Rail Investment

Louise Ellman Excerpts

Thursday 17th February 2011 Westminster Hall

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I am pleased to speak under your chairmanship, Mr Owen. I am delighted to have the opportunity to discuss rail investment in this Westminster Hall debate. I welcome the Minister to her place; I shall be listening carefully to what she has to say.

The Transport Committee published its report on priorities for rail investment in February 2010, during the previous Parliament. The Committee wanted to assess the value of investing in Britain’s rail network and to identify essential rail priorities for the future. We emphasised the importance of protecting Government funding of £16 billion committed to rail projects between 2009 and 2014. We also identified some of the emerging priorities for the next control period, from 2014 to 2019.

We should remember that rail is a great success story; 1.2 billion passenger journeys were made last year, and 100 million tonnes of freight, or 9%, was carried by rail. The Committee emphasised in its report the importance of rail to the economy, as well as to the environment. There have been many changes since the report was published last year. We have had a change of Government and a comprehensive spending review, but the questions raised by the Committee and the priorities that we identified remain highly relevant. I shall focus on two broad areas this afternoon. First, I shall deal with the Government’s more immediate rail priorities during this Parliament. Secondly, I shall look ahead to some of the important rail schemes that will require investment during control period 5 and beyond.

Following the comprehensive spending review, I am pleased to say that many major rail investment commitments have continued. Indeed, £18.2 billion was committed for that period. Although I welcome that commitment and that scale of investment, we should recognise that much of that money was already contractually committed, and works on the ground for many projects were well under way prior to the spending review. Setting out priorities and committing spending in that way was done to ensure that the rail industry had some certainty about investment, and I am glad that that could be achieved even in the current financial situation. The Government have confirmed their commitment to Crossrail and to Thameslink, although there are delays and reductions in funding.

[Margaret Beckett (Derby South) (Lab)]

I congratulate my hon. Friend not only on her Committee’s report but on securing today’s debate. I am particularly glad to hear her mention Thameslink. The report mentions investment in the north, but she will be well aware that it is the order of new trains for Thameslink that will release the existing fleet to newly electrified projects in the north-west. She spoke a moment ago about the need for certainty in the rail industry. I am sure that she—and, I hope, the House—will sympathise with the concerns of the thousands of my constituents who work for Bombardier and in the supply chain, who are anxiously awaiting the go-ahead for the Thameslink project.

[Mrs Ellman]

I thank my right hon. Friend for her comments and I agree with her sentiments. The delay is problematic in its own right, and it certainly has consequences for what is termed the cascading of rolling stock to the north, among other places. The major redevelopment of Birmingham New Street and Reading stations is proceeding.

[Kelvin Hopkins (Luton North) (Lab)]

I reinforce the strong point made by my right hon. Friend the Member for Derby South (Margaret Beckett). We must do everything that we can to maximise the possibility of keeping manufacturing in Britain. Bombardier, a British-based firm, should be considered for that if we are serious about rebuilding our manufacturing base.

[Mrs Ellman]

My hon. Friend makes an important point. He reinforces the important link between rail investment and jobs.

Electrification that was planned long before the comprehensive spending review is going ahead, but only in part. I am pleased that the Government have confirmed the electrification of the Manchester-Liverpool line and the line from Preston to Blackpool. However, there are still problems with the electrification of the Great Western main line.

[Paul Flynn (Newport West) (Lab)]

On top of the other hammer blows that Wales has suffered under this Government—the cancellation of a prison in north Wales, the cancellation of plans for a Severn barrage and the loss of jobs at St Athan—comes the fact that electrification of the line to Wales will not go ahead. My hon. Friend will be aware of the great disappointment that that has caused, and the damage that it will do to Wales’ perceived image in the rest of the United Kingdom.

[Mrs Ellman]

I thank my hon. Friend for his comments. Indeed, electrification has been promised between London and Didcot, Oxford and Newbury; but there is no promise and no confirmation of electrification of the line into Wales. In December, the Secretary of State told us that discussions were ongoing with the Welsh Assembly Government, but what will happen is still unclear. I share my hon. Friend’s concerns about the impact of the delay—is it a delay or a postponement, or is it a cancellation?—on the Welsh economy. In addition, the ongoing saga of the inter-city trains has implications for electrification on the line, to which I shall refer later.

