Greener Road Transport Fuels

Graham Stringer Excerpts

Tuesday 15th October 2013 Westminster Hall

[John Pugh]

I think I might reserve the phrase “crime against humanity” for other things, but I recognise the impact. A number of third world charities believe that the net effect will further impoverish the third world and the areas that most need our help.

[Graham Stringer (Blackley and Broughton) (Lab)]

The hon. Gentleman rather skated over the issue of hydrogen-fuelled cars. I drove in such a car 10 years ago in Detroit. The technology is perfectly good. Does he agree that hydrogen suffers from exactly the same problem as biofuels, which is the source material, in that we must have land to grow source material from which to extract hydrogen?

[John Pugh]

I am sure that the hon. Gentleman understands hydrogen propulsion a lot better than I do; I hope he makes a contribution. I am betraying my ignorance here. I am just providing a preamble to what I hope will be a successful plea in favour of greater and more effective use of LPG. I do not in any way counter or dismiss the value of what the hon. Gentleman said.

--- Later in debate ---

[Ian Swales]

No, absolutely not. My point was that the high-grade, high-protein animal feed, which the by-product feed replaces, is typically grown in South America, so the by-product feed reduces the demand for soya-based proteins, mostly from South America. There is a green chain. The situation is not as simple as people say.

The Government have had a policy for putting biofuels into both diesel and petrol for years. Starting with diesel, they set the targets and people invested large amounts in chemical plant, but all the early investors went bust because the Government kept moving the goal posts—surprise, surprise, the same has happened with bioethanol. The £300 million that people invested in the plant in my constituency has largely gone and the plant recently changed hands for a lower price. Why? Because the Government have not delivered on the renewable transport fuel obligations they said they would when the investment case was originally made.

The hon. Member for Southport mentioned an important point: we need certainty for green technologies. If we are asking people to invest large amounts of capital, we cannot keep changing our minds. Changing one’s mind leads to an industry heavily dependent on imports of green products. Unless we give investors certainty about the goal posts and the environment into which they invest, they will not invest anymore. Most of the early investors in such technologies have done badly and that is mostly due to Government policy.

For the same reasons, we need to ensure at EU level that targets for the proportions of biofuel in diesel and petrol are separate. If we allow an overall target and let oil companies play games over how much biofuel they put into each one on any given day, the people who have invested heavily in capital plant will have years of feast and years of famine, as the oil companies play their games, and will eventually exit the market. Again, traders will be left to pick up the pieces.

[Graham Stringer]

The hon. Gentleman is making an interesting speech and I have learnt a lot from it. Is not the fundamental point of what he is saying that in asking the Government to pick one technology over another, we are asking them to pick winners? History shows us that the Government are much better at picking losers than winners.

Rather than the Government’s picking winners and choosing where to put subsidies, would it not be better for them to switch some of the subsidies currently going into the energy industry—there is a huge debate about that at the moment—into research, so that we can move on to the next generation of renewable technologies, which the market will support?

[Ian Swales]

The hon. Gentleman makes a good point. I have told many potential investors in the industry that we cannot expect the Government to make winners. As at a roulette table, they will put their chips on lots of different numbers, but having made policy on, for example, the proportion of petrol that should come from bio-sources, they cannot change it when people are putting in hundreds of millions of pounds. By the way, those biofuels do not get a subsidy; all they need is a market that is understood and left to prosper. I agree with his point, but at some stage we must not so much pick winners, as set the environment for particular sectors of the market to thrive.

Oral Answers to Questions

Graham Stringer Excerpts

Thursday 12th September 2013 Commons Chamber

[Norman Baker]

As I mentioned a moment ago, the Government is investing heavily across all modes in the north-west of England, which is one of the areas to benefit most from the Government’s investment in the forward period. That includes investment in the road network, but if the hon. Gentleman is concerned about a specific road, I will be very happy to discuss it with him.

[Graham Stringer (Blackley and Broughton) (Lab)]

For maximum economic benefit, the high-speed link needs to go to Manchester airport, yet it is left out of the otherwise excellent KPMG report, which brings a serious dimension to this debate. When will it be included?

[Norman Baker]

We fully appreciate the importance of Manchester airport, which meets a very important regional need. The issue of HS2 and Manchester airport is under consideration, so the hon. Gentleman should not be unduly pessimistic about that.

Rail 2020

Graham Stringer Excerpts

Wednesday 3rd July 2013 Commons Chamber

[Mrs Ellman]

My hon. Friend makes a relevant comment.

As Network Rail’s debt has grown, more money is being spent on servicing that debt than ever before, and train operating costs have increased. Rail subsidy is necessary. Few rail lines would be profitable on a commercial basis, and even potentially profitable lines would lose passengers if the national network was cut back. There are good environmental and social reasons to subsidise the railway, and we were pleased to hear that the Government share that view.

Although the Government want to cut the subsidy, it is not clear what level of reduction they seek and under what time scale. Neither is it clear exactly where the subsidy goes at present. The Department should articulate more clearly why it subsidises rail and what taxpayers get for their money. We recommended that the Government consult on and publish a clear statement of what the rail subsidy is for and where it should be targeted. The Department’s reply was disappointing and focused on practical difficulties because of current funding arrangements. There is scope for much more work in that area.

This issue illustrates the lack of transparency in the rail industry. That has now started to change with recent work by the Office of Rail Regulation and the disclosure of wide variations in the financial performance of different routes and operators. Establishing why those variations occur will be crucial to ensuring that the rail subsidy is well spent.

Securing the efficiency savings indentified by McNulty will be challenging, particularly as they require different parts of the industry to work together in new ways. More than £1 billion is expected to be saved from train operating costs. I am concerned, however, that the savings have been put at risk by the Department’s problems with franchising. In many cases, existing franchisees will be awarded new contracts to run services for as long as four years. The Department will struggle to drive a hard bargain with existing operators without going to the market. I ask the Minister whether the Department’s decision to prioritise the re-tendering by 2015 of the east coast main line, currently operated by the Department’s company, Directly Operated Railways, will weaken the Department’s bargaining power as it seeks to extend franchises. It is clear that the Department does not want trains to be run by the public sector.

[Graham Stringer (Blackley and Broughton) (Lab)]

My hon. Friend is making a powerful point. Does she agree that the Government are trying to privatise the east coast main line for completely ideological reasons, and not for reasons of financial benefit? The east coast main line gives £563.4 million back to the Exchequer, which is almost twice as much as Virgin gave back over a two-year period. It also gets only one seventh of the subsidy per passenger mile, so there can be no other reason than ideology. The plan is undermining the Government’s negotiating position as they extend the other franchises by nearly 26 years.

[Mrs Ellman]

I thank my hon. Friend for his comment. The Minister was questioned in the Select Committee and it became apparent that the Government’s decision was to do with Government policy. I, for one, did not hear a compelling value-for-money reason for the decision.

There are a number of ways of assessing whether a franchise delivers value for money. The letter that the Minister sent to the Committee on 4 June stated that, over the three years 2009-10 to 2011-12, the inter-city east coast franchise produced a net return to the Department of £563 million. The letter also stated that, over the same period, the west coast main line made a net return of £290 million. The Minister certainly did not accept that that meant that the east coast franchise produced better value for money, but I am simply presenting the facts in the letter as a contribution to the debate. One consequence of the decision has been the postponing of the re-letting of the west coast franchise by 29 months, to April 2017. The previous timetable had been announced as recently as November. It is a matter of concern that such constant change is unsettling for the industry.

