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Rail Fares and Franchises

I am astonished that the hon. Gentleman can reach that conclusion from those exchanges, because it is not the one I would have reached. I certainly do not believe he should put that interpretation on what the Secretary of State intends. Moving on, there remains a strong argument for sharing some measures of wider economic risk with franchisees. Train operators have a number of levers to increase revenues, but they cannot control the economy. We are considering improving the mechanisms within the contract that protect train operators from the effects of recession and ensure operators do not make windfall profits in good times, which was the point the hon. Gentleman made. The recently-let South Central franchise is a good example of a passenger-focused franchise. Southern has announced an investment of £28 million to improve facilities at stations. That investment will meet the contractual requirement to refurbish 34 stations, and will provide new cycle and car park spaces. More passenger-focused franchises will become the norm. We have given Passenger Focus an enhanced role within the specification process, which emphasises the importance that the Department places on passenger needs. I hope that addresses the Select Committee Chair's point. Train operators continue to feel the effects of the economic slowdown. We naturally try to take an informed view about what might happen to franchisees. Franchise agreements require operators regularly to supply the Department with detailed and forward-looking financial information, including business plans and rolling forecasts. Speculation about whether franchisees might default would be improper, and would destabilise the market. Ultimately, we cannot be certain what actions a parent group or franchisee might take until we are notified of a default. The hon. Member for Wimbledon (Stephen Hammond) sought to wring the last available point of political benefit out of his freedom of information inquiries, but I think he has misunderstood what the then Secretary of State, my right hon. Friend the Member for Ashfield (Mr. Hoon), was saying on 1 May 2009 in looking at a management contract. There was certainly no commitment to put a management contract in place; it is just one of the options for maintaining services and protecting passengers when we know that a franchise might be moving towards potential financial difficulties. If a management contract had been put in place, it would have been very short term and it would have been done to allow refranchising to take place—nothing more or less than that. The hon. Gentleman has misunderstood what was happening.