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Greater Anglia Rail Franchise

Volume 408: debated on Friday 11 July 2003

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Motion made, and Question proposed, That this House do now adjourn.— [Margaret Moran.]

2.38 pm

My previous dealings with the Minister suggest that we agree about very little, but I have confidence that we shall be in complete agreement on my opening remarks.

The privatisation of the railways by the Conservative Government was a disaster. It was a shambles. Public assets were sold off with gay abandon, no regard to their worth and total disregard for the well-being of the railway industry and its passengers.

A once proud industry, which generations of dedicated railway men and women built up over many decades, was split asunder and fragmented. Where once was unity of purpose, there are now 101 or so companies. There is no longer joined-up thinking in service provision. The same applies to maintenance; there is a belief that safety standards are not what they used to be.

Each company apparently has an interest in only its compartment of the industry, with a prime objective of securing dividends for shareholders, ahead of the public service ethos that existed hitherto.

We were told that privatisation would bring sweeping benefits to the industry and to the travelling public. I have seen no sign of them. If I compare the publicly-owned British Rail of the early 1970s—when I was a daily commuter from Colchester to London—with the rail service of today, I can see that it has not got any better in those 30-plus years. I use the train to travel between my Colchester constituency and London. I am a politician who practises what he preaches. I believe in public transport and I use it—unlike most Ministers, it has to be said. But are the railways a truly public service? The train operating companies are owned by shareholders, not by the public through state or local authority ownership. They are private companies that the public use, in the same way that Tesco and Sainsbury are private companies whose shops are used by the public. So can we please drop the misnomer "public transport"? The accurate description is "transport for public use".

Many of us, including the real Labour MPs, would like to see the railways—and our once-proud municipal bus transport undertakings, for that matter—brought back into public ownership, at which point they could again be truthfully described as public transport. Alas, six years down the line, there is no indication that new Labour has that as an objective. The Government's only solution to what they acknowledge is a problem is to reduce the number of train operating companies. How that will galvanise the industry and provide a better service is not clear, but the Government want to give the impression that they are doing something.

So we are faced with the continuation of a privatised railway. At this point I will admit—perhaps uniquely, given what I hear is happening elsewhere in the country—that for the people living in the areas centred on Colchester and Ipswich there has been one advantage from privatisation: namely, that it has resulted in more services from two companies, First Great Eastern and Anglia, both of which serve that part of East Anglia. But will this be the case when, instead of two competing privately owned companies, there is a one-company private monopoly? A public monopoly is one thing, but I suggest that a private monopoly is not in the public interest.

How long will it be before rationalisation—a euphemism for cuts—results in a reduction in the number of services between Colchester and London? Can the Minister give a cast-iron guarantee today that the number of trains running from my town into the capital will not be reduced? If not, what possible advantage is there for rail customers in my constituency if the only benefit that might have accrued from privatisation is lost? Accepting, albeit reluctantly, that public ownership of the railways is not on the Government's agenda, we are simply left with a dog's breakfast being served up differently.

Like it or not, the good people of East Anglia are to be served by one privatised monopoly railway company. However, the public in general, and rail passengers in particular, are not being allowed any say in who that company should be—quite the reverse, in fact. Although the public have indicated overwhelmingly their desire for one of the existing companies to be considered to operate the new Greater Anglia franchise, their views have been arrogantly ignored by the Strategic Rail Authority, a quango operating without any remit to provide the public, whose interests it purports to serve, with an objective assessment of what it does and its reasons for doing it.

Can the Minister say how much influence, if any, the Department for Transport has on the Strategic Rail Authority? To whom is the SRA answerable? Is there a democratic process that requires it to operate within the democratic framework of the United Kingdom when it comes to the parcelling out of railway franchises? Or are those who run the SRA a law unto themselves, as appears to be the case? Is the Minister entirely satisfied that the SRA has complied with the spirit and letter of the directions and guidance given by the Secretary of State—in particular, section 6.10, which covers value for money, and section 10.5, which deals with the criteria for replacement franchises?

I hold no brief for First Great Eastern. I am not saying that, as the largest of the three operating companies currently running trains in the region, it should automatically be given the new single Greater Anglia franchise. But what I and thousands of other rail users are saying is that it is completely unfair that the SRA has banished First Great Eastern from the shortlist. Everyone is asking why that should be the case. Perhaps the Minister can enlighten us; the Strategic Rail Authority has refused to do so.