We have already seen two direct awards to current operators, and neither has demonstrated how the Government can secure a better deal for passengers or taxpayers. In the case of the west coast franchise, we were told that there might be new services to Blackpool and Shrewsbury, but they have not materialised. The old Essex Thameside franchise paid money into the Department. The new one, a directly awarded contract to run until September 2014, will cost the taxpayer money. Will the Minister acknowledge that there will be problems in achieving the McNulty savings in the light of the franchising fiasco and its aftermath?

The Committee recommended that the Department should strengthen its commercial capability in relation to assessing franchises, that it should consider franchises being let and managed by a Department agency or arm’s length body, and that it should consider spreading premium payments over the full length of the franchise. We suggested that franchise periods of seven to 10 years would be appropriate while the situation was being reviewed. Indeed, a review is now taking place, and we hope to hear the Government’s conclusions shortly.

During our inquiry, the rail unions argued that the privatised structure was the main cause of inefficiency in the industry, and that renationalisation would bring costs down. McNulty rejected that argument, saying that renationalisation would

“take years to complete, cause major diversion of effort, incur massive costs, and delay progress on improvements”

that were under way.

--- Later in debate ---

[Iain Stewart]

I am happy to endorse the point that my hon. Friend eloquently makes. I have travelled on that line and seen at first hand many of the improvements that have been made.

The point has been made that the rail network requires subsidy to operate, and I agree with that. Many lines would not be profitable in themselves, but for social and environmental reasons they require subsidy. We need to take into account not just the operating profit and loss of an individual rail service, but the opportunity cost: the cost to the country if that rail line did not exist and people had to travel by car or another mode of transport. We can only imagine the congestion on the roads around our major cities if we did not have commuter rail lines. They might not, in themselves, be profitable, but the environmental and financial cost of having those passengers travelling by car or another mode of transport would just be too much to bear.

I welcome the Government’s commitment to continue to subsidise large parts of our rail network, but we cannot escape the conclusion that Sir Roy McNulty and others reached in their report, which was that we should be looking to make our network as efficient as possible, in order to achieve his aim of a 30% reduction in the unit cost. Our network is comparatively expensive to run compared with others. I believe that that is a product of history, not just of one approach, be it the franchise model or the nationalised model. It is a cost that has been built into the system over many decades, particularly because until relatively recently we have had a period of managed decline of our network and what investment there has been has been made on a “make do and mend” basis. Additional costs are hard-wired into our system, but the system we now have is sensibly evolving.

[Graham Stringer]

The hon. Gentleman is a serious student of the rail system in this country. There is not a lot in what he has said with which I disagree. He is trying to put the issue into its historical perspective, so let me put it into real historical perspective. When John Major’s Conservative Government privatised the railways in the 1990s, they came to this Chamber and told right hon. and hon. Members that there would be no subsidy. That was used as justification for selling the railways off at a lower price. Network Rail now carries a debt of £30 billion on its balance sheet, so I hope the hon. Gentleman will take into consideration the false prospectus that the Conservatives gave this House in the 1990s.

[Iain Stewart]

It is always a pleasure to take an intervention from my fellow Select Committee member. If the hon. Gentleman will forgive me, I will not rehash the debates of the 1990s as I am more interested in what happens from here on. In an earlier intervention, he made the point that the Government are seeking to return the east coast main line to private hands as a matter of ideology. Equally, I could argue that it is because of ideology that the Opposition want to renationalise it. I draw the hon. Gentleman’s attention to the conclusion of Richard Brown’s report on franchising, which concluded that the franchising model was not fundamentally flawed and that although the detail could sensibly be changed, the investment in and success of the railways could not have happened if the franchising was fundamentally flawed.

Let me turn to a number of initiatives that, I believe, can deliver a more efficient railway. The hon. Member for Liverpool, Riverside mentioned the development of alliances between Network Rail and train operating companies. That is a very helpful and sensible development. The one large-scale alliance, between Network Rail and South West Trains, has not been in operation long enough for us to make any sensible assessment of what savings it can deliver, but as the real expert, Nigel Harris, said in evidence to the Select Committee, it

“is the only game in town”

at the moment and requires a fair wind to achieve the savings that it hopes to.

Such alliances are not the only form of alliance available. One or two other examples provide evidence that such an arrangement can deliver useful savings and efficiencies in the railway. The project in Scotland to electrify the branch line to Paisley Canal on the Greater Glasgow network was an alliance between Network Rail, First ScotRail and Babcock engineering. They were able to electrify the branch line at a substantially lower than expected cost and two years ahead of the planned development because the power was devolved down to that level, meaning that the various experts and operators could get together and deliver the project very efficiently.

I am doing a fellowship with the Industry and Parliament Trust on the rail industry and I have spent a good number of days going around parts of the railway system. I have seen two separate examples of an alliance between a train operating company and the rolling stock manufacturer, which enables a much more efficient system of maintenance and refurbishment of the rolling stock. I visited the Kings Heath depot, jointly operated by London Midland and Siemens on the London Midland franchise, and—this will interest my hon. Friend the Member for Folkestone and Hythe (Damian Collins)—the Hitachi depot where the Javelin trains are maintained with Southeastern. Those depots are delivering a much faster and more efficient turnaround in train maintenance. They are not “grands projets” or exciting stuff, but they deliver a much better service for rail users at a much lower cost.

--- Later in debate ---

[Mr Burns]

No, because I am running out of time.

Those arrangements could involve joint working to improve performance and planning for engineering works or to reducing delays and disruption for passengers. Integrated control centres can deliver smoother and more efficient network operations.

The Rail Delivery Group brings together Network Rail, freight operators and passenger train operators. It provides leadership for the industry, and offers a coherent and focused response to the investment and operational challenges laid down by the Government. Network Rail is enhancing its accountability with a new transparency scheme to publish more information and data that are of interest to the public.

[Graham Stringer]

Will the Minister give way?

[Mr Burns]

I will not.

[Graham Stringer]

There is plenty of time.

[Mr Burns]

There is not plenty of time. I am not speaking until 7 o’clock because the hon. Member for Liverpool, Riverside would like to make a brief winding-up speech.

Network Rail has appointed a public interest director to articulate taxpayers’ views at the highest levels in the company.

Responding to the Government’s rail Command Paper, the Transport Committee published its report on “Rail 2020” in January this year. As I said earlier, we have welcomed that report and the Select Committee’s support for our strategy, which is focused on making the existing structures and responsibilities in rail work better. We are not throwing everything up in the air and starting again, given the cost and disruption that that would be likely to entail.

We are confident that our strategy can bring rail to the cutting edge of efficiency by 2019. To do so, the industry must take advantage of new technologies by looking to introduce smart ticketing and making ticket machines easier to use. The hon. Member for Nottingham South asked when that will happen. I reaffirm that it will be during the summer. Passengers will continue to be able to get help and advice from a member of staff about buying a ticket when they can currently do so. Train operators must also look at driver-only operations for trains. This is already standard practice on 30% of existing franchise services, including many commuter services in London and Glasgow.

Crucial to the debate about rail is the Department’s role in letting and managing franchises for passenger rail services. This was discussed at length by several hon. Members during the debate. The Government’s firm belief is that franchising gives us the best possible basis for doing what we want to do with rail. The most liberalised railways in Europe have seen the highest growth in the last 15 years, with the UK and Sweden first and second respectively.

