Rail Investment

Martin Horwood Excerpts

Thursday 17th February 2011 Westminster Hall

[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.

--- Later in debate ---

[Paul Maynard]

As with all matters relating to rail freight, I bow to the hon. Gentleman’s superior knowledge, and would not dare trespass on it for fear of being shown up as an ignoramus.

I shall discuss HS2, because it is so controversial and cannot be avoided. The arguments are difficult, and whichever side of the argument someone is on their policy must be evidence based, because it is only through an evidence base that the politics of the proposals can start to be addressed. I recognise that there are arguments on both sides. As a northern Member of Parliament, I see immense potential benefits, but I am sure that if I were an MP in an area affected by the proposed route, I would have enormous concerns. It is, however, dangerous to base our argument solely on a few simplistic notions. Building the railway will not in itself heal the north-south divide, and it is foolish to base the argument on that soundbite alone. It is equally dangerous to base it on saying that there will somehow be magnificent environmental benefits by domestic aviation being rendered unnecessary. At the moment, we cannot see even one or two years ahead in our domestic aviation environment, let alone 15 to 20. Who knows where Heathrow will be by then?

[Martin Horwood]

The evidence from other high-speed rail systems around the world is that where they are over sufficient distances—which, admittedly, probably means further than Birmingham—there is something like an 80% drop in air traffic over those distances. London to Paris is a good example.

[Paul Maynard]

I agree almost entirely with that point—but perhaps only 80%. It very much depends on where someone is flying from and where they are going to, and I suggest that in 15 years’ time perhaps no one will be flying domestically to Heathrow, if only because it might have ceased to be an international hub. We might all be flying to Paris, Amsterdam or Frankfurt, but that is another matter entirely.

The key variable in the discussion on HS2 is demand. Whether demand will increase is contested, but as someone who travels regularly on the west coast main line, I know full well that that line is already reaching capacity. The east coast main line is also struggling, and we cannot have people being herded into pens at Euston station on a Friday evening and say that we are not at capacity already. I accept entirely the argument that extra capacity has to be provided, but it is not simply a matter of expanding a few platforms here and inserting a few carriages there, making cattle class a literal concept for millions of travellers. We have to discuss what type of capacity to provide, and I realise that that is perhaps a confused area for people on both sides of the argument.

--- Later in debate ---

[Martin Horwood (Cheltenham) (LD)]

It is a pleasure to serve under your chairmanship, Mr Owen. I too congratulate the hon. Member for Liverpool, Riverside (Mrs Ellman) on her Committee’s report and on securing this important debate.

It is good that there has been a reasonable degree of consensus, perhaps not entirely on high-speed rail but on the need for investment in the railways in general and the importance of that to the economy, the environment and the country. That is just as well because, given the time scales involved, it would be a disaster if those policies were to be chopped and changed between Administrations.

It is right to give due credit to the previous Secretary of State, Lord Adonis, who planned much of the investment that is now going forward. The present Secretary of State had his eye on the post of Chief Secretary to the Treasury, and may have been a little disappointed not to have secured that position, but every cloud has a silver lining and the Treasury’s loss was certainly our gain—rather, it was the railway’s gain, because he has secured one of the most outstanding settlements, and that is a credit to him and his ministerial team, and to the Government, whose overall commitment to maintaining capital spending in these difficult times means that we have secured most of the investment originally planned for the railways. That includes core funding for control period 4, for the Thameslink upgrade and Crossrail, and for High Speed 2.

It was a little uncharacteristically partisan of the hon. Lady to suggest that there was a deliberate policy to price people off the railways. That is so obviously nonsense and not part of the Government’s strategy that it should not be repeated.

[Gavin Shuker]

I want to put on record the fact that I was pleased to receive from the Minister of State the information that, as a result of RPI plus 3%, growth in the railways will be diminished by 4%.

[Martin Horwood]

Supply and demand on the railways clearly do not work in favour of the customer. If the Government had not taken a realistic approach to fares, as well as to public support for the railways, some of that critical investment in the railway’s future would have been lost. That, too, would in the end have damaged the interests of customers.

It is obviously regrettable that any fares have to rise at all. We all want to see them fall. Indeed, that Liberal Democrat aspiration was included in our manifesto. However, we must recognise that the Labour party has left us with an annual overspend that would have swallowed the Department for Transport’s budget many times over. We have to be realistic about the need to invest in that kind of environment.

The Select Committee made some important points about the security of that investment programme. Some of those programmes have been maintained. The Minister will know that I am going to mention one project that I think she maintains was not agreed but which I consistently maintain had been agreed, which is the redoubling of the Swindon to Kemble line. It was given enormous support by the Welsh Assembly, local councils, Labour MPs from south Wales and Swindon, Tory MPs from the counties between, and Liberal Democrats from Cheltenham, Bristol and Cardiff—and probably Chippenham.

The redoubling of that short stretch of line would have an enormous impact on the reliability of all the routes that serve those areas and constituencies. It would also be important to the resilience of the network in the west of England, particularly in the event of interruptions to cross-Severn services. Once again, I urge the Minister to look down the departmental sofa to see if any pennies can be found to secure that one project. It is a shame, but it is virtually the only railway project that was agreed under the previous Government that is not going forward.

The Select Committee report rightly talked about the value of rail enhancements, including many local projects, and stressed that they were as important as many of the larger projects. The importance of the right decision-making methodology was also mentioned. My hon. Friend the Member for Chippenham (Duncan Hames) made some excellent points about the need for a long-term strategic view and for joined-up planning in that respect. However, environmental concerns now take an even greater part in that methodology.

