Increasing Choice for Rail Passengers

Debate between John Penrose and Alan Brown

Wednesday 11th July 2018 Westminster Hall

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Moon. Like other hon. Members, I congratulate the hon. Member for Weston-super-Mare (John Penrose) on initiating the debate and putting forward new ideas and thinking on the operation of the rail system. One thing that I think we can all agree on is that, as the hon. Gentleman said in his opening remarks, the existing franchise system is absolutely broken. There are too many direct awards, which means a lack of competition and less pressure on prices. We have had the east coast main line shambles. No matter how we dress it up, Virgin Trains East Coast has been able to walk away owing the taxpayer £2 billion. That is a £2 billion write-off of bad debt. There are also the ongoing issues with Southern Railway, and of course there are the latest timetabling issues, so there is no doubt that the franchising system as it is operating under this Government is not working; it is not fit for purpose.

The hon. Member for Weston-super-Mare stated his belief that franchises put train companies first, rather than passengers. I certainly agree that train companies—obviously—have to make profits, but I would suggest that with open access there would still be companies that would have to make profits, so they might still be driven to display the same behaviours.

[John Penrose]

Nothing says that open access has to be among profit-making companies. There could be not-for-profits and publicly owned companies, providing that they all compete with one another on a level playing field. I just want to reassure the hon. Gentleman about that.

[Alan Brown]

As a complete free marketeer, I welcome the fact that the hon. Gentleman is saying that we can have not-for-profit and public sector involvement. I agree with that sentiment.

I think, however, that the hon. Gentleman has over-simplified how this could work. It was suggested that if one train company is not operating to satisfaction, a passenger can switch to another train company, just like shopping for coffee. I have a funny feeling it will not be that simple for widespread open access. We have heard the benefits that open access can bring, but the reality is that train operators will still be bound by the same constraints of the existing network, particularly station capacity at mainline stations. There therefore might not be the flexibility to have so many train operators competing. Slot access has to be managed. We must also consider the movement of freight on the rails. There are a number of elements that need to be understood and factored in, which might restrict open access slot availability.

It was suggested that that might incentivise Network Rail to build more capacity. At the end of the day, however, if that is an incentive for Network Rail, the taxpayer still has to fund Network Rail upfront for the costs or Network Rail will have to borrow against optimistic future track rental fees. There is a risk, therefore, that it will not incentivise Network Rail to start duplicating rail networks across the UK.

It was also said that this would be comparable to the way we shop around for air services. I do not think that is comparable. The constraints on Heathrow stifle competition just now. There is not the widespread competition in air routes that everybody would like to see. Particularly for connectivity in Scotland, passengers do not have the choice that we would like. Again, it is a slightly idealistic comparison. Having said that, I welcome the suggestion. It has merits and it can work, but it will not be able to work as an entity by itself, because we will still need to protect the less-profitable routes. I suggest that it would need to be part of the mix, but I would not dismiss it out of hand.

The hon. Member for Ayr, Carrick and Cumnock (Bill Grant), in my opinion, wrongly conflated cause and effect with the end of British Rail—franchising was brought in, and suddenly passenger numbers rocketed and all the rest of it—but that was because Government constraints on investment in the rail rolling stock were lifted. There was therefore investment in the rolling stock, which the franchises were allowed to do, but that investment was still paid for by a combination of train users and the general taxpayer, because many franchises are subsidised. It was a direct consequence not of privatising British Rail and breaking up the rail network, but of allowing that investment to take place. Too often, many Conservative MPs seem to think that franchising the system created magic money. They seem to think the franchises were like the Prime Minister’s magic money tree, but they are not. It is always funded from somewhere —that is, from the general taxpayer.

Rail Franchising

Debate between John Penrose and Alan Brown

Wednesday 10th January 2018 Commons Chamber

[Alan Brown]

I agree with my hon. Friend. Carstairs junction could be a major blockage for HS2, as well as the other operation, so I hope that the Minister was listening to her intervention and will explain why, if the remodelling was a part of the direct award, it has not happened yet.

[John Penrose (Weston-super-Mare) (Con)]

The hon. Gentleman decries the lack of competition from direct awards, so have he and his party considered the report of 18 months ago from the Competition and Markets Authority calling for more on-track competition within franchises as an alternative to the increasing allocation of monopolies through franchising?

[Alan Brown]

I am not against competition per se. There is certainly lots of information about models that are deemed to work better than others. One aspect of competition is that the public sector should be allowed to make its own bids for operating franchises. A bit of competition might help to drive innovation, but in no way should the public sector be barred from the process.