The Government are committed to ensuring that we continue to have private sector innovation and experience in our railways. As hon. Members will be aware, in March we announced a new rail franchising programme, covering every rail franchise for the next eight years. It builds on much of the authoritative work undertaken by Richard Brown, as I have said. Supporting our franchising relaunch, we have now published a new guide about how franchising competitions are run. This is information that we want to be generally available and accessible to all. It will give certainty to the market and to suppliers throughout the industry and support major investment in our rail network.

To grow a railway that will support passengers and our economy, we need that railway to be financially sustainable. Our rail strategy aims to achieve that, while putting passengers at its heart.

Oral Answers to Questions

Graham Stringer Excerpts

Thursday 27th June 2013 Commons Chamber

[Norman Baker]

The arrangements for train and for bus are slightly different in the sense that the railway arrangements for the discount card were set in place at privatisation and are funded by the train operating companies, whereas the bus arrangements are of course funded from the public purse. If the hon. Lady has particular concerns about the operation of the travel concessionary scheme in her area, I will be very happy to meet her and talk about them.

[Graham Stringer (Blackley and Broughton) (Lab)]

When the Minister sat on the Bill Committee for the Local Transport Act 2008, he was not satisfied with what the Government were then proposing because he knew, as do other hon. Members, that the current deregulated system allows bus companies to game the public purse to the detriment of the travelling public. Can he not persuade his hard-hearted Tory colleagues to help authorities that want to re-regulate the system to the benefit of the travelling public?

[Norman Baker]

As far as the landscape is concerned, following the recommendations of the Competition Commission, we have of course taken steps to improve it. The options available under the Local Transport Act—the hon. Gentleman and I sat on the Public Bill Committee—are still available. I encourage local authorities to explore the best possible options. What we are seeing across the country in places such as Brighton, for example, is a good arrangement between local authorities and bus companies, which is driving up passenger numbers.

High Speed Rail (Preparation) Bill

Graham Stringer Excerpts

Wednesday 26th June 2013 Commons Chamber

[Mr McLoughlin]

I will look at the detail of that. I am certainly determined that Parliament should be kept well informed and, of course, the company will be open to the scrutiny of the Public Accounts Committee and the National Audit Office reporting to the PAC. There is a way in which the House can keep an eye on the matter.

My third point is about funding. We can today welcome the allocation made by the Chancellor in infrastructure investment. Tomorrow, the Chief Secretary to the Treasury will say more about our plans. I know that in the context of the Bill, the House will want to be updated on the cost of HS2. I can therefore tell the House that tomorrow I will be writing to the chairman of HS2 Ltd to set a target price for delivering phase 1 of the project. That amount is £17 billion at 2011 prices. That takes account of the design and environmental changes to improve the scheme. Those changes include a tunnel from Old Oak Common to Northolt, design changes at Euston station, and a tunnel under the M6 near Birmingham.

As a responsible Government, we must be prudent, which means allowing the right level of contingency. In addition, therefore, we have set an overall indicative amount for the budget for phase 1 of £21.4 billion. For phase 2, it is £21.2 billion, so the total is £42.6 billion at 2011 prices. That includes £12.7 billion of contingency.

[Graham Stringer (Blackley and Broughton) (Lab)]

At Prime Minister’s questions this afternoon, I asked the Prime Minister why the Government were opposing the continuation of the trans-European network north of London. The Prime Minister clearly did not have an answer, and I will understand if the Secretary of State does not. However, will the Secretary of State find out why we are opposing the extension of that network? While we are in the European Union, that could be cutting off a source of funding.

[Mr McLoughlin]

I heard the hon. Gentleman’s question to the Prime Minister. Those debates on that whole process are ongoing and still at an early stage. I have some worries and I would want to get clarification before we changed the Government’s position.

--- Later in debate ---

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

I beg to move an amendment:

That this House declines to give a second reading to a Bill which authorises preparatory expenditure on a railway without specifying further detail of the route and a limit on expenditure.

Let me begin by paying tribute to all the constituents and volunteers who have worked tirelessly to protect our interests in the Chilterns. HS2 Action Alliance, 51m, Stop HS2, our Conservative councillors and all the conservation groups have worked very hard and deserve all our thanks and congratulations.

There is no doubt that if HS2 goes ahead, Chesham and Amersham and the Chilterns will be badly affected. Indeed, I think that my constituents will be paying twice: once through their taxes, and once through the disruption and blight that they are suffering.

We have heard that this project was dreamt up under the last Labour Government, and I am glad that the shadow Secretary of State took responsibility for it. The mistake we made was adopting it without asking the proper questions, and now, after three Secretaries of State in as many years, we have a £50 billion project—so we heard today—not connected to any airport or other transport system such as HS1, and divided into two phases with no guarantee that the northern route will be built even in my lifetime.

[Graham Stringer]

The right hon. Lady is an excellent constituency MP and the route north of Birmingham includes Manchester airport, so, as she was once a candidate who aspired to represent Manchester, does she think she would have a different position on this matter now if she had won that election?

[Mrs Gillan]

Ah, but fortunately I was elected to represent Chesham and Amersham, so I do not have to answer that hypothetical question.

This project is also almost 30 years out of date. Thirty years ago I might have been supporting it, but people are now looking to save costs in business by using teleconferencing and superfast broadband, and they are trying to reduce the amount of travelling their employees do. If we are in a global race, I would be much happier if we were in fact connecting effectively to Heathrow and HS1, because at the moment we do not even seem to be able to repair our existing roads and railways, and we cannot use the M25 without being stuck in a traffic jam. Surely we should be looking at our infrastructure and maximising its potential before building a bright, new, shiny railway?

Last week the New Economics Foundation did an excellent piece of work: it published a report examining a variety of projects across the country that could be procured for the same sum of £33 billion. They included some very valuable improvements for northern cities, active transport systems and much more superfast fibre-optic broadband, which we need to deliver competitiveness for this country.

I may have been a nimby—when I started off, I was a nimby—but I have studied this project and I am convinced that it is the wrong project. I am not alone in questioning HS2. We have heard what the National Audit Office has said. Its report was damning. It highlighted that the Department had failed to outline clear strategic objectives, had made errors in calculating the cost-benefit ratio and is not sufficiently engaged with stakeholders, and it casts serious doubt over the capability of HS2 Ltd even to deliver this programme alongside the other demands on the Department.

The judicial review has resulted in a judgment that was shaming for the Department, finding that its consultation on compensation was so unfair as to be unlawful. The Major Projects Authority’s report—which the Government continue to refuse to publish in detail, even though the Information Commissioner says it is in the public interest for them to do so—indicates that this project is in the red/amber category, denoting a very high risk of its failing to be delivered on time or on budget.

--- Later in debate ---

[Graham Stringer (Blackley and Broughton) (Lab)]

I will not detain the House long. I speak as the joint chair of the all-party parliamentary group for high-speed rail. I am therefore highly supportive of High Speed 2. I will make four simple points.

First, this country has a shocking and disgraceful record on infrastructure, under Governments of all political persuasions. The costs of not keeping our infrastructure up to date are much greater than the costs of High Speed 2. We have built one new runway since the second world war, we have the lowest motorway density in what used to be called western Europe, the Dibden port proposal was turned down, we have only a few kilometres of high-speed rail between the south coast and London, and we have a much smaller rail system than we had 40 or 50 years ago. Our competitors are investing in all those areas of infrastructure, to our economic disbenefit.

