HS2: Budget and Costs

Lord Adonis Excerpts

Tuesday 24th July 2018 Lords Chamber

[Baroness Sugg]

My Lords, what is needed is a step change in railway capacity, and HS2 will deliver this way beyond what would be delivered by improving existing lines. I am afraid to inform my noble friend that the Government are committed to delivering HS2. It remains on track, with strong cross-party support. The new railway line will bring huge economic benefits that will be felt across the country.

[Lord Adonis (Lab)]

My Lords, I hope that the Minister will stand by HS2 as one of the great things that is happening in the country at the moment. In this dismal decade of Brexit and austerity, two of the shining lights that people will remember are the Olympic Games and HS2. One of the leading figures responsible for delivering both of them is Sir David Higgins, who will stand down as the chairman of HS2 Ltd at the end of this month. Will the Minister convey to Sir David the thanks of this House and the country for his brilliant work on our behalf in helping both to deliver the Olympic Games and to equip us with 21st century infrastructure? It is about time, after the intervening 20th century, that we started to mirror once again the great achievements of the Victorians.

[Baroness Sugg]

My Lords, I pay tribute to the part that the noble Lord played in HS2. I will certainly pass on his good wishes to the outgoing chairman. This is one of the biggest infrastructure projects that our country has ever seen. Eventually, more than 100 million people are expected to use HS2 trains when the network is fully completed.

Rail Update

Lord Adonis Excerpts

Monday 5th February 2018 Lords Chamber

[Lord Adonis (Lab)]

My Lords, there is a huge amount of waffle in the Statement that the noble Baroness has just repeated. But I shall cut through it: Chris Grayling, the Secretary of State, is undertaking another unjustified bailout of Virgin and Stagecoach at the expense of taxpayers. I would like to ask the noble Baroness a few questions about this bailout. First, will she confirm that Virgin has been awarded its new contract for the west coast main line without any competition whatever? Secondly, will she confirm that Stagecoach is being allowed to bid for the next three franchises despite walking away from the east coast main line? Thirdly, will she confirm that Mr Grayling appears, astonishingly, to be prepared to allow Stagecoach to continue operating the east coast line despite walking away from it, and that he has not ruled this out, although he is putting in place legal procedures that look to me to be the prelude to re-awarding it the contract? Fourthly—this affects my tenure in the office of Secretary of State personally—will she confirm that it is quite wrong to say that National Express was not banned by me from bidding for future contracts in 2009? It was banned. The incoming Conservative Government in 2010 lifted that ban, which is a fundamentally different point. I believe that that was a mistake and that it has prepared the way for the problems that we face today.

Finally, will the noble Baroness confirm that the reason for these disgraceful bailouts which we have seen from Mr Grayling is because he simply is not prepared to contemplate putting his duty above ideology and substituting for failing private companies a state company? This is not a matter of being left-wing or right-wing; it is a matter of him performing his duties as Secretary of State for Transport, which he is declining to do because, as we heard in the Statement, he wants to make a whole set of cheap points about “private good, public bad”, which I think demean his office and are costing the taxpayer very dearly indeed.

[Baroness Sugg]

I will attempt to answer the questions the noble Lord raises. If I do not manage to answer all of them, I will certainly follow up in writing.

I am afraid that we do not recognise the bailout accusation. As I said, Stagecoach will be held to all its contractual obligations in full. It has returned nearly £1 billion to the taxpayer and resulted in a nearly £200 million loss to the parent company. On the west coast line, it was a direct award and no other bidder was involved. As we stated in December 2016, we set out the plans to award the West Coast Partnership with that direct award. It is a short-term award and there was no other bidder involved. It was put in place before the new West Coast Partnership was awarded. On whether Stagecoach was allowed to bid for continued franchises, as we said, it will bid for the new east Midlands franchise. We are keeping the legal advice on that under review, and we will see what happens in the coming months, but as things stand Stagecoach is bidding for future franchises. The Secretary of State quoted the 2009 NAO report. I will send the noble Lord a copy.

[Lord Adonis]

It is not correct for the noble Baroness to say that National Express was not banned from bidding. It was banned from bidding.

Railways: Fares

Lord Adonis Excerpts

Tuesday 12th December 2017 Lords Chamber

[Baroness Sugg]

My Lords, the retail prices index is widely used across government and is the consistent general indexation approach adopted across the rail industry. Franchise payments, network grants and franchise financial models are all indexed at RPI. Of course, we are all very aware of the pressures on people’s incomes and we carefully monitor how rail fares and earnings change and keep reviewing how fares are increased.

[Lord Adonis (Lab)]

My Lords, can the Minister confirm that the extraordinary decision to bail out the Stagecoach/Virgin Trains East Coast franchise could cost the taxpayer more than £1 billion? Could she estimate for the House what impact that might have on rail fares after 2020?

