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Network Rail

Volume 470: debated on Tuesday 8 January 2008

We come now to the first debate on the Opposition motions. I inform the House that I have selected the amendment in the name of the Prime Minister.

I beg to move,

That this House is deeply concerned by the track work over-runs by Network Rail on the West Coast Main Line and at Liverpool Street station over the Christmas and New Year period; believes that the disruption caused to passengers was unacceptable and that Network Rail failed to plan properly for the successful completion of works on time; further notes that Network Rail was created by the present Government and believes that these recent incidents illustrate that the organisation is insufficiently accountable to its customers; and calls on the Government to take steps to ensure that Network Rail is made more accountable to the travelling public so that efficiency is improved and a much better quality of service is provided to passengers in the future.

As if non-stop gloomy economic news and the return to work after the Christmas break were not enough to depress people last week, thousands of travellers had rail chaos to contend with as well: a truly miserable new year greeting from this Government and Network Rail, the organisation that Labour created to maintain and run the tracks on our railways—a creation process in which the Prime Minister and his closest Treasury advisers were heavily involved. A key national route—60,000 passengers a day use the extensive stretches of the west coast main line—was seriously disrupted when upgrade works around Rugby ran four days over time. Many people were forced on to lengthy bus journeys and were subject to hours of delay.

Liverpool Street station, which is used daily by 100,000 passengers, was completely closed on the first working day after the new year, when a bridge project overran, and services remained disrupted for another two days. That level of disruption damages our economic competitiveness, and causes misery for passengers and inconvenience for those who are running freight on our railways. It is simply not acceptable, it should not have happened and it need not have happened had there been sensible planning. The fact that it occurred on a day when fares increased by as much as 14.5 per cent. in some areas compounded the anger and dissatisfaction felt by so many passengers, who rightly believed that they were not getting value for money.

The hon. Lady may not have been in the House when Robert Adley, the ex-Member for Christchurch, commented that the privatisation of the railway network was like the “poll tax on wheels”. Many Transport Select Committee reports have made it clear that everything we are facing is down to fragmentation. In these circumstances, why are the Opposition suggesting that the answer to the problems over the Christmas period, which affected people north of the border who were travelling through Rugby as well as those south of the border, is further fragmentation? Why is the hon. Lady advocating that?

Where I agree with the hon. Gentleman is on his statement that the disruptions impacted negatively on people north of the border as well as on those south of it—the Opposition are deeply concerned about that. On the rest of his contribution, I must tell him that this Government have to start answering for their own record on the railway network.

They have been in charge of our rail network for the past 10 years, so I would welcome an explanation from the hon. Lady.

Does the hon. Lady accept that there has been a huge improvement in service since Labour took power? Indeed, since the creation of Network Rail there has been a 28 per cent. decrease in delays.

It is certainly true that some progress in the rail industry has been made, a significant amount of which results from privatisation. It would not have been possible to achieve that progress without the enterprise introduced by the private sector train operating companies.

As a regular traveller on the west coast main line, I am particularly interested in the project to which the hon. Lady refers. Will she put this debate into perspective by telling us the scale of the project that was undertaken during this winter break? How many person hours were put in to the work that she is challenging?

It was clearly a huge project, but there is no excuse for the disruption that caused misery to so many people.

Labour created Network Rail and Labour must carry the can for its failure. To all intents and purposes, it is a nationalised industry—more or less everyone accepts that, except the Government and the management of Network Rail. No matter how many somersaults they do to try to keep Network Rail’s debts off the Government balance sheets, they are simply in denial if they think that Network Rail is not effectively an agency of government. May I draw the House’s attention to something said by the former Leader of the House, the right hon. Member for Blackburn (Mr. Straw)? He explicitly referred to the fact that the Government

“brought Network Rail into public ownership”.—[Official Report, 1 February 2007; Vol. 456, c. 363.]

I am a regular user of the railway from Colchester to London Liverpool Street, and I have a lot of sympathy with the points that the hon. Lady is making because I have constituents who were similarly affected. Does she accept that the fragmentation of the railway industry has not helped the situation?

The serious problem that is revealed, as I shall explore in my speech, is that Network Rail is not sufficiently accountable to passengers and customers.

Further to the point made by the hon. Member for Colchester (Bob Russell), is my hon. Friend aware that many of my constituents experienced huge disruption from the overrun of the engineering works at Liverpool Street? It is not acceptable for Network Rail consistently to blame contractors: it has to take responsibility for overruns that inconvenience the public.

Does my hon. Friend agree that if Labour really believed that any split in the old British Rail monopoly was wrong, it should have nationalised the whole thing years ago and proved that that was better? Of course, it is not better, which is why Labour has not done it. The railway moved from decline to growth when we privatised it.

The reality is that Ministers now have more control over our railways than they did in the days of British Rail. They take more detailed decisions on a range of issues, such as timetabling and rolling stock, than Ministers have ever considered in the past. In Network Rail, they took the decision to create an organisation that is not properly accountable to anyone—to shareholders, passengers, customers or the regulator—and they must take responsibility for the consequences of that decision.

My constituents in Wales were seriously affected by the overrun of engineering works in Rugby, but their main concern is that the lessons are learnt for the future. They welcome the upgrade of the line and the additional services that they are now getting, but what they want—sensibly—is for the regulator to look into the problems and the lessons to be learnt, so that we can have even faster and more frequent trains to north-west Wales.

Absolutely lessons must be learned for the future, and it is sad that Network Rail has not always learned lessons from similar incidents in the past. The simple fact is that Network Rail’s senior management was incompetent in failing to plan properly to get the work finished on time. I emphasise that it is senior management that has been found wanting, because the Opposition recognise the hard work and difficult job done by so many dedicated Network Rail staff, whose morale must have plummeted in recent weeks.

Ministers were invisible as the crisis on the rail network deepened. Network Rail’s failure to communicate effectively either with passengers or with the people responsible for running the trains was inexcusable. It is one thing to overrun on a possession, but the impact is far worse if one gives only short notice that that will happen. There seemed to be a blithe assumption that if a train company were given a few days’ notice, its passengers could switch their plans and travel on a different day. But we are talking about new year’s eve. If one is going to a new year’s eve party, there is not a lot of point in getting a train on 4 January.

At Liverpool Street, One Railway, the people responsible for running the trains in and out of the station and for getting passengers from A to B, first learned of the work overrun at about 1 am on 2 January, about four hours before the station was due to reopen and trains to start running. By then, it was simply too late to get any information to customers before they turned up at stations across East Anglia, not unreasonably expecting to be able to take a train into work. That is an extreme example of Network Rail’s damaging tendency not to co-operate closely enough with train operating companies, or even keep them informed of what is going on. That approach is hindering efficiency in the railways and increasing fragmentation.

My hon. Friend makes a powerful point about the failure of Network Rail management to learn their lessons. I received a letter today from Iain Coucher in response to my correspondence. He says that, while there have been similar problems in the past,

“It is obvious now that we attempted to do too much work, in too short a period”.

The Government always make the argument that lessons will be learnt, changes will be made in the future and that things will be better at some stage. However, under the current Government, we have been constantly required to wait for that to happen. When does my hon. Friend think that the Government will learn the lessons?

I do not think that the Government will ever learn the lessons. Not only have they asked us to wait, they have asked the taxpayer to pay more and they have asked the fare payer to pay more for substandard services.

Passenger groups were not consulted by Network Rail in advance of the Liverpool Street fiasco either. Brian Cooke of London TravelWatch said:

“The situation at Liverpool Street is a thorough disgrace.”

Many passengers have voiced their frustration and some are even threatening strike action. Natalie Evans of the British Chambers of Commerce said:

“Today’s rail problems, coupled with an inflation busting increase in fares, are simply not good enough.”

Tony Collins of Virgin Trains said that

“our customers expect and deserve better.”

Passenger Focus said that the approach taken by Network Rail broke

“every golden rule on how to treat passengers”.

Anthony Smith of Passenger Focus said:

“This is unbelievable. Thousands of passengers have booked or planned New Year travel in good faith. We feel very let down and want re-assurances that the huge amount of engineering work planned”—

for 2008—

“will not run into similar problems.”

Is it not likely that the outcome of the whole sad saga will be that the regulator will fine Network Rail? Is that not nonsense, because Network Rail will merely pay with taxpayers’ money? Would it not be far better to say that Network Rail should not make any bonus payments to its management, who have shown gross incompetence?

My hon. Friend anticipates what I was about to say. We must remember that the problems were not caused by storms, snowfalls or sudden natural disasters, but simply by poor planning and project management at Network Rail and, indirectly, by the Government’s failure to put adequate systems in place to ensure that Network Rail is properly accountable for its performance.

No. I want to make some progress.

It is no answer for Network Rail to blame its contractors, as my hon. Friend the Member for North-West Norfolk (Mr. Bellingham) remarked. The regulator recently concluded that Network Rail had breached its licence by failing

“adequately to evaluate and mitigate the risks associated with the project, and to manage its contractor in line with best practice.”

Network Rail

“failed to consider and plan for the possibility of an extended overrun of the commissioning works, and the consequential effect on passengers.”

The regulator was talking not about Rugby in January 2008 but about Portsmouth in early 2007 after signalling work overruns caused huge disruption to passengers over several months. At the time, the Office of Rail Regulation made it plain:

“Even though its contractor carrying out the work may be at fault for the delays in completing the work on time, ORR considers that Network Rail should have managed its contractor more effectively and is responsible.”

It seems that few lessons have been learnt from Portsmouth.

There is a word that the hon. Lady is studiously avoiding using: Railtrack. I agree that what Network Rail did over the new year was unacceptable and that lessons need to be learnt. However, is she seriously suggesting that that railway disruption compares in any way with the financial and personal tragedies that Railtrack, which was set up by a Conservative Government, visited on the railways?

I am saying that there was major disruption that should not have happened. We should be debating this Government’s performance in running our rail network.

Even if Network Rail can heap some of the blame for Rugby on Bechtel, what is its excuse for Liverpool Street? If Bechtel is at fault, will the Minister tell us what penalties the contract will impose? If the contract does not provide for penalties, why does it not? Is that not a basic element of good procurement practice, particularly when timely completion of the works is so crucial in getting the railway back up and running and allowing people to get to work in the morning?

I thank my hon. Friend for her courtesy in giving way again. What happened at Liverpool Street was clearly unacceptable, but unfortunately it was by no means a one-off. I have had meetings with Network Rail officials about the propensity that engineering works at weekends have to overrun so that when the track is handed back on Monday delays back up in the system. That is highly inconvenient for my constituents. Does my hon. Friend agree that maintaining the track is a core part of what Network Rail exists to do? It has to do better or the public will lose all confidence in its ability.