Secondly, the justification for High Speed 2 is not the speed, as has been said, but the capacity. Having high-speed rail will cost only 10% more than the alternative of building a brand new route and will bring the speed benefits as well as the extra capacity. The alternatives that are put forward by the opponents of High Speed 2 would provide only half the benefit, while costing a great amount of time, money and disruption, as we learned from the west coast main line build. If people are worried about the projections that are used to justify the investment in High Speed 2, they should consider the fact that train passenger numbers are already at the level projected for 2021.

On the economic benefits, I am enormously sceptical of almost all economic models. There may be disbenefit to some towns and cities. The Transport Committee found that some towns in Europe that were joined to the TGV or other high-speed routes had benefited enormously, whereas others had disbenefited.

[Mark Garnier]

The hon. Gentleman is making a convincing argument in favour of HS2. He raises the important point that one of the perceived benefits is that economic activity will be drawn up the track. However, there is a risk that economic activity will actually be drawn down the track, away from the regions to London. Does he agree that, to mitigate that risk, it is important that we look to build a hub airport up the track as part of the infrastructure development of this country? A hub airport in Birmingham would be a good alternative to what is being suggested at the moment.

[Graham Stringer]

I will not be drawn into a discussion about hub airports.

On the benefits and disbenefits, it is up to the people who run our towns and cities to ensure that people go in their direction and invest in their area. There is no doubt that such people want the high-speed line. My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) said earlier that she wants the high-speed route to go to Liverpool. I do not blame her, given the potential benefit.

I am sure that some of the arguments made against HS2 were made when railways began. The vested interests of stagecoach owners and bargees almost certainly led to their using similar arguments about how railways would not catch on. I know of no economic analysis that captures the likely benefits, but what we do know, from looking around the world, is that countries that invest in their transport infrastructure almost always do better economically. We should therefore invest.

[Frank Dobson]

As the proud MP who has King’s Cross, St Pancras and Euston stations in his constituency, I am rather in favour of the railways. For that matter, I am a member of the National Union of Rail, Maritime and Transport Workers. However, I think my hon. Friend is falling into the sort of syllogism that something must be done, this is something, and therefore this must be done. There are better ways of spending this money on improving the railway system.

[Graham Stringer]

I hope I am not falling into that trap. I think that a high-speed system that will eventually join Edinburgh and Glasgow, through Manchester and Leeds, to Birmingham and London will be of enormous benefit to the country. I do not believe it is a perfect system and I do not believe it is being constructed in the best way, but it has all-party support and it can be improved. I personally believe that we should be building north to south, as well as south to north. I believe, as my right hon. Friend the shadow Secretary of State said, that we should be building a link directly through to High Speed 1. However, I do not believe that any of those problems are sufficient to stop us investing in infrastructure that will help the whole of the country.

[Andrew Bridgen]

Will the hon. Gentleman give way?

[Graham Stringer]

I will not, if the hon. Gentleman will forgive me. I have already given way twice.

My last point comes from the experience of being responsible for building the second runway at Manchester airport. Paying compensation on the basis of free market value at the time is an extremely costly way of building infrastructure. Giving free market value plus 10%, 20% or 30%—whatever is appropriate—will speed up the process and save money. I hope the Government will give consideration to that, and to serious mitigation. If people take legal action because they think they are being treated unfairly, and if there is blight for a long time, that will hinder the project. It is estimated that delays in tunnelling on some high-speed routes have cost as much as the actual tunnelling. I therefore hope that on compensation the Government will not be short-sighted. I hope they will deal with the problems outlined by my hon. Friend the Member for Sheffield South East (Mr Betts) and my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), and be generous in looking at the problems and pain caused. That will benefit the high-speed system in the end.

High Speed Rail

Graham Stringer Excerpts

Monday 28th January 2013 Commons Chamber

[Mr McLoughlin]

I thank my hon. Friend for his support and, indeed, for his work on the Transport Committee. I agree entirely with his point. Setting out our plans now and confirming them, I hope, by early next year will enable us to look at connectivity between stations in the period between our plans being outlined and the actual development.

[Graham Stringer (Blackley and Broughton) (Lab)]

There is tremendous support for this project in Manchester and the north of England, but, having heard from the right hon. Member for Chesham and Amersham (Mrs Gillan) that, surprisingly, she supports building HS2 from the north of England, will the Secretary of State reconsider what he said earlier and put both phases of HS2 into one hybrid Bill and consider building them from the north of England? In doing so, he would unite the House in an even bigger way than it is united at present.

[Mr McLoughlin]

The hon. Gentleman says that that would unite the House in a more cohesive way, but it is fairly united for such a controversial subject, as has been clear from the exchanges so far. As I have said, the proposals to go from north to south would mean further delay, and I point out that the first part of the route was actually published by the previous Government, who also thought that the right way to go was from London to Birmingham in the first instance.

Local Bus Market

Graham Stringer Excerpts

Thursday 10th January 2013 Westminster Hall

[Graham Stringer (Blackley and Broughton) (Lab)]

It is now more than 25 years since buses were deregulated outside London. I do not like to use extreme language, but deregulation has certainly had a very damaging effect on public transport, especially in the metropolitan areas, other urban areas and the shire areas. I have made many speeches in favour of some sort of re-regulation of the buses; the Minister has heard many of them over the years, and, on occasion, we have agreed. I suspect that we still do agree. I disagreed with some of my party’s bus policies when it was in power, and I still maintain those views. I am pleased that the shadow team now seems to have better policies than we had when we were in government.

The focus of my speech today is on the report of the Competition Commission, which was considered by the Transport Committee. Before getting on to the specific recommendations of both the Committee and the commission, however, it is worth taking up the point made by the hon. Member for Milton Keynes South (Iain Stewart) about the segregation of the bus industry. This is a simplification, but I think that it is essentially true that the bus system in London works extremely well. It has never been deregulated; it has received significant investment; and bus companies in London take less profit out of the system than they do in the metropolitan areas. So the bus system here in London is good.

However, if we look at the metropolitan areas, whether we look at the statistics for the last year, for the period from 2005 or even go back to deregulation, we see a steady progression of fare increases above inflation. In real terms, fares have doubled over all that time and passenger numbers have dropped by 45%. In London, the direction has been the opposite. That is an indication of where public money is better spent in the support of public services.

In the shire areas—I represent a very urban constituency, so I am not an expert on the shire areas—bus services often do not exist at all. It is not a question of their not being subsidised; they do not exist. As my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) said, when approximately £4 billion a year goes into the rail system—I am not against that—and parts of the country do not have any bus services, either commercial or subsidised, we need to take a serious look at the situation.

Parts of the bus system, in historic towns such as York, Oxford or Cambridge, are working. In those towns, the authorities have been able to restrict car access to the town centre and they have set up partnership schemes. Therefore, if one goes through the different areas, one sees that there are very poor services in many shire areas and limited amounts of competition on the road; declining bus services in metropolitan areas, with increasing fares; relatively good services in towns such as Lincoln, York and Oxford; and excellent services in London. For any Government who want to provide services to the whole country, it cannot be satisfactory to see that differentiation of service.

