Railways: East Coast Main Line

Lord Snape Excerpts

Tuesday 13th March 2018 Lords Chamber

[Baroness Sugg]

My Lords, whichever option for running the franchise to 2020 is chosen, the Government will continue to receive premium payments. As I have said, from 2020 there will be a new public/private partnership on the east coast. That will be subject to a competitive process and will include appropriate contributions paid by the private partner to the Government. The Government will continue to receive premium payments but I am afraid I am not able to give an exact figure at this time. It is important to reiterate that this is a successful and profitable line, and it will continue to deliver revenue to the Government.

[Lord Snape (Lab)]

My Lords, does the Minister accept any responsibility for this latest farce on the east coast main line? Does she not think that accepting an outrageous bid, which suggested an 8% growth in passengers every year of the franchise, was ridiculous to start with? Bearing in mind that the Treasury has frozen fuel duty for coming up for eight years, while insisting that rail fares go up in accordance with the RPI, does the Minister not feel that the Government’s so-called green policy is rather shot to pieces?

[Baroness Sugg]

My Lords, of course there were some errors in the granting of this franchise, and the suggestion concerning passenger numbers was indeed incorrect. We have learned some lessons and introduced new measures to deter overbidding, and have improved our financial modelling and stress testing. With this added testing, the department can forecast bids which are likely to default and exclude them in the future. On fares, the Secretary of State for Transport has underlined our aspiration to move from RPI to CPI but we must manage this transition properly and take into account staff costs, which are a third of operating costs.