My hon. Friend is absolutely right, as ever. Network Rail needs to get a grip and seriously raise its game. Its performance is not acceptable.

Another key error committed by Network Rail was its failure to tackle the situation effectively when things started to go wrong. The problems did not come out of the blue. Possessions are planned 18 months in advance. As early as 6 December there were clear warning signs that serious problems were occurring at Rugby when there was surely still time to remedy the situation. One question that the Secretary of State has to answer today has to do with when she was first warned about the potential overrun, and when she started to take action to sort the problem out.

As my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) noted earlier, merely imposing fines on Network Rail would not be an adequate response, as the taxpayer would pick up the bill for them anyway. As former rail regulator Tom Winsor has pointed out, the Government have removed

“the most potent instrument of…accountability—the ability of the regulator to inflict financial pain if the company’s management commits serious sins”.

While taxpayers and passengers pay the price of failure at Network Rail, its managers still receive their high salaries and bonuses. It was confirmed in November that the £286,000 in bonuses suspended after the Grayrigg accident had been paid out to Network Rail’s four senior managers, despite the serious failures that the accident revealed. Network Rail’s annual report disclosed a further £362,000 of longer-term performance incentives. Last year, the pay of Network Rail’s non-executive directors rose by 18 per cent. It looks as though the pay restraint that the Prime Minister has been grandstanding about does not apply to some of Labour’s friends at Network Rail.

It was, of course, a matter of huge irony that, on the very day that Virgin took out advertisements in the national press to warn passengers about the expected disruption, those same national newspapers carried news of the knighthood that the Government had awarded to the chairman of Network Rail for his services to transport.

The fundamental problem that the House must address is that Network Rail’s management is not accountable to anyone. We believe that that must change. The people who in theory are supposed to hold Network Rail to account are its members, but the Network Rail board decides who most of them are. It is therefore no wonder that that check has been derided as toothless and ineffectual.

Reform is needed to put in place a more effective way to penalise failure by Network Rail’s management, and to ensure that they are forced to listen to the regulator and their customers. Getting that right is of critical importance if we are to have the high-quality rail network that our economy needs. There are many reasons for that, but I shall outline just three.

First, the Grayrigg accident shows that failures at Network Rail can have tragic consequences. The report into the crash revealed a catalogue of errors.

I have been listening to the hon. Lady carefully. The motion refers to the accountability of Network Rail, but I am struggling to understand what her party would do with the organisation. Would it abolish Network Rail? If not, what steps would it take to render Network Rail more accountable? She has said nothing about that so far.

The hon. Gentleman has a treat in store as, in due course, we will publish the results of our rail review. We will explain then how we intend to tackle the problem, but this debate is about what the Government are going to do about it. They are in office, and they must deal with it.

I am sure that the hon. Lady does not want to mislead the House, but she seemed to suggest that the Network Rail board chooses its members. She will know that anyone working in the rail industry is able to make nominations to the board, and that that includes the freight companies. The Network Rail board does not choose its members—far from it. A perfectly straightforward machinery exists for that, and she must know about it.

My understanding is that the board has the final say over the public members appointed, but not over the industry members. According to the latest information, industry members make up about 24 per cent. of the board’s membership, with public members accounting for 76 per cent. I certainly meant to say that the board has a veto over the majority of members, and it was an error on my part if I did not make that clear. However, I am willing to be corrected.

The hon. Lady also knows that board members are selected by an independent body. The divide is very clear. I am sure that she does not want to mislead people by suggesting that Network Rail has a veto, as it does not.

My understanding is that there is an independent element in proposing public members, but that the Network Rail board ultimately can say yes or no to any nomination. However, I shall be happy to check my facts to ensure that I have presented the situation correctly.

The second reason why it is vital to ensure that Network Rail is accountable is that it does not give high enough priority to passenger concerns. That must surely be a key reason why it has been so exasperatingly slow to deliver capacity enhancement—measures such as longer platforms or short rail extensions into ports and industrial estates. As Network Rail’s own business plan confirms, overcrowding is not confined any longer to busy London commuter routes. It is spread across Britain and is a serious problem, even on many off-peak trains. Passenger numbers on commuter services into Birmingham, Bristol, Leeds, Manchester and Glasgow far exceed capacity on many trains. Capacity expansion is vital to tackle growing overcrowding problems, but a recurring complaint from stakeholders is that Network Rail management are simply not concerned enough about growing the railway.

The third reason why we must tackle the problem of lack of accountability is that Network Rail’s management are insufficiently focused on keeping costs under control. This is a body that has directly received £10.3 billion of taxpayers’ money at today’s prices since 2002 and will get another £3.05 billion this financial year. That does not even include the further taxpayer subsidy that it receives indirectly via payments from the train operating companies. At present the reality is that neither the taxpayer nor the fare payer is getting value for money.

The hon. Lady is very successfully setting out a case against Network Rail. Where is the evidence that the separation of Network Rail from the operating companies is to the benefit of rail passengers? If we had an integrated rail service, surely the problems that she is outlining would not happen.

Things would certainly be more positive if there were more co-operation between the management of track and train. As I have stated, that is one of the weaknesses displayed by Network Rail senior management.

The disruption around Birmingham coincided with the day that the cost of an annual season ticket to Euston rose from £7,260 to £7,608. It is no wonder London TravelWatch described new year fare rises as a bitter pill. Passengers are being asked to pay more and more, often for grossly overcrowded trains and disrupted services. The reality is that fare payers are picking up the bill for Network Rail’s failure to get a grip on costs.

So this afternoon the Secretary of State has many questions to answer, not least of which is what is the total cost of this fiasco to the taxpayer. How much have the extra engineers who were needed for the overrun works cost? Will the money paid in fines—we surely expect some of those—be recycled and spent on rail or is it lost to the rail network? What discussions has the Secretary of State had with the Office of Rail Regulation on how to improve the performance of Network Rail? What did she do to respond to the problems revealed at Portsmouth, so many of which were repeated on this latest occasion? What discussions has she had with passenger groups and train companies about getting better performance from Network Rail? Above all, what guarantees can she give us that lessons will be learnt from the current fiasco and that steps will be taken to prevent its being repeated?

With major projects planned for Reading, Birmingham New Street, Thameslink, and the east coast main line, not to mention the remaining stages of the west coast main line upgrade, and with work scheduled for more or less every bank holiday up to December, I am afraid that there could be a great deal more disruption in store for passengers. Some projects, such as signalling work at the Glasgow Shields junction, are still overrunning from the new year break. Is the Secretary of State confident that the upgrade of the west coast main line will be completed on schedule in December this year?

No. I shall conclude. The hon. Gentleman will get his chance in a minute.

The disruption over the new year was a monumental foul-up. What a contrast with the hope and excitement at the launch of High Speed 1 last month. The incident illustrates how vital the railways are for our economy, our quality of life and our country. The underlying problem is that when they created Network Rail the Government failed to put in place effective means to ensure that it was answerable for its actions. When it provides poor services, too often it gets away with it with impunity. The taxpayer deserves better from Network Rail; its staff deserve better; but, above all, passengers deserve better.

I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:

“applauds the Government for taking decisive action to correct the flaws of rail privatisation; welcomes the fact that the railway is carrying 40 per cent. more passengers and 47 per cent. more freight than in 1997 with improving punctuality and safety standards and record investment in infrastructure; and looks forward to seeing the results of the investigation by the Office of Rail Regulation into Network Rail’s performance, following the unacceptable engineering overruns experienced by passengers during Christmas and the New Year.”.

I start by commending the hon. Member for Chipping Barnet (Mrs. Villiers) for her bravery in raising the issue of the performance of our railways in the first Opposition day debate of the year. I say “bravery” because, first, although she spoke for just over 20 minutes, she failed to make a single concrete proposal on how to improve rail services. Also, there was yet another abject failure to commit to matching Labour’s investment plans for the next seven years. Secondly, it was bravery given her party’s track record on rail, which was defined by years of under-investment, declining passenger numbers, closure of lines, and of course a botched privatisation. I recognise the compliment that she paid the Government when she accepted that performance had improved on the railways in the past 10 years. However, people will be incredulous that she puts the improvement down to the privatisation that took place under the Tory Government. Sometimes I think that she lives on another planet.

Indeed not, and I beg the hon. Lady to wait for the rest of my speech. Before I tackle head-on the issues that she raised, I, too, welcome the hon. Member for Lewes (Norman Baker) to his place on the Front Bench. I look forward to his contribution, both to today’s debate and to other transport debates in the coming months. I know what a keen interest he has taken in rail, and in championing the concerns of his constituents.

Over Christmas and the new year period, there were serious, unacceptable delays on key sections of the rail network, including at Rugby and at Liverpool Street station. I regret the impact that they had on thousands of passengers. The chief executive of Network Rail has rightly apologised. He told me that he intends to learn all the lessons from the engineering works delays, to minimise the risk of unforeseen overruns in future.

I tried this question with the hon. Member for Chipping Barnet (Mrs. Villiers), but she said that it was my right hon. Friend’s job to answer it. The project was huge, and there were unacceptable overruns, but will my right hon. Friend try to put the matter in perspective? I travelled down the west coast main line on Monday and saw the massive changes that have occurred. How many people-hours were put into the project over the weekend? If the scale of the work is made clear, it will help the debate.

I thank my hon. Friend for his question. I travelled on the west coast main line only a few days ago and I, too, experienced a comfortable, reliable journey, which took two and a quarter hours from London to Manchester. The performance of the rail network has improved so considerably that I am delighted to tell the House that I can now use that route regularly, whereas after the Hatfield incident, when it was clear how chaotic a state the railways were in, some of us, including me, had to switch to the air for a period. My hon. Friend rightly says that the scale of the works was enormous. I can tell the House that in any 24-hour period, the equivalent of 5,000 people were working full-time to upgrade and renew our railways.

If Network Rail could not cope with the scale of that work, how will it cope with all the other projects that are proposed for the rail industry in the next few years?

The point I am making is that it is important that the full lessons are learned from the episode. The failures call into question whether the processes put in place by Network Rail to manage engineering works over the Christmas and new year period were adequate. I can tell the House today that the rail regulator has announced that he is extending his investigation in view of the concerns expressed by Network Rail’s customers and funders.

Is my right hon. Friend aware of problems north of the border? I am sure that her colleague the Under-Secretary of State for Transport, the hon. Member for Glasgow, South (Mr. Harris), who has responsibility for railways, is. I am thinking particularly of the problems on the line between Glasgow and Paisley. Although that section of the railway is not her responsibility, does the problem not show that the idea of further fragmentation in the railway network is nonsense and should not be supported?

I entirely agree. As I intend to amplify later in my speech, the idea that accountability or lack of accountability for the rail structure is a cause or potential cause of the engineering overruns is ludicrous. Those are separate questions that need to be addressed separately.

