Rail Franchises

Lord Ahmad of Wimbledon Excerpts

Monday 11th July 2016 Lords Chamber

[Baroness Randerson]

To ask Her Majesty’s Government what is their policy for determining when a rail franchise has failed to provide the service required and should therefore be terminated.

[The Parliamentary Under-Secretary of State, Department for Transport and Home Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, the Secretary of State for Transport has statutory powers under the Railways Act 1993 and contractual powers under the franchise agreement to penalise train operators for contravention of obligations. These powers are more fully set out in the Department for Transport’s published enforcement policy.

[Baroness Randerson (LD)]

I am sure the Minister will not be surprised to hear that I wish to ask about Southern trains, which has failed to provide anything approaching the service stipulated in its franchise. Now it has cut services by 15%, and quite understandably the passengers are on strike today, yet the best the Government can muster is today’s long overdue but very limp statement by Claire Perry. Enough is enough. When will the Government finally step up to their responsibilities and take over this franchise? Will the Government consider devolving power over commuter services such as this one, in a structure similar to the successful London Overground?

[Lord Ahmad of Wimbledon]

My Lords, it does not surprise me that the noble Baroness has raised this issue, which has come up in this House recently and I have responded from the Dispatch Box. I agree with the sentiments expressed by the noble Baroness and other noble Lords: the current operation is unsatisfactory. As many noble Lords will know, the new timetable started operating this morning, reflecting a target of getting 85% of services running. As I said only last week, part of the issue is that the force majeure clause has been invoked, which does not mean that the franchise can be put on the premise that the noble Baroness suggests.

[Lord Rosser (Lab)]

My Lords, last Wednesday, the Minister said that where Southern Rail,

“can provide evidence that cancellations are due to official or unofficial industrial action, it can claim force majeure”.

This is what it has done in respect of the current level of performance and the reduction in the number of services it operates. Does this definition of force majeure mean than long-suffering commuters can expect no compensation and the company can expect no penalties? The Minister also said last Wednesday that the Government were,

“in regular contact with the company”.—[Official Report, 6/7/16; col. 2011.]

How many times have the Government also met the organisations representing the employees, to find out what they have to say about the cause of the present poor service and cancellations, in order that the Government hear both sides of the story, at first hand, before coming to a conclusion on whether official or unofficial industrial action is the sole cause of the problem and whether responsibility for any such action rests solely at the door of one party?

[Lord Ahmad of Wimbledon]

As I said previously, the Government’s position is very clear. We want both parties to come to the negotiating table and find a resolution for long-suffering commuters. It is very clear what has happened. I do not accept the noble Lord’s point about not meeting. We meet regularly with all people concerned, and we have implored them to take action to ensure that we get a more effective service. As to the way forward, I think it right that we allow the two parties to come together at the negotiating table. The Government will play their part in ensuring an effective service for Southern commuters who, as I have said, have suffered for far too long.

[Lord Lucas (Con)]

My Lords, does my noble friend agree that it ought, at least, to be the object of a rail franchise that the day-to-day experience of the travelling public should get better over the long term? What would he say about a franchisee which, from its first moment in possession of a railway, has set out to do the exact opposite? Is there no way to set it on a right course?

[Lord Ahmad of Wimbledon]

There are various procedures open to the Government if the contract fails in its objectives. As I have already indicated, I take on board what my noble friend has said on the issue in respect of which the franchisee is claiming force majeure, which is part of the franchise. I assure him that the Government are looking at this very closely. There are various enforcement policy options available to the Secretary of State and we continue to monitor the position very carefully to ensure that we see an improvement in service. Prior to the early part of this year, we saw service levels rise to 83%. The noble Lord picked out the issue of industrial action and I talked about high levels of sickness leave. These have seen performance go from 83% to about 63% since May.

[Lord Christopher (Lab)]

My Lords, as a passenger on this railway line, I believe that the Government are dissembling. The contract which has been drawn up is quite unique and provides an incentive to the railway company not to run trains if it can avoid it. Under the contract, you collect the money from the tickets and pay a substantial fee to Southern to provide the trains. I suspect that you are seeking to buy time in order that Transport for London can take this over in a year or two’s time.

[Lord Ahmad of Wimbledon]

My Lords, I do not agree with the noble Lord. He may well be aware that DfT has effective enforcement procedures; indeed, an enforcement advisory panel was set up specifically to review possible contraventions of franchise agreements. Perhaps we have hope, in the sense that the official who leads that panel is a gentleman called Andy Murray.

