East Coast Main Line Franchise

Debate between Ian Mearns and Roberta Blackman-Woods

Thursday 20th June 2013 Commons Chamber

[Ian Mearns (Gateshead) (Lab)]

I congratulate my hon. Friend the Member for Edinburgh East (Sheila Gilmore) on securing this important and timely debate from the Backbench Business Committee—I have to declare an interest, because I sit on it. Like many colleagues, given the recent history of the east coast main line and privatisation, not to mention the present Government’s failure on the west coast main line franchise, I am deeply concerned about the Government’s plans and the impending privatisation of the east coast main line.

The Secretary of State for Transport’s announcement to start the tendering process for the east coast main line and nine further franchises paid no regard to public interest. It will result in the return of a profitable rail service to private hands within the next two years. The plans are no doubt a recipe for disaster. We already know that South West Trains, another private franchise, is in operating difficulties.

We have clearly established that Government Members are in favour of state ownership of the railways. I am sure that the hon. Member for Beckenham (Bob Stewart) and the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns), are in favour of state ownership, but not UK state ownership; they are in favour of German, French or Dutch state company ownership of UK railways. Do we honestly think for one moment that Angela Merkel would allow such a situation to prevail in the Federal Republic of German? I do not think so.

[Roberta Blackman-Woods]

My hon. Friend makes an excellent point. Is it not ludicrous that a publicly owned company in the UK cannot bid but publicly owned companies in other European countries can?

[Ian Mearns]

Given how Eurosceptic so many Government Members are, I think that it is utterly bizarre that they would rather see profits from UK railways going to France, Germany or Holland.

If Members have any doubts about the way this is all coming about, they need only look back a few years to the Government’s rescue of the line from the failing £1.4 billion National Express franchise. However, despite the private sector’s record of failure, the Government are determined to press ahead regardless of the interest of the travelling public. They would pursue the foolish policy of privatisation, despite history repeatedly telling us that the privatisation of railway lines and rail infrastructure is detrimental to cost and service for the customer and to the Government because of huge financial bail-outs.

The state-owned Directly Operated Railways, which runs the east coast main line, has generated and paid the Government £640 million in premiums and profits since 2009, and it is anticipated that by the end of this financial year that figure will be £800 million in total. Surely even the Chancellor or the Finance Ministers whom I faced on the Finance Bill Committee earlier this afternoon would want to see those moneys returned to the Chancellor’s coffers. Even this Government, given the current financial state of the country, should want to keep the franchise in public hands and see those profits repatriated to the Treasury.

The Government should pocket the profits for the public and use them to help cut the deficit and perhaps even invest in infrastructure. One thing that we have to accept about the east coast main line—railway engineers have told me this—is that, unfortunately, when it was first electrified I am afraid to say that it was done on the cheap; it was not a good model of electrification in the first instance. This Government, however, do not want to see that money reinvested. It is clear that, for them, private shareholder interest comes before the public interest. This is yet another example of this Government’s failed and ideologically driven economic policies.

No one denies that the east coast main line suffers its own problems of chronic under-investment, particularly with regard to what is now very tired rolling stock. We have discussed rolling stock reinvestment, but the problem is that we are being promised jam not tomorrow, but the day after tomorrow. The first new rolling stock on the east coast main line will be the diesel replacement, but that will not actually occur until 2018, with the rest of the fleet following further down the line. Let us not forget that the east coast main line inherited this burden from the privately owned rail firms, Great North Eastern Railway and National Express.

There has been very little rolling stock investment on the line for many decades. There has been some refurbishment, but that was mainly on carriages that were damaged following the tragic Hatfield and Selby rail crashes. The only way to run an effective rail service is to ensure that the infrastructure is up to scratch through continued investment, yet the overriding objective from a private sector perspective is not to invest in maintenance and customer satisfaction, but to return money to shareholders.

Privatisation in the rail sector is consistently lacking and detrimental to customers and the industry. Why privatise a service that has been successful? In short, it is not broke, so why fix it?

Let us recall the demise of Railtrack in 2002. The problems were numerous, but the straw that broke the camel’s back was the requirement for essential safety repairs following the Paddington and Hatfield disasters. Railtrack—a privately owned company under the failed model—was answerable to shareholders rather than the public. It was, to put it bluntly, badly managed, effectively bankrupt and unwilling to try to fund urgent safety improvements as well as normal running costs. Subsequently, as we know, the company was put into administration and Network Rail, a not-for-profit body, was invented to take over the rail network.

Given the inherent debt of Network Rail, is any Government Member suggesting for one moment that we re-privatise it? Of course not, because it would be completely and utterly stupid. Even if it were privatised—let us be honest—who really trusts this Government to introduce a fair and transparent, or even competent, tendering process in the current rail industry? Let us not forget the west coast franchise, for instance, which has cost the Government at least £50 million. What a complete shambles—a shambles that has resulted in Virgin, which lost to First Group in the tendering process, having to have its contract extended until 2017. The whole model does not produce competition; it produces a series of service monopolies on individual lines. That is not competition as anyone would understand it.

In among all this, the staff on the east coast main line have worked diligently and conscientiously through all the management changes over the years, but they have seen the equipment and rolling stock that they work on slowly deteriorate around them. Those staff are a credit to the service and deserve our congratulations. They and the travelling public they serve on the east coast main line deserve so much better.

The east coast main line should remain where the vast majority of the travelling public want it—in the public sector, in public ownership—and some of the surpluses that it generates should be reinvested into the service itself.