The Committee’s report also advocated the electrification of the midland main line that links Sheffield and London. It is unclear what progress is being made there. It is clear that enhancing our rail network represents a worth-while investment of public funds, with economic regeneration and environmental benefits. The comments of my right hon. and hon. Friends reinforce that point.

It is not only investment that is important. It is equally important that we secure value for money for the public purse. The previous Government asked Sir Roy McNulty to study the rail industry and to consider how to secure better value for money. It is unacceptable that our rail industry is up to 40% more expensive than its European comparators, as the Office of Rail Regulation discovered. Sir Roy published his interim findings in December 2010. Promisingly, he has identified potential savings of up to £1 billion, which he believes can be achieved without cutting services. Like the rail industry, my Committee awaits Sir Roy’s final report with great interest. Certainly there is a mood for change, and it is important that the Government seize this window of opportunity to make improvements.

The interim findings of the McNulty review suggest that the way forward is a greater alignment of incentives between the different players in the industry. The Government have already set up a high-level group with the industry to examine the options for Network Rail and train operators to work together more efficiently. I would be grateful if the Minister were to elaborate on the options that the Government are considering, and whether those aspirations will result in real long-term savings to the industry, without compromising passenger safety or service provision.

The Secretary of State has promised a White Paper on the future structure of the industry, following the findings of the McNulty review. I hope that it will spell out the Government’s broad longer-term strategy for the rail industry. Do the Government share the previous Government’s aspiration that increasing capacity on the rail network must be at the heart of their strategy? As passenger numbers and the amount of freight carried by rail continue to grow, we need to increase capacity. As right hon. and hon. Members know, the issue of overcrowding remains a serious problem on parts of the network, particularly at peak times. Overcrowding is a consequence of success and must not be ignored, and neither must its related health and safety issues, which are often hidden.

Giving evidence to the Committee in October 2009, the Office of Rail Regulation forecast that passenger numbers would double over the next 25 to 30 years. Alleviating capacity constraints must be at the heart of any strategy on the future of the rail network. Will the Minister tell us something about the White Paper that is expected soon? What sorts of policy initiatives will it contain and what kind of consultation will it be subject to?

The Committee recognised that rail was important for the environment, economy and regeneration. I was concerned to see that in January, when the Department published its report “Public Attitudes towards Climate Change and the Impact of Transport”, it did not mention rail. I hope that that was an unfortunate omission. None the less, I would like some reassurance from the Minister that the Government recognise the environmental benefits of increasing rail travel.

I come now to the important issue of rail fares. The Government have announced that regulated rail fares will rise from RPI plus 1% to RPI plus 3% from 2012 to 2015. Disturbingly, they have stated that train operators should actively look to manage overcrowding through the fare box; in other words through increasing fares.

[Martin Horwood (Cheltenham) (LD)]

I am reluctant to correct the hon. Lady as she is giving an expert explanation of the Select Committee’s point of view. None the less, will she not accept that although rail fares can rise by that amount, they will not necessarily do so?

[Mrs Ellman]

I do not totally agree with the hon. Gentleman, and I will explain why in a moment. My concern is that it now appears to be a deliberate Government policy to drive people off rail by increasing fares. Indeed, it seems rather perverse. It is true that Government policy is to increase fares by an average of RPI plus 3% . I must stress, though, that that is not an actual increase; it is an average. The reality could be a rise of RPI plus 8% for individual fares, which is a very great increase indeed. For example, the annual season ticket between Bournemouth and London would increase by £211 at RPI plus 3%, but by £645 if RPI plus 8% was applied, which is possible under the Government’s formula.