It is right that I set out to the House the scope of the investigation. The rail regulator’s investigation will focus on the engineering overrun at Rugby, the engineering overrun at Liverpool Street, the impact that those have had on passengers, train operators and freight operators, and the robustness of Network Rail’s plans for the remaining work to enhance the west coast main line. In particular, the regulator will examine whether there are any systemic failings underlying these events. The interim report, which will be published, should be produced by the end of February. I hope that all Members of the House will agree that we should not pre-empt its findings.

Will the right hon. Lady deal with the question that I put to the Opposition spokesman, my hon. Friend the Member for Chipping Barnet (Mrs. Villiers)? It seems ridiculous that, by way of a fine for the incompetence of management, we should deprive Network Rail of money that would be spent on the infrastructure. Everyone admits that the problem is the incompetence of the management. Is it not better to penalise the top management by refusing them bonuses for the next three years to ensure that they produce the efficient management that is so necessary for Network Rail?

I understand the genuine concerns expressed by the hon. Gentleman, and I, like him, sympathise with all the passengers who suffered disruption on the network over the Christmas and new year period. It is easy to say in the House that fines are no incentive for Network Rail. It is incumbent on any Member who suggests that fines do not provide the necessary incentive to say how any other model would provide an improved incentive for Network Rail.

So does the Secretary of State think that the senior management of Network Rail should be paid their full bonuses or not?

Certainly, if the results of the investigation by the Office of Rail Regulation suggest that Network Rail is in breach of its licence, has been in breach of its licence or is likely to be in breach of its licence in future, that would need to be taken into account in setting bonus payments, as the contractual management incentive plan, as I understand it, sets out clearly.

Those matters are not for Ministers, however; they are for the remuneration committee of Network Rail. That management incentive plan is clearly in force and recognises those issues. It is not right for Ministers or for the hon. Lady to pre-empt the findings of the Office of Rail Regulation’s report, which will focus on determining whether there were genuinely unforeseeable reasons that led to the delays or whether there was a failure of management. We should await its conclusion.

I am grateful to the Secretary of State; she is generous in giving way. When her colleague the Secretary of State for Justice boasts about bringing Network Rail into public ownership, the right hon. Lady cannot evade responsibility for the way in which Network Rail is run.

I am astounded by the fact that the hon. Lady is claiming that we have a public ownership structure for Network Rail, when she is not aware, as my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) set out to the House, what the accountability of Network Rail is. She should know that it is a private not-for-profit company which is responsible to its board.

I welcome the investigation, particularly into what happened at Rugby. What angers the public is the arbitrary way that that was handled by Network Rail—for example, people being bussed from Coventry or Birmingham to Northampton. That caused a great deal of public anger and it is important that we find the causes of the problems. It is worth while remembering that the previous Government broke up the railways. There were 100 different companies and it was a total mess. The system was a mess in 2000—we remember some of the accidents and disasters. Something had to be done. We should bear that in mind when the Opposition criticise us.

I completely agree. The hon. Member for Chipping Barnet should not be proud of the record of her party when it was in government.

Our problems stem from the fragmentation that happened during all the years of Tory privatisation—[Interruption.] I am glad to see that the Liberal Democrats agree.

The announcement that the Office of Rail Regulation will investigate the issue is important and welcome. Will my right hon. Friend give a little more detail of the extent to which the rail regulator will specifically consider what happened in respect of the west coast main line, and how much the remit of the regulator’s inquiry will cover the wider issues—

Order. Please have a seat. Interventions should be brief and consideration should be given to Back Benchers who have put their names down to speak. Speeches should not be made during interventions.

My hon. Friend is correct to raise those issues. This morning, I asked the rail regulator about his inquiry’s terms of reference. He made it clear that he would broaden his investigation to consider not only upgrading and engineering work on the west coast main line, but whether there was proven evidence of a systemic problem that needed to be addressed in the management of engineering works. It will also address the point, made by the hon. Member for Chipping Barnet, whether full lessons have been learned from previous episodes, including that at Portsmouth.

Is the Secretary of State not aware that last year the taxpayer gave the company 90 per cent. of its total operating costs? It is entirely a creature of the Government. It is her duty to discipline the management and make it efficient.

I think I might know what the right hon. Gentleman’s solution is: to revert to a situation in which, rather than being accountable to a membership board, Network Rail is more concerned with paying dividends to private shareholders, and [Official Report, 23 January 2008; Vol. 470, c. 15MC.] in which Government investment, far from increasing—as it is, by £10 billion over the next five-year period—returns to a level of chronic under-investment. I would not agree with that solution, and nor would many members of the public.

It is important that we put the episodes of Christmas and the new year into context. Today, we have the fastest-growing railway in Europe.

While we are still on the issue of the investigations, I should say that my hon. Friend the Member for Central Ayrshire (Mr. Donohoe) has already raised the delays between Glasgow and Paisley at Shields Junction. I understand that the delays involve a number of private companies and raise issues, again, about the fragmentation of the railways. Can that matter also be looked into?

I can confirm that the rail regulator has told me that he will also take into consideration the engineering overruns at Shields Junction.

The Secretary of State is very generous. She rightly links the issue of management performance with bonuses. As I said earlier, Mr. Coucher, the chief executive, said:

“we attempted to do too much work, in too short a period”.

He accepts that he made a mistake. Given those circumstances, does the Secretary of State think that he should receive his bonus? Yes or no?

I have made two points absolutely clear. First, bonus setting is not for the Government; it is not my role as Secretary of State for Transport to set the bonuses of Network Rail’s management. However, I sympathise with those who, understandably, feel angry about the delays and overruns in the Christmas and new year period.

Secondly, bonuses are set by Network Rail’s remuneration committee, which is chaired by an independent non-executive director and acts according to a management incentive plan that takes into account whether a licence has been breached or is likely to be breached in future. The rail regulator is examining that issue and his interim findings will be published at the end of February. I hope that, at that point, everyone will be clear about whether there was a breach of the Network Rail licence.

As I was saying, today we have the fastest-growing railway in Europe. When the Conservatives were in power, the railways were faced with the problem of managing decline; now, for the first time since the war, we are planning for growth. Why? First, the stability of our economy has enabled this Government to double spending on our railways over the past 10 years; and secondly, we took the tough decisions required to clear up the mess left after privatisation, when the state of the track had deteriorated dramatically, confidence was shattered, and costs had spiralled out of control. The Railways Act 2005 put in place a new structure that has, for once, got a grip on costs and is delivering significant improvements in performance. For the first time in 50 years, we have a stable structure for our railways on a secure financial footing, with firm, costed plans that should enable us to double the size of the railways over the next 30 years.

I wonder whether the Secretary of State agrees with her colleague, the Minister with responsibility for railways, who said:

“‘Delivering a Sustainable Railway’…does not identify a need to re-open lines to deliver additional capacity.”—[Official Report, 18 December 2007; Vol. 469, c. 1444W.]

How does she square that with the massive growth that she is predicting?

I would be surprised if the hon. Gentleman were not aware that we have firm, costed plans that are delivering within the 2009 to 2014 period. In those costed plans, we have said that there will be no line closures and that we will monitor the growth in passenger numbers over that period; if passenger numbers grow faster than expected, we will, in the following period, think about whether additional railway capacity is needed, including whether to open new lines. When we come to the second control period, from 2014 onwards, I retain an open mind on whether we need, for example, to reopen a disused rail line between London and Birmingham, whether we should have a high-speed rail link that links London to Birmingham, or even beyond to Manchester and so forth, or indeed whether other modes of transport, such as roads, should be encouraged. It is right that we take a fundamental look at these issues in the light of what is happening with the growth in passenger numbers and of a proper diagnosis of the problems. We are going through that process at the moment to prepare ourselves early for decisions that will be taken in several years’ time.

Under Railtrack, the cost of the west coast main line modernisation programme had soared from £2.4 billion to £14 billion, with no end of the work in sight. Network Rail was able to get a grip on costs, no longer underwritten by blank cheques from the Government. Its work was endorsed not only by the Public Accounts Committee, with which the hon. Member for Chipping Barnet should be familiar, but by the National Audit Office. We are seeing steady improvements in overall performance, reliability and safety. We have delivered the channel tunnel rail link on time and on budget. It is precisely because we have regained control of spending that I was, in July, able to set out the resources that we intend to devote to the railways over the next seven years and the further improvements that we expect the industry to deliver.

The hon. Member for Chipping Barnet questioned whether Network Rail was indeed making efficiency gains. I can tell her that in this current five-year control period, Network Rail is on track to deliver efficiency gains of more than 30 per cent.—a record that Railtrack was never able to match. I would be interested to know whether she would commit to match the £10 billion investment that we intend to make between 2009 and 2014.

We have heard Opposition Members suggest that the fare payer should not have to put any more into the railways, whereas previously they have suggested that taxpayers should not pay more. Does my right hon. Friend, who is an economist of some renown, know where the third source of money that they propose to get is to be found?

My hon. Friend makes an excellent point. Indeed, I am still not clear about the fares policy of the hon. Member for Chipping Barnet. If she disagrees with what passengers are being asked to pay, would she and her party expect the taxpayer to pay more instead, or would they rather cut services and investment? If so, which of the projects that we have announced would they like to cut? I remind the hon. Lady that rather than people being priced off the railways, passenger numbers are at record levels, with 370 million more passenger journeys every year than in 1997—a figure that is increasing year by year.

As we are talking of passengers, is the Minister confident that the public were given the right transport alternatives between Christmas and new year, and indeed after new year, by the rail travel companies?

That is one of the issues we need to consider. Indeed, the Office of Rail Regulation will examine the impact that that disruption had on passengers. There are clear arrangements in place under which compensation can be paid to train operating companies and, under the passenger’s charter, to passengers, if they have been incorrectly sold tickets or subjected to severe disruption. I would expect those measures to be enforced.

The hon. Member for Chipping Barnet quoted the price of a season ticket to Birmingham. I must say that I have not checked the price of such a season ticket, but the hon. Lady’s contribution on fares would have slightly more credibility if she were able to get some of her sums right. I had the opportunity to read an article that she wrote recently in the Yorkshire Post. In it she bemoaned the fact that a walk-on-and-go saver return from Leeds to London would go up from £149.60 to about £156.78, and that a walk-on-and-go open return for the same journey was going to rise from £370 to about £400. I am afraid that the hon. Lady may need some remedial maths lessons because she arbitrarily doubled the cost of the actual fare. It is no wonder she was removed from her job shadowing the Treasury, and no wonder that she is labouring under the false impression that people are being priced off the railways.

The Secretary of State may think fare rises are a laughing matter, but many families do not. Fare rises under this Government are putting real pressure on many family budgets. The Opposition are seriously concerned about that; I would hope that she is as well.

