Inter-City Rail Investment

Stephen Hammond Excerpts

Thursday 9th January 2014 Commons Chamber

[Sheila Gilmore]

I think that it is. I do not propose to reiterate all that has been said by so many of my Opposition colleagues in several of the debates we have had on this subject about how East Coast has performed. Given the history, it is particularly frustrating. As I have campaigned on the issue and talked to people about it, I have found that the levels of support we get are extremely high.

People who are not politicians and who are not involved in the debate at that level are baffled as to why, when the east coast main line has already been through two difficult franchising periods, this should be happening in that way. Given what we have learnt, they ask, “Why are we doing this if it is working well? If it is working well, why not leave it in place and see what happens?” As I have said, that would not necessarily have prevented the Government proceeding with other franchises, if that is what they were determined to do—some people would certainly have preferred it if they had not been. It seems particularly perverse to pick this one. That is what many members of the public feel, and not just those who travel on the line regularly.

There is a lot of concern about how this will work out. If East Coast had been performing badly in the public sector, it would have made sense. An imperative to turn it around might have trumped the disadvantages of negotiating extensions on the west coast main line and the Great Western main line. But East Coast was and is performing well, and that defence is simply not available to Ministers.

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

I have listened carefully to the hon. Lady, who says that there is no excuse. She will of course want to point out that, in terms of punctuality, the east coast main line is the worst performing long-distance franchise and that it has been so for at least the last year.

[Sheila Gilmore]

It is quite clear from the figures on punctuality that the problems East Coast has faced have been substantially about track and weather. A previous speaker referred to the problems with the lines, particularly in the Peterborough area, over the past couple of years. Those problems need to be addressed well in advance of any other changes. If we discount those problems, I do not think that anybody in the rail industry is suggesting that that has been due to the operator.

My contention is that we have reduced our ability to get improvements on other important lines and that that is regrettable at a time when there is real support and appetite for rail investment, and for good reasons. That has given us an opportunity to move ahead with this and perhaps make up for past mistakes. It seems to me to have been an opportunity missed.

--- Later in debate ---

[Caroline Lucas (Brighton, Pavilion) (Green)]

I add my congratulations to the hon. Member for Redcar (Ian Swales) on securing this important debate. I apologise, as others have, for the fact that I shall discuss a line that connects to London. I accept his broader point that we should not be so southern-centric, but I hope he will forgive me, given that my constituency depends a lot on the line between Brighton and London.

I find myself in agreement with the hon. Member for Brighton, Kemptown (Simon Kirby), who is not in his place—I hope this is an area on which we can have cross-party agreement—that the current rail system is failing our constituents in Brighton and Hove. The Brighton-to-London commuters I meet almost every day are, without exception, frustrated and angry about the poor quality of the service that they pay through the nose to use. It is a huge amount of money and, as has been said, the cost just went up again earlier this month. An annual season ticket between Brighton and London Victoria is nearly £4,000; to be fair, there would be £28 change, but that is still a huge amount. What do people get for their £4,000? The main line from Brighton is in dire trouble. It struggles and creaks through inadequate capacity.

Last month I attended a Network Rail event on the future of the Brighton main line to make the case for more capacity between the capital and Brighton. The connection between the two cities is critical to my constituents and we do not want to wait for the crumbs from the table. Many Members have said that this is not a debate about HS2 and it certainly is not, but I think we should remind ourselves of the amount of money that can be found when the political will is there to invest in our rail infrastructure. I would far rather that that money was invested in the general rail systems on which so many of our constituents depend, rather than what I see as pretty much a massively expensive vanity project that will not deliver the gains that we need.

Brighton is a dynamic, internationally successful city and a major tourist destination, but it needs more investment in its rail lines: far too often the city is cut off because of problems at East Croydon or elsewhere on the line. We need some real vision and commitment to invest to get Brighton the second London line that we so desperately need. It is essential to have not only increased capacity, but a fast alternative route for passengers at times of disruption.

In October, Baroness Kramer, the Transport Minister in the other place, said:

“It is anticipated that Network Rail will provide a copy of its Brighton Main Line Pre-Report…to this Department before the end of the year. It will include…the potential role of new line schemes, including Lewes to Uckfield.”—[Official Report, House of Lords, 22 October 2013; Vol. 748, c. WA166.]

Have Ministers received that report, and if so when will it be made public so that we can see it? In the autumn statement, the Chancellor said that he will accelerate the Network Rail study into improvements in the Brighton main line. Is that the same pre-report that was supposed to have been done by December, or is it an additional study? Weary commuters would welcome some clarification. Either way, we need to know the exact official terms of reference of the report and when we will get to see it. It is critical that the study should be a thorough review of capacity between the Sussex coast and London, covering all the options to end the chaos that we so regularly experience on this critical rail artery into London.