Current forecasts for the third quarter of 2011 are that RPI could be 3.9%, the base against which RPI for the following year is assessed. That means fares could rise by an average of 6.9% in 2012, with individual fares increasing by up to 11.9%. Those are significant increases and a matter of great concern. We all recognise that there are economic and financial problems, but it is disturbing to think that there could now be a national policy to price people off rail. I look forward to hearing the Minister’s response to that concern.

[Mr John Leech (Manchester, Withington) (LD)]

The hon. Lady is making an excellent speech. No one wants to see fares rising, but the economic reality is that if we are to continue investing in the railways, we must increase fares. Does the hon. Lady not think that if we are moving from the retail prices index to the consumer prices index, fares should increase by CPI plus 3% rather than RPI plus 3%.?

[Mrs Ellman]

The hon. Gentleman makes an interesting point. We must all recognise economic constraints, but we have to consider seriously the implications of any policy that might price people off rail.

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

I hope that I can give the hon. Lady some reassurance. Of course we want to see passenger numbers increase. That is important for our economic future and for our environmental policies. We have had to take a difficult decision on fares in order to deliver the vitally needed rail capacity improvements. As we are dealing with an enormous deficit that we inherited from our predecessors, we have had to ask passengers to pay a bit more to contribute towards the investment that they want to see put into the railways.

[Mrs Ellman]

I thank the right hon. Lady for her comments. I recognise the Government policy context in which these decisions are taken.

Let me now draw attention to the issue of rolling stock. If people are going to be asked to pay more for their fares, it is reasonable to ask whether the rolling stock will be adequate to ensure that people have a reasonable journey. The more people pay, the more concerned they will be if the rolling stock is not adequate. The situation is extremely confusing. The announcements made by the Department for Transport on what rolling stock is to be provided, where and when have been unclear.

When our Committee issued its report last year, we expressed deep concern at the postponement in issuing the rolling stock plan for 1,300 new carriages that were expected by 2014, and at the uncertainty and confusion the delay was causing within the industry, but we recognised that the commitment to electrification legitimised the pause in assessing exactly what rolling stock was required and when. However, since then, little real progress has been made in delivering new carriages. Instead, we recently received another announcement by the Department that 2,100 new carriages would be delivered by 2019, 1,850 of which will be net additional vehicles. As my right hon. Friend the Member for Derby South (Margaret Beckett) said, many of these are for the Crossrail and Thameslink projects, which will then lead to electric carriages on the network being cascaded to other parts of the country, including the north. If and when that happens, I hope that it will not be a matter of the north getting the cast-offs from the south. I expect the stock to be in good condition and well suited to meet the needs of the people in the north.

Given that the completion dates for both Crossrail and Thameslink have been delayed to 2018, will the Minister tell us when these much-needed carriages that the industry has been waiting for, will finally be delivered? How many of those carriages expected by 2014 will actually be delivered by that date?

[Mr Leech]

Does the hon. Lady not accept that the previous Government did not have a good record on delivering on promised rolling stock?

[Mrs Ellman]

Indeed. The hon. Gentleman may recall that previous reports of the Transport Committee during the time of the previous Government were not slow to criticise the inadequacies of the Government where we felt it was appropriate to do so, and rolling stock was one of those areas. We also have the ongoing saga of the new generation of InterCity trains. In November, the Government announced that they had narrowed their options for the replacement of the old InterCity 125s down to two: a bid from Agility Trains for a mixture of electric and hybrid trains; and a proposal for a fleet of all-new electric trains that could be coupled to new diesel locomotives where the overhead electric power lines end. I know that many of my colleagues in Wales are anxious for that decision to be made because of the impact that it will have on the Great Western main line to Swansea. Again, the Government have not been very clear about what is happening regarding that line and I would be grateful for any clarification.

During the next control period, which is between 2014 and 2019, and beyond, it is extremely important that we have continuing and substantial investment in the rail network, improving it to accommodate passenger growth and to alleviate unacceptable overcrowding. One of the priorities for the next control period must be investment in the rail infrastructure in the north of England. Our Committee’s report shows very clearly how the south, particularly London, has benefited from rail investment. We support that investment, but we noted in the report that when we examined the amount of transport investment per head we found that there was three times as much in London and the south-east as in other regions of the country. We support investment in London and the south-east, but similar interest should be shown in the needs of the north.