I, too, agree that it is important that we have correct and reasonable fare increases for individual journeys. That is why we have capped regulated fares at 1 per cent. above the rate of inflation for individual franchises over the period in question. If the hon. Lady took the trouble to investigate the average cost per kilometre, or per mile, which I know my hon. Friend the Member for Crewe and Nantwich prefers, she would find that the average cost per mile of travelling by rail is pretty much exactly the same now as it was in 1997.

The hon. Lady makes the reasonable point that we need to simplify the structure, and make it easier for people like her to understand what the appropriate rail fare is. I am committed to making sure that that happens in the future.

The right hon. Lady seems to make light of the fare increases. Constituents travelling from east Kent to London are paying infinitely more for a worse service with bad timekeeping. May I invite her to join me on an early morning train from Thanet to London? I will endeavour to guarantee her personal safety.

I have no need to join the hon. Gentleman on his commuter journey. However, I can tell the House that I am committed to more capacity on our railways, to ensuring that the necessary investment goes in and to protecting passengers from rail fare increases through a cap on regulated fares in order that they cannot rise, per franchise, by more than 1 per cent. above inflation. May I remind the hon. Gentleman that 80 per cent. of all fares are either regulated or on a discounted ticket?

Would my right hon. Friend repeat the question that she asked? If the money is not to come from the taxpayer or from the fare box, where will it come from? That is the point that the House has to address. Massive investment in rail can come only from the taxpayer and it is time that we all accepted that.

I certainly accept my hon. Friend’s point. It is right that the Opposition should wake up to the fact that there are only two real sources of funding for the railways: the taxpayer or the fare payer. If the hon. Member for Chipping Barnet is proposing that fares should be held down, and that the taxpayer subsidy should be reduced, only one interpretation can follow, which is that she and her party are committed to slashing investment in the railways.

I agree with the point about funding, and we have identified ways of raising funds from public money, which I will set out. However, I say to the Secretary of State that the truth of the matter on fares is that since her Government have been in power, rail fares have gone up by 6 per cent. in real terms, and bus fares by 8 per cent. in real terms—this information is from a parliamentary answer—while the cost of motoring has gone down by 10 per cent. That is a long-term trend that has actually slowed under this Government, but we have to recognise that rail and bus fares are going up while motoring costs are going down, which is contrary to what is necessary to tackle climate change.

Regulated fares have not risen in real terms since 1997. There have been some increases, especially in open first-class and premium fares, but 80 per cent. of people travel on a regulated or, indeed, discounted ticket.

If the hon. Gentleman will forgive me, I must make progress.

It is essential to invest the extra £10 billion to which we are committed in the period from 2009 to 2014, and to ensure that the 1,300 new carriages and the longer platforms are provided and that the major station and network upgrades at Reading and Birmingham New Street and the renovations at the 150 stations that are due to be renovated happen.

No, I must now finish my comments.

We are not complacent. Recent events clearly show that Network Rail has much more work to do. Once we are in possession of the rail regulator’s conclusions and the results of Network Rail’s investigations, we will be in a position to determine what, if any, steps need to be taken to prevent a recurrence. I greatly regret the difficulties that passengers experienced in the past couple of weeks, but I ask hon. Members not to lose sight of the enormous improvements that we have made to our railway.

Unlike the Conservative party, the Government have learned the lessons from Railtrack, as we were forced to pick up the tab for the Conservative party’s failure. The Government took the tough decisions and are making the sustained investment necessary to improve the railway. We can be trusted with its future.

I thank the Secretary of State for her courteous welcome to me in my position on the Front Bench.

I do not need to rehearse the impact on passengers of the fiasco over Christmas and the new year because both other Front Benchers adequately set that out. However, the late notice given to the train operating companies has not been mentioned. The companies that operate from Liverpool Street were made aware only at midnight that there would be no trains the following day. With the best will in the world, it is difficult for a train company to arrange for alternative transport on buses and coaches when it is given almost no notice of Network Rail’s failure to complete engineering works. The way in which Network Rail did not integrate with the train operating companies needs to be factored into the Office of Rail Regulation investigation.

No one has mentioned the impact on freight traffic of the overrun of engineering works. If we want to increase freight on the railways—the Government seek to do that—we must bear it in mind that predictability and guaranteed delivery times are as important for freight traffic as they are for passengers. Perhaps the Secretary of State knows that freight customers had to be told that depots at Daventry were effectively isolated by the west coast main line works and their overrun. That is especially bad for supermarkets, which rely on freight movement being on time 24/7. The impact on freight therefore also needs to be taken into account.

If Network Rail’s failures were to continue—I certainly hope that they do not—that would lead to freight going back on the roads and perhaps to the Secretary of State returning to the air to get from the Manchester area to London. That would be a retrograde step. It is important that the ORR investigation takes all those matters into account and ensures that a remedy is found. The public at large and the freight operators are entitled to a railway that is safe, clean, fairly priced, cost efficient and predictable. We are getting there in some respects, but not on overrunning engineering works.

The hon. Member for Chipping Barnet (Mrs. Villiers) referred to an episode at Portsmouth. If she had wanted to do so, she could have gone back to Paddington in 2003 when the mainline station remained closed during the rush hour because of overruns. There are several instances of overruns in recent years. On each occasion, they have led to significant disruption for individuals and, indeed, the economy. Individuals who contacted me in the past few days include self-employed people who lost much money as a consequence of an overrun. Had they known a couple of days earlier, they could at least have planned an alternative way of getting from A to B, which they could not do, because of the late notice given by Network Rail.

We need to move towards a seven-day railway. The number of engineering works, whether they overrun or not, has been increasing in frequency over recent years. It used to be the case 15 years ago that engineering works were the exception rather than the rule. Now hardly a weekend goes by when there are not significant engineering works up and down the network.

Could that have anything to do with the fact that 15 years ago there was a Tory Government who were not investing in those engineering works?

It is certainly the case that Railtrack’s failure to deal with engineering properly has made a huge catch-up necessary. The Conservative spokesperson mentioned the words “rail” and “track” quite a lot, but seemed to avoid mentioning Railtrack at all, even though it is quite an easy word to say.

Does the hon. Gentleman not admit that if the Government had come to an agreement with Railtrack, we would have a much cheaper and more efficient solution than the bodged nationalisation that those on the Government Benches have brought forward?

No, I do not agree with that. To be fair, some elements of privatisation worked better than others. As a matter of fact, train operating companies have been reasonably successful. However, the creation of Railtrack was a complete fiasco, with the setting up of a body that naturally wanted to prioritise money for shareholders in a monopoly situation. The way it did so was to spend as little as possible on maintaining the network. I welcomed the creation of Network Rail, which was a Lib-Dem proposal—one of the ones that the Government nicked, dare I say, along with many others, including independence for the Bank of England and so on. Nevertheless, Network Rail is a much better solution and we are happy that it was created.

Let us move towards a seven-day railway. Some of the engineering works, whether they overrun or not, are frankly unnecessary. I have been in dealings with Network Rail—I mentioned this in an oral question to the Under-Secretary of State for Transport, the hon. Member for Glasgow, South (Mr. Harris), in December—about the works that took place over one weekend last Easter between Lewes and Three Bridges and between Brighton and Three Bridges. The whole network, comprising two branches, was shut for two days. There is no way that Network Rail could have been working on that entire stretch for two days. There are places such as Haywards Heath where it is perfectly possible to turn trains round. What Network Rail does is purely an administrative convenience. It gets a possession order for as long as possible, in order to ensure that works do not overrun if at all possible, and in the meantime passengers are sent long distances by bus, when it is quite possible for works to be planned more adequately, making that alternative unnecessary.

It is also the case—I want the Office of Rail Regulation to look into this—that some of the rules that apply to possessions are archaic. It is time we examined whether there are excessive rules governing how works are carried out on the railway. I am conscious that safety must be the first priority for the rail network, but—

Norman Baker: I will just finish this point and then I will allow the hon. Gentleman to come in, particularly as he was not allowed to do so earlier.

Other countries in Europe allow single-line working where there are double tracks, whereas Network Rail rules insist that the whole track is taken out of service. Other countries allow temporary points to be installed, with a 20 mph cross-over, but Network Rail does not allow that. A great deal of traffic that is taken off the railways for engineering work could move if some of those archaic rules were abandoned.

I was trying to be helpful to the hon. Member for Chipping Barnet (Mrs. Villiers) earlier, as I will now show. Does the hon. Gentleman agree that one problem that has not been discussed, but should be, is the acute shortage of railway engineers in this country? A number of my friends are railway engineers and sometimes they despair. The problem obviously relates to the previous Government, but my Government have not really done enough to deal with it. Much of the reason for our problems, along with the acute contractualisation in the industry, which causes its own difficulties, is to do with the fact that, on occasion, there are insufficient railway engineers to conduct a proper safety case.

That is true. Network Rail told me that one of the problems was the number of people qualified to reinstate overhead electrification lines. There are simply not enough people able to do that. Network Rail should have identified the problem and perhaps allowed a longer period for that work; nevertheless, it is an issue. For a long period of time when Railtrack was in operation, the required investment was not being made and the maintenance was not being done, and sadly some of the skills were lost. They have to be rebuilt for the industry.

What should be done with Network Rail? Clearly there has been a failure. I accept the Secretary of State’s view that we should not prejudge what the ORR decides—I shall not make a comment about bonuses—but the enforcement powers available to it seem to be less than useful on occasion. They are not applied fully or are applied only rarely by the ORR because the public money provided by taxpayers simply gets circulated around. That does not achieve very much. A fine imposed on Network Rail may well make newspaper headlines, but it will make no practical difference to how it operates; in any case, the targets set by the ORR are out of date and need tightening.

Network Rail is receiving quite a bashing this afternoon—and quite rightly, so far as London Liverpool Street is concerned, a station which directly affects my constituents. However, is my hon. Friend surprised that the Government, in attempting to give a balanced response to the motion, have not pointed out that of the 35 major projects undertaken by Network Rail over Christmas and the new year, 33 were successful?

I am surprised that the Secretary of State did not make that point but, having said that, I think that my hon. Friend’s point provides little comfort to those who were caught up in the two episodes—at Rugby and at Liverpool Street—that were rather spectacular failures. However, if my hon. Friend wants to remind passengers caught at Liverpool Street that something went right in Glasgow, we will have to see how that works out.

More needs to be done about Network Rail and I would like the Secretary of State to look further into her noble Friend Lord Berkeley’s suggestion in the other place that foundation trust status might be appropriate for Network Rail—similar to what the Department of Health is considering for hospitals. The idea is that hospitals can get interested people—as many as 10,000—to sign up to being on a lower-tier board and that those people can then act as the body that elects a much smaller board to control the hospital. In this case, that arrangement could be applied to Network Rail, with the bonus that Network Rail would not then control who was elected—a point to which the hon. Member for Chipping Barnet referred. It would also bring to an end the current Heath-Robinson arrangements.

