Transport Secretary: East Coast Franchise

Debate between Ian Mearns and Alan Brown

Wednesday 23rd May 2018 Commons Chamber

[Alan Brown]

Funnily enough, Stagecoach’s share price increased when the Transport Secretary gave a statement from the Dispatch Box in February. Share prices go up and down, which is to do with the overall performance of these companies, and they are very big companies. The whole point of these big companies bidding and providing parent company guarantees is that it is supposed to offset the risk, rather than leaving the risk to the taxpayer.

On the question of state-owned companies or public sector organisations running franchises, the Transport Secretary’s logic completely falls apart when we consider that four foreign state-owned rail companies already operate franchises in the UK. Those companies are making a profit here for reinvestment in their domestic set-up, which is proof that state-run railways can work efficiently.

The previous east coast main line services are further proof that public ownership can work. When the previous franchise failed and was taken into public sector operation, it returned £1 billion in track fees to the Treasury and turned an operating profit of £42 million. So, as has been asked before, why move away from that successful model to one where VTEC can come in with inflated sums and then get to walk away? It is clearly not right.

The southern rail franchise shambles also happened on the Transport Secretary’s watch. The main conclusion of the NAO’s report is that it could not be demonstrated that the franchise has delivered value for money. At the time, the operator blamed Network Rail and the unions, and the Government blamed the unions, completely ignoring the Transport Secretary’s role in refusing to engage with them. The fact is that 60% of the cancellations were due to Govia Thameslink Railway and only 40% were caused by Network Rail. The UK Government set up the model supposedly to deal with the complex infrastructure upgrades, but the Government took all the revenue risks, so the strikes actually cost the taxpayer, because the loss of revenue is underwritten. The Government also awarded the franchise based on an even higher roll-out of driver-only operation, which is what caused some of the disputes.

[Ian Mearns]

This is not just a problem with southern. Southern is a failing franchise, but northern seems to be on the verge of failing, too, with complaints from passengers across the north of England about services regularly not being provided.