Oral Answers to Questions

Lord Hammond of Runnymede Excerpts

Thursday 15th September 2011 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

2. What assessment his Department has made of the ability of British-based train manufacturers to win contracts for rolling stock.

[The Secretary of State for Transport (Mr Philip Hammond)]

Since privatisation, Bombardier, as the only current UK-based train manufacturer, has supplied the majority of new trains across the UK main line rail and London underground networks, with a combined total of over 4,500 new carriages ordered since 1996. Going forward, there are a number of contracts that the Department would expect Bombardier to bid for, including the Crossrail project for the supply of around 600 carriages, and it is already a pre-qualified bidder. The tender for this contract is due to be issued in 2012. There are also potential future orders for the London Underground deep tube lines.

[Steve Rotheram]

I listened to what the Secretary of State had to say and, quite frankly, I could have predicted his response. Why is he not prepared to do anything to reconsider his disastrous decision to award the Thameslink contract to a company that intends to build these trains in Germany?

[Mr Hammond]

I sometimes get the feeling that I am talking to a brick wall on this subject. I have said it before and I will say it again: the criteria by which the bids were to be evaluated were laid down by the Government in 2008. The criteria have to be followed, although they might not be the criteria the hon. Gentleman would like. We have made a commitment to look at the way we specify the criteria in future public procurements, but on this project it is Labour’s mess and we are landed with it.

Tom Blenkinsop: I am sorry, but the right hon. Gentleman told the Transport Select Committee that there was an option to review or restart the Thameslink procurement process at any time during the year before naming the preferred bidder. Will he now admit that that was a terrible mistake, which has put at risk Bombardier, Britain’s last train manufacturer, and thousands of British jobs down the supply chain?

[Mr Hammond]

The only other option available to the Secretary of State—I have to repeat myself again—would have been to cancel the Thameslink procurement completely and abandon the project. That power exists, but there is no power to alter the terms under which the competition is conducted once it has begun. That was made very clear by the representative from the European Commission and by the academic lawyers who gave evidence to the Select Committee.

[Nigel Mills (Amber Valley) (Con)]

Will the Secretary of State confirm that he will look to include socio-economic conditions in future procurement contracts and to give them sufficient weighting that the full economic impact of the contract can be taken into account?

[Mr Hammond]

The Prime Minister has agreed that the growth review should include a review of public procurement in the UK, and that work is now under way. We will look at what happens in other EU countries that are similarly constrained by EU procurement rules, and we will look at best procurement practice in large commercial companies to maintain long-term best value. We will certainly look at the opportunities provided by, and the appropriateness of, including socio-economic criteria, where appropriate.

[Duncan Hames (Chippenham) (LD)]

I am sure that the Secretary of State will want to join me in congratulating Invensys, based in my Chippenham constituency, on winning a multi-million pound signalling contract on the Thameslink project. A world leader in train-signalling technology, Invensys has in the past experienced some difficulty in winning domestic contracts. What steps is the right hon. Gentleman taking to ensure that recognition of UK engineering talent is more commonly the rule rather than the exception?

[Mr Hammond]

The general rule is that we would expect to evaluate bids for contracts on their merits. Companies such as Invensys and, indeed, Bombardier have won many contracts on their merits, but we will look at whether we should, in appropriate cases, include wider socio-economic issues and factors, which some other EU member states routinely do in their public procurement processes.

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

Yesterday, the Deputy Prime Minister made a speech about the importance of investment in infrastructure. Will the Secretary of State provide some examples of how that might lead to more opportunities for UK-based train manufacturing in the short term?

[Mr Hammond]

I am grateful to the hon. Lady for her question. We are sensitive to the pressures that the UK train manufacturing supply chain—not just Bombardier but the component suppliers—are under, and the Department is urgently looking at some other projects that might be advanced. In particular, the industry proposed a project to modify the cross-country Voyager train fleet so that it could run under electric power, which would provide—if Bombardier were to win the contract—a substantial piece of work for the crucial design department in Derby. That is at the heart of securing the future of that business.

[Maria Eagle (Garston and Halewood) (Lab)]

Yesterday, the Deputy Prime Minister told the right hon. Gentleman to speed up delivery of Crossrail. Will he update the House on the new completion date for the project, which will, I presume, now be earlier than December 2019, the date to which he pushed it back after the election?