As well as talking about the specific needs of Brighton, including for a Brighton main line 2, I will say a few words about this country’s broader rail system. I believe that it is failing us, which is unforgivable in the sense that there is an alternative to the overcrowded, unreliable, overpriced and fragmented private services that we have to put up with. We could have an integrated, publicly owned and run railway that does not waste money on profit, and there is a model for doing that gradually and affordably.

Despite the standard mantra that privatisation saves money, the cost to the public purse of running the railways has risen by a factor of between two and three since they were sold off. The report “Rebuilding Rail” from the Transport for Quality of Life group makes clear the key reasons for that increase, which include high interest payments to keep Network Rail’s debts off the Government balance sheet—the Government have recently been made to put those debts on the books—as well as debt write-offs, costs arising from the fragmentation of the rail system into many organisations, profit margins of complex tiers of contractors and subcontractors, and dividend payments to private investors.

The only way to sort out that mess and waste, as well as the rising fares, overcrowding and the rest is for the state to take back control of the railways. That is why I am actively campaigning for them to be brought back into public ownership through my private Member’s Bill, the Railways Bill. I hope that the official Opposition will make it clear in their response whether they might back that Bill. If we want to improve our inter-city services, we have to nail the myth that buying back assets that have been sold off would be too expensive. The step-by-step approach in my Bill would allow the assets of the railways to be reacquired for the public at minimal cost, with substantial ongoing savings over time as franchises expire or companies break the terms of their franchise agreements. There is strong current evidence that it is better for passengers, railways and taxpayers when franchises are in public hands.

The Minister has been chuntering—if I may use that word—during my speech. I have not picked up what he has said, but I suspect that he is not entirely in agreement with me. I challenge him about the east coast main line. He put some facts and figures to the hon. Member for Edinburgh East (Sheila Gilmore), but, frankly, they are misleading. The east coast main line was brought back into public hands because of market failure, but it is the UK’s most successful rail franchise. Its passenger satisfaction levels are the highest on record, and it pays millions back to the taxpayer, as opposed to most other train companies, which deliver millions to shareholders.

The Minister mentioned punctuality, so let us look at that. The facts show that the punctuality of the east coast main line is 0.1% different from that of the west coast main line: on the east coast main line, with very little Government investment, it is 82.8%, but on the west coast main line, with massive Government investment, it is 82.9%. That seems to suggest that on overall efficiency, the east coast main line is doing very well.

The Office of Rail Regulation agrees with me. It says clearly that the east coast main line is the most cost-efficient line. Even the Financial Times says that it is

“the most efficiently run rail franchise in terms of its reliance on taxpayer funding”.

It receives the lowest level of Government funding.

However much the Minister chunters, there is plenty of evidence—this Government like to say that they are an evidence-led Government—from the east coast main line that bringing rail back into public hands works. It is precisely the threat of a good example that makes the Government want to sell it off as quickly as possible, so that it is not there as a standing embarrassment to the rest of their rail policy. It really does beggar belief that the Government want to re-privatise the line.

[Stephen Hammond]

Will the hon. Lady give way?

[Caroline Lucas]

With pleasure.

[Stephen Hammond]

Let us look at the evidence if that is what the hon. Lady wants to do. She should know that the rolling stock costs for the east coast main line came in at £85 million in 2012, whereas the bill for Virgin was £302 million. That is a substantial difference. The access charge costs are substantially lower and are likely to rise. Those are two pieces of evidence that place question marks over her line that it is the most efficient railway line.

[Caroline Lucas]

It is not just my line. As I have said, it is the line of the Office of Rail Regulation. I would suggest that there is cherry-picking going on in the figures that are being presented. There are questions over what the start time is and over how much of the responsibility for the costs can be laid at the door of Directly Operated Railways and how much at the door of the previous private franchises, given the lack of investment that went in earlier. My position stands strongly and I am backed up by independent regulators and others.

If the Government really want to make savings and to improve our transport network for everyone, they should recognise that privatisation has failed and bring railways back into public ownership as the franchises expire. According to calculations in the “Rebuilding Rail” report, reuniting the railways under public ownership could save more than £1 billion a year of taxpayers’ money. To put that figure in context, if all unnecessary costs were eliminated and the resulting savings were used entirely to reduce fares—I am not saying that that would necessarily be the best thing, but it gives one a sense of what we are talking about—it would equate to across the board cuts of 18%. Fares that are price regulated because of their social importance could be cut substantially more.

