Rail Franchising

Ian Mearns Excerpts

Wednesday 10th January 2018 Commons Chamber

[Ian Mearns (Gateshead) (Lab)]

On my hon. Friend’s point about the east coast main line, because of the ideological decision by the Government, profits of £1 billion going back to the Treasury have been forgone. At the same time, we are allowing a private franchise not to pay £2.1 billion to retain its franchise. Does she agree that it is economic madness to retain that service in the private sector?

[Maria Eagle]

My hon. Friend is correct. Money is clearly no object in trying to avoid the embarrassment of yet another failure of the franchise in the hands of a private operator. Why did the coalition Government decide to re-privatise the operation? The date is a clue, as it happened just weeks ahead of the 2015 general election. The decision was cynical, ideologically motivated and costly to the public purse.

Our policy at that time was clear. We wanted to keep East Coast in public hands to act as a public sector comparator to the private franchises. We wanted to keep the operational expertise in Directly Operated Railways to enable us gradually to take the operation of the railways back into public ownership as franchises ended without having to pay enormous amounts to buy out contracts. Just changing the order of franchise competitions to enable that re-privatisation cost the public purse hundreds of millions of pounds. Indeed, the consequences of that lamentable decision are being seen today in the ongoing chaos and waste of money that the franchising system is inflicting on our railways—now spectacularly reinforced by the Transport Secretary’s capitulation to the financial interests of the private train operating companies on the east coast main line.

The Transport Secretary is effectively institutionalising massive taxpayer bail-outs, which he has renamed “partnerships”, and I predict that this will not be the last such bail-out. He is effectively institutionalising giving in to the tendency that the private companies have shown over the years of gaming the franchising system to keep taxpayer subsidies while avoiding making the payments that they are contracted to make. Virgin-Stagecoach is not the first train operating company to do that and it will not be the last. The system delivers lucrative near-monopoly rail contracts on the basis of post-dated payment promises by private companies that can simply be abandoned when they become due, with no penalty attached for behaving badly.

The Government are now institutionalising the reality that the private companies take the profits but the taxpayer provides almost all the investment in trains, track and infrastructure and covers any losses. That is the very definition of a licence to print money. Private train bosses are simply laughing all the way to the bank, and this Secretary of State, for ideological reasons, is allowing them to do so. We cannot go on like this. It is time that this costly and failing system was ended. It has not worked, and it will not work in the future. We need to ensure that we do things better.

--- Later in debate ---

[Lee Rowley (North East Derbyshire) (Con)]

I am grateful for the opportunity to speak in this debate. I have only three minutes, so I will go as quickly as possible.

I am a new Member in the House, and regrettably I come to these debates and I hear the same stale and artificial arguments by Opposition Members. That has happened again today: we immediately reach a position where private is bad and public is good. That argument is totally stale and artificial, as the hon. Member for Liverpool, Walton (Dan Carden) has just demonstrated for the past three minutes or so.

The hon. Member for Huddersfield (Mr Sheerman), who is no longer in the Chamber, said that the discussion had become entirely partisan very early on. I think that the partisanship of the discussion was demonstrated when the motion was tabled, critiquing franchising in both concept and totality. That is the ultimate problem, because the Labour party seeks to take some examples, which I acknowledge and accept are not good, from around the country, and extrapolate from them to say that there is a systemic problem forever with rail, which means that it needs to be changed.

The evidence from the system is that more people are travelling than ever before. We have 60 years of post-war history on the rail network. For 40 of those years the network was in public ownership and for 20 it was in private sector ownership. Much of those 40 years was uneconomic—the railways lost an incredible amount of money and the number of passengers who travelled on them reduced by a third.

[Ian Mearns]

rose—

[Lee Rowley]

No, I will not give way to the hon. Gentleman.

In the past 20 years, 13 of which Opposition Members stood up to defend and were under a Labour Government, there has been an increase in the number of passengers using the railway, more trains than ever and greater customer satisfaction about many parts of the line.

I want to make two points in the time I have left. Given that today is an Opposition day, I looked at an Opposition day debate in 1994, in which the former right hon. Member for Holborn and St Pancras, who was shadow Secretary of State for Transport, spoke. He said that privatisation would not get the necessary investment, secure the safety of the railway network or upgrade the lines. In the past 20 years, that has been shown to be wrong.

The franchise that serves my constituency, East Midlands Trains, is an example of one that works well. It is not perfect by any means, but in the past few years, it has worked well. Transport Focus says that it is performing well, especially on punctuality and reliability. In surveys, customer satisfaction is nearly 90%.