We then have the Virgin Trains East Coast shambles on the east coast line. The Transport Secretary stood at the Dispatch Box again to say that there was no bail- out. When he responded to me during proceedings on the statement, he claimed that the parent company guarantees would protect the taxpayer, but we now have confirmation that franchise fees were backloaded, meaning that Virgin was able to walk away without paying the £2 billion premium track fees it was supposed to pay. That was confirmed at the Dispatch Box. He said, “It’s okay, we’re going to get the £165 million parent company guarantee,” but that is considerably less than the £2 billion premium fees the taxpayer would otherwise have received, so the argument is nonsense. To say that the franchise might have failed is no excuse. It is testament, again, to the failed model currently being operated by this UK Government. The very fact that Stagecoach’s shares went up after we heard news of the new model proposed by the Transport Secretary tells us who is walking away with the best deal from the new arrangements.

The east coast main line gives us proof that public ownership can work. When the previous franchise failed, it was successfully run as a public operation that paid over £1 billion in track rental fees to the taxpayer and returned a nominal profit of £42 million from the overall operation. The large private companies would not suffer a £42 million profit, because they would think it too little, but it would be welcome for the public sector and could drive further investment. Another failing of the franchise model is that it only allows big companies to operate, and they chase massive profits, at the behest of their shareholders.

The public-private alliance model proposed by the Transport Secretary might in theory be an improvement but, again, it is bonkers not to revert to the working model under the public franchise. The new model will still contain risk in terms of multi-layer operations and interactions, and even the timetabling to get it in place, as was outlined by the hon. Member for Middlesbrough.

Low-Cost housing

Debate between John Penrose and Alan Brown

Wednesday 8th February 2017 Westminster Hall

[John Penrose]

The hon. Lady tempts me into a slightly wider area of discussion than the one I was focusing on. However, my broad point at least is that we will not be able to make all housing more affordable, whether that is for those on lower or middle incomes, unless we dramatically increase the supply of new homes of whatever tenure—whether we are talking about homes for rent or for buying. Only by doing that over the longer term will we manage to reduce the cost of housing for everybody at all income levels. The hon. Lady might like to propose some additional measures and, if so, I am sure that she will make some remarks later to turbo-charge some other opportunities for those on lower incomes as well. However, as a starting point and a fundamental, we are kidding ourselves if we think we can get away without increasing the overall level of new homes that are being created in the first place.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I congratulate the hon. Gentleman on securing the debate. One aspect concerns me slightly about the London model: is there not a risk that people being allowed to build upwards will lead to the creation of single town houses that have become much larger, therefore creating half-a-million-pound houses rather than low-cost housing, which is the thrust of the argument?

[John Penrose]

If demand is unsatisfied in any part of the housing market—whether at the top or bottom end—that will spill across. If people are looking for a particular size of house—if their family is growing and they need a three-bedroom house as opposed to a two-bedroom house—and they cannot find one, the demand will spill over into other areas of the housing market. Demand will drive up price, no matter what, and that will knock on through to other areas of the housing market. The hon. Gentleman is right that there are hotspots in the housing market—geographically and in terms of kinds and sizes of house and tenures—where this problem is particularly acute, but we cannot afford to be that choosy. We need to build an awful lot more of all kinds of houses if we are to reduce prices. Some of the hotspots may well apply to people on lower incomes and, at that point, we should be doing something about it, but that should not be to the exclusion of everything else; otherwise the knock-on effects will still be felt throughout the tenure range.

With what I have said in mind, I would like to take up the offer in the White Paper and make a formal submission to the consultation that the Minister launched yesterday. I want to make a concrete proposal—please forgive the pun—for a new permitted development right to add to the suite that the Government suggested. The right would allow small-scale additions to town and city centre properties when the final result is still below the treeline or other buildings in the same block. Converting existing shops or offices would still require planning permission, but building new apartments within those height limits above them, or above existing housing, would not. It would not apply to substantial new buildings or major developments, nor to listed heritage buildings or conservation zones.

That measure is safe, sensible and proportionate and should not scare anyone—certainly not those worried about Manhattan-style buildings. It would offer a little piece of freedom from the cold and clammy hand of bureaucracy: a chance for every householder to help solve the nation’s housing problems by extending the size, and value, of their property by adding extra bedrooms or perhaps an entire apartment on top of what is there already. It would provide an opportunity for energy and ideas to have their head, without being diverted, amended or discouraged by official objections, rooted in the very British fear of any building that is taller than two storeys high.

Without the measure, officialdom will be too slow to change. They will not be forced to look upwards, and will carry on thinking the same way as they have for the last 50 years. We need change immediately, not at some distant future time. Without a shock—a stimulus—and some creative development yeast, the White Paper’s dough will never rise. Many valuable town and city centre sites will continue to be ignored.

The new permitted development right could be that stimulus—that little piece of freedom. It could be a creative spark that lights the blue touch paper of Britain’s stodgy, slow-paced, cosily comfortable housing market so that it takes off like a rocket. It would improve our economy and our quality of life, make our homes more affordable and reduce development pressure on greenfield and green belt sites. I hope the Minister will agree.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mrs Gillan. As a Back Bencher, it is certainly unusual for me to be second in the speaking order.