On the structure of Network Rail and following the earlier exchange with the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), I have looked at Network’s Rail’s website on the procedure for the selection and appointment of board members. Paragraph 28 says that public members are appointed by the board on the recommendation of a membership selection panel and later in the document it makes it clear that Network Rail’s articles of association require a majority of members to be public members. Thus, the board has a veto over the majority of members—[Interruption.]

That is a matter for the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) rather than for me. She is welcome to intervene at some stage to make her point. It is interesting that the Conservative spokeswoman clarifies a point for the Government rather than for her own party’s policies, which, as was mentioned earlier, are not at all clear. Having listened to the opening speech from the Conservatives, I have to say that their policy seems like a destination board on which it is not quite clear at which stations the trains will be stopping. Perhaps we will hear more detail when reviews or reports are discussed at some distant point in the future. What is perfectly clear is that it is inconceivable and inconsistent to argue on the one hand that the Government should do more to bring Network Rail under control while on the other to argue for a Railtrack-type solution, which moves things more into the private sector. With respect, the Conservatives need to sort out which of those directions they choose to follow rather than trying to argue for both sides of the case at the same time. I would ask the Secretary of State, however, to look further into Lord Berkeley’s suggestions about foundation status.

Is the hon. Gentleman as interested as I am in one issue? I believe that the Secretary of State said in respect of last year—or was it for the year ahead—that 30 per cent. cost savings were expected. She talked about percentage figures, so is the hon. Gentleman as interested as I am about what that means financially and what will actually happen to that money?

I will take that as a rhetorical question, not least because I cannot provide the answer. It is a valid question, however, and I hope that the Minister will respond to it in his summing up.

Somewhat surprisingly, the hon. Gentleman is making rather a good speech and I agree with quite a lot of it. I also believe that there is something to be said for Lord Berkeley’s suggestion to give Network Rail foundation trust status at some point in the future, but how large would the board have to be to provide the sort of accountability that the hon. Gentleman is looking for?

This is a tentative proposal and there will be many people with different answers to the hon. Gentleman’s question, but I think that while at least 10,000 people would be needed to own the network, no more than 30 or 40 would be required to perform day-to-day management duties on a board of this nature. However, I am open to suggestions.

Up to 40. There are currently more than 100, but the number needs to be reduced. What we need to recognise is that the present arrangement does not work, and this is an interesting idea which may provide an alternative. If there are other alternatives let us hear them, but the status quo clearly does not provide accountability, and in that respect the Conservative motion is right. In fact, having read the motion I think I agree with it, and I have come here to recommend to my colleagues that we support it. The hon. Member for Chipping Barnet has done her best to persuade me not to support it, but I think that, on balance, I will stay with her when it comes to the vote, because it criticises Network Rail in a way that I believe is right.

A wider problem, on which I intervened in the Secretary of State’s speech, is the capacity of the network. Although “Delivering a Sustainable Railway” makes many useful points and the Government have been moving in the right direction on rail in recent years, I think that they have flunked in one key respect: they have not grasped the nettle and acknowledged that network capacity needs to be increased far more than the White Paper suggests. By sorting out Gatwick airport and providing a bit of signalling here and a couple of extra lines around a station there, the Government have bought five or 10 years and nearly 15 per cent. extra capacity. The trouble—or the benefit, if you like—is that, as the amendment says, the railway is carrying 40 per cent. more passenger traffic since 1997, and the volume is increasing every year. Even if all the improvements identified by the Government were brought onstream in sufficient time, they would not cure the problem within five or 10 years.

The Secretary of State says that decisions can be made in a number of years’ time, in phase 2 or whatever she calls it, but that will be too late. The lead-in periods for major infrastructure projects such as reopening lines or building a high-speed line are such that even if the Secretary of State or her successor decides in 2012 or 2015 to go ahead with a major scheme, it will be another 10 years before it is introduced. In the meantime, it will be impossible to meet the demands caused by overcrowding. The Government ought to anticipate the decisions that will be needed now, rather than waiting for overcrowding to become even more chronic.

Does my hon. Friend agree that the £10 billion investment proposed by the Government is far less than is required to make such massive improvements in the railway industry?

The Minister seems keen for an answer to that question, and, unlike the Conservatives, I will give him one. We have a future public transport fund consisting of an extra £6.5 billion, which recognises that money can come from a climate change charge on internal flights, from the auctioning of landing slots and from the introduction of a transport development levy on heavy goods vehicles. We know how we will pay for improvements that are above and beyond what the Government propose. The Government’s scheme has been costed, but I do not think it goes far enough; our scheme has been costed, and goes further. I shall leave the economic analysis there, in the context of the three parties.

We all need to grasp the importance of growing the network, and, as the hon. Member for Crewe and Nantwich has said, that must involve public money in one way or another. There is no alternative; we cannot PFI it. Even now, however, the Government are reluctant to acknowledge that the network must grow. There is still a mindset that holds that money spent on roads is investment and money spent on rail is subsidy, which is why it is still easy to get roads built in this country—although the Government have cut the programme significantly—but not so easy to get railway lines reopened or stations opened. The hurdles for rail projects are still far higher than those for road projects. If we are to take climate change seriously, let alone congestion on the network, we must change the mindset in the Department for Transport and in the House more generally.

For 20 years—here I am making a local point—I have argued for the reopening of the Lewes-Uckfield railway line. It is a no-brainer in economic, social and environmental terms. Network Rail is on board, as are all local councils led by all parties and MPs representing all three parties. The Government, however, are largely being weak and unsupportive. Ministers have offered warm words in support, but there has been no action from the Government. I do not wish to be over-harsh but that is the reality.

I asked a parliamentary question about this matter and it was clear that the Government had no plans to re-open the line.

They have no plans to put any money in. They would be very happy if someone else did all the work and found the funds. That is not the approach they take to roads, but it is the one they take to railways. That alternative mindset needs to be changed within the Department. I happen to think that the Under-Secretary of State for Transport, the hon. Member for Glasgow, South, who has responsibility for railways, is quite good, and I hope that he has influence within the Department.

There are problems at Birmingham New Street, where the apparent solution is to deal with the passenger waiting area rather than with the fact that the station needs more track and greater capacity. That is no proper solution, but there is not even a solution of that nature at Manchester Piccadilly. Major bottlenecks around the country are simply not being dealt with under the Government’s plans.

According to a Department for Transport assumption—this was in The Times, so it must be true—in 2025, oil will be $50 a barrel. That is the Department’s official estimate on which it is basing its policy. I think it is wrong on that and that the price will be rather more than that; indeed, it is rather more than that now. As a consequence, electric-based transport, including rail, will become more financially attractive than petrol-based transport. The Department needs to reassess and amend its assumptions for oil prices. If it does, it may reach a different decision on what its future transport policies should be.

The Department’s current policies mean that the famous Mottram-Tintwhistle bypass—

At the same time as that bypass is proceeding, the Woodhead tunnel, which could be used for freight transport, is being used by National Grid to install power lines. Such are the sort of unconnected arrangements that operate in this country.

The Government have identified a number of issues in the rail industry that need to be dealt with and I accept that there are some good plans in the departmental paper. They do not go far enough, particularly in recognising the need to grow the network, but at least they are costed. Any serious party needs to have serious proposals that are properly costed. We certainly do.

Clearly, the subject of today’s debate is topical and important, because we should be giving extensive consideration to the structure of the railway at this time. The track record of the Conservative party in government was such that it is unlikely that anyone will listen to proposals that might come from it. We understand that the Conservatives might propose horizontal fragmentation of the railways, involving a merger of the train operating companies and Network Rail, but at this stage we do not know.

We do know that, over the past 10 years, we have seen massive investment in the railways in this country, resulting in huge improvements in passenger services. That does not mean that no criticism can be made of the current position or that no improvements need to be made, but it is grudging of the Opposition not to recognise that improvement.

Network Rail was created in 2004 as a not-for-dividend company. Since then, it has been largely successful, and we have seen improvements in the service provided and a decrease in delays. We have to recognise that if we are to see significant investment in the railways over the coming years—and, perhaps, investment beyond that currently proposed—passengers will occasionally be inconvenienced by engineering work. However, we shall have to get on top of the issues that have arisen over the past few weeks and do everything possible to ensure that passenger inconvenience is minimised.

We know that Network Rail has been largely successful in the work it has done. Delays caused by infrastructure have fallen significantly since its creation—and by 28 per cent. since 2004, when it took control. It is far too simplistic simply to rubbish Network Rail.

Some of the problems of the past few weeks have been discussed. My hon. Friend the Member for Central Ayrshire (Mr. Donohoe) and I have raised issues that have affected our constituents, such as the problems at Shields junction between Glasgow and Paisley. I was pleased that the Minister confirmed that those specific problems will be looked at and that any lessons that need to be learned for the future will be learned.

I understand that a number of private contractors have been involved in remodelling and signalling work at Shields junction. Many Labour Members are concerned about the problems that arise when many different organisations and companies are involved in such operations. No matter how good the planning, the more operators and private companies that are involved, the more likely it is that there will be communication problems and different interests between different organisations.

That is not a new issue. The Transport Committee has looked at it in great detail. In a 2004 report it recommended the introduction of a new public sector railway agency

“given all the powers required to manage the entire rail system.”

The report said, effectively, that the fragmentation of the railways was continuing to cause problems. One issue that we need to look at in the light of the events of recent weeks is whether the fragmentation of the railways and the number of different organisations involved has been a factor in making inconvenience to passengers far greater than it should have been and in causing overruns. I hope that the investigations promised by the Government will look thoroughly into those issues and reach conclusions.

What earthly difference would it have made if Network Rail had owned the trains as well as the track? It was its mistake, and it would still have been as bad.

As the right hon. Gentleman will be aware, delays have reduced significantly since Network Rail took over those responsibilities, which contrasts starkly with the period when his party was in power. We need to look at fragmentation and at whether, particularly in a period when there will be huge change in the railways as significant investment is made over the coming years, the structures that exist and the levels of co-operation are such that they will ensure that the work can be carried out with the least possible inconvenience to the public.

Labour Members would like to see further significant increases in railway capacity. There has already been a more than 40 per cent. increase in those using the railways. Clearly, such increases will come about only as a result of significant further investment in infrastructure and rolling stock, so this is a timely debate. The current set-up, whereby renewal work for the significant upgrading of the railways is undertaken by a wide range of private contractors, is not likely to ensure that the work is carried out in a way that provides either best value for the taxpayer or the best possible service to the public.