First Great Eastern is the best-performing train operator in London and the south-east. It is also the only franchise in the region not receiving public support, having turned a £40 million a year subsidy into a £10 million a year premium to the Government. The latest report from the London Transport Users Committee shows that First Great Eastern achieved the best punctuality and reliability score of all operators running services to London.

The SRA has refused to give verifiable reasons for excluding First Great Eastern. That has prompted some to ponder whether the SRA decision has more to do with the settling of old scores by senior members of the SRA against First Great Eastern than with what is best for a public railway service in the east of England. I am told that the SRA decision is without precedent. Can the Minister confirm that? We are not talking here of another Connex.

A MORI survey revealed that only 3 per cent. of passengers support the SRA's decision to exclude First Great Eastern from the Greater Anglia shortlist. The same survey shows that support for First Great Eastern services is twice the national level for rail franchises. The rail passengers committee for eastern England, which, as the Minister knows, is part of
"the statutory watchdog protecting and promoting the interests of rail passengers throughout Great Britain"
is appalled at the dumping of First Great Eastern.

The RPC's eastern England secretary, Mr. Guy Dangerfield, told me in a letter:
"The Committee publicly expressed its surprise that FirstGroup did not make the short-list for the Greater Anglia franchise. Our Chairman, Derek Langslow, wrote to the Chairman of the Strategic Rail Authority on 1 May asking about the basis on which the decision to take forward only three bidders was reached.
So far the SRA has declined to say more than that the process is commercially confidential and will remain so.
Our view is that, while we don't expect to see the answers, provided to the SRA by prospective bidders, in an open and accountable world we cannot see why the questionnaire itself, together with details about the weighting applied to the questions, is a commercially confidential document."
Mr Dangerfield added:
"We remain perplexed that FirstGroup, a company of financial strength owning a demonstrably competent subsidiary like First Great Eastern, is not on the short-list."
Does the Minister agree that because the
"statutory watchdog protecting and promoting the interests of rail passengers"
has made such a strong statement, perhaps there is something seriously fishy about the whole situation?

The Federation of North Essex Rail User Groups—representing rail users from Colchester, Clacton, Manningtree, Frinton, Walton and Harwich—is particularly scathing about the SRA. A press release issued on 13 June said that the different groups
"are so angry that they have combined to make this joint statement to the media."
This is what they had to say:

"We deplore the arrogant way that the Strategic Rail Authority has acted in relation to rail services between London Liverpool Street, Colchester, Manningtree and Ipswich, and between Colchester and Clacton, Frinton and Walton by:—
Sacking a highly competent rail operator (First Group) without giving any reasons or explanations for such a bizarre decision.
Short-listing three operators that in at least two cases, either lack experience in some areas or are plainly known to be weak in train punctuality or operations.
Refusing to answer any correspondence on the issue with anything other than a meaningless response that says they will not change their decision. The answer has been issued to all who have written to them regardless of status and position.
Taking over timetable planning and changing the timetable without consultation with any of the current or future train operators or the established rail user groups."

A signatory to the federation's press release is Mr Graham Male, chairman of the Colchester rail users. He goes on to make further complaints, including that the SRA's strategy
"would mean that average journey times would be longer than those achieved by steam trains in the 1950s."
What a damning indictment of the SRA.

I was told by one First Great Eastern employee:
"There is widespread concern at First being excluded—from people who smelled an injustice. Many local authorities made strong protests. There was obviously cross-party political support."
I welcome the hon. Member for Braintree (Mr. Hurst) to the Chamber. The employee continued:
"We received well over 500 letters and e-mails and I suspect the SRA got more."
Surely the Minister must accept that the travelling public, and all who work for First Great Eastern, are fully justified in demanding that the quango SRA respond to the best interests of railway users by including First Great Eastern on the shortlist. Surely that would be natural justice.

Between my seeking the debate and securing it, there has been a legal challenge, the first round of which was a victory in the name of First Great Eastern. Astonishingly, its parent company threw in the towel. That must be the first recorded case in which someone on the brink of a legal victory has capitulated. Why did that happen? It does not need a Sherlock Holmes to find the answer. It is blindingly obvious from what the managing director of First Great Eastern, Mr. Dave Kaye, told me in a letter dated 27 June:
"Having exhausted the various options open to us, we wish to withdraw with grace and, as First has received assurances from the SRA that it is still a valued participant in the railway industry, move on to new challenges."
New challenges? Assurances? Nudge nudge, wink wink!

