Increasing Choice for Rail Passengers

John Redwood Excerpts

Wednesday 11th July 2018 Westminster Hall

[John Penrose]

I completely agree; Network Rail has all the wrong incentives. I plan to lay out how we might be able to improve them in future. If it had the right incentives to find and to build more capacity, it would be better for Network Rail, the travelling public and rail firms.

If franchising is bust, I will come on to what I think is an alternative in a second. Before I do so, at the risk of perhaps annoying some of my friends in the Labour party, I must pause to say that I am afraid I do not think renationalisation is a valid option as an alternative at the moment. That is not because of the staff, the ownership models or anything like that; it is because politicians, people such as us in this room, no matter whether we are from the political left or right, are generally useless managers of a complicated operation such as a rail system. We take short-term decisions based on elections rather than proper investment cycles, we meddle in details we know little about and we frequently cave in to the vested interests of management or staff at the expense of customers. Anyone who remembers the bad old days of British Rail will know it was a disaster: an uncomfortable, unreliable service with few passengers, starved of investment and with shockingly bad industrial relations. It is pretty hard to argue that it represented some long-lost golden age of rail that we ought to return to.

[John Redwood (Wokingham) (Con)]

Does my hon. Friend agree that there is a lot of misunderstanding in the debate about rail? The fact is that all the track, signals and stations are nationalised and publicly provided, and the small amount of competition is just a competition, once in a while, to run to a timetable that is state approved and controlled, and to standards that are laid down by the state. We effectively have a nationalised monopoly at the moment.

[John Penrose]

I completely agree with my right hon. Friend. I fear that renationalisation is trying to answer the wrong question when we are starting from a position where we, as taxpayers, own the track and network in the first place. It is time to stop obsessing about the failed and stale old-fashioned options of yesterday, whether franchising or nationalisation, and instead to try a new, better alternative that puts passengers first. Open access rail breaks up the franchises so passengers have a choice of different train companies on their local route. If they do not like one, they do not have to wait 10 years or more for the next franchise to be signed, because a different firm’s train will be along in a few minutes.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

I strongly support the proposition of my hon. Friend the Member for Weston-super-Mare (John Penrose)—that we could do with more competition and choice on the railways. The Hull example is great, and I am pleased that it has cross-party support. That city was not well served by the existing monopoly system. It allowed competitive challenge and granted an extra service, and everybody seems happy with it.

That example demonstrates that it is possible to introduce competitive challenge into what is effectively a nationalised monopoly system at the moment. We had rather more competition and choice in the early days of franchising, when it shook things up and improved services, but it is clearly not doing that to any great extent anymore, because successive Governments have wanted more control and authority over the detail and specification of the franchises. In the only competition that there has been, one or two bidders have bid too enthusiastically, and we have then had the embarrassment of their walking away. People rightly ask what they added and whether they were genuinely at risk if they were able to walk away. They would say, “Well, Network Rail didn’t deliver the capacity we were promised, so we weren’t able to deliver the services,” and they would say that the rest of the structure—the controls over timetabling and specification down to the kind of minutiae that my hon. Friend mentioned—made it impossible for them to achieve the changes or innovations that might have led to a profitable service for them and a better service for the customer. There is, therefore, quite a lot of common ground between the parties that the existing system needs considerable change. As my hon. Friend rightly said, we have all had experiences of broken and bad services in recent months, and our constituents have been let down all too often when they have tried to make the journey to work.

My own experience is that I often visit cities and towns around our country, because I love our country and I wish to stay in touch with more of it than just my constituency, and often when I am trying to get back to London to do the rest of my job, I book myself on a fast train and some previous service has been delayed. There may have been a driver problem with a slow train; more often, there will have been a big signalling problem earlier in the day. Then, not only is our service delayed when it arrives, but it gets progressively more delayed into London, depending on how far out we started, because it gets stuck behind stopper services that are themselves delayed, and then everyone is extremely frustrated and the businesses are in the dock for failure to deliver. That is particularly hard for the franchise company if it is indeed a Network Rail failure. It is more fitting that it should get the anger of the travellers if the issue was its own inadequacy at managing.

I therefore have a lot of sympathy with what my hon. Friend says, but I want to explore the most difficult part of his proposition. I am all in favour of open access and different competition. I agree with him that if people can offer services that the public actually want, rather than having to accept a managed best guess—probably over-managed by the Government—that would be better. I am just a bit concerned about how the network monopoly would still operate. My hon. Friend makes a very good point: he says that if there were open access to the network, presumably it would still be a public sector monopoly, but it would have an incentive to provide more capacity, because obviously the more open-access services it ran on its tracks, the more revenue it would gain. We would hope that it would behave in a positive way, even though it was a public monopoly, and would see that that was its main aim, and we presume that a Minister would instruct it that it needed to provide more capacity.

We first need to ask ourselves how we could get the extra capacity in our current system at a sensible price, whatever model of ownership and running the railways we might want, and then we need to look at how a particular model might operate. It seems to me that there are two relatively good-value and straightforward fixes for capacity that we need to do more of. I do not myself think that we can carry on with the idea that we will simply build new railway lines. The High Speed 2 expenditure is a very wasteful way of doing that and it will also do quite a lot of commercial damage to the routes that it takes on when it opens up, so we will have excess capacity on that particular set of routes and still be chronically short of capacity everywhere else. We are chronically short of capacity particularly at peak times into main cities, and the best thing the railway can do is move an awful lot of people at roughly the same time, when it has a clear advantage over the roads. We chronically lack capacity when it could do a really good job and provide an answer for people who are prepared to pay very high sums of money for a season ticket in order to carry out a job that often is not that well paid. They expect, in return for that, reliability and a seat on a train, which is a luxury that many of them do not get under the current system.