The particular project that we recommended in our report was the northern hub. That bottleneck in the Manchester area critically affects the operation of both passenger and freight services right across the north of England, including in Leeds, Liverpool and Newcastle. The Northern Way study concluded that addressing the northern hub could provide economic benefits worth up to £16 billion for the economy of the north.

Investing in the northern hub remains as important as ever. However, there is particular concern about that issue, because of what has happened to the organisations that brought the project together. The combined work of the three northern regional development agencies was very significant in developing the project, costing it and working out its implications and benefits. Sadly, the project for the northern hub—the Northern Way project—may no longer be supported because the RDAs are being disbanded. Indeed, it is very unclear what will happen to the organisation that has developed and costed that project in such great detail. I would be very pleased if the Minister could confirm that she will support that project as a top-priority project for the north in the period ahead.

The longer-term investment priority is the development of a high-speed network. Our Committee welcomed the previous Government’s change of policy when they decided to support high-speed rail. However, we emphasised that investment in high-speed rail should not detract from investment in the existing classic network. Moreover, if high-speed rail is important for the route from London to Birmingham—as the current Government have stated, and I agree with them—it is equally important that it extends to the north.

The case for high-speed rail has been put forward, based largely on the need for additional capacity for both passengers and freight. That argument is very important, but it is also very important that the economic impact of high-speed rail is recognised. Indeed, the Government have said as much many times. They have said that their support for high-speed rail is based on the need to reduce the disparities between north and south. That means that if high-speed rail goes ahead, as I hope it will, it must go beyond Birmingham to the north.

[Andrea Leadsom (South Northamptonshire) (Con)]

Does the hon. Lady accept that there are concerns about whether High Speed 2 is necessary to achieve the capacity increases that are so badly needed between London and Birmingham?

[Mrs Ellman]

I thank the hon. Lady for her comments. That is an important issue and indeed it is extremely important that the Government spell out their case very clearly on the need for HS2, particularly given the considerable opposition to HS2 from a number of quarters. The Government must do that.

Finally, my Committee has recently returned from a visit to Brussels where we met the Transport Commissioner, European Commission officials and Members of the European Parliament, including members of the Transport and Tourism Committee. One of the subjects that we discussed was the UK’s failure to apply for funding from the European Union. We received information that suggested that the EU might be willing to part-fund the cost of feasibility studies into HS2, paying 50% of those costs. However, it appears that no application has been made for Trans-European Transport Networks, or TEN-T, funding, which could part-fund the costs of looking into HS2. Indeed, when members of my Committee questioned the Minister recently in our inquiry into European issues, it appeared that the UK was rather slow, or perhaps loth, to apply for European funding. I wonder if we could receive some assurance from the Minister today that the Government will look at that issue again, particularly the possibility of securing European funding for studies into the viability of HS2.

Deciding the priorities for rail is a very important task. Our Committee’s report was produced a year ago, but it is clear that the priorities and concerns that we highlighted are equally relevant today. I hope that this debate today will help to take the debate on rail priorities forward and help to secure increasing investment for the extremely important service that is our rail network.

[Albert Owen (in the Chair)]

Before I call Mr Paul Maynard, I wish to inform Members that I will ask Mrs Ellman to make some concluding remarks.

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[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

It is a pleasure to serve under your chairmanship, Mr Owen, and I, like everyone else, congratulate the Chairman of the Select Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman), on securing this debate on such an important issue.

It has been a good debate, and we have at times been in danger of breaking out into a bit of cross-party consensus, which is extremely unusual on rail. It has been enlivened by references to Trotskyism and Leninism—the first time I have seen such elements enter into a debate on the railways. Everyone has recognised the crucial importance of our transport networks in general, and our rail network in particular, to our future economic prosperity, and to our ambition both to address environmental concerns, including those about climate change, and to deal with congestion on our roads by providing a viable alternative to the lorry and the car.