Before I move on to the reports by the Competition Commission and the Transport Committee, I will make one simple point about the Lib Dem “nearly policy” on concessionary fares. One of the reasons why the decline in passenger usage in metropolitan areas has not been more severe—in fact, it was even halted for a period—was the increased money that the last Labour Government put into concessionary fares. That meant that people over the age of 60 had free access to the buses and used them, which changed the usage of buses for the better.

At the moment, the leader of the Liberal Democrats, the Deputy Prime Minister, is considering whether to take concessionary passes away from people such as me, because we can afford to pay the bus fare or do other things. In a way, one cannot argue about that. However, the Liberal Democrats should also think about congestion. Most of the policy of most of the Governments during the past 30 or 40 years has been to try to get people to leave their car at home and use buses instead. The fact is that, if relatively affluent pensioners can afford buses, they will not pay the bus fare to Stagecoach or FirstGroup if their pass is removed. Instead, they will take their car out; that is what I would do if I did not use the bus or tram in the area where I live. That will lead to increased congestion. I suspect that the Minister sympathises with that view, but I ask him to say to people—within his own party and within Government—that they should think harder about the transport implications before they go too far in pulling concessionary fares.

I will move on now to the Competition Commission report itself. I think that any reading of both the written evidence and the oral evidence that was submitted to the Committee will show that the Competition Commission’s report was deeply flawed. Before I get on to that, however, I just want to say one or two words about competition. It is sometimes assumed—particularly by those from the Labour side who want to re-regulate buses and to introduce quality partnerships in parts of the country—that we are against competition. Nothing could be further from the truth. Where commercial businesses are involved, in order to ensure that we get the best-quality, most efficient and effective service, competition is a good thing. However, the fact is that in most of our big cities and in a lot of our shire areas competition does not exist. In fact, if we wanted to have competition in those areas, it would be necessary to introduce off-road competition, because the competition is not taking place on the road itself. There is no competition in many parts of this country.

If people look at the evidence that the Transport Committee received, they will see one indication of the lack of competition outside London; there is competition in London, although it is not on-road competition. That is the profit levels of companies. If people read the oral evidence that FirstGroup gave to the Committee, they will see that FirstGroup said that it is withdrawing from London because it could make twice the return on the capital outside London that it does inside London; those were not quite the words that FirstGroup used, but they are what FirstGroup meant. If competition were working, the situation would be the other way round: we would expect FirstGroup to be making less and to fight more for profits in other parts of the country. As I have said, nothing that I say in this debate should be taken as showing that I believe that, where there are commercial interests involved, there should not be competition. There certainly should be competition.

Turning to the Competition Commission report itself, I was disappointed by the quality of the evidence that the commission used. It published an interim report that hinted that it was considering pushing towards off-road competition—the quality partnership approach. However, that was changed in the final report. A couple of things happened. We know the figures for FirstGroup because its representatives told them to the Committee, and they also told the Committee that other bus companies had done the same. FirstGroup spent about £3 million lobbying, providing information and—I think that this is a direct quote from the Competition Commission—putting its case as strongly as it could. Undoubtedly, that affected the final recommendations of the report, which were that there should be more head-to-head competition on the roads, without any mechanism to produce such competition or any evidence that it was happening in all but a few places. In fact, I think the Competition Commission gave us three examples of areas where competition was happening, but they were fairly isolated places and not in our major conurbations. That was disappointing.

The Competition Commission officials said, when asked why they had shifted the emphasis in their report, that they thought that specifying the level of services would lead to less competition and higher costs. When we asked why they thought that, they cited the costs in London, but they could not really give any more information. I looked at the evidence that the Committee received before I came into Westminster Hall today. The Minister in his own oral evidence to the Committee—I think that it was in response to question 400, if he wants to look at it now—more or less demolished the commission’s argument, because he gave figures that showed the subsidy per passenger in London was 45p, whereas in the metropolitan areas it was 57p and in the shire areas it was 71p. The commission’s basis for rejecting quality partnerships—without taking evidence—was, therefore, deeply flawed. At the same time, however, the commission had evidence of huge collusion between the bus companies in the north-east. Rather than examining the real costs in London, where profits—albeit not excessive ones—were being made and there was a good service, it used a theoretical model that clashed with the London experience and with what was happening in the north-east. That was one of the flaws.

The commission identified anti-competitive practices in the north-east, and such practices clearly exist in other parts of the country as well, but it is difficult to prove that they do because, by and large, bus companies do not have written agreements not to compete with each other—they just do not do that. When the commission was asked about divestiture, which has happened in other anti-competitive areas, it said that only big bus companies would come in if, in an area such as my part of Manchester, it stopped FirstGroup. The company has been operating a near monopoly very badly in north Manchester, and the commission has said that it would just be another large company that would come in. FirstGroup has operated an appalling business when it comes to running buses in north Manchester and it is now selling its interest to Stagecoach, so there is no intermediate point at which there is on-road competition; there is just the selling of one almost monopoly to another monopolist. The fares have been high in north Manchester, and, although I do not know this for sure, I cannot imagine that Stagecoach will reduce the fares when it takes over the garages.

I believe that the Minister is sympathetic to helping with quality contracts. There is legislation, in the form of the Local Transport Act 2008, that enables such contracts to be put in place. There has, however, been no answer to the question posed by the Transport Committee, and by my hon. Friend the Member for Liverpool, Riverside today, about why the bus service operators grant cannot be used to help local authorities to introduce quality contracts. It will be difficult to bring in a first quality contract. I believe it will save money—I think that the detail of the Committee report is wrong in stating that it will be more costly—but it might be very difficult when we have Brian Souter of Stagecoach saying that he would rather drink poison than allow a quality contract to happen. He and his managers are threatening a scorched earth policy.

When the Minister came before the Committee, he made some helpful comments to the effect that bus companies should follow the law, and I am interested to know whether there is anything else he can do to support the company in west Yorkshire and Nexus, which, I understand, are both still going down the quality contracts route. I believe, as does the Minister I suspect, that the scheme will lead to a better bus service, so if there is a legal option to go down that route the Government really should provide as much support to the quality contract areas as they are prepared to provide to the better bus ones. I cannot see why the quality contract areas should be discriminated against.

This has been a long speech. The Transport Committee’s report is good, and I hope that the Government will move on and support the moves to balance up bus services. Without going through all the detailed arguments, it seems that there is much greater similarity between Greater Manchester, the west midlands and London in relation to introducing franchising operations and a regulated system, than between Greater Manchester, Oxford and Cornwall. I hope that the Government, recognising the success in London, will try to move within the 2008 Act to help the introduction of the schemes, not just in Manchester but in Leeds and Newcastle.

--- Later in debate ---

[Graham Stringer]

Every minute.

[Julie Hilling]

I asked a student who lived there, “Do the buses stop in the night?” and she said, “Oh yes, they stop in the middle of the night.” I then asked, “How long do they stop for?” and she replied, “For 10 minutes, at 4 am.” There are buses every minute, 24 hours a day, apart from during those 10 minutes at 4 am.

A couple of years ago in Manchester, the situation was so bad that no other vehicles could get into the city centre. All the buses were queued far back because so many people were competing to run their buses along that corridor. We can compare that with the estate I live on. The service to Hag Fold stops in the evening, and on a Sunday it does not start until midday, so no one can use the bus to go to church on a Sunday morning, or for a day out. That is the reality of our buses, and I live in an urban area; I am not even talking about a rural district. We need, therefore, planning for services across an area that is not based just on whether a route is profitable. We need a service that goes as close to people’s doors as possible, otherwise those who can drive will.