As I have said, there are two ways in which we can expand capacity more quickly. The most important, which the Government are now experimenting with—I urge them to go further and faster—is the wholesale adoption of digital signalling. According to my understanding of the technology and the expertise in the industry, it would be quite easy to get a 25% increase in capacity by introducing digital signalling. If we fly in a light aircraft over Britain at the peak time in the morning or evening, we will see completely clogged main roads into and out of the cities and largely empty railway track into and out of the cities because there is typically a 2-mile gap between the trains, for very good safety reasons. But with digital technology, it would be possible to run a really safe railway and have fewer gaps between the trains. Of course I want a very safe railway, and largely we have a very safe railway; we want to be able to take that for granted. However, given that the trains should all be going in the same direction on the same piece of track, and given that through the signalling system they should not be intersecting with one another in the way road traffic does, it should be possible to run more trains on a continuous piece of track with clear visibility, a satellite system and a digital communications system, which would act as a restraint were two trains to get into the wrong place. They would be able to see each other electronically, and there could even be automatic override, although I think drivers are quite capable of keeping the trains safe, and that is one of their main functions in such a situation.

I therefore urge the Minister to roll digital signalling out more quickly, and we may be able to go on from a 25% capacity uplift to a rather bigger capacity uplift, because the tracks remain remarkably empty when one is standing in quite a busy station, waiting for a train. It can be a very long wait, and not much else happens. We think to ourselves, “If this were a main road, I would have seen a thousand cars by now,” and we have seen two trains. We think to ourselves, “This is crazy. We have these fabulous routes. There must be a safe way of developing them.” And the great news is that there is, because digital technology, satellites in skies and the ability to know exactly where things are give us that capacity.

The other thing that I think is needed, to deal with the problem of the people going long haul needing a different pace of train on a single piece of track that also has to take stopper trains, which go much more slowly, is a bit more investment in bypasses. We do not need very long sections of track; we just need regular sections of track where we have double-tracked where there was a bit of spare land—there is quite a lot of waste and spare land around the railway system—so that the fast trains know that they have to go only another 3 or 4 miles down the track and there will be a short bit of track, with appropriate signalling, where they can get past the slow train without any problem. Then we would undo some of the damage that has been done by the timetable disruption through the absent driver, broken signal, broken rail or whatever it is that has caused the problem that day.

You will be pleased to know that this will be a short speech, Mrs Moon. In conclusion, open access, competition and choice can make a difference, but we need to tackle the capacity problem. Perhaps my hon. Friend is right to say that we can do that with a monopoly provider, or perhaps we have to look at models whereby individual dominant players on a route network with open access take responsibility for the capacity provision with the regulator, because we need to ensure what whoever holds the track not only has a theoretical incentive to provide more capacity, but actually wants to provide more capacity. We may need a market model for that, because up to this point Network Rail has been bitterly disappointing, very backward looking and slow at answering what the public want, which is a lot more peak-time capacity into our towns and cities.

--- Later in debate ---

[Joseph Johnson]

To some extent but not entirely— I think that is the answer to my hon. Friend’s question. An integrated ticketing system enables people to buy a ticket for any journey anywhere in the country; it does not necessarily enable them to buy a ticket that is fungible across operators.

My hon. Friend also mentioned the east coast main line, where there are no fewer than 11 passenger operators, including the two open access operators, Hull Trains and Grand Central, which have delivered huge benefits for the communities they serve. Alternatively, take the west coast main line, where Great North Western Railway has recently been granted rights to run open access services between London and Blackpool alongside the franchised operator. That will offer passengers a choice of operators and up to six extra direct services to Blackpool per day, on top of the franchised services already available to them.

My hon. Friend the Member for Henley (John Howell) mentioned the new east coast railway. It is right that we consider all options for that new railway, which is under development, so that we deliver the best outcome for passengers and taxpayers, but we must also deliver all types of service, which a free market on its own would not do. So unless they can make a profit, franchises can get this balance right for everyone.

I am clear that open access is an important part of the railway, and can play a greater role in offering greater choice, in the right circumstances.

[John Redwood]

One day when I was trying to get back from Birmingham to London, I had pre-booked on service A to terminus A and that service was up the spout, so service A very kindly said that I could go on service B—a different company on a different route to a different terminus—and it just honoured the ticket. So there is clearly a way of making these tickets interoperable if the companies wish.

[Joseph Johnson]

My right hon. Friend has made an important observation. We can certainly look at ways to make tickets more fungible, but the purpose of the present integrated smart ticketing system is to enable passengers to “turn up and go”, to use the latest technology and so on. As yet, it has not focused on making tickets fungible between operators, and I am sure that is something that, as the open access policy develops and as open access develops as a feature of our system, will become more prevalent.

As the CMA recommended, however, a greater role for open access requires robust reforms to create a level playing field between different types of operator. At present, as my hon. Friend the Member for Weston-super-Mare knows, open access operators do not pay towards the fixed costs of the network on which they operate, nor do they contribute towards the vital social services that the franchised operators that they compete with deliver. That distorts the incentives of operators and means that we cannot realise the full benefits of competition for passengers.

That is why we are now working closely with the Office of Rail Regulation on its proposals for reforming track access charges in the next rail control period, from 2019 to 2024. These reforms will see open access operators pay an appropriate amount towards the fixed costs of the network where they are able to. We support this move as a vital step in creating the level playing field between open access and franchised operators.

We have also consulted on a possible public service obligation levy. Such a levy would complement track access charging reform, so that open access operators would also pay towards the social services that franchises deliver to many stations. Those stations would not have the levels of service they do today if left entirely to the free market, and the Government offer greater passenger choice through the franchising system to deliver social as well as economic benefits.