[Mr Hammond]

The Deputy Prime Minister did not tell me to speed up the Crossrail project. The thrust of his speech was the need to ensure that committed capital funds are spent on their intended profile. The requirements to keep demand in the economy mean that we must get those vital capital programmes spent on programme, and the Crossrail project is spending on programme and will deliver the completion of the project from 2016, with full running from 2019.

[Maria Eagle]

So the Deputy Prime Minister was wrong—there is no plan to bring forward projects and no plan for growth. May I ask the Transport Secretary about the procurement of trains for Crossrail? After his disastrous decision to award the Thameslink train contract to a company that will build the trains in Germany, putting at risk Britain’s train manufacturing industry, he has said that he is reviewing the Crossrail contract. As he has just confirmed that Crossrail is still being delivered on his slower timetable, rather than reviewing it for six months, why does he not scrap the process and start again, and this time ensure that Bombardier has a fair chance to secure the work. Finally—

[Mr Speaker]

Order. I think we have the gist, and we are grateful.

[Mr Hammond]

The hon. Lady is all over the place. There is nothing to scrap in relation to the Crossrail rolling stock procurement programme, because we have not started that procurement yet. We announced that we will postpone the issue of the invitation to tender until the new year, in order that consideration be given to the findings of the growth review and how public procurement in this country can best support the strategic interests of the supply chain. The broader Crossrail project, involving a major infrastructure investment—the tunnels across London—is, as the hon. Lady and anyone who travels around London knows, already under way as is manifest in the large number of big holes in the ground.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

3. What assessment he has made of recent trends in levels of rail travel.

[The Secretary of State for Transport (Mr Philip Hammond)]

Annual statistics for the year ending March 2011 published by the Office of Rail Regulation show that passenger travel rose during the year to reach an overall, all-time high of 33.6 billion passenger miles. The number of rail journeys has been rising steadily each year since privatisation with only one slight drop in the total during 2009. Since then the upward trend has resumed to reach a total of 1.4 billion journeys undertaken. Long-distance rail travel has nearly doubled since privatisation.

[Simon Hart]

Will the Secretary of State put some pressure on Network Rail about the state of their stations? Whitland station, in my constituency, is now in such a deplorable state that it works against people wanting to travel on rail and against attracting tourists to our area.

[Mr Hammond]

Management of stations is the responsibility of train operators. Under the revised franchise programme that the Minister of State has announced, we intend to transfer leasehold ownership of stations to the franchise train operator, so that it can have a more direct, hands-on involvement. However, I will look into the specific example about which my hon. Friend asks.

[Mr Denis MacShane (Rotherham) (Lab)]

The Secretary of State’s extraordinary statement that rail travel is something for rich people could be made only by one of the southern millionaires in the Cabinet. If he came to Rotherham, he would see plenty of people who are not rich, but they are now being threatened with the ticket office at Rotherham station, which is being rebuilt, being taken away. May I put it to him that many of my constituents do not do computers and need help and aid? That ticket office at Rotherham station must stay.

[Mr Hammond]

I understand the right hon. Gentleman’s point, and I agree that there will be a need for assisted channels—

[Mr MacShane]

What are assisted channels?

[Mr Hammond]

I will tell the right hon. Gentleman what assisted channels are. Even as the purchase of tickets, over time, is bound to become more computer based, as new technologies are deployed and more tickets are bought online, through mobile technology and so on, there will still be a need for an assisted channel, and we will ensure that there is one.

[Dr Julian Huppert (Cambridge) (LD)]

Price is clearly a major factor in determining how many people use the railways. The previous Government went for above-inflation increases each year, and we have argued for increases below inflation. The Government have gone for 3% above RPI. Does the Secretary of State accept that 8% increases in rail, and 7% increases in London transport, is simply too much for people to deal with.

[Mr Hammond]

The hon. Gentleman says “we”. I am not sure who the “we” is. We have decided that we will have to increase rail fares by 3% in real terms for the next three years in order to protect the major programme of investment in the rolling stock, electrification and new infrastructure that the country needs. It is a tough decision, but it is the right decision.

[Mr Speaker]

Order. May I ask the Secretary of State to face the House, as he is addressing us?