Passenger experience, too, is important. When it comes to franchise reform, it is important that we do not use only the basic metrics, such as punctuality; we should also consider the quality of passenger experience on some of our railway services. I would nominate leg room as being one of the most important. Passenger experience should play a much greater part not only in the awarding of franchises but in their maintenance and, if necessary, their recall when services and standards fall. It is also important that regional balance is considered. Many Members have made similar points. Some of the specific medium to long-term priorities identified in the report were equally important, and the points were all well made. I am an unashamed supporter of high-speed rail as is the Liberal Democrat party. The time scales involved are quite mind boggling. We can reassure some hon. Members about the investment involved, because it is spread over a long period of time.

[Andrea Leadsom]

Is the hon. Gentleman an unashamed supporter of HS2, or is he an unashamed supporter of dramatically increasing the amount of capacity on the west coast main line?

[Martin Horwood]

Both actually. The importance of High Speed 2 is not simply related to the stretch to Birmingham. If we consider the ultimate plan, which is to link London and Scotland, and then Scotland and Europe, by high speed rail, with another link to Wales and the west, we can see that it will compete holistically with aviation—I have already mentioned that aviation traffic tends to drop by 80% on routes covered by high speed rail—and cars. As people shift from conventional rail to high-speed rail, which happens and is an environmental issue because high-speed rail is more energy intensive, the likelihood is that their places will be taken by people abandoning car journeys as traffic becomes more competitive.

[Andrea Leadsom]

rose—

[Martin Horwood]

I am a little wary of the time, so I will plough on. I endorse the view that we need a balance in railway investment between not only Manchester but the whole of the north of England and London and the south-east. I echo the comments of my hon. Friend the Member for Chippenham about the need for a rebalancing in favour of the west and Wales. When we enter the next control period, it is important that we bear in mind such balances.

Electrification, which was raised by the Select Committee, is an important issue, especially in the context of the Great Western main line. We need to be wary about presenting the commitment to electrify as far as Newbury and Oxford as any kind of cut. That project will continue until 2018, so to look beyond that is already well into the next Parliament. The Labour party committed itself to 20% cuts in its submissions to the comprehensive spending review across unprotected Departments, so if extra and faster investment in electrification were to happen, it would be interesting to see what cuts would be made to pay for it.

We must be wary of the perception that all the investment is working its way out from London. If I were to suggest that we face a rise in rail fares across the entire network, constituents living in Wales or Bristol would not see a great return on that rise. However, someone who is living in, say, Witney, would be closer to one of the stations that would be electrified—Didcot parkway or Oxford—and they might get a very real and rapid return on their increased rail fares. We have to be wary about the perception that all the benefits are being delivered first to London and the south-east.

The hon. Member for Luton North (Kelvin Hopkins) made some important points about signalling technology. My hon. Friend the Member for Chippenham mentioned the European rail and traffic management system, and I raise an alarm about that. I urge the Minister to examine the experience of Londoners when the ERTMS was introduced on the tube system. She should perhaps take some advice on how well the system works.

[Kelvin Hopkins]

There is a difference between signalling assistance in general and specific signalling assistance about which there may be some doubts.

[Martin Horwood]

That is absolutely correct. The Select Committee report also mentions the importance of investment in rolling stock. It is important for the Government to take their time to get that right. There have been delays under both Governments, so that is common ground. Rolling stock is a significant contributor to the general level of expense in our railways. If it takes time to consider how to deliver more competitive prices for rolling stock, it might be a delay worth considering.

Smart ticketing was raised in the report. It is important that we have better integration of ticketing. The current system is confusing and often unfair. Claire Cook, my fantastic PA in my constituency office, regularly books me a first-class ticket on a Gloucestershire to London train for £21.50. That horrifies many of my constituents who pay several times more for a standard ticket on the same train on the same route. They do not seem reassured when I tell them that because they have, in effect, paid for my ticket too, they are really saving money. That really does not seem to go down well. The risk is that there is an unnecessary perception of high cost, because people do not realise that cheaper fares are available. The ticketing system must be addressed. We should move towards a system that is a bit more like Oyster cards in London. When someone uses an Oyster card, they can be pretty sure that they are getting the cheapest fare available for that route. The application of such a system would be a good thing for the whole country. Obviously, though, that is a technical and organisational challenge.

Finally, everyone regrets increases in fares. Even when we accept that fares have to increase, there is a need to examine the sharp practices by train-operating companies, such as shifting the time boundary between peak and off-peak, so that there are suddenly more peak fares than before, even though, technically, the price has not been raised. That is a stealthy way of raising prices for customers. The use of averages was a point very well made. The Government must be on the ball about fare increases and make sure that train-operating companies are not taking advantage of customers.

In short, we should attack the fundamental causes of the high costs—the lack of capacity, the supply and demand problems and the cost base of the railways. The Office of Rail Regulation has said that Network Rail is up to 40% less efficient than its European counterparts, which means that we have some fundamental problems. With the inflated cost of rolling stock and so on, there is clearly potential for the Government to address the fundamental costs of our railways. If they do that effectively and protect investment, we will have a transport system that any Government could be proud to say is better value for money, better for the environment and better for the travelling public.

[Albert Owen (in the Chair)]

Before I call Mr Gwynne, I remind Members that Mrs Ellman, as Chair of the Select Committee, will be making a few comments at the end.