paid back, and why have people not been encouraged to claim in the honest and decent way practised by East Coast? My final question to the Minister—I do not suppose he will have much time to respond—is will he please think again about refranchising the east coast line? If it is not broken, do not try and repair it.