---

Rail Fares and Franchises

Is the Minister telling us that it needs a pyramid of civil servants in the Department, rising up to senior civil servants writing timetables, for us to be sure that as we jump off the train somewhere on the network, we can jump on to another? Should we not say that those closest to the passengers inside franchises with minimum specified details could deliver as well and as effectively? I do not suggest anything wholly new; that model worked and was in place for many years. It was put in place by some of the Minister's predecessors. My lesser specification is an acknowledgement that that system works and has been seen to work. The Government's role in buying rolling stock should be radically scaled back. It makes no sense for us to pretend that Ministers or civil servants should have day-to-day control over moving new rolling stock around. That degree of detailed involvement is slowing up the delivery of new capacity and driving up costs for the taxpayer and the fare payer. We have witnessed the chaos surrounding the procurement of what was promised to be 1,300 carriages—although it is now generally accepted that there are 978—and the subsequent cancellation and moving around of the InterCity express process. There has been the failure to see the Thameslink process reach a decision, and the failure of the cascade to deliver trains, particularly to Northern Rail where the franchise suffers from carriages that are in excess of 25 years old. Three weeks ago in this Chamber we debated Thameslink and I am sure that the Minister is almost ready to sign off the letter that he promised in answer to a number of questions. However, in conjunction with what was said in the Transport Committee, perhaps he will answer a few more points this afternoon, or again promise to deliver a letter. Will he confirm that the InterCity express contract will be signed on time? Will he confirm that, as he announced in the earlier debate, the Thameslink upgrade is going to be delayed for a year? Should we assume that the train procurement contract is therefore also going to be delayed for a year? Will he confirm how many of the 1,300 carriages have been ordered and how many are in production? How many have been delivered and when will they be in service? When can Northern Rail expect the cascade of trains? As in the previous debate, I will give the Minister the opportunity to confirm whether the Government are postponing the decision on or have stopped the order of 42 extra Pendolino trains, and that we will not see an increase from trains with nine cars to those with 11 cars on the west coast main line. I hope that the Minister will be able to answer those questions. The Transport Committee report touches on rolling stock and procurement and for many people, particularly passengers, the Government's rolling stock procurement programme seems to have come to a halt or gone into chaos. That has a direct impact on passengers. I look forward to the Minister enlightening us with those details in a short period of time. I believe that franchise agreements should be more flexible and less prescriptive. They should allow more decisions in the rail industry to be taken by rail professionals, subject to a more powerful consumer-facing regulator. That should improve the ability of the rail industry to react to capacity needs, plan for the future and deliver value for money for the fare payer. My third point is that if the reason for lengthening franchises is to improve services, enhance capacity and incentivise operators to invest in the railways, we must ensure that not only is there value for money, but that any investment enhances capacity. That brings us to the issue of whether TOCs should be able to invest in rail infrastructure. At the moment, that area of responsibility is solely for Network Rail. The problem that we often hear about from passenger groups and operators is that Network Rail's culture can prevent what are relatively small and modest improvements to stations—such as short works outside stations or improvements to line capacity—from going ahead. Often, an operator might identify a platform that needs lengthening and be prepared to invest in that and work with Network Rail, but finds that Network Rail has not prioritised that issue. We believe that contracts and funding for smaller scale capacity enhancement projects, which are currently dealt with by Network Rail, should be opened up to other providers, including—although not exclusively— passenger and freight operators, on the basis that those investments will enhance capacity. We would encourage rail franchise bids to contain projects of that type. Joint bids for funding by Network Rail and local passenger and freight operators would also be welcome. Network Rail says that it is receptive to the idea, and I look forward to that happening. It would also be important to amend Network Rail's licence to include a specific duty to co-operate with operators and other entities carrying out those sorts of capacity enhancements. The advantages of that are clear. It would speed up the construction of much needed capacity enhancements, improve efficiency and provide a cost comparison against the bulk of Network Rail's current functions. It would provide useful benchmarks against which to measure the whole of the infrastructure industry in this country, and it would encourage passenger and freight operators to invest in important capacity enhancements. The last part of the Committee's report deals with National Express. Reading from the evidence-taking sessions, I want to point out a couple of issues that are particularly important. With the benefit of hindsight, the comments made by the Secretary of State to the Committee appear to suggest that the Committee was not given the fullest evidence about the state of the east coast franchise. On 17 June, and again on 15 July, the Committee was told that the Secretary of State had no knowledge about the severity of the problems on the east coast main line. However, freedom of information requests have revealed that not only was the Secretary of State aware of the problems with the franchise when he went before the Committee, but that he, or one of his predecessors, had attempted to negotiate a management contract with National Express. That is clear from the evidence in the freedom of information request, and the letter written by Mr. Ray O'Toole to the Government on 21 April 2009, which stated that although National Express was not in breach of any term of the franchise, it would not be able to continue with that franchise. It is clear from details of a meeting between the Secretary of State, Mr. Bowker and Mr. O'Toole on 9 June 2009, which were surrendered under the Freedom of Information Act, that Network Rail had no viable alternative but to withdraw from the franchise from 1 January 2010. Both 21 April and 9 June were prior to 17 June and 15 July, when the Committee was given evidence. Page 7 of the Committee's report states that the Government should""hold firm on its commitment not to re-negotiate franchising contracts"," and the Government reaffirmed that commitment in their response to the report. Ministers are on record as saying that they do not negotiate, but the Government were negotiating. As further FOI requests show, the previous Secretary of State put in place negotiations between National Express and the Department for Transport about a possible management contract. To be kind, the evidence given to the Committee was far from the very fullest; FOI requests have subsequently shown that certain elements, which should have been disclosed to the Committee, were not. That is an important part of the debate, and it needs to be raised this afternoon. In paragraph 16 of the report, the Committee states:""Now is an ideal opportunity to keep the lucrative East Coast franchise in the public sector."" It will not surprise the Chairman of the Select Committee to know that although I agree with much of her report, that is one thing that I emphatically reject. At a time when the newly nationalised East Coast company, after only three months in existence, has the worst punctuality and reliability figures, I would hope that the evidence is on my side. The Committee concludes that there are underlying problems with the franchising model, and everybody in this Chamber can agree with that conclusion.