Justine Greening
Main Page: Justine Greening (Independent - Putney)Department Debates - View all Justine Greening's debates with the Department for Transport
(12 years, 10 months ago)
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Maria Eagle
The reality is that when the previous Government saw what train operating companies were doing with the power that flex gave them to game the system and clobber some commuters far more than others, we banned it. This Government have reintroduced it. Times are still tough and the Government should not have caved in to pressure from train companies, but they seem to be unwilling, or perhaps incapable, of standing up to vested interests on behalf of commuters, who are now paying the price. I have made it clear that we would have strictly enforced the 1% above inflation cap and not allowed the increases of up to 11% that commuters have faced at ticket offices since the new year.
The Secretary of State for Transport (Justine Greening)
Perhaps the hon. Lady would like to finish the other part of her phrase, which is that she would not have allowed rises of above RPI plus 1%, just as she would not have allowed below RPI plus 1% flexibility. Will she confirm that that is the position and that many commuters would face fare increases under her proposals?
Maria Eagle
What we are not seeing from train operating companies or the Government are proposals to reduce fares. The technical position is of course that if an average cap is applied to each fare, the fare rise will apply to each fare. The Secretary of State is right about that, technically speaking.
Maria Eagle
No.
Next year’s fare increases are set to be even higher—not 1% but 3% above inflation, with the same again in 2014. Unless the Government are willing to stand up to the train companies, and unless they are willing to take on the vested interests and remove the right to add another increase of up to another 5% on top of this year’s so-called cap, commuters next year will face fare rises of up to 13%, with another 13% the year after. That is happening at a time when average incomes are plummeting. Over three years, some tickets will rise by almost one third as people’s real incomes fall by 7.5%, yet the Government seem completely out of touch with the impact of that on households.
Season tickets are heading rapidly towards £10,000 a year on some routes into London once underground travel is included; families are now paying more on commuting costs than on the mortgage or rent; and ticket price rises are outstripping wage increases several times over, if people are fortunate to see a wage increase at all. That is the cost-of-living-crisis facing households throughout the country. Rent levels are going up; energy and water bills are rising relentlessly; bank charges are extortionate, as the cost of living means overdraft limits are breached; and the cost of transport is rising.
Justine Greening
I am listening very carefully to the hon. Lady, who is raising what we all recognise as important issues, but I want to double check something, because earlier in her speech she talked about getting more money into Government coffers through the RPI plus 5% flexible policy. Does she recognise that the policy she is announcing today is a spending commitment? If so, how does she set it against what her shadow Chancellor said yesterday, when he stated:
“I can say to you unequivocally we can make no commitments to reverse any of the Government’s tax rises or spending cuts”?
Maria Eagle
I do not know the spending commitment to which the Secretary of State says I have referred, because there is no spending commitment, and it is complete nonsense for her to say that there is —[Interruption.] I understand her point, but if she wishes to try again I will give way.
Justine Greening
Clearly, the money for that policy has to come from somewhere, and it is from the taxpayer. The hon. Lady obviously accepts that point, so the policy is a spending commitment. Will she simply confirm the reality of that?
Maria Eagle
What I have said is that we would stop the operation of the flex system, as the Secretary of State’s Labour predecessor did. We said before the election that we would do so, but the Government have reversed that policy, and commuters are being clobbered as a result. That is quite clear.
The Secretary of State for Transport (Justine Greening)
I am delighted to be back at the Dispatch Box for the second day in a row. I am also delighted to be debating this important issue with the Opposition who have left the country with such debts, that the Government have little leeway to do what the hon. Member for Garston and Halewood (Maria Eagle) is proposing, which is to add more debt on to a debt crisis.
The Opposition talk about how they feel about train services and rail fares and I will respond to the particular points that the hon. Lady has made. However, many people who are listening will find it galling that the day after the Leader of the Opposition made his relaunch speech which talked about responsibility, his party is instantly engaging in an Opposition debate that shows no responsibility whatever and is making more unfunded commitments that would only add to the debt levels with which it has already burdened our country. The Labour party left this country with the highest structural budget deficit of any major economy in the world and with the highest deficit in our peacetime history. Those debt levels are costing us £120 million a day. We would much rather invest that money in our transport system and other public services. The debt levels that the Labour party left us are crippling the country and we have to tackle them first. As we regain control of our country’s finances, we are aware of how difficult the economic situation is for many people. That is why the Government have taken tough decisions to restore credibility to this country’s economic policy.