Cost is incredibly important. My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), the excellent Chair of the Transport Committee, talked about the ever-increasing cost of bus travel, as did my hon. Friend the Member for Blackley and Broughton (Graham Stringer).

For the third time this week, I will talk about my neighbour, Leah, because she will be affected by the cuts to tax credits and other benefits. She is a mum of two who works 16 hours a week and earns £101. She pays £18 a week—£4.50 a day—for her travel card, which, of course, can be used only with one provider that stops serving the estate in the evening. Unless she gets home early enough, she has to pay another bus company to get her anywhere near home. Compare that with £2.80 a day in London for a service that can be used with any provider.

Travel cards are important for reducing costs and opening up integrated services. Look at the liberation of Oyster that we have had for nine years. Those of us who reside in London for a few days each week have been amazed by the Oyster card: people can go on any bus or tube by flashing the cost-effective card. Compare that with people in my area, who have to decide from which company they will buy a travel card on any given day, because a card can be used only on one service, such as First. They have to ask themselves whether the company will manage to take them on the whole of their journey, or whether they will have to buy separate fares because the company will take them on only part of the journey.

Transport for Greater Manchester is trying hard to get some sort of Oyster mark 2 for the conurbation, but there is no surprise that the operators are not co-operating. Fares in south Manchester are 15% to 20% cheaper than those in the north of the conurbation. Having different operators is the only answer, because it surely cannot be true that diesel costs more in Bolton than in Withington. Costs seem to be part of the reason why the operators are not co-operating. What will the Minister do to support areas such as Greater Manchester to introduce travel cards that will liberate services for so many people?

Running a big bus company is a licence to print money. Since deregulation, the companies are earning a profit of some 7% each year at no risk. If a service is uneconomic, the operators can cancel it and hope that the local authority will pay them to deliver it. Quality contracts would enable routes to be bundled so that operators would have to deliver all the routes in a bundle, both good and poor. They will still be able to make a profit, but they could not continue to hold transport authorities to ransom over the provision of a route.

People make choices about where they live and work, and about schools, based on public transport. What are they supposed to do when they lose the bus service that enables them to lead their life? We know of people who have had to give up their job because they have lost a bus service and can no longer get to their place of work. I have a group of women in Blackrod who can no longer go to their church, which they went to for many years, because the bus stopped running along that route. I ask the Government to use the better bus area fund to support all models of co-operation, including quality contracts. They should also do more to support passenger transport executives and local authorities that are considering quality contracts.

As my hon. Friend the Member for Blackley and Broughton mentioned earlier, we know operators have threatened a scorched earth effect by removing all buses if a transport authority wants to go the way of introducing quality contracts. Well, I do not think that a bus operator should be allowed to obstruct the implementation of Government legislation by making such threats. It would not be acceptable for other groups to threaten to thwart Government legislation, so why is it acceptable for a bus operator to do so?

Bus travel has zoomed up in London. Why has bus travel gone up so fast and so far? It is about cost, availability, the Oyster card and regulation, and it is very much about subsidy; it is about the state saying, “Public transport is a public service, not just a means to get around.” My constituents in Bolton West deserve the same sort of service as London residents, and I look to the Minister to address how he can help the Greater Manchester transport authority and my constituents get the service they deserve.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I thank all those who have taken part in this afternoon’s debate. I particularly thank the Committee and its Chairman for its report on competition in local bus markets. It is good to have time to debate the issue once again. The report was a welcome addition to the evidence base on this subject. It reminded us once again that, although competition is important, the ultimate prize is to improve bus services for the travelling public. That must be our primary aim. That was a key test for the Government when considering the Competition Commission’s recommendations—namely, would they result in more passengers travelling on the bus?

There is a point of uncommon purpose and agreement with my colleague the hon. Member for Nottingham South (Lilian Greenwood): Greener Journeys has made a welcome contribution to the debate on buses. We know from the work by Greener Journeys and others that bus services make a significant contribution to the economy. Sustainable growth relies in part on a good quality, affordable bus network to get people to jobs, training and education. I think that I have said so before, but if I have not, I can confirm that I am pursuing that matter and that welcome report with colleagues in different Departments across Government. Clearly, it is not simply a transport matter, but an employment and environment matter. Other benefits might flow from the recommendations being taken forward.

Although the overall picture is mixed, I am positive that we are headed in the right direction. There are many areas of the country where bus services flourish and where significant progress is being made in ticketing, infrastructure and integration. I have seen first hand in places such as Sheffield and Oxford the power of partnership working to make a real difference to bus services in city centres and beyond. There is significant investment going into new vehicles, new technology and new services by the better bus companies, both big and small. There is good innovation out there. I pay tribute to Trent Barton. It is always unfair to pick one company out, but I have been very impressed by the way that Trent Barton markets individual services, which is a testament to how a good bus network can be built through good management. We see a key example there.

I have been keen to build on investment by encouraging the bus industry to think about what more it can do to get people on to buses. That is why I am pleased that bus companies across the country have come together with two exciting offers in response to my suggestions. The first, BUSFORUS, is a website to collate information on bus services and tickets in one place for young people. The Passenger Focus survey, to which the Chairman of the Select Committee referred, showed a high level of satisfaction with bus use. Of course, it masked a slightly less high level of satisfaction among young people. That is helpful in persuading bus companies that they should perhaps give more consideration to young people in the way that they conduct their business. They are now doing so, and they have made a good start with the website.

[Graham Stringer]

The Minister makes a fair point about the survey masking dissatisfaction among young people. An even bigger point, because the survey is of bus users, is that it completely masks the dissatisfaction of the people who have abandoned bus services because of poor quality or high fares. The figures of 88% and 92% satisfaction are misleading, because they exclude the people who no longer travel by bus.

[Norman Baker]

It is true that those no longer travelling would by definition be excluded, because they would not have been on the bus to be subject to questions. I suppose the same applies to rail services. However, if bus services were being abandoned because of poor quality, I would expect that to be highlighted by the people still on the bus, but who have not yet abandoned it, so I do not think that the hon. Gentleman’s point is necessarily true, if I may say so. It might be that bus passengers are no longer on the bus because they have decided to travel by a different mode—car or train—or because the bus is no longer there in the circumstances that suit their individual needs.

The second deal was Bus for Jobs, which helps jobseekers get back to work by offering free travel for the whole of this month of January. Those are exactly the sort of leadership examples that should be demonstrated by bus companies. I will continue to work with the companies, and cajole them if necessary, to ensure that they continue to put passengers’ long-term interests directly at the heart of their businesses. Of course it is in their commercial interest to do so, and therefore they ought to be doing that for themselves, as many of them are.

--- Later in debate ---

[Norman Baker]

Precisely. If it is working, and it appears to be, it would be wise commercially to see where else it might apply. Doubtless, the people at FirstGroup are listening to this debate very carefully, and they will have heard the hon. Lady’s pitch for a similar scheme for Bolton West and elsewhere, no doubt, in the conurbation.

