Rail Franchising

Will Quince Excerpts

Wednesday 10th January 2018 Commons Chamber

[Martin Vickers]

Perhaps they are a little more free-market and capitalist-minded over in Germany.

At present, competition is for the franchise; what we want is more competition in the running of services, and one way we can achieve that is through open access operators. Hull Trains and Grand Central both run on the east coast main line and provide services to areas that in the main do not get a service from the main franchise holder. Indeed, I understand that Grand Central will shortly put forward a proposal for direct trains from King’s Cross through to Scunthorpe, Grimsby and Cleethorpes. I hope that the Minister will be supportive of that, because it would be a great boost to the local economy.

[Will Quince (Colchester) (Con)]

My hon. Friend has mentioned open access, and I agree with the points he is making. Does he agree that open access tends to produce a higher satisfaction rate among passengers and rail users?

[Martin Vickers]

My hon. Friend is absolutely right. Hull Trains and Grand Central both get very high satisfaction ratings.

The House should take note of last year’s Transport Committee report on rail franchising. It states:

“Open access has been a success, albeit on a limited scale to date. The balance of evidence points to potential benefits in open access having an expanded role on long distance routes.”

It goes on to state:

“Reforms are needed if open access is to be expanded on the network. We recommend that the Department and the ORR work together, as they develop the financial framework for the railways over Control Period 6”.

I hope that the new Minister will make it one of his priorities to look more closely into introducing open access operations on to the railway, in order to provide genuine competition and to improve services, particularly on those routes that are struggling at the moment.

--- Later in debate ---

[Will Quince (Colchester) (Con)]

Thank you, Madam Deputy Speaker, for calling me to speak in this debate. It is a pleasure to follow the hon. Member for Garston and Halewood (Maria Eagle) despite my not agreeing with what she had to say. The cost of an annual ticket from Colchester to London is now £5,104 and I am in no doubt that that is a huge amount of money for my constituents. However, despite what is claimed by the Opposition, including the hon. Lady, the fares are not lining the pockets of rail companies. For every £1 spent on fares, 97p goes on the running and improvement of our railways. However, when our constituents pay such amounts to travel to work they need to see value for money.

To be fair, passengers on Abellio, which runs the service to Colchester, will see real benefits from the new franchise. Over 1,000 brand-new carriages are coming into service from next year, at a cost of over £1 billion—I assume that that is another £1 billion that Labour would borrow. There will be free wi-fi for all passengers at stations and on trains. Season ticket holders and those who buy their tickets in advance will benefit from automatic Delay Repay. All those things will make a massive difference, and I have only one ask for the Department. The new 15-minute threshold for Delay Repay was announced after Abellio was awarded the franchise, so as things stand it is likely that it will not be introduced until a new franchise is awarded in 2025. My constituents, Abellio and I would like to see that implemented earlier, so I ask the Department and the new Minister, my hon. Friend the Member for Orpington (Joseph Johnson), whom I welcome to his place, to see whether they can make it happen as soon as possible.

However, I will not stand here and pretend that the current franchising system is perfect. We still have issues with competition and with the number of companies coming forward.

[Huw Merriman]

On competition, my hon. Friend may remember a Transport Committee report in which we found that the same big companies were bidding and that there was not enough competition.

[Will Quince]

I have served on the Transport Committee with my hon. Friend for two years. He is right that, in the invitation to tender for our most recent franchise on the Great Eastern main line, the three companies that put in a bid were Abellio, the existing franchise holder; National Express, which had had the franchise taken away when it was given to Abellio; and FirstGroup, which had had the franchise taken away when it was given to National Express. He is right that we need to encourage more bids.

Large franchises mean that multimillion-pound bonds are put up by companies that are looking to run the services, and there is a lot of risk even for large companies. We should consider creating smaller franchises that carry less risk, thereby attracting more interest and more bids, delivering more competition and, ultimately, better value for taxpayers’ money.

[Lloyd Russell-Moyle]

Would allowing councils, local authorities and other public bodies to bid for franchises not be a good way of ensuring more competition, and competition that people can control?

[Will Quince]

The honest answer is most likely not, but I agree that we need more competition. I agree with my hon. Friend the Member for Bexhill and Battle (Huw Merriman) that we need more open access.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

My hon. Friend is making a fine point. I welcome more competition, and I would welcome the involvement of groups from the charitable and non-profit sectors. The idea that the public sector should underwrite risk with taxpayers’ money is what we are moving away from.

[Will Quince]

My hon. Friend makes an eloquent point.

[Sandy Martin (Ipswich) (Lab)]

Will the hon. Gentleman give way?

[Will Quince]

I am sorry, but time is limited and I have taken enough interventions.