I congratulate the hon. Member for Weston-super-Mare (John Penrose) on securing the debate. He has campaigned on this issue and raised it in Parliament before, so it is clearly something that he is keen to see progress. I agree in principle with much of what he said about ensuring vibrancy in main streets at night. If that can be done by building upwards above shops, that is a good thing, but in the long run we really need to be careful. I have already touched on my concerns that the proposal might open the door for the construction of large town houses without delivering low-cost housing, which is the thrust of this debate. I am also slightly concerned that there may be a rush by too many people to do it. We need to ensure that the right controls are in place, including building standards and building controls, and that the processes can be inspected. Clearly some low-rise buildings were only ever designed to be low-rise buildings, even though they may be adjacent to higher buildings.

[John Penrose]

Just to clarify, nothing in the proposals that I have made today would affect building control or building regulations. Clearly we would need all the usual checks to ensure that buildings will stay up and be safe once they have been constructed.

[Alan Brown]

I fully accept that. I know that is the premise; I am just saying that we need to ensure that the resources are there to keep an eye on things. We have heard stories about properties in London getting built in the rear of gardens and so on, which is done without planning consent or building standards consent. It is a question of ensuring that procedures are properly followed. Foundations need to be checked and may need to be strengthened, and buildings that are structurally tied to adjoining buildings need proper structural design. I recognise the hon. Gentleman’s good point about controls, listed buildings and exemptions, and I agree that a controlled method of allowing building up can work.

Let me return to low-cost housing, which is the title of this debate. We need to do more to make low-cost housing available. I welcome the UK Government’s White Paper, but neither I nor my party think it goes far enough. As was raised yesterday, the elephant in the room for low-cost housing is the right-to-buy model. In the long run, the extended right-to-buy model for social housing will eat into the availability of low-cost housing. Subsidies from the public sector to allow people to buy properties use money that could otherwise be going directly into stimulating housing growth or be put towards brownfield development. Members have raised concerns about building outwards and eating into the green belt. Clearly brownfield regeneration is a good thing, especially in the urban environment. The money being taken out of the system for right to buy could be put to better use, either directly for building new social housing or for stimulating new brownfield development.

By ending right to buy, the Scottish Government have protected 15,500 properties that would otherwise have been sold from stock. Quite often, houses that are sold end up in the buy-to-let market, which pushes rents up because social rents are always cheaper than private rents, and that has an impact on the housing benefit bill. Again, that means more money from the public purse that could otherwise be going towards housing.

The Scottish Government are making a record investment in council house building. I request that the UK Government consider going back to that model and funding the construction of public housing. Because there is no right to buy for housing in Scotland, housing associations have more confidence to build housing. They can also get subsidies from the Scottish Government. The Scottish Government delivered 30,000 affordable homes in the last Parliament and have a target of 50,000 for this Parliament.

I recognise that the White Paper targets affordable homes, but the argument goes full circle: for the UK Government to deliver affordable homes, they need to put public money to the best possible use, not subsidise the purchase of properties for people who already have one and who do not need a discount to become a homeowner. I know that a lot of people have aspirations to become homeowners, but the No. 1 thing is to ensure that there are enough homes for everybody. We can look to further drive home ownership once there are enough homes for everybody, but once that happens the market will even out and we will not see the continued push on prices.

The hon. Gentleman said that there would be controls on listed buildings. My other concern is that we would need tight controls on the aesthetics of buildings to ensure that they blended in with the surrounding environment. Where there are permitted development rights rather than planning controls, there still need to be tight guidelines.

[John Penrose]

May I press the hon. Gentleman a little on that point? I take his point with respect to areas that have a homogeneous architectural style and that therefore have conservation of one kind or another, but not areas that have no such homogeneous style and no conservation control or anything like it. Most British cities are a hotch-potch of things built over several centuries, and that is fine. I am concerned that he is trying to create a sort of clammy bureaucratic control where historically there has been none and everyone has been happy with the outcome.

[Alan Brown]

I take the hon. Gentleman’s point. Perhaps, as always, the truth is somewhere in the middle. However, I would have real concerns if people were just able to throw up these buildings. There could be real issues with the materials used, with long-term maintenance and with the aesthetics of buildings. For instance, if people use the wrong materials for wood fascias and do not maintain them, they become a real eyesore in the long run. I am just putting that out there; I think those issues should be considered within permitted development rights. Local areas might not have a completely homogeneous style; as he says, cities may have developed as a hotch-potch, but that is not always an attractive look, and if we do not watch out, it can become even less attractive. Clearly that is not the desire behind the hon. Gentleman’s proposal, but I conclude by congratulating him on advancing it.