Mrs Anne Main (St Albans) (Con)
I am pleased that the Secretary of State is drawing attention to the history behind this matter. My constituents experience the highest rail fares in the country at nearly 30p a mile. Those fares did not get to that level overnight. In his speech on Monday, the Leader of the Opposition described Hertfordshire as one of the cheaper places to live. That shows that the Opposition are completely out of touch with my constituents.
Justine Greening
The Opposition are out of touch. The speech largely failed to talk about how we can tackle the underlying problem in the rail industry, which is the cost. The hon. Member for Garston and Halewood touched on that point and I will come to it later. The industry was passed over to this Government with a high cost. I want to tackle that cost, but the previous Government did nothing to tackle it in 13 years. One of the most important things that the Government and I have to do is to get to grips with the high cost of the railway industry. That must be part and parcel of the Government’s overall approach to getting a grip on our public finances.
At the heart of the Government’s clear determination to do that is giving ourselves the best possible chance of keeping interest rates as low as possible for as long as possible to help families and businesses with loans and mortgages. It is not just the taxpayer who is paying through the nose for debt. We must keep interest rates as low as possible for people across this country who rely on that for their household finances to make sense. Let us be clear: if we had taken the advice of the Opposition to spend more and borrow more, which is what they have been talking about in this debate, we would be talking not about the cost of rail and bus fares, but about an International Monetary Fund bail-out to keep our country afloat, and we would be living in a country facing bond yields and interest rates like those of European countries such as Greece. That is the situation that the Opposition want to swap for.
Kwasi Kwarteng (Spelthorne) (Con)
Does my right hon. Friend have any idea why the perennial problem of rail costs was not tackled in 13 years under Labour and why she and her Department have had to deal with it?
Justine Greening
My personal view is that there were two key reasons—a lack of ability to tackle the problem, because Labour simply did not understand how to do so, and a lack of willingness. Tackling the problems means that we need to have some difficult discussions about the work force, and as we saw in the vote that has just taken place in the House, the Labour party shows no willingness ever to stand up to its party pay leaders, the unions.
Maria Eagle
Given that the Secretary of State has said that she is interested in reducing the costs of the railway industry, does she accept that she needs to examine its structure? One of the big causes of excess cost in the industry is the fragmentation that was left to us after the botched privatisation that the previous Tory Government carried out.
Justine Greening
I think many people watching the debate will wonder why the hon. Lady’s party did nothing in 13 years. I will shortly publish a Command Paper setting out our approach to tackling a number of the broad challenges that exist.
Mr Tom Harris (Glasgow South) (Lab)
I am disappointed that the Secretary of State is being so churlish and saying that the last Government did nothing to reduce costs. Is she even aware that in the five-year control period ending in 2009, they forced Network Rail to improve its efficiency by 33%? Why has she not admitted that that was a major achievement, or that further efficiency savings were included in the next control period ending in 2014?
Justine Greening
I do not think there is any way in which the hon. Gentleman can dress up the outcome of the McNulty report, which set out very clearly just how expensive our railway industry is compared with those in mainland Europe.
I understand that rail fares are a large part of household expenditure for many people, particularly commuters, who often travel significant distances to go to work and earn a living. Of course, the taxpayer subsidises the rail industry alongside rail fares, and thanks to difficult decisions that the Government took in the emergency Budget and the spending review, the Chancellor was able to announce in the autumn statement that we would fund a reduction in the planned increases in fares so that regulated fares would increase by RPI plus 1%. That reduction is helping millions of people who use our trains.
Mr Edward Leigh (Gainsborough) (Con)
Will my right hon. Friend say something about rural fares? The anytime weekly return to London from Market Rasen, which is not in the frozen north, is £150, and the average weekly wage in Market Rasen is £561. That means that people are paying 26% of their weekly salary just to get to London and back. That is not acceptable, and something must be done. We must have less emphasis on the high-speed rail link and all those wonderful projects and more emphasis on helping ordinary people in rural areas.
Justine Greening
My hon. Friend is right to set out the very difficult balance that we have to strike. On one hand we have to ensure that we keep rail fares affordable, and I am determined to do what I can to do that in spite of the fiscal straitjacket within which the Government are having to operate. On the other hand, we have to ensure that we can balance investment in the short term. I am sure that many Members were delighted to see Bombardier agree the contract with Southern for more carriages, and we are putting unprecedented investment into the existing railway lines. We have to strike a balance between working out who pays for the hard work that is going on today and ensuring that we have a railway network that is fit for service in the future.