Quite simply, the SRA has told the parent company of First Great Eastern, FirstGroup plc, that if it drops its case for the Greater Anglia franchise it—the SRA—will ensure that the company is treated favourably in regard to franchises elsewhere. What other explanation can there be for First's otherwise inexplicable decision to withdraw from a legal challenge that it was winning?

FirstGroup has services in the north-west, and from London to Wales and the west country. Moreover, the group is one of the two final bidders for the TransPennine Express franchise. On the day that First was given the bad news about the Greater Anglia franchise, it was announced that it had pre-qualified for the Northern franchise. A coincidence, or what? It is not necessary to be a cynic to see that FirstGroup realised that it was not in its best interests to upset the SRA, so First Great Eastern was sacrificed.

The words of FirstGroup's spokesman Mr. Martin Helm, as reported in the Colchester Evening Gazette on Wednesday last week, were most revealing. He said:
"The SRA has decided they're not reinstating us and we've got a broader business to consider."
He added:
"It's very difficult for an operator. There's no appeals process and we're in the hands of the SRA—its decision is final."
Back in April, seeking to justify the rejection of First Great Eastern from the shortlist, the SRA's communication director, Mr. Ceri Evans, told the Evening Gazette:
"This is a commercial deal",
but he said that the commercial reasons were too sensitive to divulge publicly. Then the excuse got even lamer. Mr. Evans said that First Great Eastern was not being judged on its past performance—which, as a regular rail user, I would have thought would be a good indicator of whether it was up to the job—but had
"left gaps in what they said they would do to run the new franchise".
He said that the gaps involved "quality", but refused to say where quality had been compromised in First's application for the new franchise. Obviously, the words "openness" and "transparency" are not part of the SRA's vocabulary; certainly they are not part of the vocabulary of the inappropriately styled communications director.

First Great Eastern issued a legal challenge, requesting that the SRA disclose the documentation on which its claim that First had failed was based. It came as no surprise that the judge found in favour of the company—but then came the capitulation by the parent company. What we do not know is how the stitch-up between the SRA and FirstGroup plc was engineered. Was there a simple phone call, a private meeting at a discreet venue—perhaps over lunch—a nod and a wink? Perhaps the Department for Transport would like the appointment diaries of the two parties, and logs of their phone calls, to be examined. Or does either outfit contain a public-spirited whistleblower who will spill the beans?

First Great Eastern staff with whom I have discussed the situation feel that they have been shafted and betrayed. They have been let down and abandoned by a parent company that seems to have its eye on franchises elsewhere, and it is felt that the SRA has done a deal to get the legal challenge dropped.

While I do not doubt for a moment that most First Great Eastern staff will transfer next year to whichever company wins the Greater Anglia franchise, for many middle and senior managers the future is not so sure. Some, no doubt, will be head-hunted by companies elsewhere; I am told that others are already dusting down their CVs, and making overtures for jobs that have not yet even been advertised. What will happen to the management of First Great Eastern in the meltdown of the remaining period of the franchise? I fear the prospect of months of uncertainty as staff leave, having been dumped by their current employer.

One employee told me:
"The SRA still claim they can get the new franchise in by 1 April but most people think it is very unlikely."
Worryingly, he also said:
"First will freeze all investment and, frankly, I think we will very quickly see a drain of good managers off to other parts of the FirstGroup or elsewhere in the rail industry. The chances of replacing them are slim.
He added:
"We will do our best to get the new trains in service but we have no budget to market them—the biggest rail investment story in Essex for many, many years (£80 million on 21 new trains just a few months before the franchise ends) and we can't tell anyone about it!"

Another staff member wrote to me saying:
"We have recently achieved the Investor in People Award for our Engineering Department with the rest of the company being assessed for the Award later this year. If we do not get back in the bidding process a huge amount of work by many of our staff will be perceived as a waste of time—and motivation levels to exceed business goal targets will nosedive."

It is recognised that the railway network, not just in the Greater Anglia area but nationwide, has been starved of investment and encouragement by successive Governments. Despite that, the industry has generally been well served by managers, who know what the railways are about. The action of the Strategic Rail Authority towards First Great Eastern is a kick in the teeth towards those who have served the region well.

