Railway Industry

John McDonnell Excerpts

Tuesday 19th October 2010 Westminster Hall

[John McDonnell (Hayes and Harlington) (Lab)]

I shall make several brief points. I refer to my entry in the Register of Members’ Financial Interests: I chair the RMT parliamentary group, as the Minister will know. We are hoping that through the National Union of Rail, Maritime and Transport Workers, the Transport Salaried Staffs Association and ASLEF, we can have a dialogue with the Government during this key period when critical decisions are being made about the future of rail. I would welcome an early ministerial meeting to discuss the interim McNulty report when it is published in November. It is a pity that it was not published before the comprehensive spending review, because it would have been helpful to see whether it influenced some of the decisions that will be announced tomorrow.

The RMT group met with Roy McNulty last week for an informal discussion of some of its concerns about what happened in the past and what seems to be occurring under this Government. We were hoping that there would be a more objective discussion about the future structure of rail in this country, but it appears that any prospect of looking at an integrated railway system under public ownership—even some element of public ownership in the structure which would enable a public sector comparator—has been ignored again.

I still cannot comprehend why we cannot at least consider using one of the franchises as a public sector comparator. We know from the experience in the south-east that when Connex was brought back into public ownership for a period, it ran more efficiently, more effectively and more profitably than most other franchises across the country. We hoped that the previous Government would at least maintain it in public ownership so that there could be a public sector comparator.

If Members trawl through Hansard, they will see question after question over past years in which Ministers were asked why we cannot have a public sector comparator. They were also asked what calculations and assessments had been made in respect of other systems across Europe that are under integrated public ownership, so that we could at least make some judgment of the private franchising system that has been in operation in this country for the past two decades.

Several lessons have come out of independent comparisons. It has been found that integrated systems under public ownership, without a panoply and multiplicity of various agencies—my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) listed 24 different companies and four or five regulatory bodies or Government decision-making bodies—are more efficient as well as more cost-effective. I am concerned that in Mr Roy McNulty’s review there is still a prejudice even against examination of a public sector option or role in any part of our system beyond Network Rail.

Briefly, on investment, the rail industry overall, including management and unions, hopes that commitments will be given by the Government in the comprehensive spending review statement to high-speed rail—we look forward to the consultation starting in January—and to Crossrail. That would at least allow us to see a longer-term future for investment in the infrastructure that we so desperately need.

I compliment the previous Government, who at least committed themselves to Crossrail and to bringing forward high-speed rail, although I was critical of some of the delays in investment. We need this Minister to tell us that that long-term programme is secure.

The hon. Member for Newton Abbot (Anne Marie Morris) discussed rolling stock. Even under this Government, we need a discussion about investment in rolling stock, which would stimulate British industry rather than the import market. With a limited amount of investment and a commitment to the purchase of rolling stock, there is potential to rebuild the rail manufacturing base in Britain. This relates largely to what my hon. Friend the Member for York Central (Hugh Bayley) said about the loss of skills over years if we do not invest in the rolling stock manufacturing base of our country.

Any lifting of the cap on protected fares will fly in the face of everything that the Government, when they were in opposition, said about their commitment to the development of rail as one of the key transport mechanisms that will help us to protect our environment. The threatened increases of anything up to 37% to rail fares on some routes, and now the threat of increased fares on London underground, undermine the Government’s green credentials from the outset. I hope that there will be some acknowledgment in the comprehensive spending review of the role that rail plays in tackling climate change, and therefore the importance of maintaining fares at a reasonable level.

Passenger numbers have increased dramatically over the past 13 years, largely as a result of the increase in economic activity. As we go into recession, there will inevitably be a reduction of passenger usage, and there will be a temptation to make up the funding gap by increasing fares. That would be completely counter-productive: it would push more people off public transport and, as a result, have a dramatic impact on our policies to tackle climate change and our environmental policies overall.

Finally, let me raise a staffing issue. The treatment of the Jarvis workers was a disgrace. The way in which they were notified of the loss of their jobs was appalling. They have almost been turned into roaming serfs looking for work. We hear stories of people having to move around the country on zero-hour contracts, and even of people putting up camps near to where they can bid for work the following day.

I raised the matter with the previous Government and said that there should have been an intervention by the Government and Network Rail, and that the contracts and staffing levels could have been maintained. Things were badly handled then, and there is a need for this Government to intervene now, because this is not just about how individual staff are treated; it is also about the expertise that we need for the future.