I know that some passengers on particular routes have faced higher increases than others, and I listened to what the hon. Member for Garston and Halewood said about the 5% flex in rail fares. I am bound to point out, however, that it was the last Labour Government who introduced that flex in 2004.
Maria Eagle
I accept that it was introduced by the Labour Government, but it was then stopped by the Labour Government and reintroduced by the current Government.
Justine Greening
I am pleased that the hon. Lady has made that intervention, because I have with me an exact extract from the franchise agreement that the last Labour Transport Secretary put in place. I shall quote from it, to remove any uncertainty, and then maybe the hon. Lady would like to intervene on me again. It states:
“With effect from 1 January 2010, Schedule 5 of the Franchise Agreement will be amended as set out in the Appendix to this notice.”
That is the change that she has talked about. However, it continues:
“On and from 1 January 2011, the amendment to the Franchise Agreement set out in this notice of amendment shall be reversed.”
Does she want to intervene to correct the record?
Maria Eagle
I am very happy to intervene. Of course I will not contradict what the legal agreement states, but the last Labour Transport Secretary made it perfectly clear to the Transport Select Committee in 2009, in oral and written evidence, that the policy was to continue. It had not been negotiated, but that is different from the policy having been changed. Negotiations go on all the time in government, as the Secretary of State will be finding out. I do not think that quotation makes the point that she thinks it does.
Justine Greening
I really suggest that the hon. Lady stops digging the last Labour Transport Secretary into a deeper hole than he is already in. The contract is absolutely clear-cut, stating categorically in black and white that the flexibility levels introduced by her party’s Government would be reintroduced the year after their abolition.
Mr Tom Harris
Irrespective of what the legal agreement was, does the Transport Secretary personally believe that it would have been a good idea to renegotiate a further period for which the flex would not have been in force?
Justine Greening
I do not, because I believe that the train operating companies need flexibility, so I support my predecessor’s decision. If I did agree with negotiating a further period, it would represent a spending commitment. I agree with the shadow Chancellor that now is not the time to make any further spending commitments, even if the hon. Member for Garston and Halewood does not. We can see the absolute disarray that the Labour party is now in.
I find it incredibly frustrating and galling, as I think many other people do, to hear on one day the leader of the Labour party—the party that left this country in a worse financial state than any other Government ever have—profess that we must be responsible, even though Labour was irresponsible and did not have the custodian values that it needed in looking after our public finances, then the day after, to hear Labour talk about more spending and more debt in the middle of a debt crisis. The very people who let this country down the most and left our public finances in their worst state ever are now the ones talking about responsibility. Most people outside will see that for exactly what it is—absolute political gibberish.
Justine Greening
No, I am going to make some more progress now.
I ask the hon. Member for Garston and Halewood, or perhaps the shadow Minister who winds up the debate, to come clean and talk about how their spending commitment would be funded. If the hon. Lady wants to go against what the shadow Chancellor is saying about there being no more spending, she must accept that her suggestion represents a spending commitment. It is time to talk about how she would fund it, otherwise she has to accept that it would lead to more debt at a time when we are right in the middle of a debt crisis. There is no point in the Leader of the Opposition promoting responsibility when his own party continues to show absolutely none.
The hon. Lady also has to admit that the flexibility that she wants to take away from train operating companies has meant some passengers benefiting from lower increases or decreases. For instance, passengers on the Birmingham to London route via High Wycombe have seen their annual season ticket price reduced by 7%, and the Gatwick to Bournemouth saver return has been reduced by 28%. She is proposing to raise the cost of those passengers’ travel. Presumably she is quite happy to confirm that—she can intervene if she wants.
The bottom line is that for all the bluster that we heard from the hon. Lady, she would abandon the long-term investment in capacity improvements that depends on continued funding from both the taxpayer and the fare payer. She talks about 11% fare increases, but the last Government also allowed such increases. It is worth reminding ourselves of their record on rail fares and value for money. The Labour-led Transport Committee in the last Parliament stated:
“Neither passengers nor tax payers are getting value for their money…The value for money of rail travel has deteriorated by most yardsticks over the past decade.”
I have listened carefully to the comments of the hon. Member for Garston and Halewood, and I hope that we both accept that the real driver of rising costs for fare payers and taxpayers is the inefficiency of the rail system that we inherited from the Opposition. She mentioned other European railways, and Sir Roy McNulty’s independent review of our railway network found that the system that we inherited from the previous Government is 40% less efficient than those of our best European comparators. Taxpayers and fare payers must shoulder that huge cost burden because of the previous Government’s failure to reform our railways.
