PARLIAMENTARY DEBATE
Rail Review: Terms of Reference - 11 October 2018 (Commons/Commons Chamber)
Debate Detail
For a generation before the Railways Act 1993, British Rail was in seemingly terminal decline. Passenger numbers were falling, stations were closing and short-term decisions were being made at the expense of the travelling public. The 1993 Act brought investment, new services and better reliability. A quarter of a century later, the situation is very different. Our UK rail network is at capacity in commuter areas, with many of the most intensively used lines in Europe. On many routes, it is simply not possible to squeeze more trains on to the network. As we now know, the railways were not in fact in terminal decline; they had been starved of investment. The period of privatisation has reversed the decades of decline and heralded the fastest expansion of our railways since they were built by the Victorians. It has also delivered billions of pounds of investment and radically improved safety. Our railways are now among the safest in the world.
Nevertheless, that welcome expansion has brought new, acute challenges. On major commuter routes throughout the country, the trains are packed each morning. Network Rail, which represents a third of the industry, based on spend, is nationalised. It is also responsible for more than half the daily disruption. But no matter whether it is a failure of the track, a fault with a train or a customer incident, it is because there is little resilience or margin for error in the system that, when things go wrong, the knock-on effect can last for hours. The problem is compounded because the railway is run by multiple players without clear lines of accountability.
When I took over as Secretary of State for Transport in 2016, I said that change was needed and started the process of bringing together the operation of the tracks and trains, which was split up in the 1990s so that we had single operational teams. That process is helping to overcome problems caused by fragmentation in some areas and creating a railway that is more responsive to passenger needs. I also said that that change needed to be evolutionary and not revolutionary, to avoid destabilising the industry, so we have started to shape alliances between the teams running trains and the teams running track to create a more joined-up and customer-focused structure.
The difficulties with the introduction of the new timetable over the summer and the problems that we are experiencing with many major investment projects has convinced me that the process of evolution is no longer enough. The collapse of Virgin Trains East Coast has also highlighted the need for radical change. Put simply, we need that change to ensure that the investment going into the railways from both the Government and the private sector results in better services for passengers and delivers the improved reliability, better trains, extra seats and more-frequent services that we all want to see.
Last month, my Department announced a root-and-branch review of how the rail industry works. Keith Williams, the deputy chairman of John Lewis & Partners and former chief executive of British Airways, is to lead the work, and I expect him to make ambitious recommendations for reform to ensure that our rail network produces even greater benefits for passengers and continues to support a stronger, fairer economy. Keith Williams’ expertise in driving customer service excellence and workforce engagement will be incredibly valuable as we reform the rail industry to become more passenger focused.
Keith will be assisted by an independent expert panel from throughout the country, with expertise in rail, business and customer service. The panel will ensure that the review thinks boldly and creatively, challenging received wisdom, to ensure that its recommendations can deliver the stability and improvements that rail passengers deserve. It will be supported by a dedicated secretariat and will now begin to engage with the industry, passengers, regional and business representatives, and others throughout the country, drawing on their expertise, insights and experiences to inform the review.
The review will consider all parts of the rail industry, from the current franchising system and industry structures to accountability and value-for-money for passengers and taxpayers. It will consider further devolution and the needs of rail freight operators and will particularly take into account the final report of Professor Stephen Glaister on the May 2018 network disruption, which is due at the end of the year and to which I shall turn in a moment.
When we establish what we think is the right approach to mend our railways, it must be properly tested and scrutinised independently. I have today published the rail review’s terms of reference and placed copies in the Libraries of both Houses, together with the names of the review’s independent panel. The review will build a rigorous and comprehensive evidence base, and it will make recommendations regarding the most appropriate organisational and commercial framework for the sector that delivers our vision for a world-class railway. The private sector has an important part to play in shaping the future of the industry, but it is important that the review considers the right balance of public and private sector involvement.
Some have called for the return to a national, state-run monopoly, and for us to go back to the days of British Rail. There is an expectation that taking hundreds of millions of pounds of debt on to the Government books will magically resolve every problem. This fails to recognise that many of the problems that customers faced this year were down to the nationalised part of the railways. It also creates the false sense that a Government-controlled rebrand would somehow make every train work on time. Those who make this argument fail to tell passengers that the much-needed investment that is taking place today would be at risk, and that taxpayers’ money would be diverted from public services to subsidise losses.