Surely to God we have learned lessons in the past that if we do not maintain expertise, and therefore do not maintain the track effectively, there will inevitably be accidents, loss of life and serious injury. We have had so many inquiries—surely we have learned the lessons. I urge this Government to intervene, to look at what happened in the displacement of ex-Jarvis workers and their expertise, and to see what can be done to secure not just their jobs but also their expertise for the long term.

[Julie Hilling (Bolton West) (Lab)]

I declare an interest in the debate, as I have a constituency development plan with the TSSA.

On the staffing point, does my hon. Friend agree that if we break up Network Rail, we will create not only more insecurity for workers, but a bidding structure for them? When rail was first privatised, the bidding war for drivers made the cost much more expensive because each franchise then bid for certain expertise.

A more important issue is safety. Already there is erosion of track inspection and other safety elements. If we fragment the industry further, especially track control, we will certainly make accidents, such as those at Grayrigg, Hatfield and so on, more likely.

[John McDonnell]

I could not have said that more eloquently. My hon. Friend makes an extremely valid point. I urge the Government to tread carefully when making decisions on franchising and the integration of track with operations, because we have seen what has happened elsewhere. Mr Armitt said that when companies have gained franchises in other sectors, they seek to “sweat the assets” to maximise their profits. That eventually has an implication for safety. Having a nationally integrated system would overcome those issues.

My hon. Friend also referred to the transaction costs involved both in that sort of breaking up and in individual franchising. The Government should carefully examine Roy McNulty’s work and the transaction costs that will result. On London Underground, I was assured by the previous Government that Metronet was a one-off failure and that Tube Lines would be secure, but we then had the failure of Tube Lines. The estimated cost of those franchises and setting up the public-private partnership was £400 million on consultancies, accountants and lawyers alone. The Government should learn lessons from the past.

On London Underground staffing, despite what people read in newspapers, RMT and TSSA have taken industrial action because 800 jobs will go if London Underground does not reconsider its position. Those 800 staff are based at stations including Hayes and Harlington in my constituency. If we lose those staff, we lose security and safety at those stations in the lead-up to the London Olympics. We are trying to put on a display for the world so that when people come here to enjoy the Olympics, they can travel in comfort and absolute safety. It would be a retrograde, short-sighted step to lay off those 800 staff, particularly at this key time.

I urge London Underground to return to the negotiating table and to seek a settlement with the two unions. Otherwise, there may be a long, bitter and protracted dispute that will affect the travelling public in a way that will jeopardise their safety in the long term. The dispute is a principled one. It is not about wages, but about looking after the safety of the travelling public. That is why I support it and have appeared on picket lines. There may be a role for the Government. If London Underground remains intransigent, the Government should intervene, because the matter is important.

I welcome this important debate engendered by my hon. Friend the Member for North Ayrshire and Arran. I urge the Minister to meet the union groups, to discuss the McNulty report on the long-term future, and perhaps to return to the matter in six months to monitor progress on the Government’s initial decisions.

--- Later in debate ---

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

I congratulate the hon. Member for North Ayrshire and Arran (Katy Clark) on securing the debate, and congratulate the shadow Minister, the hon. Member for Denton and Reddish (Andrew Gwynne), on his recent appointment and his first address from the Front Bench.

I thought that it would be useful to consider the questions that the hon. Lady helpfully repeated at the end of her speech. First, she asked whether Sir Roy McNulty’s work is informing the comprehensive spending review. Neither his interim report nor his final report have yet been published or finalised, but I can assure the hon. Lady that Sir Roy has kept my right hon. Friend the Secretary of State and officials at the Department for Transport informed of his work, so that is feeding into the decisions being made on the comprehensive spending review. The early draft work, as it has been going ahead, has helped us to feed into the Treasury process and the CSR.

The hon. Lady also asked whether I would write to the executives of the rail operating companies about remuneration.

[John McDonnell]

Before the Minister moves on from the McNulty report, I point out that I asked whether she would meet the rail unions to discuss the McNulty report when the interim report is published in November.

[Mrs Villiers]

I was going to come on to that, but I am happy to answer it now. I have slight qualms about this while the industrial action is continuing on the London underground, because I am concerned about the huge inconvenience that that is causing passengers. As the hon. Gentleman is keen for me to meet the unions, I am happy to do that, but I would still urge them to find an alternative way to resolve their dispute on the London underground.

[John McDonnell]

The two issues are unconnected. We will make sure that the right hon. Lady can travel on a non-strike day.

[Mrs Villiers]

I suppose that I am particularly sensitive about the issue because the day on which I was due to meet the Transport Salaried Staffs Association coincided with a strike day so, for all sorts of reasons, it seemed inappropriate to go ahead with the meeting.