Unless we are prepared to get to grips with the underlying causes of the inefficiencies, we will never make the progress that I am so passionate about achieving. That means getting different parts of the industry to work more effectively together, as we are doing through the rail delivery group, which has been set up, as Roy McNulty proposed. It means aligning incentives better and increasing transparency—I absolutely agree with that. However, it also means tackling some of the work-force issues, which, we must all accept, have driven up costs. When we reach those difficult discussions in the coming weeks, months and years to tackle rail industry costs that are too high, I hope that the Labour party will step up to the plate and join us in making the necessary decisions to bring rail costs down for the longer term and relieve the fare rise pressures that we have experienced year after year.
Kelvin Hopkins (Luton North) (Lab)
The Secretary of State rightly draws attention to the difference in cost between continental railways and ours. The only major difference between them and us is that theirs are publicly owned and integrated and ours are privately owned and fragmented.
Justine Greening
That is an over-simplification. However, the hon. Gentleman is right to point out that Sir Roy McNulty identified in his report a need for the different parts of the rail industry to work together much better. Network Rail is already doing that with many of the train operating companies. That was to be a key way of driving costs down—not through worsening services but by running the system better in the first place.
Stephen Hammond
If we are comparing privatised or denationalised and nationalised railways, perhaps the Secretary of State would like to reflect on the point of history that, in the last 15 years of British Rail, fares rose faster than in 15 years of denationalised railways.
Justine Greening
As ever, my hon. Friend, for whom I have huge respect and who is obviously an expert in the House on the subject, makes an incredibly powerful point. It is worth complementing that with the point that we also experienced unprecedented increases in passenger demand since privatisation.
Julie Hilling (Bolton West) (Lab)
When the Secretary of States talks about reducing costs in the industry and staff numbers, does she mean cutting the salaries of people who work in ticket offices on basic wages of £16,000 or £17,000, or of train dispatchers, who are on basic wages of £14,000—not big, but low salaries? Is she saying that those people should have their salaries reduced?
Justine Greening
I do not think that I have talked about reducing salaries. Many people might say that a train driver on a salary of £40,000 or more had a well-paid job compared with them.
Clearly, we need to address important issues that relate to the costs of the railway industry. That is why we will publish the rail Command Paper early this year to set out how to meet the challenge. That is the real prize. The long-term way of reducing pressure for relentless fare rises is by tackling the underlying driver: the industry’s cost base. As I said, that will also give the Opposition an opportunity to demonstrate whether they are serious about reducing costs to passengers or whether their policy review is limited to tinkering at the edges with uncosted commitments drawn up on the back of an envelope.
Mrs Main
I have written to the Secretary of State about Network Rail, which has fundamentally failed many of the train operators—67% of all delays and stoppages are to do with Network Rail. It is time to have a debate about it. Network Rail, which is with the Office of Rail Regulation now, has been deeply inefficient in the amount of money that it costs the taxpayer.
Justine Greening
That is what I mean when I talk about the need to align financial incentives better so that people are pulling in the right direction and so that, when performance is not good enough, it costs the people who cause the inefficiency in the first place.
I want to move on to the second aspect of the comments of the hon. Member for Garston and Halewood —bus fares. Although every sector and Department have had to play their part in deficit reduction, the Labour party still does not accept that, even after yesterday’s speech by the Leader of the Opposition. Nevertheless, we are determined that, even in the difficult economic conditions that we face, buses will continue to receive their fair share of funding. Yes, it is constrained by the terrible legacy that the Labour party left us, but we are determined to encourage more people on to buses and to make bus travel more attractive. That is why we set out in a spending review our commitment to continuing our financial subsidy of bus operators. The bus service operators grant remains untouched for this financial year, with savings to be introduced only from April, alongside others that we have had to make across Government as part of tackling the deficit that the Labour party left us.
Justine Greening
Many Londoners will not forget that the current Labour candidate for Mayor increased bus fares in 2004 by a huge amount. I simply do not accept that his proposals for London will mean anything other than catastrophically undermining the essential investment, on which so many Londoners count, in the transport system. It is financial jiggery-pokery, and it does not add up. I believe that Londoners will see right through it in May.