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[David Mowat (Warrington South) (Con)]

11. What plans he has to review the business case for (a) High Speed 2 and (b) Crossrail.

[The Secretary of State for Transport (Mr Philip Hammond)]

Economic cases for large projects are periodically refreshed—for example, to reflect the latest economic forecasts. A robust economic case for HS2 was prepared for the recent consultation, with a benefit-cost ratio of 1:2.6. An update will be published later this year. The latest update of the Crossrail economic case was published in July 2011, with a BCR of 1:1.97. I should make it clear that the economic case is only one of the criteria used in decision making for transport infrastructure projects.

[David Mowat]

I thank the Secretary of State for that reply. As he made clear, the business case for HS2 is stronger than the business case for Crossrail. The HS2 business case gets even better if the link north of Birmingham is taken into account. Given that fact, will the Minister consider bringing forward the construction of HS2 in order to stimulate the economy in the same way as has been mooted for Crossrail?

[Mr Hammond]

I am grateful to my hon. Friend for his support for the HS2 project. Let me give him an example to reinforce his point. At the time the decision was made to build the extension to the Jubilee line, the BCR was less than 1, but I do not think that many people would argue today that we could possibly do without the Jubilee line extension. The construction profile and overall project profile for HS2 are based on the requirement to obtain parliamentary and other statutory consents and the cash-flow limitations of the Treasury’s ability to fund a project on such a scale. Unfortunately, it will not be possible to accelerate it.

[Mr Clive Betts (Sheffield South East) (Lab)]

I know the Secretary of State will be aware that there is widespread political and business support in my city, Sheffield, for HS2. Will he also consider how improving the connecting links to the wider city region could make the business case for HS2 even stronger?

[Mr Hammond]

The hon. Gentleman is absolutely right and I have said time and again that a major infrastructure project such as HS2 is not an alternative to routine investment in the rest of the rail network and that to get the maximum out of HS2 we will also need to improve the connectivity from the nodes on the HS2 railway to the surrounding areas.

[Jonathan Ashworth (Leicester South) (Lab)]

13. What recent assessment his Department has made of the effectiveness of its procurement policy for rail rolling stock.

[The Secretary of State for Transport (Mr Philip Hammond)]

As stated at the Select Committee on Transport on 7 September, for all future Government-led procurements—not just those for rolling stock—the Prime Minister has asked the growth review to examine the degree to which the Government can set out the requirements and the evaluation criteria with a sharper focus on the UK’s strategic interest, including a review of public procurement practice and outcomes in other EU member states and a review of current private sector best practice. The results of those reviews will inform future Government-led procurements.

[Jonathan Ashworth]

I am sorry that the Secretary of State feels that he is talking to a brick wall when Members raise legitimate concerns about the impact on jobs of the Bombardier decision. I am concerned about the impact on Leicester, where many firms are part of the supply chain. What reassurance can he give those firms now that the majority of our trains will be built abroad?

[Mr Hammond]

The hon. Gentleman is quite wrong to say that the majority of our trains will be built abroad. One contract has been awarded to Siemens, and those trains will be built in Germany. Other contracts are in the pipeline, and Bombardier remains a very strong bidder. It has demonstrated over the last 15 years its ability to win a majority of UK train orders. From 2014 we will have a second UK-based train builder, Hitachi, in the plant that it is establishing in Newton Aycliffe, with the creation of 600 new jobs.

[Margot James (Stourbridge) (Con)]

I very much welcome the review of how the Department implements the procurement rules. Does my right hon. Friend agree that there is no time like the present for a thorough review of how this country has, in the past, gold-plated EU directives and regulations?

[Mr Hammond]

I should emphasise to my hon. Friend that the review is not concerned simply with train procurement but is a review of public sector procurement across the board. It will look at what is happening elsewhere and whether there are things that we can do differently so that procurements initiated by this Government do not have the flaws that hon. Members are identifying in the Thameslink procurement initiated by the last Government.

[Mark Reckless (Rochester and Strood) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Transport (Mr Philip Hammond)]

Since I last answered Transport questions, the consultation on high-speed rail has closed. The Department has announced £155 million of investment from the first-round allocation of the local sustainable transport fund, concluded deals to put new carriages on key commuter rail routes, set out the next stages in the Department’s rail franchising programme and launched a consultation on proposals for new lane rental schemes to cut the number of rush-hour roadworks.