The coalition has pledged to cut the deficit and also recognises that securing growth is vital, which is why in the comprehensive spending review the Chancellor placed a priority on transport spending. As many Members, particularly the hon. Member for Luton South (Gavin Shuker), have acknowledged, transport projects can generate wider economic benefits many times their cost. I very much welcome the generous acknowledgement by my predecessor as rail Minister, the hon. Member for Glasgow South (Mr Harris), that the anxiety about a Conservative Government slashing spending on the railways has not materialised. Rail emerged from the spending review in a far stronger position than most people had expected, and that was acknowledged also by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard).

We have had to take a difficult decision on fares and I, of course, wish that that could have been avoided, but without the three years of RPI plus 3 increases, we simply would not be able to deliver the vital capacity improvements that passengers need. To make the sums add up, we had no choice but to ask passengers to pay more, but we are absolutely confident that passenger numbers will continue to grow. I was surprised that the Select Committee Chairman asked whether we were committed to new capacity and whether we expected growth to continue, because we are embarking on one of the most ambitious extra-capacity programmes in the history of the railways. That demonstrates our confidence that passenger numbers will grow, and our commitment to relieving overcrowding, which, as she rightly highlights, is a major concern.

[Mrs Ellman]

Do the right hon. Lady’s statements mean that she gives a categorical commitment to delivering the rolling stock as promised, and will she include in the conditions of future franchises a requirement to look at the health and safety implications of overcrowding?

[Mrs Villiers]

I will, in a moment, outline the Government’s commitments on extra rolling stock. Health and safety is a matter for the Office of Rail Regulation, which takes on board all such factors in its decisions on safety in the rail industry. There has been a significant improvement in safety on our railways over recent years, and we need to pay tribute to the fact that they are one of the safest forms of transport.

In response to the hon. Member for Glasgow South, we do not at the moment have any plans to reintroduce the flat cap. Affordability is the concern, but we will keep the matter under review, and see if it becomes more affordable in the future.

The improvements that we have promised are extensive, and over the next four years the Government propose to invest £30 billion in transport, £14 billion of which will support capital maintenance and investment in our railways. Major projects that we are funding include high-speed rail, Crossrail, Thameslink, Birmingham New Street and the tube upgrades. In answer to the question that the hon. Member for Liverpool, Riverside asked about carriages, we expect there to be about 2,100 new carriages on the rail network by 2019, of which about 1,850 will be additional capacity, and I shall go into a little more detail on carriages in a minute.

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[Mrs Ellman]

Thank you for chairing this important and interesting debate, Mr Owen. I thank the Minister for her response. I am pleased to see my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) acting so effectively in his new position. We have had a constructive debate, and I thank all hon. Members who have participated, including Select Committee members and others who find the issue important enough to have spent time and spoken here. The range of contributions underlines the importance of investment in our railways. Contributions have addressed the importance of investment in local stations, of local services and of developing capacity, whether in local, regional or high-speed rail services. I listened carefully to the Minister’s response. She has given some assurances. The Select Committee will be following up the promises and commitments that she made, and will take up the various points raised by hon. Members.

The report that we have been debating was concluded a year ago, but it is significant how highly relevant many of its recommendations and the issues that it raised are today. The Select Committee’s work is enhanced by the involvement of many Members. I assure all hon. Members here that we will be pursuing all the points that they have raised in our questions to Ministers and others responsible for delivering our services, and in new inquiries. I thank everybody for their constructive participation.

[John McDonnell (Hayes and Harlington) (Lab)]

I apologise for coming so late. We were engaged in debate in the main Chamber. When the McNulty report is published, I urge the Select Committee to consider it in detail and give us the opportunity for a further debate based on the Committee’s consideration of the recommendations.

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[Mrs Ellman]

I thank my hon. Friend for his comments. The Select Committee takes rail investment extremely seriously and will give the McNulty report full consideration in due course, along with the Government’s White Paper on the future of rail. Value for money in our rail service is intrinsically linked to the structure of rail and is the best way to deliver an effective service in terms of passengers and freight.

Question put and agreed to.