Before I commence my concluding comments, I invite the Minister to encourage his officials to see how they can help with the following request. The Government are keen to promote regional identities, although in the case of the east of England, it is a somewhat artificial region. That said, if the Government are serious about devolving power, which as a principle I support, and since Cambridge is geographically central to that region, 1 hope that whichever operating company wins the franchise will provide a regular direct service linking Colchester and Cambridge via Ipswich as a practical alternative to the A12-A14 road journey. It would be helpful if the Department for Transport endorsed such a direct rail service.

In its documentation seeking bids for the Greater Anglia franchise, the Strategic Rail Authority stated among its key objectives of letting in paragraph 3.1:
"Deliver a safe, more reliable service of consistently high quality for rail passengers;
Provide a clarity of service specification so that industry partners work together for passengers;
Deliver value for money for passengers and taxpayers; and
Secure accountable, viable operators who are passionate about delivering for their customers."
I submit to the Minister, in the total confidence that it is a view shared by 97 per cent. of those surveyed by MORI, that First Great Eastern should have been included on the final shortlist. Its track record, literally, demands that it should. Even though the parent company has done the dirty on First Great Eastern, its staff and those who use its services, I hope that, even at this late hour, the Government will tell the Strategic Rail Authority that its behaviour is not acceptable, demand answers to the questions that its decision has caused to be asked, and state that First Great Eastern should be reinstated on the shortlist.

2.57 pm

I congratulate the hon. Member for Colchester (Bob Russell) on securing the debate and on providing an opportunity for the House to discuss the Greater Anglia rail franchise. I do not think that he did his constituents or others in East Anglia any service by the manner of his speech. I shall forgive him his childish and tiresome rant about the state of our railways. People who consistently do our railways down do no favours to commuters or all those struggling to work hard in the railway system. I forgive him, too, because there is no budgetary provision whatever in any shadow Budget emanating from his party for the full renationalisation of the railways, so he is out on his own, as ever, in that regard, too.

What I cannot forgive, even under the cloak of parliamentary privilege, is the irresponsible manner in which the hon. Gentleman alluded to some conspiracy theory, where we have everything but the second gunman on the grassy knoll. To speak of half-truths, innuendoes, stitch-up, companies being shafted, nudge-nudge, wink-wink and the Strategic Rail Authority telling FirstGroup what it may or may not get elsewhere, is frivolous beyond belief, irresponsible in the highest regard and does the hon. Gentleman no credit at all. Nor does it help in any way to pursue what his constituents require.

The hon. Gentleman will know that, last year, the SRA consulted the industry, stakeholders and passengers on its proposed policy of one operator at London termini. The authority's consultation document suggested that having one substantive operator at a terminal would—this may have been the area that he should have dwelt on—facilitate optimum use of available capacity, both in the station and on the approaches to it; provide a simplified, more understandable and impartial day-to-day interface with the passenger; remove many of the contractual interfaces that he complained of at stations and simplify the timetable planning process; and improve reaction to service disruptions.

In the main, the responses to the consultation were positive, supporting the notion that such a policy would bring significant benefits to operators and passengers alike. The SRA has therefore adopted the policy in its programme of replacing franchises. All services into London Liverpool street are therefore to be combined into one Greater Anglia franchise. The franchise will be comprised of the services currently operated by Anglia Railways, First Great Eastern and the West Anglia services of West Anglia Great Northern, the franchises for which are due to expire by 31 March 2004. All the stations managed by those operators will be included in the new franchise, as well as the stations operated by Central Trains between Peterborough and Norwich.

The competition for the franchise was originally launched on 27 March 2002. There was a strong response to the invitation to pre-qualify and in May last year the authority announced that nine parties had done so successfully, including FirstGroup, the incumbent operator of the First Great Eastern franchise. Following the publication of the Strategic Rail Authority's new franchising policy in November 2002, the competition for Greater Anglia was relaunched in January of this year. On 1 April, the authority announced that three parties had qualified as bidders for the franchise. These are GB Railways plc, the incumbent operator of the Anglia Railways franchise; National Express Group plc, the incumbent operator of the West Anglia Great Northern franchise; and Arriva Trains Limited.

As the hon. Gentleman said, there has been much debate and speculation over the decision not to qualify FirstGroup to receive an invitation to tender for the franchise. While this is a matter for the Strategic Rail Authority as the letting agent, it would be difficult for me not to comment on the matter in the context of this debate. Of course, the authority's primary concern in letting any franchise is to get the best possible deal for passengers and taxpayers. Given that the Greater Anglia contract has a headline value of up to £3.5 billion, there had to be a rigorous process for selection.

