Rail Franchising

Paul Sweeney Excerpts

Wednesday 10th January 2018 Commons Chamber

[Alan Brown]

I agree with my hon. Friend and I was going to come to that point later. I cannot understand the UK Government’s intransigence over devolving Network Rail, which it is anticipated would save the taxpayer £30 million and increase accountability to the Scottish Government.

I have touched on some of the causes of the demise of British Rail. Since privatisation, passenger numbers and investment have increased, but again we need to go back to cause and effect, because that was not a direct consequence of privatisation. It has been possible to lever in private investment, but that is recouped through passenger fares and public subsidy—that is the bottom line. When the Government allowed private investment to come in, they decided to be a bit bolder in specifying increased services, new rolling stock and other improvements for the franchises. However, that same ambition could be replicated either under nationalisation or by allowing public sector investment, rather than everything being levered in through private investment. Following privatisation, there was also an upturn in the economy, so a range of factors actually contributed to better passenger experience and increased numbers. The Transport Secretary really needs to move away from his “private equals good; public equals bad and inefficient” mentality, but I fear that today there are no signs of that changing.

In its 1997 manifesto, Labour reneged on its commitment to renationalising the rail system, but it at least commissioned the McNulty review in 2009 to identify better value for money in the railway franchise system. Incredibly, the Tory Government sat on that report for six years before coming up with modest proposals to vertically align the infrastructure and passenger operations in an alliance model.

Alliances can be made to work, or at least to work better than they do under the current franchise system. The ScotRail-Abellio alliance is the only franchise that stipulates that all staff must be paid the real living wage. It also guarantees trade union representation at every franchise board meeting, no compulsory redundancies and 100 new apprentices. Rather than making staff’s terms and conditions a mechanism for greater profit, the Scottish Government have incorporated protecting them into the contract. On passenger experience, there will be new rolling stock, 23% more carriages, a new approach to cycling interaction, and a drive to expand tourism. Those aims, ambitions and protections contrast directly with the attitude of the Secretary of State and the Tory’s southern rail franchise.

That is not to say that there were not teething problems with the new Abellio alliance, but it is now the best performing large franchise in the UK. Even so, the Scottish Government are putting in place measures to allow a public sector procurement bid to be submitted either at the end of the franchise or at the mid-point, where there is a possible break. The success of CalMac ferries in competing in the private sector shows how this can be achieved.

As we heard in the intervention made by my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), if responsibility for Network Rail was devolved to Scotland, with the body under the control of the Scottish Government, the operation of rail services in Scotland would be much more efficient, and there would be much more accountability. That would give us a better way to move forward.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

On the devolution of Network Rail, does the hon. Gentleman accept that power over devolved franchises has already been devolved? Enhanced capability was devolved in May 2016 whereby public sector bids could be brought forward for ScotRail. That was known well in advance of the current tender. Is it not the case that ScotRail could have been in public hands today if the Scottish Government had delayed that tender?

[Alan Brown]

A small history lesson: it was the UK Labour Government who refused to hand these powers over to Scotland. They had the chance to do so in 2000 and 2005. Since the Scottish National party Government came to power in 2007, they have written to three Transport Secretaries to ask for the powers to be devolved to Scotland, and three times that has been refused. The shortlist for the ScotRail-Abellio tender process was drawn up in November 2013, so the initial invitation to tender came way before that. The contract was awarded in October 2014—a year and a half before the new powers came into play. It is absolutely ridiculous to say that the Scottish Government could have sat on their hands and waited for future powers that might not have come. They did come, the Scottish Government will use them in the future, and they are preparing that public sector bid, so I thank the hon. Gentleman for that intervention.

--- Later in debate ---

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The debate has demonstrated that privatisation has led to a disastrous combination of service failure, disinvestment and profiteering from public subsidy. A particular absurdity of the Railways Act 1993 was that it banned any British public sector bids for franchises, but permitted overseas state-owned railway firms to bid. Hong Kong’s state railways will run Crossrail, the French state has stakes in the London Midland, Southeastern and Thameslink franchises, and Dutch state railways run the Greater Anglia and Scotrail franchises, having been awarded the latter contract, worth £6 billion, by the Scottish Government in October 2014. That came about after rail franchising powers were devolved to the Scottish Government in 2005. Labour, ASLEF, the Transport Salaried Staffs Association and the RMT trade unions appealed to the Scottish Government in October 2014 to delay the award of the new Scotrail franchise until the power to create a public sector bid was enabled by the passing of the Scotland Act 2016, which came into force in May that year and had been known about at the time of the franchise award. This practical measure to accelerate the return of a publicly owned and operated railway in Scotland was disregarded by the SNP, and as a result we are stuck with a railway in Scotland that will be owned by the Dutch state for another decade.

In the year since Abellio was awarded the franchise, fares have risen by over 12%, yet wages have increased by only 1.8%. Performance targets have been missed, many routes have been overcrowded, stops have been skipped—that has left passengers stranded—and customer satisfaction has not improved. All the while, Abellio sends its profits back to be invested in the Dutch railway network.

My constituency was once the centre of the British locomotive manufacturing industry. As a result of privatisation, British Rail’s world-class engineering and manufacturing divisions were sold off to foreign companies. They have subsequently been run down to the point where much of the UK’s rolling stock is imported from Europe or Japan, with virtually nothing exported from the UK. Other nations view their railways as a core part of their industrial and advanced manufacturing strategies. Restoring the public ownership of rail franchises would be an excellent first step towards a renaissance in the wider railway industry in Britain, the nation that gave railways to the world. I will be supporting the motion tonight.