The review will look at how the railway is organised to deliver for passengers. It will look forensically at the different options, and then make recommendations on what will best deliver results in different areas of the country. In autumn 2019, the review will conclude with a White Paper, which will set out its findings, and explain how we will deliver reform. We expect reform to begin from 2020, so passengers will see benefits before the next election.
I have commuted for most of my career—over 35 years —and I still do. I am proud to be in a Government who are supporting a major programme of investment in rail, from Thameslink to the TransPennine upgrade, with new trains in the north, south, east and west. However, we cannot stand by while the current industry structure struggles to deliver the improvements that this investment should be generating. So it is time for change.
The review will not prevent us taking every opportunity in the short term to improve passenger experiences. That is our focus and that is why we are committed to an investment of £48 billion in the railways over the next five years.
Professor Stephen Glaister’s interim report has provided us with an accurate account of the series of mistakes and complex issues across the rail industry that led to the unacceptable disruption that passengers experienced earlier this year. We know that, in the north, delays to infrastructure upgrades, beyond the control of Network Rail, were a major factor in the resulting disruption. Richard George, the former head of transport at the 2012 Olympics, is now working with the industry and Transport for the North to look at any underlying performance issues so that they can be properly addressed.
In the four weeks ending 15 September, in the Northern rail area, more than 85% of services met their punctuality targets; the highest level delivered for Northern rail’s passengers since the timetable introduction in May. Northern is now running 99% of the May timetable and is running more trains than were operating in that region before the May timetable. We are working with Transport for the North and the industry to plan further uplifts in services, while prioritising reliability.
In the coming months, passengers across the north will begin to benefit from the brand new trains that were unveiled last week. The first trains are now operating in parts of the Northern rail area. There will be more than 2,000 extra services a week. Every single Northern and TransPennine Express train will be brand new or refurbished as new, and every single one of the old Pacer trains will be gone.
I now want to turn to Govia Thameslink Railway, which has new leadership. The reliability of its services has improved significantly: since the introduction of the interim timetable in July, 85% of its trains arrived at their station on time, and that performance has been getting better. In addition, in the past week, the first of the new Class 717 trains that will run on its Great Northern routes began testing. GTR is now operating 94% of the weekday timetable that it intended to run from 20 May, including, crucially, all the services in the busiest peak hours. By December, it plans to introduce all planned off-peak services, but there is much more work to do to improve performance, particularly at weekends.
Since the disruption in May, there has been intense scrutiny from the Government and the regulator, the Office of Rail and Road, on what went wrong and why. GTR must take its fair share of the responsibility; its performance was below what we expect from our rail operators. Officials in my Department are now taking action to finalise how we will hold GTR to account for the disruption. My hon. Friend the rail Minister will keep the House updated.
We need now to move forward and take action on these issues, particularly after the disruption that passengers experienced. We need to help passengers plan ahead; to ensure that we do everything we can to reduce delays and cancellations; and to ensure that we properly compensate disrupted fare payers. The review that I have announced today is very necessary. It will continue the approach and ensure that the rail industry is focused on putting the passenger first and that we maximise the benefits of this investment. The lesson of this summer is that it is now time for change and we will deliver that change.
The Department for Transport’s press releases are very fond of exaggerated claims, historical or otherwise, so the froth around the Secretary of State’s rail review announcement was to be expected. We were told that it would be “far-reaching”, “sweeping” and “root and branch”. Really? I am surprised that the Department did not say that it would be the most comprehensive rail review since the Victorian era, or since the time of Brunel, as it usually does. These absurd and ridiculous claims undermine rail policy debate and belie a tragic reality. His review is not far-reaching, sweeping or root and branch. It is none of those things. It is a predetermined prevarication and a way for him to cover up his disastrous failure to run the railway properly and to kick it into the long grass for a year. It offers precisely nothing to the millions of rail passengers who have endured months of misery since the timetabling crisis in May.
A Government review is one of the oldest tricks in the political book. It is usually a good way of kicking a difficult decision into the long grass, so fair play to him—or was it the Prime Minister’s idea? Under the Conservatives, over the past eight years, rail reviews have practically come along with the frequency of buses—McNulty, Brown, Shaw, Hendy, Bowe, Laidlaw, and Hansford. I could go on.