My hon. Friend the Member for Bexhill and Battle is right that we need to consider more open access in which two or more companies operate on the same franchise, where the line can support it. I appreciate that many lines cannot support such open access, and the Great Eastern main line is a prime example of where it would be very difficult. Where we do have open access, operators tend to have higher satisfaction ratings, which proves that competition can offer benefits for passengers.

Ticketing is another thing that could be improved. I would like season tickets to take inspiration from the fare capping on the London underground. Buying an annual ticket, as opposed to a monthly ticket, offers a substantial discount. If a person’s employer does not offer a season ticket loan, it can be difficult for them to afford a one-off payment of often thousands of pounds—in the case of Colchester to London, about £5,000. Passengers should not pay less just because they can afford such a large amount in one go, so I urge the Government to look into capping season ticket travel on new franchises so that passengers will never pay more than the cost of an annual ticket in a single year. That would instantly save commuters hundreds of pounds, and it would be made easier by the implementation of smart ticketing, which we are seeing rolled out across franchises.

Our rail network has undergone an extraordinary transformation since privatisation. Passenger journeys, down a third between 1960 and 1995, have doubled. We have one of the safest railway networks in Europe. The focus must now be on doubling down on competition and value for money as part of the franchising process, and not on taking away all competition and returning to the days of British Rail. I encourage the Government to set a 40-year vision to transform our railway, rather than listening to the Opposition’s plans for returning our railway to the state last seen 40 years ago.

--- Later in debate ---

[Huw Merriman (Bexhill and Battle) (Con)]

It is a great pleasure to follow the hon. Member for Wigan (Lisa Nandy).

This morning, on my daily commute to this place—I am one of the few people who are fortunate enough to be able to commute here from East Sussex—I walked through London Bridge station, which has caused me and many of my constituents enormous difficulties because it has been rebuilt and its tracks reconstructed. It now looks absolutely fantastic and is a shining example of the £40 billion investment that the Government have put into the railways and the difference that that has made.

I wish to talk up our railways and their success. Let us remember that since 1997, under the current Administration and the previous Labour Administration, the number of passengers on our railways has doubled. The rail system now largely pays for itself; it does not need the £2 billion a year taxpayer subsidy that British Rail took to not run things properly. When we compare our rail system to those in Europe, we see that we have the second safest railway after Ireland; that we have the second best-performing railway in terms of passenger feedback, second only to Finland; that we use our rail system over 60% more than the European average; and that we have put more investment into our railways than any other EU country. We should talk up the rail system’s success, because not only is there all that, but it employs 250,000 people, releases about £11 billion of costs that would otherwise go on congestion charging, reduces carbon dioxide emissions by 8.4 million tonnes, and adds £10 billion to our gross value added. So we should all talk about the success of our rail story.

Of course, though, there are challenges. We have certainly seen challenges with the Southern network. We have really suffered with strikes and a poorly performing operator, and that has been laid bare today. Nevertheless, we should not forget that the unionisation of the rail network has caused enormous problems. It should be well remembered that the same train drivers who have now pledged to drive the trains that they said were not safe have taken a 28.5% pay rise. That is a much greater pay rise than the passengers who are paying for their rail tickets each year got. All Members need to recognise that costs such as that result in our passengers paying more and more.

Let us give something back to the passengers. At the moment, Network Rail has to compensate rail operators for any delays it causes. Only a third of the passengers who experience those same delays claim their compensation, so train operators are keeping the money. I want the train operators to be required to bank that money.

[Will Quince]

Is my hon. Friend making the point that I suspect he is going to make about automatic Delay Repay being included in future franchise agreements?

[Huw Merriman]

I am indeed; I thank my hon. Friend for helping me to finish my sentence. The rail operators should be required to bank that money and put it in a pot so that it can be spent only on new technology for trains. That technology would mean that everybody would be required to tap in and out of their train journey, and if by the time they got to their destination they were more than 15 or 30 minutes late, they could have the compensation credited to their bank account when they tapped out. In this day and age, there is no need for passengers to go through the timely, costly and bureaucratic exercise of claiming, which is why they currently do not claim. I have introduced a private Member’s Bill, which I hope will be given its Second Reading at the end of March, and I would like the Minister to get behind it. I believe that the technology does exist and that, with more will, the train operators could put it in place. That would give more back to the passenger.

It is all well and good to talk about the public good, and I recognise a lot of Network Rail’s good work, but it has also been responsible for a large proportion of the delays for which the train operators have taken the flack. It is time to do more than just stick with what we have; we should make all the track the responsibility of the train operators. We should also question whether some stations should be transferred out of Network Rail’s control.