We must tackle the deficit, but we continue to ensure that funding goes into our bus services. Indeed, we spoke to the industry as part of the spending review about how we could get more out of the bus service operators grant. After difficult spending decisions, the industry said that it felt able to absorb the reduction without raising fares or cutting services. Nevertheless, we are protecting the concessionary bus travel scheme.
Lilian Greenwood (Nottingham South) (Lab)
I can assume only that the Secretary of State is out of date, because the Confederation of Passenger Transport UK told me that, although it initially felt that it could absorb the 20% cut in the bus service operators grant, the combination of that and the cuts to concessionary travel repayment and local transport was a perfect storm.
Justine Greening
The hon. Lady should apologise to that organisation more than anyone else because her Government left the country’s finances in a state that means that we have to make very difficult decisions. There is not a day when I do not come into the office wishing that the state of the public finances that the Labour party handed us was better. The reality that we must all, apparently apart from Labour Members, face is that we have got to tackle that problem. That means making some difficult decisions. The Labour party is in complete disarray.
Justine Greening
Until the Opposition speak with any sort of single voice, it is pointless taking further interventions. Most hon. Members would accept that I have taken an awful lot and it is time for constituency Members of Parliament to have their say on behalf of their communities.
We are committed to investing in bus travel. In the past two months, we have also announced nearly £100 million of additional investment in buses as part of the growth review.
We are committed to investing in the transport infrastructure—not only HS2, as we announced yesterday. We are putting unprecedented investment into rail infrastructure. Even in these tough times, the Government are taking action to help people with the rising cost of living at the same time as dealing with the massive budget deficit that the Labour Government left us. That is why we are helping keep interest rates low for families and businesses, freezing council tax for the second year running, cancelling this month’s fuel duty increase on top of last year’s fuel duty cut. It is why we are funding a reduction in the planned increase in regulated rail fares and continuing our financial subsidy of bus operators while implementing a massive programme of investment in our transport infrastructure, not just for passengers today and in the next 10 years, but for those in the decades to come. Our determination to reduce the cost of railways in the long term to fare payers and taxpayers means that we will introduce proposals for substantial reform in the rail Command Paper early this year.
That is the significant action that we are taking. The Labour party talks about responsibility at the top, but in reality that means difficult decisions. We are making them, and that stands in stark contrast to the Labour party’s tinkering, unfunded and, in so many cases, unworkable proposals.
Mr Tom Harris (Glasgow South) (Lab)
Since the Secretary of State spent some time talking not about rail fares but about the economic legacy of the last Labour Government, I wish to make one brief point first. As an Opposition Member, she was a member of the shadow Treasury team and, up until November 2007, the Conservative party’s policy was to support every penny of spending made by the Labour Government. If she is claiming that the deficit that the Government inherited was created in the last 18 months of the Labour Government, that is something that the House would like to debate. She cannot pour scorn on the spending of that Government when she sat on the Opposition Front Bench and supported every penny. That is double standards. The Secretary of State shakes her head, and I am more than happy to give way if she wants to explain why she did not tell the then shadow Chancellor that he should not support Labour’s spending plans.
Justine Greening
Everybody in Britain knows exactly which party got the country into the financial mess. It is precisely why Labour Members are on the Opposition Benches now: it was them.
Mr Harris
That says quite a lot about the Secretary of State’s reluctance to accept her own culpability for supporting the spending plans of the previous Labour Government.
I do not believe that the railway industry is broken, or a basket case. I was proud to serve as a railway Minister in the last Labour Government, and I understand the successes that have grown from 13 years of Labour governance of the railway industry. We have more people travelling on the railways than at any time in their history outside of wartime. We have more services every working day than ever before, and punctuality is at an all-time high. Those were achievements that this Government have managed to continue—and I hope that that continues—but fares are a fundamental weakness. They are the crucial interface between the travelling public and the railways and—irrespective of the public subsidy to the railways—if we do not make rail travel affordable for ordinary people, it will not be surprising if they feel that the railways are letting them down.
The previous Secretary of State for Transport, the right hon. Member for Runnymede and Weybridge (Mr Hammond), famously described the railways as a “rich man’s toy”. A few weeks ago, I challenged the Secretary of State in the Transport Committee about whether she agreed with that assessment and, understandably, she did not want to commit herself. She told the Transport Committee that she wanted to see the balance between the taxpayer and the fare payer move towards the latter. She also said that in the long term she wanted the fare payer to pay less. Well, she can have one or she can have the other, but she cannot have both. It is clear that unless the taxpayers’ contribution is increased, fares will not come down. The Secretary of State refused to answer that point at the time.