Under public ownership, all the public money that is invested in the railways could be used to deliver a better service for passengers, while also achieving wider social and environmental goals, rather than to line the pockets of private shareholders. Train travel could once again be a pleasure and something to be proud of. That is the kind of bright future that I want for our railways. I urge Ministers to wake up to the potential of public investment in our inter-city infrastructure and to look at the evidence clearly and objectively, rather than cherry-picking the figures, as I fear the Minister has done this afternoon.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

It is an honour to address the debate this afternoon. I congratulate the hon. Member for Redcar (Ian Swales) on securing the debate and on the way he conducted it. His speech was interesting and thoughtful, and he proved by his journey time calculations and recalculations that he can do mathematics.

We heard some fascinating contributions from a number of other Members. The three Members from the south-west were united across the political divide in wanting to see improvements to train services in the south-west, particularly the three-hour train to Plymouth. I remember campaigning in the city, along with the hon. Member for Plymouth, Moor View (Alison Seabeck), back in 2007. The failure of investment about which she complained has not happened only under this Government. I can, of course, bring her good news. She quoted a fare of £271. Should she choose to travel tomorrow morning, there is a return fare of £92, so one needs to be careful about saying that only one fare is available.

I heard the pleas of my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) about Mayflower 2020 in Plymouth. I do not know whether he will see President Christie turning up there. He invited me to come to a meeting, and I would be delighted to do so. I follow his lark in saying that I hope he is here for rather longer than just for 2015, and I am sure he will be.

I say to the hon. Member for St Austell and Newquay (Stephen Gilbert) that I can only imagine how frustrating it must be to go back to the constituency in the middle of the night to find that the film has been lost. The prospect of corresponding with him fills me with unbounded joy. I look forward to receiving and acting on his suggestions none the less.

The two Members representing Brighton shared a moment of political unity. I certainly hear their pleas. I can confirm that the Department received a draft in December of the report to which Baroness Kramer referred—the London to south coast rail study, which was carried out by Network Rail—and I expect to see a final version within the next couple of months.

I can bring some good news to my hon. Friend the Member for Brighton, Kemptown (Simon Kirby) on the basis that Thameslink will see 116 new trains of eight and 12 cars coming into operation, which will directly benefit his constituents. I am delighted to tell him that when he opens his post tomorrow morning, he will find a letter from me accepting his challenge to come and travel on the early morning train. I very much look forward to doing that.

I was not entirely surprised to hear the contribution of the hon. Member for Luton North (Kelvin Hopkins). He and I have enjoyed sparring over issues for the last few years. I listened with interest to his comments about the Birmingham Snow Hill line, and I am sure that he will want to raise his point about it with us again.

I understand the call of my hon. Friend the Member for Cleethorpes (Martin Vickers) for more initiative and private sector innovation in franchising. I hope that, through the direct award and the new refranchising process, we will be able to deliver that for him.

I enjoyed the contribution from the hon. Member for Edinburgh East (Sheila Gilmore), although I had obviously heard it before in previous debates of this nature. The simple fact is that the east coast main line is the worst-performing of the long-distance franchises. Its passenger satisfaction figure may be up, but it is still six points behind the figure for the west coast main line.

We heard a wide range of contributions today, and I am grateful to Members for taking the time to be here. The debate has shown how valuable the railways are to our country, and to communities throughout it.

[Kelvin Hopkins]

Will the Minister give way?

[Stephen Hammond]

I am sorry, but I do not have time.

As for what was said by the hon. Member for Nottingham South (Lilian Greenwood), let us have some honesty in this debate. When Labour was in office it crashed the economy, and gas and council tax bills doubled. Had her party been in office today, the average fare would have risen by 11% rather than 3.1%. Moreover, in 13 years, we saw just 9 miles of electrification. Just as we are dealing with the economic mess that was left behind by the last Government, we are determined to deal with the massive infrastructure deficit that we inherited. [Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The hon. Member for Nottingham South (Lilian Greenwood) must not shout from the Dispatch Box. She was listened to in silence for a considerable time, and she must let the Minister finish his speech.

[Stephen Hammond]

Thank you, Madam Deputy Speaker.

According to the World Economic Forum, in 1998—just after the last Conservative Government left office— the United Kingdom ranked seventh in the world for infrastructure spending. By 2009-10, we had fallen to 33rd. I am pleased to note that we are rising again, but there is much more work to be done. The failure of the last Government is epitomised by the fact that, according to the Civil Engineering Contractors Association, between 2000 and 2007, the UK’s infrastructure investment was lower than that in any other OECD state.