Turning to remuneration in the rail industry, the level of pay across the industry clearly needs looking at in the context of the McNulty review. I have discussed remuneration levels with the train operators, and I expect that dialogue to continue.

The hon. Lady’s third question was about introducing a windfall levy for the train operators. The Government have no plans to do that. Her fourth question was whether I would meet her and colleagues to discuss those who—tragically for them—were made redundant by Jarvis. Yes, I would be happy to do that.

On the franchising review, the hon. Lady asked specifically about a clause on ScotRail and she will appreciate that that is a matter for the Scottish Government, but she also asked a wider question about the approach that the UK Government will take in relation to the franchises for which we are responsible. I am not convinced that we should have a blanket withdrawal of that type of indemnity clause; there is a place for such clauses in appropriate circumstances. She then asked whether the McNulty review, and the Government considerations flowing from it, would look at an expanded role for the public sector and additional nationalisation. That is certainly one of the options that Sir Roy will consider.

The hon. Lady also asked about ticket offices and the loss of guards. In many cases those are matters for those operating services, but the overall approach in relation to the franchises is governed by the ticketing settlement agreement. We need to look at reforming that, to ensure that we get it right, but it is obviously important to consult properly with the communities affected by the decisions.

The hon. Lady also talked about the strike action on the London underground and the loss of guards. I am convinced that we need to modernise working practices in the rail industry. I am concerned, as I already said to the hon. Member for Hayes and Harlington (John McDonnell), about the damage to the London economy caused by the strike action that is taking place. We have to recognise that the way in which people buy tickets has changed, and that rightly will impact on London Underground’s decisions about the deployment of its staff.

[Mrs Villiers]

Forgive me; I am probably trespassing on devolved matters because the relationship between London Underground and its employees is of course a matter for which the Mayor is politically accountable. I have to say, however, that of course I am concerned about security for women using public transport—I am a woman myself—but there is a real argument for saying that staff deployed on platforms are more valuable to passenger security than those stuck behind ticket office windows. I am not sure, therefore, that the security issue can justify the retention of ticket offices. Security focuses on whether people have access to staff in stations, which is not the same as whether a ticket office is open.

I shall go on to some of the wider issues addressed by the hon. Member for North Ayrshire and Arran. I would like to assure the House that the coalition has put rail at the heart of its strategy for transport, in terms of re-energising our economy, reducing carbon emissions and addressing congestion on our roads. I welcome the support shown today for taking into account the concerns of both passengers and rail freight—a point rightly made by the shadow Minister. Much will depend on the announcements made tomorrow in the spending review. It is clear that transport will not escape the pain that is the unfortunate consequence of the deficit that we have inherited from the previous Government, but I emphasise that the Chancellor has made it clear that he recognises the economic benefits of investment in infrastructure to support economic growth, and that he recognises in particular the importance of investment in transport infrastructure.

The shadow Minister asked me about Crossrail. I am sure that he welcomed, as I did, the support expressed by the Chancellor at the weekend for the Crossrail project. We have also expressed clear support for Birmingham New Street, we are taking forward plans on high-speed rail and we are working very hard on Thameslink. Our focus in all those projects is to ensure that we value-engineer costs down to keep the projects affordable and deliverable within the spending envelope that is now available.

[John McDonnell]

I emphasise that, although there is a commitment to the Crossrail project overall, people are concerned about the paring down of the project and the missed opportunities that might result from that. For example, in my own constituency, Hayes and Harlington station is to be redeveloped. If there is any paring down in the investment of such station projects, we will miss the chance to include modal transfer opportunities and to ensure the integration of our local transport network.

[Mrs Villiers]

Both the Secretary of State and I have repeatedly talked about our support for delivering the whole project, and it is worth bearing in mind the excellent work done by the team behind Crossrail to find lower-cost ways to deliver the same transport benefits, and to deliver the whole project.

It is true that there has been significant good news on the railways in recent years. Since privatisation there have been some striking successes, with train punctuality now at record levels and a significant increase in the number of passenger journeys. Also, the number of miles travelled on the railways has gone up by 75%. Since privatisation, therefore, a story of managed decline has been transformed into one of significant growth. Although the recession has subdued that trend to a degree, we expect it to resume once the economy recovers.

So, that is some of the good news about the UK’s railways. But the downside is that the cost of running the railways did rise dramatically under our Labour predecessors. If we are to deliver the improvements to services and capacity that hon. Members have called for today, and that passengers want, we have to find a way to get costs down. The disastrous deficit left for us by our predecessors makes it essential that we drive out cost inefficiencies on the railways, and we owe it to passengers to do our very best to get costs down.