Transport Secretary: East Coast Franchise

Helen Goodman Excerpts

Wednesday 23rd May 2018 Commons Chamber

[Andy McDonald]

That is entirely a matter for the Welsh Government.

The east coast saga is littered with incompetence and delusion, alongside a frankly cavalier regard for the public and passenger interest by a succession of Transport Ministers.

[Helen Goodman (Bishop Auckland) (Lab)]

This is now the sixth change of management for the east coast main line in 11 years. That cannot be good for any organisation. Does my hon. Friend know what is happening to the planned investment programme of new trains being built by Hitachi in the north-east?

[Andy McDonald]

My hon. Friend is entirely right. There are people now working on the east coast main line who are expecting their sixth change of uniform in 10 years. It is absolutely ludicrous. There has been an appalling record over the past several years.

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[Iain Stewart]

No, my point is that Virgin is making a profit on the line and is very able to meet the competition, but what is difficult to forecast accurately—[Interruption.] If the hon. Lady stops chuntering and listens to what I have to say, I will answer her point. The revenues have grown, but they have not reached the very ambitious levels that we set. Many factors behind that are completely unrelated to the rail industry. I shall touch on some that are related to the rail industry, but those that are not include fuel costs, which are considerably lower than was envisaged at the time the franchise was let—

[Helen Goodman]

That should help!

[Iain Stewart]

No; if it is cheaper for people to use motor vehicles, they are more likely to do that than to use the train. There is a question mark over the extent to which Network Rail’s non-delivery of some of the upgrade projects is a factor; that is part of the picture about which I do not yet know and is something that we will scrutinise. There is also something more fundamental happening in the nature of rail usage, relating to different travel-to-work arrangements and work patterns. There is currently no clear idea of what is behind that, but it will affect other franchises, as well as the east coast line.

[Iain Stewart]

Absolutely not. I will come to that point and refer to the evidence that the Select Committee heard on Monday from Iryna Terlecky, who has many decades of experience in the rail industry.

The shortfall in projected revenue would have happened irrespective of who owned and ran the railway. The difference is that under a nationalised system, the public purse would have taken an immediate hit from the loss of revenue, whereas under the system we have, the parent company and the bond that it put up has taken the brunt of it.

[Helen Goodman]

Will the hon. Gentleman give way?

[Iain Stewart]

No; forgive me, but I have three minutes left and the hon. Lady’s previous intervention was not really up to scratch.

There are of course lessons to be learned about how we base our revenue projections over a long period. There need to be more cautious forecasts of rail revenues over the long term. Indeed, I think that that has already happened in respect of some of the franchises that have subsequently been let. We need to revisit some of the Brown recommendations on the balance of risk that an operator takes against extraneous factors that are not to do with the direct operation of the railway. In the end, though, the franchise system does work; it does deliver enhanced performance. I, too, remember what British Rail was like when I was a child, and it was not a glorious existence.

Let me conclude on what I hope is a more consensual point. I am a sentimental old railway buff and I cheer the reintroduction of the LNER brand. LNER was one of the big four private companies that transformed this country’s rail system in the first half of the previous century. May I make one little plea? LNER had iconic liveries, from the apple green of the Flying Scotsman to what is called the garter blue of the Mallard and the Gresley class, and the teak colour of the carriages. Please can we have that back and rekindle the romance of the railways of those years? I am absolutely certain that that would help to keep passenger numbers high and ensure that this important railway line has a bright future.

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[Daniel Zeichner (Cambridge) (Lab)]

It is a pleasure to follow the hon. Member for Milton Keynes South (Iain Stewart) and other expert members of the Transport Committee who have spoken in this debate. I am only sorry that the Secretary of State has left the Chamber—left the dock, effectively—because I was rather hoping that we might discuss what we will do with the £2,400. I was going to suggest that we should perhaps buy him a bus pass, because I am very keen on moving from rail to bus. I was actually going to say something nice about him as well—only one nice thing, I hasten to add—because I was going to thank him for raising the vexed issue of the timetable changes. Many Members will have heard their constituents’ concerns about the way in which the process has been handled. Of course, this is a major set of changes—we understand that—and such change is not easy to implement.

I was on the “Mann in the Morning” programme on wonderful Radio Cambridgeshire this morning, listening to people who have had bad experiences on the rail line from Cambridge. Those experiences were immediately blamed by the Secretary of State on Network Rail. We are now in the process of no longer transferring risk within the system, but transferring blame. It is not all about Network Rail; the train operating companies must bear some responsibility. If we get a chance to look into what happened around this timetable change, we may well find that that is the case, too.

The positive side is that people in the industry want to make it work. The message from passengers that I heard today is that they want the system to be run as a public service, and that is also the ethos that many in the industry want. We should try to focus on that because, despite privatisation over 25 years, most people in the rail industry still have a public sector ethos. If we could celebrate that and make it work, we would do much better.

I do not agree with Members who say that the franchising system works. I am deeply sceptical about it. A number of reasons have been raised for the failure of this particular franchise. Network Rail is, of course, immediately blamed for ideological reasons. In fact, the evidence given to the Transport Committee rather suggested that the relationships were “not very clear” and that there were some “implicit” understandings rather than “contractual” understandings. If we are writing big contracts, we do not do it like that. Network Rail was not to blame for the failure of this particular contract. It was probably down to a decline in the number of season ticket sales because this route, as has been said, is volatile.

If we are to return to the Brown recommendations and say that train operating companies should not be subjected to these big macroeconomic risks, I would ask what kind of risk transfer is really taking place. These are the very risks that we face, and other businesses have to cope with such risks.

[Helen Goodman]

This discussion about the over-bidding on the franchise reminds me precisely of the discussion that we had with the mobile phone companies, which came along, cap in hand, having overbid for their spectrum. It was clear that the system was just not working because people wildly overbid.

[Daniel Zeichner]

I am afraid that my hon. Friend is right. That takes us into a much broader philosophical discussion about how we get investment into our key industries, and that applies to a whole range of discussions. Just look at the huge number of consultants, lawyers, contracts and all the rest of it that are involved. We are told that some 300 people are employed just on trying to sort out who is responsible for delays and that hundreds of millions of pounds are lost on this process. Frankly, do we really need all of that? What are the train operating companies actually delivering, apart from the delightful colour changes that have been suggested? If we ask passengers what they want, they say an integrated system. They are talking not about transferring risk or arguing about blame, but about getting the system to work. Let me conclude with a few words about the so-called future partnership model.