I am listening carefully to the hon. Lady, and I think that I follow the line she is taking. Has she read the derailment report on Waterloo, where services were taken in-house? Exactly the problems that she is outlining were recognised by the rail accident investigation branch as being a major contributory factor, although the work was carried out in-house. Thus, there is no guarantee that taking things in-house will necessarily prove to be the answer that she seeks to the problems.

I agree that simply taking things in-house will not necessarily mean that any problems are addressed. I am making the point that the railways’ fragmentation, as undertaken by his party, as much as their privatisation, has caused so many of their problems. Although I support public ownership of the railways, one of the major issues that we need to address is the impact of fragmentation.

The point that I have been attempting to develop is that we must move back to a unified railway system. We have heard about the significant amount of engineering work over the festive season. That is a quieter part of the year, and decisions have been taken to carry out work during such times and at weekends. If such significant work is to take place, there will be inconvenience, and we must ensure that our structures enable that work to take place.

Does the hon. Lady accept that although the Christmas and new year period was quieter in terms of numbers, it is the time when people who are not regular customers use the railways? Their experience of the railways was therefore a terrible one, and the business will not grow if people who use the railways once a year experience such things.

I agree. As someone who used the railways over the past few weeks, I am aware of what the hon. Gentleman describes. People will take a number of factors into account when using the railways, one of which is fares. We must accept that engineering work will need to be carried out at some point, that whenever it takes place it will cause some form of inconvenience to passengers and that this is about trying to ensure that inconvenience is minimised.

I hope that the House will agree that the railways will provide an important part of our transport future. Compared with many other forms of transport they are very environmentally friendly, and we must invest more in technologies to ensure that they become even more carbon friendly. We must do far more to invest to make rail the preferred mode of domestic traffic within Britain, because the reality is that not only are the railways often a slower and, as the hon. Member for Lewes (Norman Baker) has said, on occasion, although not always, more unreliable mode of transport, they are often a more expensive one. Indeed, it is often cheaper to get a package flight to the Caribbean than to get a first-class flexible ticket to Scotland.

Passengers will take a range of factors into account when considering whether to choose railways as their mode of transport. We must consider whether the structure of the railways is the most effective way of ensuring that passengers receive the best possible service, and I hope that the House can unite around that. I am grateful to the Secretary of State for her undertaking to investigate the events of the past few weeks, and I hope that the Opposition will consider the outcome of the investigations as carefully as they have considered the problems.

It is almost always a pleasure to hear the name of my constituency on the national media, but that was not the case over the Christmas and new year period. All the adjectives that hon. Members have used to describe what happened during that period are justified and I shall not repeat them all.

What occurred was obviously unacceptable. It was a chronic failure of management and, to be fair to Network Rail, it has accepted that. We do not need to argue about whether what went wrong over Christmas and new year was or was not a bad failure of management by Network Rail: it admits that. The question is in what way it failed and whether we can ensure that it does not fail again.

I agree with the hon. Member for Ellesmere Port and Neston (Andrew Miller), who is sadly no longer in his place, that the project was very big, and it is inevitable that things go wrong in such projects. However, it is not inevitable that things should go wrong to such an extent, nor that it should take so long to put them right. That is what we need to focus on when we discuss what happened.

I also agree with the hon. Members for Stroud (Mr. Drew) and for Lewes (Norman Baker) that the explanation that Network Rail has given is, in large part, that it simply did not have enough skilled labour to get the job done, not just around Rugby but elsewhere on the network. I understand that, and it is a reasonable point to make, but we have to ask at what point that became apparent to Network Rail, and therefore when it should have decided to do something about it. When we consider what we definitely know, it is apparent that Network Rail management knew—certainly by 21 December, and probably a long time before—that there would be significant problems in the area around Rugby. However, it is not apparent what, if anything, management decided to do about it. Those are the relevant questions not only for the regulator to address when the inquiry begins, but ultimately for the Government and the Secretary of State to address.

On 21 December, when Network Rail realised that the engineering work around Rugby was due to run into new year’s eve, what did it do? What action did it take? What did it do when it realised that the work would overrun beyond new year’s eve? The management has given me and others the explanation that when they talked to the limited supply of skilled engineers and electricians who had the knowledge and expertise to deal with the overhead lines—which is what needed to be done—they all said that they had made other plans for the new year celebrations. One can understand that to an extent, although it should have been anticipated. However, the line did not reopen until 4 January. What went on in the Network Rail management offices that meant that they did not make adequate provision to ensure that the line opened almost immediately after the new year? One has to wonder whether managers made a clear calculation that the works would inevitably overrun by more than was acceptable and that the company would be fined, but that it would be easier and cheaper to pay the fine than to do what was necessary to get the work done on time. That is what the Office of the Rail Regulator will investigate, and we all—especially the residents of Rugby—look forward to the conclusions of that investigation. It seems to me that we have to ask such questions.

Another question that should fairly be asked of Network Rail is about the information that it gave to the train operating companies. Virgin Trains suffered hugely as a result of the overrun and was not given adequate information at adequate times. After the first announcement of the engineering overrun, the Virgin Trains website said that although people could not travel on new year’s eve and new year’s day, for which the company was sorry, their tickets would be valid on Wednesday and Thursday. It quickly became apparent that rail travel on Wednesday and Thursday was not going to happen, either. That made Virgin Trains look foolish. The company would have made that announcement based on information that it was given by Network Rail. If that information was wrong, we need to understand why it was wrong and why Network Rail did not give out accurate information about when it realistically expected the line to reopen.

I have said that normally it is a pleasure to hear about my constituency in the national media or anywhere else, because it is an attractive place to visit. I am sorry to say that no Member of this House—or anyone else—has been able to do so effectively for a long time. My interest as the Member of Parliament for Rugby is not only in the level of disruption in and around Rugby and its effect on Rugby’s reputation, but in what the disruption and its consequences mean for the people whom I represent. One of the problems that the level of disruption throws up is that those who live in Rugby or travel from Rugby station see an awful lot of down sides in the disruption caused by the upgrading of the west coast main line. They cannot rely, as perhaps others elsewhere in the country can, on the hopeful prospect that one day it will all be wonderful and that they will be able to get up and down the country easily and much more quickly. For those who live in or travel from Rugby, that is not necessarily the case.

The Under-Secretary of State for Transport, the hon. Member for Glasgow, South (Mr. Harris), knows my points, because I have made them to him before. He will be relieved to hear that I shall not go through all the detail again. He understands my case. The problem is that the overruns in engineering work and disruption affect people in Rugby as much, if not more so, as everyone else. However, those people do not have the prospect of a better service when it is all done.

The 2009 timetable shows that not only will there arguably be a less good service down to London and back at peak times, but the services from Rugby to the north-west and Scotland—hon. Members have mentioned them in particular—will be noticeably worse. There is a tension, if not a conflict, that we must resolve. If we are to develop a fast rail line, as the west coast main line will be, of course it is right that there will be a tension between getting people from one end to the other as quickly as possible while simultaneously stopping the train at all the places where people wish to get on and off. I understand that. However, it does not seem that it can possibly be right that the improvements to the west coast main line could so effectively bypass the people of Rugby, who have suffered so much in making them happen.

We have seen all the work on the track and the new station being put up, but there is little point in those improvements for those who live in or travel from Rugby if all they achieve is the quicker passage of other people through their town. People in Rugby want to be able to get on the train at Rugby and to go to the places to which they want to go.

I am taken by the moderation of the tone of my hon. Friend’s speech. I entirely share his views on the point that local services will be less frequent because long distance services will be faster. Macclesfield station suffers from that, as the Under-Secretary knows full well. I shall meet the managing director of Arriva, the company that has taken over from Virgin Cross Country, and that will be one matter that I shall raise. Why should people from Scotland get to London more quickly when people from Macclesfield cannot travel to Birmingham or Manchester so frequently?

I agree, and I was about to say that one of the most important things about access to Rugby is that it means that people are able to enjoy the town and everything that it has to offer. That is especially true for passengers from the north-west, and I look forward to my hon. Friend travelling to Rugby regularly when he and I have succeeded in persuading the Minister that there should be a better stopping service on the west coast main line.

I understand the conflict facing the Minister. He does not have an easy task, but the problem is that those who have suffered the most from the terrible debacle on the west coast main line over the past few days are likely to benefit the least when the work is finished. That will cause greater resentment and make it more difficult to attract people onto the railways. The hon. Member for Lewes was right to say that people will put up with a bit of inconvenience once in a while when they understand that a big project has to be carried out, but that they will not do so over and over again. They will not put up with inadequate information, or with being told one thing one day and something else the next.

If such episodes become more frequent, people will revert to the sort of behaviour that we do not want them to adopt—they will get back into their cars and drive, instead of taking the train. It will then be much more difficult to persuade them to leave their cars behind and try the railway again when the work is done and the service is as fantastic as we all hope that it will be.

Many legitimate questions have been raised in the debate about the terrible incidents over the turn of the year. We all accept that the project was a big one, but we have to understand why Network Rail’s management failed so badly. We need to know what went wrong, and to make sure that we can look people in the eye when we tell them, “Use the railways, they are a good way to get around.”

At the moment, I do not think that I can look my constituents in the eye and say that. I do not imagine that the hon. Member for Lewes or my hon. Friend the Member for Macclesfield can do so either. Those of us with constituencies along the west coast main line are all in the same position, because a terrible mess has been made of improving the rail system so that people can get around the country.

Even when the disruption is over, people along the west coast main line will not see an improvement in their rail service. They may see a shiny track, and they may even glimpse a train passing through their stations at 125 mph, but that is not what they are looking for. That is why the answers to the questions that have been posed this afternoon matter.

I hope that the response from the Office of Rail Regulation will answer those questions. The Government must take on board the points made—very fairly—by Opposition Members in this debate about the structure of Network Rail. However, I hope that the Minister will also look at how the rail network as a whole is structured, and at how it can be made to operate for the benefit of people up and down the country over the next few years.

I very much welcome this debate. Many hon. Members have a lot to say about what is happening on the railways, and those of us who believe firmly that the rail service can make an enormous contribution to the fight against climate change want to ensure that it is as good as it can possibly be. Rail travel can be extremely quick, and it is much safer than road travel. It has a significant role to play in helping to combat climate change. The Climate Change Bill will set the challenging target of reducing carbon emissions by at least 60 per cent. by 2050, and greater use of the railways will be vital if we are to achieve that.

However, there is a genuine problem with the services offered on Sundays. I fully understand that our rail networks need to be maintained and upgraded, and I support that. I also appreciate why much of that work has to take place on Sundays, but I want to question our attitudes to Sunday services. Under this Government, there have been considerable improvements in the frequency of some trains and in the quality of rolling stock, but in many parts of the country the attitude to the provision of Sunday services remains very outdated. In those areas, the approach seems to be that train services exist only to transport workers five days a week, in a world where annual holidays last from Saturday to Saturday and football matches are only ever played on Saturday afternoons. However, the world has changed—as anyone who has been to an airport or shopping centre on a Sunday will know.

