Railways: Public Procurement

Lord Davies of Oldham Excerpts

Tuesday 30th November 2010 Grand Committee

[Lord Davies of Oldham]

My Lords, I, too, begin by congratulating the noble Baroness, Lady Greengross, not only on her introductory speech, which emphasised the value of the report of the Transport Forum, which she chaired and which did such valuable work, but on indicating that there are a few hares that may run well beyond the range of the railways issue for the Minister to consider. It is not often that I express sympathy for Ministers, and I will not make a habit of it, but I have a little sympathy for him today. I am sure that he has concentrated a great deal on the railways, and I want to reflect on the lessons that we need to learn in relation to them, but other Members of the Committee have taken the opportunity to identify areas which ought to be considered in the light of the report and its formative work on the issues of public services and public procurement.

I hope that the Minister has some response for the noble Lord, Lord Bradshaw, about the future of the Post Office and about where mutuals may play their part in the provision of services. The Minister will also have noted the experience of my noble friend Lord Tunnicliffe in procurement and the way that contracts need to be drawn, pursued and followed through. On that, we derive insight from the railways, but not all those insights give us much comfort at present. Hence, a number of noble Lords have identified their areas of anxiety.

My noble friend Lord Beecham, with his vast experience of local government, brought up the issue of PFIs. The range of responsibilities and opportunities that may derive from them makes it important for the Government to learn lessons on procurement, given the range of issues to be covered. The noble Baroness, Lady Howe, identified the voluntary sector, and the noble Earl, Lord Attlee, therefore has a great deal on his plate when responding on the lessons on which we want enlightenment. I look forward to his response.

My party has been very concerned about what we need to learn from the experience of railway service provision. We were on the brink of re-evaluating the way in which the present system of privatised railways works. That is why we produced an outline policy document on the key issues that we had learnt from years of operating the railways. It was quite clear that important lessons needed to be learnt, and they have been identified to a very large extent in this report. We were particularly concerned about how to encourage innovation and investment. The business process needs to be altered to put greater emphasis on that. We were also concerned about the changes required during the life of a franchise. It seemed to us that it is necessary to have elements of flexibility that enable you to come to terms with changed circumstances over a franchise. We were concerned about the specification and delivery. In particular, we thought that the TOCs needed to be contractually required to deliver services and other outputs important to the public. We need those contracts to be established in a clearer way than has, perhaps, been the case in the past. We are concerned about risk. I bear in mind the point made in the debate that the risk falls upon the public sector—either the local authority or the state—because that is where responsibility for the service lies. Nevertheless, that means better management of risk and incentivising operators.

I would ask the noble Earl to think about and respond on one little matter. He will be aware that the level of costs borne by fares was 57 per cent in 1992 and that it went down to 54 per cent by 2008. What is his estimate for 2014-15 in the light of the recent indication of the part that the rail passenger has to pay in increased fares? What will the fare burden be as a percentage of the costs of the railway four to five years from now? I am sure the noble Earl has quite enough to respond to.