Rail is just one part of an unprecedented programme of transport investment that this Government are introducing to drive growth and job creation. As a result of the tough decisions that we made in order to get the public finance mess that we inherited under control, we have been able to achieve the longest period and the largest amount of rail modernisation since the Victorian era. That will mean faster journeys, more seats, improved access to stations, better freight links, and a rail network of which the country can be proud. The Government are delivering their vision of a railway that will be more financially and environmentally sustainable, support growth and deliver benefits for both passengers and freight customers. It has been agreed on both sides of the House that since privatisation the railways have been successfully carrying more passengers, more safely, on many more and newer trains, many of which arrive more punctually, and that levels of passenger satisfaction have been higher than ever before.

At the heart of the growth to which I have referred, and at the heart of today’s debate, are the historic inter-city routes, which provide a vital link between the towns and cities of the country. The impact of those routes is clearly significant: they provide links for communities, businesses and freight, and drive the country’s economy. They are important because they do exactly what a railway should do. They serve local communities, they serve people, and they serve markets. They move people to jobs, connect industry with its markets and suppliers, and connect regions with one another. The high capacity and reliability of inter-city networks is crucial.

As was pointed out by the hon. Member for Redcar, it is easy to think of inter-city services as merely connecting one end of a route to the other, but it is important to recognise the importance of intermediate stops and the rail networks that spread out from them. They provide the inter-regional and intra-regional connectivity that allows us to keep the country moving. Good inter-city rail services make it possible to live in one place and work in another, or to live in one place and socialise in another. They open up opportunities for employment throughout the country. We must therefore continue to invest in increasing, extending and enhancing services that are already improving rapidly during the current period of investment.

As many Members said, the inter-city network is all too often seen only in terms of connections to London. It must not be so. It is a driver of change in the economic geography of the country, decreasing journey times and improving links between all our nation’s major cities and regions, providing agglomeration benefits for business, increasing productivity and, importantly, providing access to new markets. The major cities of the north—Liverpool, Manchester, Leeds and Sheffield—will soon benefit from the huge investment in the northern hub, a transformative package of rail enhancements radiating from Manchester.

Investment needs to flow not only from the Government and Network Rail. We must continue to find ways to adapt our contracts and contacts with the private sector to ensure that we work in partnership with them, allowing them to bring real innovation through their own investments in projects that will genuinely benefit their passengers. The west coast main line is a great example of successful inter-city investment. Working in partnership with Network Rail, over £9 billion has been spent to modernise the route and improve journey times from 2008. That investment has been so successful that in order to meet the increased demands and expectations of passengers, further investment on the franchise has been necessary. Some 28,000 more seats per day were provided on the line by 106 new Pendolino carriages procured when the direct award was negotiated with Virgin at the end of 2012. To those who say no benefits come from direct awards, I say I suspect that the passengers who fill those 28,000 extra seats may well feel there is some benefit.

This Government are also investing a huge amount in electrification. Our rail investment strategy included our plans for the “electric spine.” This major investment links the core centres of population and economic activity in the west, east midlands and Yorkshire with the south of England. It will complete the full electrification of the midland main line out of London St Pancras and provide electrification of the lines from Nuneaton and Bedford to Oxford, Reading, Basingstoke and Southampton. All this will provide faster, more reliable services on many important strategic routes, and not just routes into London. This is massive investment from this Government on a scale not previously seen. By 2020, three quarters of the passenger miles travelled in England and Wales will be on electric trains, compared with 58% today and under 40% previously.

The Department has big plans for the inter-city East Coast and Great Western franchises. At the heart of revitalising those railways is the £5.8 billion intercity express programme, which will deliver 122 new state-of-the-art trains across those vital routes. The majority of the construction for those new trains will be carried out at Hitachi’s new factory in the north-east. This investment is great news for British manufacturing, creating more jobs for the area and strengthening the supply chain in the UK. This programme, together with the major investment in Thameslink in the south-east, will open up the opportunity for a cascade of rolling stock to other parts of the network, where, as we recognise, it is needed. This is all aimed at upgrading rolling stock and improving inter-city services.

As we have seen in recent weeks, regardless of the levels and types of investment, some situations will always prove challenging. The rail network’s performance and resilience has, with some exceptions, been sorely tested by the severe weather this autumn and winter and done reasonably well. There is no room for complacency, however, and I hear the points made by Members from the south-west about the spend on resilience and I am sure that will be borne out in Oxfordshire and a number of other places. The Government are determined to ensure we have the best resilience in place.

The Government’s commitment to investment in inter-city rail services cannot be in question. We must work with the industry to ensure investment is used to its maximum potential across the country and delivers real benefits for passengers and taxpayers. This significant investment in our inter-city routes will transform travel across the nation, and future capacity challenges must also be met. Only by committing to this new route and this investment—we are making the hard decisions and putting the economy right—can the Government continue to promise a programme of investment in inter-city routes unparalleled and unseen before.