[Baroness McIntosh of Pickering (Con)]

My Lords, can my noble friend explain to the House what emphasis is placed on price in awarding the franchise, as opposed to the quality of the service and the ability to deliver on that service?

[Lord Ahmad of Wimbledon]

With any contract awarded there is a specific procedure, and the issue of price is looked at along with the other factors that my noble friend has raised. Any franchise that is awarded has that central point—the ability to deliver. I have made it clear that the Government feel very strongly that the current unsatisfactory levels of service on that line have to be improved. There are other investments and some improvements such as new rolling stock, but that is not good enough: we need to see more improvements.

[Lord Stoneham of Droxford (LD)]

My Lords, is not one of the major problems of franchising that it is difficult to get long-term commitment to investment and training, particularly at the end of a franchise agreement? Do not the problems of the current Southern franchise derive from the exit from the previous franchise, when investment and training were lacking?

[Lord Ahmad of Wimbledon]

On the current franchise, the noble Lord is aware that there have been issues of training and staff turnover, and Southern and its parent company has recruited new drivers, for example. On the current dispute over the new, driver-operated trains, I assure all noble Lords that at no time has it been said that there will be any redundancies. At no time has any person been told that their job is under threat. The issue of training is part and parcel of the new offer with regard to the new driver-operated trains that are being introduced.

[Baroness Farrington of Ribbleton (Lab)]

My Lords, the Minister did not answer the question of my noble friend Lord Rosser, which was how many meetings have there been between the Government and the trade unions, and when.

[Lord Ahmad of Wimbledon]

If the noble Baroness reflects on Hansard, I made it clear that the Government’s job is as a facilitator. We made it clear to both parties that they should have arbitration between them and find a resolution. The franchise is awarded to them. It is for them to come together around the table and find a resolution to this long-standing dispute.

[Lord Lexden (Con)]

With commuters losing their jobs as a result of this appalling dispute, has any assessment been made of the number of lost jobs?

[Lord Ahmad of Wimbledon]

I cannot answer my noble friend’s specific question but I am sure that he is aware of the issue of compensation, raised by the noble Lord, Lord Rosser. I believe that my right honourable friend the Prime Minister made it clear last week that there will be additional compensation, which the Government are looking at, made available to those long-suffering commuters.

[Lord Snape (Lab)]

Is the Minister not aware that the problem behind the situation with this franchise and others is the Government’s determination to bring about driver-only operation of trains? That, combined with the de-staffing of stations and of the railway industry in general, is not the proper way forward as far as passengers are concerned. If they were consulted, like the trade unions, that is exactly what they would tell him.

[Lord Ahmad of Wimbledon]

The issue of driver-operated trains has not meant, as I have said, any reduction in staff. The role of what were conductors in training supervisors means greater focus on delivering customer service. There is an issue with sickness that is contributing to the challenge and to the problems we have. The current sickness rates operating on that franchise are not just higher; they are much higher than average.

[Baroness Symons of Vernham Dean (Lab)]

On the question raised by the noble Lord, Lord Lexden, is the Minister saying that there is the possibility of compensation for those who have lost their jobs because of frequently arriving late at work or not arriving at all as a result of this dispute? Can he be specific on that point?

[Lord Ahmad of Wimbledon]

I can be specific. As I said, I do not know the number of people who have fallen victim in the way that the noble Baroness and indeed my noble friend have suggested. I did make the point that additional compensation is being looked at for those commuters who have suffered. Individual cases have been put forward and they will continue to be monitored, but my right honourable friend the Prime Minister has highlighted in his statements that we are looking at additional compensation. But to be clear, on the issue of loss of jobs et cetera vis-à-vis compensation, I do not know what the situation is. Obviously, every case will be looked at on its merits.

[Lord Shutt of Greetland (LD)]

My Lords, if ultimately there is a requirement for the Government to directly operate this franchise, is there a shadow body within government ready and available to take that up?

[Lord Ahmad of Wimbledon]

The policy that I referred to in my original Answer includes details of how the department can take a step-by-step approach to ensure that any enforcement action is, in the first instance, proportionate to the contravention, and explains the enforcement tools and options available to the Secretary of State in any circumstances that may subsequently arise.