[Baroness Sugg]

My Lords, VTEC has paid all its premiums in full to date, and we expect it to continue to do so as long as the contract continues. As with all recent franchise contracts, when entering into the east coast contract Stagecoach committed to inject additional funds into the business at its own expense, and we will hold it to that commitment in full. From 2020, there will be a new east coast partnership, one of the first of a new generation of integrated regional rail operations. That will include appropriate contributions from the private partner under a long-term competitively priced procured contract. I do not recognise the figures that the noble Lord uses.

Railways: Update

Lord Adonis Excerpts

Wednesday 29th November 2017 Lords Chamber

[Baroness Sugg]

My noble friend will not be surprised to hear that I do not agree with him on the benefits of HS2; nor do I recognise the £100 billion figure that he quotes. Our trains are becoming increasingly crowded, and that is why we need HS2. We have invested £55 billion in it, but that is not at the cost of other improvements in our rail network. The announcements we have made today will enable both HS2 and our existing railways to improve.

[Lord Adonis (Lab)]

My Lords, I congratulate the noble Baroness on her appointment to the best department in the Government, the Department for Transport. I also welcome what she said about HS2 and east-west rail. Is she aware that when this House voted on HS2, it voted by a majority of 10 to one in favour of the project? That is a degree of unanimity that the House has shown on no other subject that I am aware of—besides its opposition to Brexit.

However, I find the Statement disappointing, because the document that the Government have published today is, essentially, a smokescreen, with all the blather about reopening Beeching lines—which, of course, is not going to happen. It is a smokescreen for a very big announcement, which is detectable only in the small print: that the Government intend to end the current east coast franchise three years early. They intend to do so—forfeiting hundreds of millions of pounds of payments that would have been made to the Department for Transport—in order, it appears, to bail out the two private companies that currently operate that route, in the guise of a public/private partnership that will do nothing other than excuse those companies from making the premium payments to which they were previously committed.

Does the Minister understand that treating private companies in this way in respect of contracts they have entered into will simply encourage other private train operators to try for the same kind of bailout? Is she aware that when I was Secretary of State we faced exactly the same pressure with the downturn in projected passenger numbers on the east coast main line, which led the then private operator, National Express, to ask us for a bailout, which we refused to give? It was as a result of that refusal that the east coast nationalisation took place: it was a huge success, and should not have been ended. Had the East Coast national company continued operating that line, the return to the taxpayer would have been significantly higher than we now face. Can the noble Baroness answer two specific questions? First, can she tell me precisely how much the taxpayer will lose in premium payments that are currently contracted under the new public/private partnership which she announced this afternoon? Secondly, will she undertake to publish all the communications between Stagecoach, Virgin and the Department for Transport which have taken place prior to the development of the strategy that she announced this afternoon?

[Baroness Sugg]

My Lords, I do of course recognise the noble Lord’s vast experience in this area but I am afraid that I do not recognise the description of the announcement today as a bailout. As the noble Lord will know, as part of the bidding Stagecoach made a series of financial commitments. It has met them in full to date and the Department for Transport expects it to continue to honour them. We will hold VTEC to its obligations and in the meantime will ensure that passengers are protected. The noble Lord mentioned the Directly Operated Railways solution. Since 2015, VTEC has contributed on average 20% more per rail period to the taxpayer than when the line was operated by Directly Operated Railways, and has achieved consistently high passenger satisfaction. It will have a rollout of new rolling stock in 2018. The choice today is not between OLR and privatisation. As announced, we are implementing the first regional public/private partnership on the route to deliver the best of both the private and the public sectors.

--- Later in debate ---

[Baroness Sugg]

On the separation of track and train, we acknowledge the benefits of putting together the operation of both those things. That is exactly what today’s announcement is all about. On the east coast partnership, as I said, the new partnership will come in from 2020, at which point the current franchise will be terminated. That was originally expected to happen in 2023. As I also said, we will hold VTEC to the obligations it made.

[Lord Adonis]

Until 2020?

[Baroness Sugg]

Yes.

Brexit: Tourism

Lord Adonis Excerpts

Monday 20th November 2017 Lords Chamber

[Baroness Sugg]

The CAA already operates the vast majority of EU regulations in the UK and will continue to do so after exit.

[Lord Adonis (Lab)]

My Lords, will the Minister guarantee to the House that there will be no disruption in air traffic as a result of Brexit in March 2019?

[Baroness Sugg]

My Lords, the Government recognise the need for UK air traffic management arrangements to remain interoperable with the rest of Europe. Safe and efficient air traffic management is a priority for us. We are considering all the potential implications for the UK and working with NATS to ensure that there is no disruption.