The Transport Act 2000 makes it clear that each franchise competition is a new competition and everyone, whether incumbent or not, must treat it as precisely that. The Strategic Rail Authority is well aware that Great Eastern has performed well under the stewardship of FirstGroup. That was not overlooked in the decision-making process. However, that process is primarily centred on the responses to the "Qualification to Receive An Invitation to Tender" document. That was a clear and concise document, explaining precisely what was required of bidders.

FirstGroup, along with all the bidders, accepted and participated in this process. The Strategic Rail Authority evaluated the substance of FirstGroup's response on a basis consistent with all others. The notion that it is about settling old scores or nudge-nudge, wink-wink elsewhere is immature to say the least and ill becomes the hon. Gentleman. He besmirches a number of people who are working with integrity throughout the rail industry. He might want to reflect on those comments when he looks at Hansard tomorrow.

The hon. Gentleman says that he has been well briefed. He might have employed a speechwriter to give greater emphasis to the genuine concerns among commuters from his constituency and that of my hon. Friend the Member for Braintree (Mr. Hurst).

As I said, the SRA evaluated the substance of FirstGroup's response, consistent with all others. On the basis of those responses, it selected the bidders that scored highest against the criteria that had been clearly set out. The authority made it clear in advance of the qualification exercise that if a sufficient number of applicants met the minimum requirements, it would invite not fewer than three and not more than five bidders.

FirstGroup was not ranked among the top three bidders and was therefore not invited to continue in the bidding process. The company was Understandably disappointed, but I am glad that the prospective legal challenge has been withdrawn and the SRA can now focus its attention on selecting a preferred bidder and working towards signature of a franchise agreement. Unless I am informed otherwise today or subsequently, the SRA will not change the bidding process halfway through; the process was clearly mapped out for all individuals concerned.

What are the next steps? In June, the Strategic Rail Authority finished consulting stakeholders on their aspirations for the franchise and, having evaluated the responses received, issued a final franchise specification to the bidders on 1 July. This specification indicates a number of options and proposals that could be included in bids such as schemes designed to enhance capacity, the possibility of a metro-style service within the Greater London Authority boundary, improved interchanges between train and other forms of transport and improved station facilities such as the capacity and quality of car parks, improved facilities for cyclists, better access for disabled passengers, better security and improved signage.

The SRA also requires bidders to put forward with their bids a detailed rolling stock plan, indicating how they would maximise the use of infrastructure capacity during peak periods. Such plans would be expected to show how the bidder intends to accommodate the implications of operating longer rolling stock, and what trains they intend to refurbish, replace, procure or lease.

The authority intends that rural routes be managed within a separate business unit. The successful franchisee will be expected to ensure that the business unit has appropriate autonomy to review and develop rural services, and to provide local focus, accountability and partnership with the communities that they serve. As I said, rural routes are important in this regard.

The bidders will work up their proposals and submit them for the authority's consideration in time for a preferred bidder to be announced later this year. The franchise is envisaged to come into effect in April 2004. Of course, all bids must be backed by a robust business case. The authority will be looking to select the bid that is affordable, deliverable and of most benefit to passengers: in other words, the one that offers best value for money.

I hope that I have gone some way towards demonstrating that the new franchise will bring significant benefits to passengers—a point that the hon. Gentleman chose not to touch on—both to commuters to London, and to users of local services. The Greater Anglia franchise is the first to be let under the new franchising policy, and the first to be let under the one operator per London terminal principle. It will therefore be under a particularly bright spotlight, and I know that everybody in the industry will do their utmost to ensure its success.

I understand the hon. Gentleman's point about the comments of aggrieved employees who would rather that their company was involved in the bidding process. However, it is a matter of regret that he chose to couch his contribution in such a childish and immature context, which did nothing for commuters in the area served by Greater Anglia, or for his Colchester commuter constituents. Nor did it add anything in terms of highlighting what is a very important issue.

In my previous manifestation as Minister with responsibility for housing, I had a rather rough debate with the hon. Gentleman in Westminster Hall. I came here today with the explicit intention of being nice, emollient and terribly ministerial, but I am afraid that I could not be because of the unnecessary and immature drivel that he introduced into the debate. Perhaps next time will be third time lucky.

Question put and agreed to.

Adjourned accordingly at seven minutes past Three o'clock.