[Mark Reckless]

Many of my constituents who are not rich but were used as guinea pigs for RPI plus 3% by the last Government have no choice but to commute by coach, getting up at 5 or 6 am to get into London. Will Ministers welcome the statement by Southeastern yesterday that it will henceforth use the flex possibility to consider elasticities so that areas where people are not well off and where there is significant competition may see lower fare increases in future?

[Mr Hammond]

Absolutely. We are all in favour of competition. Train operators should note what is happening in the marketplace, and where coach operators are taking their business they should use the flexibility that they have to respond.

[Alison McGovern (Wirral South) (Lab)]

T2. Yesterday’s unemployment figures were disastrous for Wirral and the wider Merseyside economy. Given that RPI is now over 5%, will the Secretary of State explain how his RPI plus 3% train fare hikes will help work pay for ordinary people?

[Claire Perry (Devizes) (Con)]

T4. Last night I drove down to my constituency and, unusually, the motorway was very clear. However, it is often the case that there are accidents on both the M3 and the M4 and it seems to take an unfeasibly long time to get the motorway reopened afterwards. Will the Department do something about that?

[Mr Philip Hammond]

My hon. Friend raises a very topical point. She may know that in August we had one of the longest ever post-accident closures on the M25 very close to my own constituency, as it happens, when the motorway was closed for more than 24 hours following an accident. The Under-Secretary of State for Transport, the hon. Member for Hemel Hempstead (Mike Penning), has been in discussion with the Association of Chief Police Officers, the police lead on traffic services. A working group is now operating between the Highways Agency and ACPO, which will be reporting before the end of the year. We have also allocated £3 million to invest in the latest laser scanners to allow the police to record traffic accident scenes more quickly and allow the clear-up of the motorway to progress more quickly.

[Lisa Nandy (Wigan) (Lab)]

T3. The Government are asking more disabled people to find work through the work capability assessment programme. Does the Minister understand that transport, and in particular cancelled station upgrades, slow replacement of rolling stock and rising prices are a significant barrier for many disabled people in Wigan and across the country? What action is he taking to address this?

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[Rehman Chishti (Gillingham and Rainham) (Con)]

T7. Following the Government’s consultation on the future of the Dartford crossing, will the Minister consider extending the local person’s discount scheme to include my constituents and the wider Medway area?

[Mr Philip Hammond]

I am happy to consider any representation that my hon. Friend wants to make, but our primary objective is to ensure that funds are available for an additional crossing in the future, and our approach to Dartford is to ensure that that can be affordably delivered.

[Kelvin Hopkins (Luton North) (Lab)]

T9. In awarding the Thameslink contract, did the Secretary of State take into account Siemens’ industrial relations record? Siemens’ global business strategy has been described as aggressively anti-union, and staff currently working for First Capital Connect on the existing Thameslink bid have not been reassured by the Government that their terms and conditions will be protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 should they transfer to Siemens. Will he reassure those workers and the House that TUPE will apply in such circumstances?

[Mr Hammond]

My understanding is that TUPE will apply in such circumstances. For the record, Siemens employs 16,000 people in this country, many—indeed, I think most—are represented by the Unite union, and my understanding from the inquiries that I have made is that relationships between the union that represents them and the company are extremely good.

[Jake Berry (Rossendale and Darwen) (Con)]

T8. The extension of high-speed rail to Manchester will bring huge benefits to my constituents, both in terms of jobs and growth. Will the Minister reassure the House that this line will not stop at Birmingham but will come to Leeds and Manchester, and additionally will he confirm that if we are to have a proper integrated transport plan, we should look at a rail link between Rossendale and Manchester to complement it?

[Mr Hammond]

Ah, the sting in the tail! My hon. Friend makes a very good point and I understand the concern that some Members representing seats in the north-west, Yorkshire and places further north have about the fact that we have to progress this project in two separate stages through two separate hybrid Bills. I have made it clear on every occasion I possibly can that the Government are committed to the whole Y network project. The benefit-to-cost ratio is based on the whole Y network, and I will do whatever I can to build into the first hybrid Bill reassurance to people and businesses in Manchester, Yorkshire and the Humber, and the north east that we will indeed complete the full Y project.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

The Minister referred earlier to the access for all programme. Newton station in my constituency is in dire need of an upgrade to improve access. Will he speak to Transport Scotland to ensure that the station gets those improvements quickly?