Rail Engineering (Jobs)

Norman Baker Excerpts

Tuesday 29th March 2011 Commons Chamber

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I welcome the opportunity to debate in some detail the issues raised by the hon. Member for Hayes and Harlington (John McDonnell), who spoke with his usual integrity and humanity.

The hon. Gentleman will appreciate that the Minister of State, who has responsibility for this matter, is not able to be with us tonight, but I will make sure that his comments are drawn to her attention. I will ensure that a written response to the questions that I am not able to answer tonight is sent to him. I am grateful for his comments about her involvement. I understand that she is well aware, from the recent meeting and from correspondence, of the importance that the hon. Gentleman attaches to addressing the impact of events such as Jarvis plc’s entry into administration on the rail industry skills base and on former employees. I have sympathy for those who have lost their jobs, and for the impact that it will have on their families. It is always a tragedy when someone loses their job, and the impact is much more widespread than just the effects on the individual concerned.

The Government are progressing with an ambitious programme for rail investment, because we believe that the railway network is vital to economic growth and reducing carbon emissions. However, funding is not unlimited. We must ensure that every pound is spent efficiently, and secure the maximum long-term benefits and value for money. Of course, that includes having a safe railway.

The spending review settlement demonstrated the Government’s commitment to rail transport. We have announced that we will fund and deliver a wide-ranging programme of investment in rail infrastructure and rolling stock. As the hon. Gentleman said, the projects include Thameslink and Crossrail, and the associated 2,100 new carriages; the intercity express programme; extending the electrification of the Great Western main line to Bristol and Cardiff; and electrifying the lines between Liverpool, Manchester, Preston and Blackpool. Major station development projects will proceed at Reading, Birmingham, London King’s Cross and Gatwick airport. There are a number of other projects, including those announced in the Budget last week.

The sustained financial support that we have offered now needs to be matched by a relentless drive for efficiency on the part of the rail industry. Sir Roy McNulty’s value-for-money study will have a crucial role in tackling that challenge from an industry-wide perspective. Sir Roy’s emerging findings give a strong indication of the scope for improved value for money in our railways. The potential savings of up to £1 billion that are identified in the report are efficiencies that should be achievable while keeping the same level of services. From my point of view, achieving efficiencies in the railway means making a stronger railway for the future.

One of the key principles for making those savings is much closer working and an alignment of incentives between train operators and Network Rail. Alongside the Government’s response to Sir Roy’s interim findings, we therefore confirmed plans to reform the rail franchising system to make franchises longer, more flexible and more responsive to the needs of passengers, while providing better value for taxpayers. The railway as a whole faces significant challenges in terms of costs and affordability. Finding effective responses to those challenges will not be easy in such a large and complex industry. The study team has been encouraged by the ready co-operation it has received from many people within the industry. Its aim, with their help and support, is to chart a route to a sustainable future for rail in this country.

It is widely recognised that getting better value for money is key to a sound future for rail in this country. We want rail to be in a good place to compete with other modes, not least for carbon reasons. Sir Roy’s recommendations, and the industry’s response, will shape the Government’s proposals for the reform of the industry, which we intend to set out later this year.

However, we recognise that a bigger and more efficient railway needs the very best of engineering and other skills to succeed. The industry’s success in meeting the challenge of the future will depend on the skills, motivation and capabilities of its work force. That is tied into the issue of how the industry manages its supply chain, and how we manage our investment in the industry. We have registered the widely held view that the Government should try to avoid driving peaks and troughs in demand for various skills. In the future, the industry leadership needs to be able to play a greater role in addressing the issue, and it must consider the impact that investment decisions can have right down the chain and how those decisions can be balanced to provide the best value for the taxpayer.

I am conscious that I had less than 10 minutes for my speech, but I shall try to get through as much as I can. I turn to the specific issue of Jarvis plc’s entry into administration. We greatly regret the failure of Jarvis and the subsequent loss of jobs and impact on individual families. I know that my right hon. Friend the Minister of State welcomed the chance to meet the hon. Gentleman and others in the RMT parliamentary group on 15 February, and to hear the group’s views on the matter at first hand. Following that meeting, I understand that Network Rail’s chief executive, David Higgins, has been in touch to confirm his willingness to meet the group to discuss its concerns.

Network Rail re-let to Babcock Rail the track renewal work previously undertaken by Jarvis on the London North Eastern and Midland and Continental routes, which led to a number of staff gaining employment with Babcock Rail. However, as the hon. Gentleman is aware, the contractual arrangements for track renewal work are commercial matters between Network Rail and the infrastructure companies, in which the Government have no locus to intervene.

Network Rail has made it clear that all current track renewal work has been allocated, and that there are no outstanding contracts to be filled. It is tasked to deliver the value for money needed to meet the output and efficiency targets for the operation, maintenance and renewal of the network set out by the independent Office of Rail Regulation. The ORR’s latest industry review makes it clear that Network Rail is delivering improved efficiency through the use of new technology and improved working practices, including the use of high-output track renewal equipment and pre-assembled modular sets of points, which allow it to carry out renewal work more quickly.

The Government recognise the importance of maintaining a skilled work force in the rail sector. That is why Sir Roy McNulty’s value-for-money study is working to identify major improvements in asset and supply chain management, and to forecast future requirements for work force skills. The Government also believe that infrastructure investment is crucial for Britain’s future, so over the next four years we will provide £14 billion of funding to Network Rail to support capital maintenance and infrastructure investment.

As the hon. Gentleman will know, we support a Y-shaped national high-speed rail network from London to Birmingham, Leeds and Manchester, with connections on to existing main lines. That would release capacity to expand commuter, regional and freight services on existing lines. The benefits of that network would bring about £44 billion to the country. Building the London to west midlands line would create about 9,000 jobs during construction, 1,500 permanent jobs following completion and 30,000 jobs around the stations of the high-speed network.

The Government are determined to achieve a sustainable, efficient and growing railway. We are equally determined that no changes should be made that would jeopardise the impressive improvements in safety and punctuality achieved across the industry in recent years. We are determined to get those responsible for track and train to work together more closely, to drive down the costs to taxpayers and fare payers while improving the quality of services.

Underlying our determination is our recognition of the need to maintain a skilled and properly resourced work force in the rail industry. Sir Roy McNulty’s value-for-money study will forecast future requirements for work force skills. We will consider Sir Roy’s final recommendations very carefully when they arrive, including in relation to the matters that the hon. Gentleman raised, against the overriding need for any reform to be designed to secure the greatest long-term benefits to the fare payer and taxpayer.

Many of the specific matters that the hon. Gentleman raised are best taken forward by my right hon. Friend the Minister of State, and as I said, I will ask her to write to him formally to provide a response. He suggested that the new contractors should give first refusal to ex-Jarvis workers, but I do not believe the Department should require that, because we have no locus to involve ourselves in commercial arrangements between Network Rail and those whom it seeks to employ, let alone in deciding who contracting companies take on. However, his comments have been noted, and I am sure that those in the rail industry will pay attention to them.

The hon. Gentleman asked whether it would be possible to meet the appropriate civil servants to examine the criteria for when the Department might intervene under the Railways Act 2005. That is a matter for the Department, and notwithstanding the fact that my right hon. Friend the Minister of State is not here, I will suggest to her that that might be a sensible way for the hon. Gentleman to meet officials.

[Jim McGovern]

The Minister mentioned billions of pounds of investment. Could he tell me, or will he meet me—