People want to travel on Sundays. They may want to have a family day out at the seaside or attend a sporting event or go shopping, but they invariably find that they cannot make the necessary return journey by train on a Sunday. Anyone going away for a weekend, or a student coming home from university for a weekend, will want to travel on a Sunday, but railway services are very restricted. For example, the earliest that people can leave Llanelli on a Sunday is 11 am, which means that they cannot get very far. They cannot get to the seaside until after lunchtime, and if they want to come to London they will not get here until late afternoon if they are lucky and have not been delayed too many times by various transfers on to buses and other delaying tactics that seem to beset the railways on a Sunday.

I have often found that Sunday services are crowded, especially during the evening when people are trying to get back from weekends away. Many people are completely put off travelling on a Sunday by the lack of trains, the lack of choice of routes, overcrowding or because they really cannot face the unpredictable delays and the inconvenience of struggling with heavy luggage in and out of stations and on and off replacement bus services.

We had exactly the same problem on Boxing day. Many of us witnessed traffic jams on Boxing day—a day that is now popular for sporting events and that many families can enjoy out together. If we want to encourage people to leave their cars at home and to go by train we need services that they can use. Likewise, many people who go away to visit friends or relatives at Christmas have no option but to use their cars, because they simply cannot get back on Boxing day ready to go to work on 27 December. Effectively, if people want to use the train to go away at Christmas, they have to be able to leave relatively early on Christmas eve, stay away for at least three nights and come back on 27 December. In many other countries there is a much more comprehensive service on Sundays and Boxing day. That is what we need here. Travel is an important part of people’s leisure activity and we need a much better service on Sundays, with more frequent trains and far less disruption to services.

I would like a much more organised approach from Network Rail to the maintenance and upgrading of our railways. It seems to be very inflexible in the way it works. As other hon. Members have said, it seems to take out an entire track or area for weeks and months at a time. Perhaps 200 miles of track seems to be affected. Instead, it could take the work bit by bit and say that from one station to another might be closed for a month, and then the next one and the next one. It has taken out the entire line from Llanelli to Newport. It can be immensely inconvenient to go from one tiny station to the next by bus.

The other problem is that once Network Rail has fixed its dates it is incapable of changing them. We had a poignant example last year. A big match was taking place in Cardiff and many people would have liked to take the train to it. Although there were weeks of notice, Network Rail was inflexible and unwilling to change its arrangements, so it was impossible for anyone to use the railway on that day. Many people who would have enjoyed relaxing on the train and arriving in Cardiff without the fuss of finding somewhere to park had to drive down the motorway with so many others and wait in traffic jams and queues to get into the city. There is a lot to be said for keeping a close eye on what Network Rail is doing and I implore the Minister to require strong answers about recent events during the recess and to look to the future at exactly what Network Rail can do to guarantee that its work will be much less disruptive.

On a more positive note, I welcome the Government’s proposals for simplifying the fare structure. I look forward to the implementation of a ticketing system that will ensure that passengers are sold the best available tickets for a journey. I understand that that will be in place by the autumn. It is very much needed, because the present system leaves people confused, especially if they are travelling from one area of the country to another. There seem to be so many different types of tickets and operating procedures.

We are all concerned about what happened during the recess, but there is a tremendous future for the railways and I would very much like to see that we get the problems sorted out so that people can have confidence in our service and we get more people out of their cars and on to the railways.

We saw a sorry performance from the Government Front Bencher this afternoon. There was a complete lack of analysis of what really went wrong, and a complete absence of remedies to make sure that, in future, money is not wasted and there are not so many delays. There was no real understanding of the structure that the Government created in their new Network Rail company, and there was no real, sincere apology to all the people whose travel arrangements, local stations and rail tracks were disrupted over the Christmas and new year period.

The Government are backed by Labour Members who seem to believe in a couple of myths—in ideological baggage left over from the old socialist period. One of them is the proposition that a nationalised monopoly railway, taking us back to the golden age of British Rail, would be a lot better, and the other is the proposition that fragmentation was the cause of the recent delays and problems. I shall consider those two myths before providing a bit of analysis on what is wrong with Network Rail, how it could be put right in the short term, and how it could be made a lot better through fundamental structural change in the medium or longer term.

Let us deal first with the myths. We are invited to believe that the nationalised monopoly between 1947 and 1993 was a paragon of virtue, which never delayed people, produced extremely good services, and delivered a much better railway for less money. Those of us who have read the history books, and some of those who are old enough to have lived through that period, will know that the reality was very different. Between 1947 and 1993, the nationalised monopoly was in continuous decline. I am not making a party political point. It did not matter whether there were a Labour, Conservative or Labour-Liberal coalition Government; the system did not work.

Over that long period, there was a continuous trend: a fall in the proportion of our freight carried by rail and of passenger journeys by rail. People voted with their feet and their pocket books for the flexibility of road travel. Hauliers came into the market and took the freight business. Indeed, the nationalised monopoly railway stopped competing for most freight business, because it decided that it would not do single-wagon marshalling at all. It decided that it was interested in rail freight business only if it involved complete train loads, and if there were a reasonable number of trains a day, or a week. There were only a few people in the country with enough business to get an offer from the railways to run rail freight.

It was not surprising, therefore, that there was a big decline in rail freight and passenger movements. The decline was accelerated by the gross financial mismanagement that characterised the nationalised railway under all Governments over a long period. During the period in question, huge subsidies had to be put into the railway. Despite those large subsidies, fares rose in real terms year after year, which put people off using the railways. Those on low income were deprived of any realistic chance of access to the railway, because rail travel became prohibitively expensive. It was a double whammy: the system was bad for the taxpayer, who had to subsidise it, and bad for the fare payer, because fares kept rising in real terms.

From time to time, under Treasury pressure, the railway was forced to cut services and to make closures. Sometimes there were a lot of closures all in one go, as in the case of the notorious Beeching cuts. More often, there was a dribble of closures, year after year, as and when Governments thought that they could get away with it. The nationalised monopoly always presented Governments of all persuasions with exactly the same cruel choices: “Pay up, or we close lines”; “Pay up, or we close services”; and “Pay up, Minister, or we will pick on your line for particularly bad treatment.” That was the brutal political reality that characterised the rows between the nationalised monopoly and Labour or Conservative Governments.

I find it surprising that after all these years of allegedly new Labour, the Labour party has not moved on in its thinking and realised that that was not a particularly good model. It was not even a good model for the people who worked for the railway. The nationalised monopoly kept sacking people, because as it retreated, made cuts and reduced services, it had to take cost out, although the costs still grew unrealistically. An awful lot of people were therefore made redundant into the bargain.

I think that Ministers understand those points, because we are 11 years into a Labour Government and there is absolutely no sign that they wish to recreate a nationalised monopoly. One cheer for that. We have some common ground, and some agreement. I do not expect any Minister to leap to his or her feet this evening and suggest that the record of the nationalised monopoly under Labour Governments was particularly fine. Ministers know that what I say about fares, service quality, delays, reliability and redundancies is all too true of the nationalised railway monopoly. Those on the Front Bench have at last realised that there needs to be a different model, and that a nationalised monopoly is not run by the Government but runs the Government, bosses the Government around and does not deliver for all the money that is put in.

However, many Labour Back Benchers seem to think, fondly, that there was a golden age of nationalised monopoly and, fondly, are misled into believing that their Government might one day recreate that nationalised monopoly. I should like to assure Labour Members that I do not believe that there is any chance of the present Labour Government recreating the nationalised monopoly of their dreams. The Government could not afford to nationalise the train companies, and they know that it would be a disaster trying to run the railways as they were in the 1970s and 1940s under Labour Governments and in the 1960s and 1980s under Conservative Governments. It was the failure of the nationalised monopoly that drove the Conservative Government into fundamental change, which ushered in a new era for the railways.

As someone who was involved in the decision for railway privatisation but who did not recommend the scheme that was chosen, I have no need to defend that scheme. The decision to introduce some element of private capital and some element of competitive choice and challenge did enough to transform the railways. We need turn no further than to the right hon. Member for Kingston upon Hull, East (Mr. Prescott), who has praised the way in which the privatised railway post-1993 moved from retreat and decline to an era of growth and development.

Ministers regularly use figures for the 1993 to 2007 period and, of course, they like using figures for the 1997 to 2007 period, when they can claim more of the credit. Whichever period one chooses, it presents a very different picture from the previous 40 years. It is a picture of growth in passenger travel and in freight transportation. Many of the present problems of the railways are the kind that one wants in a business. They are the problems of too much pressure of demand—more people wishing to use the railways and more people frustrated that better use cannot be made of those fabulous routes across the country and into the centres of our leading towns and cities, which are at present in the monopoly custodianship of Network Rail, the subject of the debate this evening. We seem to have some agreement that privatisation kicked off something that was rather good.

In spite of myself, I am enjoying the right hon. Gentleman’s contribution. It is good to know that we do not have to wait for the publication of his memoirs to see that he disagreed with his Cabinet colleagues on the nature of the privatisation of the railways in 1993. Before he goes on to the consequences of that privatisation, would he mind sharing with the House his specific reservation with regard to the financial structure of Railtrack, the rolling stock companies and the passenger franchising system?

My problem with the structure that we chose and with the Government’s structure is that I think we left too big a monopoly element in the track. The evil is monopoly—it is not public ownership so much as monopoly. As all the economic textbooks rightly tell us, monopoly does in the customer. It always charges too much and delivers too little. It always looks after the interests of the owners and the senior managers. It does not look after the interests of the customers or even of the more junior employees, who do most of the work. So it is a nasty system, and even public ownership does not tame monopoly sufficiently to get rid its evil consequences.

At the time, I favoured splitting the railway into regional rail companies, which would allow competitive challenge over time, because they would have to re-bid for franchises; so it was not a perpetual monopoly for them. At the same time, it would allow others to come in and build new track or suggest new services, so that there was some element of contestability where the tracks could, in certain circumstances, be used as a common carrier and would not necessarily remain the monopoly preserve of the regional company. The basic structure was to go back to regional companies.

Although I do not think it necessary, reconnecting track and train can make sense. I was a strong opponent of the London underground system developed by the Government, because I thought that splitting track and train in confined tunnels was particularly foolish. I proposed the pro-competitive solution of splitting things into competing companies that owned track and train entire with their own lines; I think that that would still be a better answer, given that the system has gone bankrupt in one major company and is obviously struggling.

I am grateful to the right hon. Gentleman for giving way once more. Would he like to share his thoughts on the fact that European legislation prevents the ownership of trains and tracks together?