The hon. Lady asked what we would do to roll out something like Oyster. I can assure her that we are doing a great deal of work on smart cards, or smart ticketing—it is becoming difficult to get the right form, because we talk about mobile phones and everything else, and there is no simple phrase these days to describe all that. As a Government, one of the first things that we did was give a big sum of money to the various passenger transport executives to help develop smart ticketing in their areas, and we are giving other help as well. That money is forthcoming for rail and bus.

The hon. Lady asked what we would do to help Greater Manchester. I hope that we will do a great deal. We continue to work productively with the integrated transport authority up there. I am always very happy to meet its representatives and hear any concerns that they have. We have, in fact, given a great deal of money to Manchester for transport in the past two and a half years, including the beginning of the delivery of the entire northern hub, so I hope that we are doing a good deal to help transport in that area.

I was asked about data on bus spend. I am advised that DCLG collects some of those data and they are published as part of its annual statistics—not just on supported services, but more generally. On best practice, I think it is something that has value, but it is predominantly for the local government family in this new era of localism to identify that themselves. Of course, we are interested in it, and talk regularly to our local government colleagues and to the Association of Transport Coordinating Officers, for example. However, it is broadly my view that the Local Government Association needs to do rather more to step up to the plate and identify best practice, rather than simply seeing itself as a body that lobbies Government for something. In the new era of localism, it has a different role to play, which I hope it will develop rather more than it has done. We are helping local government in many ways, including through providing guidance for local authorities on tendering.

[Graham Stringer]

I have listened carefully to what the Minister has said. I feel that he is coming to the end of his speech, and he is being very generous in giving way and covering all the issues. However, I have not heard him answer the question asked by my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) about the deregistration of services, and whether he will legislate to ensure that, when services are registered, both ridership and fare information is made public.

[Norman Baker]

Let me muse on that matter for a moment—until I become inspired—and deal with the points made by the hon. Member for Nottingham South as part of my closing remarks. I have noted with interest her support—increased support, I might say—for quality contracts, and her proposal for bus deregulation exemption zones. The Opposition is of course entitled to produce its own policy and I look forward, with interest, to that evolving. Therefore, perhaps it would be churlish of me to point out that for 13 years, some of us were making such arguments and they were batted back and we were told that what we were proposing, which may not be terribly different from what she is now suggesting, was a load of old nonsense. It would, however, be churlish to make that point.

I do not think that it is true to say we are in a great cycle of decline. I say to the Opposition that there are issues about the bus industry that I have been happy to accept, including what some councils have done in terms of bus cuts and the real impact that has on individuals in those areas. However, I encourage her not to exaggerate the position. That “great cycle of decline”, as I mentioned yesterday, shows an increase in passenger journeys of 0.6% over the last 12 months. Even if we take out London, a decline of only 0.8% is shown. It is not a great cycle of decline, and we must not talk down the bus industry and the opportunities for users.

Rising Cost of Transport

Graham Stringer Excerpts

Wednesday 9th January 2013 Commons Chamber

[Mr Reid]

I am certainly not going to apologise after the SNP has just increased ferry fares by 10%. The hon. Gentleman is right, however, that the SNP Government in Scotland copied the Government here, so the rail fare increase in Scotland is also RPI plus 1%.

Liberal Democrats believe it is important to end the era of above-inflation rail price increases as soon as possible. However, that important aim has to be balanced with the need to raise cash for the investment that our railways so badly need. Our railways have suffered from decades of chronic under-investment, leading to a system which was increasingly inefficient, overcrowded and highly expensive to run. I am therefore pleased that the coalition Government have committed to invest about £16 billion in our railways up to 2019. That will support over £9 billion-worth of improvements, which will help to provide more services and greater capacity, particularly for commuters to our nation’s biggest cities.

The coalition Government are currently overseeing the biggest investment in our railway infrastructure since the Victorian era, and at the same time we are working hard to reform our railways and reduce unnecessary costs. The coalition plans for further rail electrification will also ultimately result in over 800 miles of track being electrified. Many speakers have contrasted that with the record of the previous Government. Our future plans include the important High Speed 2 project. It will create a direct high-speed link between London and Birmingham, which will eventually extend to Manchester and Leeds, and, I hope, Edinburgh and Glasgow as well. That will help enhance rail connections throughout the country and reduce journey times, and boost future opportunities for jobs and growth.

I will not support the Opposition motion, as it has fallen into the typical Opposition party trap of calling for fare cuts while saying nothing about where the money will come from for the investment our railway system so badly needs. Liberal Democrats and Conservatives are working together in government to put our railways on a sustainable footing, and we hope it will soon be possible to keep fare increases below inflation.

Although the country needs to reduce the deficit, I am pleased that the Minister, my hon. Friend the Member for Lewes (Norman Baker), has recently been able to announce more than £120 million of funding for buses, including £31 million for low-carbon buses. I also welcome his launch last year of the Government’s policy document, “Green Light for Better Buses”. It sets out a series of reforms that will attract more people on to the buses, ensure better value for the taxpayer and give local authorities more influence over their bus networks. Ultimately, it is for local authorities working in partnership with their communities to identify the right transport solutions for their areas.

[Graham Stringer (Blackley and Broughton) (Lab)]

Is the hon. Gentleman not aware that outside London there has been a continuing decline in the level of bus patronage and that the real answer to that is, as the shadow Secretary of State said, to have quality contracts or to re-regulate the buses? What are his Government going to do about that?

[Mr Reid]

The important thing is that the Government work together with local authorities and that power is devolved to them to find the correct solution; this Government are providing money and are working with local authorities.

Cycling has another important transport role to play, and I was pleased with the announcement in the autumn statement of a further £42 million investment in the sustainable transport fund for cycling infrastructure, including cycling safety. No matter how much effort is put into providing public transport and encouraging people to use it, in rural areas, particularly sparsely populated ones such as mine, the car will always be part of the transport solution. So I am pleased that the Government abandoned Labour’s fuel duty escalator and have reduced fuel duty by 1p a litre on the mainland and by 6p a litre on the islands. I hope that the Government will soon get the EU approval required to extend this scheme to remote parts of the mainland.

Oral Answers to Questions

Graham Stringer Excerpts

Thursday 29th November 2012 Commons Chamber

[Graham Stringer (Blackley and Broughton) (Lab)]

After half a century of inquiries and investigations into runway capacity in the south-east of England, there are almost no new facts to be learned. Is this not just a fig leaf before the Government do a U-turn and provide a third runway at Heathrow?

[Mr McLoughlin]

I am sorry that the hon. Gentleman thinks that is the case, but it is not. In fact, we are trying to build a consensus across the parties on large infrastructure projects such as this, and to a degree that consensus has been achieved. The HS2 route that we have adopted is the route that the previous Government published.

Aviation

Graham Stringer Excerpts

Wednesday 4th July 2012 Westminster Hall

[Graham Stringer (Blackley and Broughton) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Dobbin, for what I think is the first time.

I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on obtaining this important debate on the different issues relating to competition in the aviation industry. I agree with many of the points he made, and it is worth exploring further the points with which I disagree. He is serious about trying to find a solution to the country’s aviation policies, and that is worth discussing. Judging by the expressions of everyone taking part in the debate, there is agreement that Boris island is a complete non-starter. It is a decoy duck, Potemkin village, a red herring, or, as the previous Labour Secretary of State said, bonkers; it will not happen. But it is part of the illusions around aviation policy—which are the basis not of what the hon. Gentleman has been saying but of the Government’s policy—that somehow we do not know what has been happening in aviation, and there is more information to be found out. That simply is not true.

