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Sustainable Railways

I welcome the debate and the discussions that we are having. Before I go into my own speech, I want to put on record the fact that many of us spent years under the previous Government opposing rail privatisation and continual rail cutbacks and closures. Since the Labour Government came into power in 1997, there has been a pro-rail strategy as a whole, which is sometimes all too easily forgotten. We should remember the miserable period of privatisation and what went on before that. This debate is important because it gives us the opportunity to look towards a better rail strategy for the future. In that sense, I welcome the work of the Select Committee and what it is trying to do. A number of hon. Members—not from London—have spoken with great envy about investments in London. I can understand that, and I have sympathy with their position. The problem with the rail network goes back to its original development, which was essentially about building mainlines from London to the rest of the UK. It was compounded by the enormous Beeching cuts in the 1960s. Essentially, Richard Beeching called for the preservation of the most viable sections of the railway, which were London, the south-east and the south coast commuter belt, and implied that the rest of the country should go hang itself. Later, scorched earth policies were developed within Departments, which included the extreme proposal to close all railways north of Birmingham, and we are still living with that. I hope that the Minister will give us some good news on the issue of major investments in essential railway hubs, such as Birmingham, Manchester and Newcastle, and in overall rail developments. I have a couple of general points concerning the overall financial strategy for the railways. As I have said, I welcome investment in the rail network. It is important and has long been needed. Essentially, we are catching up on the levels of investment that have already happened in most western European economies. Germany, Belgium, the Netherlands and France have all invested far more in railways and have a far better rail system as a result. Nobody has adopted the model that we have in this country, which is one of pouring public money into the infrastructure and then franchising the rail operations out to particular companies, which them make large profits out of it. When they get into difficulties they come to us as the taxpayers' representatives to bail them out even more. I find it utterly astonishing that after having signed up for lucrative contracts, some of those companies have the brass neck to expect the public to bail them out during an economic downturn. As my hon. Friends said, now is the time to consider having public ownership of not just Network Rail but the franchises as they come up for renewal, so that we, as the public purse, get the benefits of them and are able to better control what they do. On 27 January, the Secretary of State was sent a letter, which was signed by all three rail unions—ASLEF, the National Union of Rail, Maritime and Transport Workers and the Transport Salaried Staffs Association. The unions talked about the loss of jobs in the railways. They called for the creation of jobs through major infrastructure projects, which was mentioned in the Prime Minister's jobs summit. The letter says:"““Against this background it is therefore astonishing that the rail industry, which is heavily dependent on taxpayers' subsidy and based on a number of contractual relationships with Government, is being allowed to announce widespread jobs losses and is making strategic decisions which will result in further job losses. It appears that in effect the Government is subsiding redundancies in almost every sector of the rail industry.””" The letter then outlines a number of concerns. It says that"““in the name of efficiency savings Network Rail are cutting the frequency of track inspections and routine signals maintenance.””" The unions said that they were deeply concerned with the reduction in renewals work and the cumulative effect that that would have. They said:"““We fear conditions are being created which could lead to another Hatfield, Potters Bar or Grayrigg.””" They then ask why, if they are putting all this public money into the railway system, they are not getting a return on it. Then there is the issue of the large increases in rail fares. The companies that are increasing fares to raise money for investment are also turning in quite astonishing profits. For example, Arriva's operating profit in the six months to June 2008 was £14.8 million, and its interim dividend was up 10 per cent. FirstGroup's profit in the six months up to September 2008 was £48 million, and its interim dividend was up 10 per cent. in which it paid out £55 million in dividends. Go-Ahead Group's operating profits in the 12 months to June 2008 was £77 million, and £48 million was paid out in dividends. National Express turned in £28 million profits in six months and paid out £40 million in dividends. Stagecoach turned in £31 million in profit and a 33 per cent. increase in dividends and £29 million was paid out in equity dividend at the time. Those are serious issues. If the rail companies are to be allowed to get away with putting up their fares to this level, we should be in a position to control what they do and the level of profit that they pay out, which is clearly not going into investment.