Is it not the truth that we do not need another review to tell us what is wrong with the railway? Why do we need a rail outsider to tell us what we know already? Is this the expertise that we need? Also, can the Secretary of State tell us how many days a month Keith Williams will contribute to the review? My sources tell me one day a month. Hardly worth the bother, is it? The fact that the permanent secretary at the Department for Transport was desperately ringing around retired rail executives urging them to join his review panel tells us something.
Does not this show that the Government are out of touch with the rail industry? What is more, the rail industry has called for public ownership to be considered as part of the review—it is the Rail Delivery Group if the Secretary of State wants the reference. This review has no credibility in the rail industry.
I know that the Minister told a conference fringe meeting in Birmingham last week that rail franchising is broken—I am pleased that we can both agree on something, but we differ on how to move forward. He thinks that bolting together operations and infrastructure into individual partnerships on the east coast or Southeastern is the way forward for rail. In fact, his review is simply a 12-month prelude to justifying this proposal, which no one in the rail industry takes seriously or thinks is workable. It is ironic that, as an ardent Brexiteer, he is doing so much to perpetuate a rail operation system that enriches those foreign Governments who own the majority of rail franchises. His review offers nothing for the private UK supply side businesses, which are the backbone of British industry. Will the review consider the roles of the DFT or the ORR? Practically everything starts or finishes with the Department. Will he suspend all current franchise competitions while this review is underway—Southeastern, East Midlands and west coast? Will he come back to the Dispatch Box and confirm that he will now reward the failure of Govia by re-letting the Southeastern contract to it in the coming weeks?
The rail industry and rail passengers have had a battering this year with failed franchises, a timetabling crisis and cuts to promised investment. There is an ongoing lack of leadership. Will not this 12-month review create even more paralysis, confusion and uncertainty when rail desperately needs stability? It is unacceptable that passengers on GTR and Northern face further inflation-busting fare rises in January. Will the Secretary of State support Labour’s call for a fare freeze on those routes—in addition to compensation?
We need to put the railway back together as a unified whole. The British public are crying out for an accountable railway. They are desperate for a system that is simpler and more efficient. Above all, our railways need to be run in public ownership for the public interest, and his review will do none of those things.
The hon. Gentleman asked about franchises. As he knows I announced that information three weeks ago. I have taken the view that I do not want to remove the possibility of passenger benefits in the short-term—for example, the longer trains that I want to see on the Southeastern franchise. Therefore, I do not intend to halt a number of the franchises, but I have announced that I will not be going ahead with CrossCountry. Finally, he asked about costs in the industry. When I hear Labour Members line up with the consumer and insist that rail pay increases should be in line with the same inflation measure that everybody else uses, I will take them seriously on costs in the industry. But they do not; all they do is line up with the trade unions.
How are we going to get oversight of the rail experts who are needed to sit on the panel? After hearing the statement, I think that we can safely say that the term “rail expert” does not apply to the Secretary of State. Yet again, he argues that the new investment that came in after privatisation was somehow magically due to privatisation, not a change in Government rules that allowed private companies to borrow. Yet again, he blames Network Rail—a body that he is responsible for—and continues to duck his own culpability in the timetable fiasco. And then, in this statement, he talks about the absence of clear lines of accountability; I think we know who has responsibility.
With regards to terms of reference, we need to look at the value for money of the subsidy in the current system—£2.3 billion in 2016-17—as well as the value of public sector bids, and how foreign state-owned companies can come to the UK and make money to reinvest in their own national railways. We also need to look at the devolution to Scotland, especially as Network Rail is too large as it is; the performance of the Department for Transport, especially with regards to the tendering process and the mismanagement of the east coast main line tender; the performance of direct awards and the cost to the taxpayer; and the HS2 and Crossrail delays.
Will the Secretary of State stand up and rule out the privatisation of Network Rail? He seems to keep saying that the nationalisation of Network Rail is the problem. We do not want a repeat of the Tory Railtrack failure by privatising the state infrastructure. Will he rule out privatisation today?
The review will look comprehensively at the structure of the industry. It is designed to deliver genuine change. I do not expect the industry to emerge from this review in the same shape that it is in today. It is important that we find a structure that works for the public and passengers, but I do not intend to transfer the ownership of Network Rail to the private sector.
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