Going back to the Roskill commission in 1969 and a series of other White Papers and investigations, more is known about aviation policy in the south-east of England than about possibly any other area. If we want to be competitive, there must be more airport capacity in the south-east. Otherwise, the decline and damage that lack of aviation is causing to the economy will continue. I do not agree with the hon. Gentleman that it is right to suspend any discussion for the length of the Parliament. It might be right for the coalition agreement, but it is not right for the economy.

[Mark Reckless]

Will the hon. Gentleman give way?

[Graham Stringer]

I will in a moment, but I want to go through some of the points that the hon. Gentleman made.

I do not think the “Heathwick” proposal works in detail. When I give way to the hon. Gentleman I want him to tell me about any city in the world—Toronto, Washington, Glasgow—that has tried having two airports. There are examples all round the world of countries saying “We will have an intercontinental airport here and a domestic one there,” and finding that neither of those airports has worked. Off the top of my head, I cannot think of a city with two competing hubs. The nature of hubs, and what makes them valuable—both for countries and airlines—is that airlines from all over the world go into them, with great interconnectivity. The idea of competing hubs is a contradiction in terms, and there is no real evidence that having two adjoining airports works.

[Mark Reckless]

I am delighted to have some discussion of the issue in the current Parliament, and I look forward to hearing from the Minister what decisions may be made about how that discussion should happen. I just do not think we should build any new runways during this Parliament.

I disagree about dual hubs. Perhaps the idea has been tried in, say, Tokyo and one or two other places and has not been ideal, but we are not making a comparison with the ideal; we are making a comparison with the constrained capacity possibility that 14 million people might try to fly from Exeter. Expanding Gatwick, rather than restricting it, will not result in the perfect economic hub airport, but hubs give declining returns, to scale, to the extent that they get bigger and bigger. If we allow flights to new emerging markets and competing hubs operating in the competitive interest of the country, rather than one hub operating in the interest of the monopolist based there, that would be a significantly better airline policy than the one we have.

[Graham Stringer]

All I would say is that the proposition has not worked. We are in decline and we need extra runways in the south-east. Only one new runway has been built in this country since the second world war. Heathrow was, I think, originally planned to have 12 runways, albeit in a different configuration. The hon. Gentleman can look at the history books if he wants to.

The hon. Gentleman’s argument relies on two issues: first, that our connections to China, as the Minister of State said, mean that we are not really suffering; and secondly, that slots are too cheap at Heathrow, and if we freed up that market we would help the economy as a whole. Let me give some evidence.

The Frontier Economics report, “Connecting for Growth”, which was produced in 2011, showed that trade is 20 times higher where there are direct flights to cities in China. It estimates that the UK is missing out as trade goes to France, Germany and Holland, and quantifies the cost to the UK economy of a lack of connections as £1.2 billion a year. Taking that present value over 10 years, that amounts to £14 billion. Paris and Frankfurt boast 1,000 more annual flights to the three largest Chinese cities, Beijing, Chongqing and Guangzhou, than we get from this country. The Minister of State is right to say that we send a large number of flights to Hong Kong, and that there is hubbing in the Oneworld alliance at Hong Kong. The City of London is doing quite a lot of damage at the moment, but if we consider some of the effects, and the latest financial centres index, the Hong Kong index has gone up by 21 and London has gone down by three. There is a correlation, if not a direct one, between the hubbing that is going on there and the damage that is being done to the UK economy. Forbes Magazine has shifted the UK down from sixth best country in the world in which to do business to 10th best. One contributing factor is our connections with other countries.

[Zac Goldsmith (Richmond Park) (Con)]

Does the hon. Gentleman agree that some of the problems that he has just described result not from lack of capacity but from poor prioritisation? Hundreds of flights every day to and from Heathrow involve places that do not in any way contribute to Heathrow’s hub status. We have short-haul flights, flights to Malaga and 15 flights a day to Cyprus. Such point-to-point flights could happen at any other airport. We have masses of spare capacity, but it is not all at Heathrow. If that is the problem, surely the priority is to make better use of existing capacity and to get rid of some of those pointless flights that could easily happen elsewhere.

[Graham Stringer]

I always find that a particularly difficult argument to be put by Conservatives, who suddenly want to plan routes and move away from a completely deregulated market in Europe—apart from where it is constrained by slots. Having argued ideologically for that position, all of a sudden they want to tell aeroplanes that they can only go from Manchester and Leeds and not from London. I do not believe that that is the Conservative party’s position at all. Even if we put up the price of slots, which has been kept artificially low by how slots are regulated, we would not necessarily get the flights going to the right parts of the world that will benefit this economy. We would get even more flights going to New York and the west coast of the United States because those are the most profitable routes from this country in the short term. The two cheap slots would not solve the problem because the central issue is lack of capacity.

I have a few more facts from the London chambers of commerce that represent the views of 350 business leaders from the BRIC countries: 92% made the general point about the importance of direct flights; 67% said that they were more likely to do business in a place if there were direct flights to it; and 62% said that they would only invest in an area if there were direct flights between the city in the country in which they were operating and the city in which they were likely to invest. Such flights to Brazil, Russia and China are limited.

I wanted to talk about the damage that air passenger duty is doing to regional airports, but I do not think that there is time because of the number of Members who wish to contribute to this debate. None the less, such duty is doing damage and the Government really need to change their policy. Twenty-two of our competitor countries in the EU have no air passenger duty whatever, so imposing a duty is a ridiculous anti-competitive position for this country to take.

I want to talk a little about how we use capacity in the regional airports. It is not possible to, as the hon. Members for Rochester and Strood and for Richmond Park (Zac Goldsmith) suggested, somehow move flights about, but there is no reason whatever why we could not have a completely open skies policy in the regional airports. There is 15 times more capacity in our regional airports than would be provided by one extra runway at Heathrow. It would be against the law to direct flights within Europe to that runway; that simply could not happen. At the moment, airlines are reluctant to make use of the partial open skies policy in relation to major regional airports with fifth freedom rights, but the Government must agree that, and sometimes there are difficulties. Airlines, which have a real interest in getting into Heathrow, are suspicious that if they use the facility of partially open skies in the regional airports they will be kept out in any future negotiations to get into Heathrow. Having a completely open skies policy in the regions, however, might shift out one or two intercontinental routes. It will not change the whole structure of aviation, but it will help.

Finally, the central point of the Government’s policy, especially the Liberal Democrat part, seems to be that constraining capacity in the south-east will help the environment and not damage the economy. I hope that I have shown that that constraint in the south-east is already damaging our economic competitiveness, and the answer to that is to build extra runways and not a new airport. It is worth saying, and it has been said before, that our policy is damaging not only our economy, as we are, in effect, helping other hubs in France, Germany, Denmark, Spain and Holland to do better, but our environment. When planes take off from the United Kingdom, taking passengers to airports such as Schiphol to pick up intercontinental flights, they are putting more nitrous oxide, sulphur oxides and carbon dioxide into the atmosphere than would otherwise be the case. Although the whole aviation debate needs to be opened up, the solutions have been known for a long time, and the Government have had their head in the sand for their whole time in office.

[Jim Dobbin (in the Chair)]

Order. Six Members still wish to speak in this interesting and important debate, so they will have roughly four minutes each before those on the Front Bench respond