I am not an expert lawyer on that issue; nor am I any kind of lawyer. However, my understanding and reading of the situation is that European legislation does not prevent that. That legislation requires more competitive challenge than a nationalised monopoly would allow, so I find myself in the curious position of supporting the thrust of those European regulations and that legislation, because competitive challenge is a good thing.

I turn to the second myth that I want to dismiss before going into the future, where the Minister wants to tempt me. That is the myth, which we have heard throughout this debate, that the particular problems of the constituents of my hon. Friend the Member for Rugby and Kenilworth (Jeremy Wright) and others were caused by fragmentation. That is complete nonsense. If Network Rail had been British Rail recreated, owning the trains that could not run, that would have made absolutely no difference to its mistake over the engineering works at Rugby and Liverpool Street. The same people would still have made the same miscalculation of failing to deliver enough engineers to sort out the complicated project within the deadline.

I am afraid that Labour Members who think that fragmentation caused the problems during the Christmas and new year are simply wrong. The problems were caused by Network Rail’s gross management miscalculation, and would have happened whether there had been fragmentation or not.

I agree entirely with my right hon. Friend. Does he accept that if Network Rail’s management themselves say that there has been a management failure, there is no need for the Government to look for any other explanation?

I agree, and I hope that the Government will not waste money on that. If Network Rail were a business reporting to me, the problem would be so obvious and would be sorted out with a timely and lively exchange with the senior management. I shall come to that when I discuss what power the Government have over that particular creature.

First, however, I should like to dismiss the fragmentation argument. If we compare the rail industry, which has all the problems that we have described—not growing quickly enough, fares too high, inadequate service for many people—with the aviation industry, a successful public transport industry in this country, the contrast is telling. The aviation industry is completely fragmented; on the Labour analysis, it should not work at all—it should be delaying passengers, putting fares up and doing all the bad things that the Labour Members I mentioned seem to expect.

The aviation industry is totally fragmented: there are competing public and private owners of airports, there is a privatised company dealing with air traffic services and a range of competing companies deals with luggage, other services and the retail offer at airports. Furthermore, competing companies own the planes and fly people around.

Aviation is more complicated to control. If there is a mess on the railways, all the signals can be put on red and problems can be sorted out. However, if a mess is made at an airport, a load of planes will stack up without much fuel and things cannot suddenly stop for a couple of hours so that problems can be sorted out. There would be a real disaster on our hands—the aviation system is much more complicated, working in three dimensions with limited runway space for landings. An awful lot of people would be at risk as they flew above the airport without much fuel in their planes.

The system shows that if we trust competition—what the Labour Members I mentioned would call “fragmentation”—we get much lower fares, much faster growth and much better passenger satisfaction. There is a much better range of offerings at a typical airport than at a typical train station. Airports usually offer a more pleasurable experience, except when the Government intervene on the security side. Aviation attracts a lot more people and delivers far more.

The Government’s problem is that aviation is a runaway success. They do not like that, as they do not think it green enough and it uses a competitive challenge model. Railways, which they think a greener way to travel, are not a sufficient success. Whether railways are greener is arguable; that depends on how many people are travelling and how old the train is, although they could well be greener in some cases. The Government have problems with the rail industry because a lot of monopoly is still left in it.

Let me turn to the main focus of the debate, which is Network Rail. Ministers would lead us to believe that this business is an independent private sector company—that it just happens to have a different structure from all other private sector companies, that it just happens to be set up by the Government, that it just so happens that the Government own all the shares, and that it just so happens that the Government give it the bulk of its revenue. Ministers must be living in cloud cuckoo land. It is a Government creature—they can do anything they like with it. They can come to this House today or tomorrow and change its whole structure, and nobody will object because all the people on the board, the membership list and so forth are creatures of this Government, put there for some strange purpose—presumably to try to pretend that its borrowings are not properly public sector borrowings but are in some mysterious way private sector borrowings. Of course, they are as public as any borrowings could be, because they all have a Government guarantee. The only reason that Network Rail has been trading without qualified accounts and having access to banks is that it gets a guarantee from the taxpayer.

The company’s financial structure is remarkable. It is a rather tiny company, as its net assets are only £6.3 billion. After all the billions of expenditure and with potentially billions in assets—or so one would have thought, given all these fabulous routes—the company’s net asset value is £6.3 billion. To put it in context, that is just two years’ worth of the revenue subsidy that the Government tip into the business. However, the business has more than £18 billion of net borrowings, or net debt, because it has a Government guarantee routing private sector money into it.

Even more remarkable is the revenue account. Last year, 90 per cent. of the operating costs were paid for by a revenue grant. Those who confuse investment and revenue subsidy complicate the debate to no little extent. Yes, the business needs investment, and yes, it is making investment, but it survives only because a colossally high proportion of its operating costs are being paid by a revenue subsidy. That does not happen to the competing road haulage or road passenger industries in the way that the Liberal Democrats imply; they seem to have mistaken investment money for revenue subsidy money.

This business is not efficient or well run, and it is not in robust financial health. It is there entirely because the Government support it with revenue and with guarantees on capital account. Its management do not seem able to make their business more efficient or, despite endless fare increases, to be able to do enough to grow the business so that the revenue strand from the fare payer overtakes that from the Government and becomes the dominant influence in the way one assumes that Ministers would like, given that they too must be rather worried about its huge dependence on revenue subsidy.

We are also led to believe that Railtrack failed because it did not invest enough. If the Minister looks at the figures, he will see that there was a quantum leap upwards in the amount of investment going into the railways after privatisation compared with pre-privatisation performance under Labour, Labour-Liberal and Conservative Governments at the time of the nationalised industry. In the last two years of its existence, before it was so rudely terminated by the Government, Railtrack had invested £5 billion, and then £5.3 billion in successive years. That shows that it was making a substantial commitment to the improvement of the railways, bearing in mind the fact that in the last couple of years of the nationalised industry the investment level had been about £2 billion. The privatised industry managed to invest at two and a half times the level achieved by the nationalised industry in its dying years. If Members wanted to rush to their feet— although they do not seem to be—to say that that was because there was a Conservative Government, I should say that the investment record under Labour and Labour-Liberal Governments was equally gloomy. There was not a sudden big reduction in railway investment when the Conservatives came to office in 1979.

Quite a lot of the railway investment under nationalisation was ill-judged. It went on glamour projects and on switching traction methods—particularly electrification, where the benefits are somewhat arguable—rather than being concentrated on better types of train, such as lighter or better braking trains, that could be used more frequently on the network, which must be the answer.

I now wish to be a little more creative and say what should happen from here. First, we all want the management of Network Rail to be made accountable for the egregious errors that we all agree have occurred in recent weeks. Those are not new errors, as my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) pointed out. It did not learn the lessons from previous mistakes when engineering works had similarly overrun. As my hon. Friend the Member for Rugby and Kenilworth pointed out, they were eminently foreseeable errors. Those involved had to undertake a survey of quantities. They needed to know how many man and woman hours of good engineering skill they needed, and to understand the complexity of the task ahead of them. The main thing that management should do in such a situation is break the job up into manageable units of work, and create a contingency for things going wrong—people not turning up on new year’s day because they may be preoccupied, a bit hungover or whatever. Instead, they crammed too much into a limited time, and on two separate occasions they had to come to industry and the travelling public to say, “We’ve overshot. We can’t actually manage it.”

Some Labour Members seem to think that it is a sufficient excuse to say, “Oh well, some of this work entailed private contractors, which again shows that fragmentation was wrong, but it was a mistake to use private contractors.” It was the call of Network Rail, the Government’s own creature, whether to use private contractors or to hire the staff in-house so that they were permanently on its books. That is a matter for Network Rail; I do not have an ideological bias on that. Sometimes it is better to have one’s own people in-house, and sometimes it is a good idea to use private contractors. People need to form a judgment based on how often they use them, how much they cost and how competitive the consultants and contractors are.

We pay very large salaries to Network Rail senior executives so that they can decide such matters for us. Ministers should be supervising that process. If senior managers cannot make such judgment calls sensibly—if they get the balance between in-house staff and private contractors wrong, if they get the bills of quantities wrong or if they cannot work out how long a given type of engineering will take—they simply are not up to the job.

The defence of Ministers is to say that that is not really any of their business because they have created an independent private sector company, and it is up to the board of the company and the remuneration committee of the board to take the necessary decisions. My view is very simple, and I think that it is shared by most members of the public. If a business is 100 per cent. owned by the Government, if 90 per cent. of its operating costs are paid for by taxpayers’ subsidy and if all its borrowings are guaranteed by the public, we should expect our representatives—the Ministers—to hire the best managers, and fire them if they get it wrong, or to find a way of making sure that they do not get it wrong again.

I found the evasive answers from the Secretary of State on the matter of remuneration and bonuses both surprising and depressing. If I were running a private business and my managers had done something wrong, the first thing I would say to them, after one had got to grips with the magnitude of the error, would be, “Of course, there won’t be any bonuses this year.” I think that they would then say, “Well, if that’s all you’re going to do to us, boss, we’ve got off quite lightly. Can we keep our jobs?” One might hear that sort of thing in the private sector context. Why do we not have that sort of feeling in the public sector? Ministers should have a private but lively conversation with the managers in this company to tell them that this is not only unacceptable, but that there has to be some visible financial penalty on senior managers.

We are talking about people earning exceedingly large sums of money. I do not want to penalise those at the bottom of the heap who did all the work and did not get paid much for turning up on a wet and cold December night, but the people at the top, who have made the misjudgments, have to feel the penalty in their pocketbook. The least that one would expect a Minister to say is that the performance pay element will either be abolished or much reduced, because performance has been sadly lacking in this situation. I do not know of anyone who will write to me saying, “How disgraceful of you to say that these highly paid people cannot have their full bonuses this year”, given the suffering that people went through when they could not get their trains at Christmas and new year, and when they saw their stations and services so disrupted.

We need Ministers to tackle the rather ramshackle structure of Network Rail and to put in place a serious board with a limited number of really good people who can provide a critical appraisal of senior managers and provide focus through the remuneration committee and board meetings to ensure that such things are unacceptable to the board and, therefore, are less likely to happen in future. It will not help to have 100, 1,000 or 20,000 “members”, or whatever. That is completely bogus. It is mock democracy, whereas I am a true democrat. If it is to be proper democracy, all 60 million people, or all 45 million taxpayers, have to be involved because we are the stakeholders. We are the ones who are paying the bills. However, that is not realistic. We have representatives to carry out the process for us, and they are called Ministers. Ministers have to appoint a limited number of really good people, who can ride the business hard and ensure that it performs to proper commercial disciplines—if they want to carry on doing things the Network Rail way.

Let us get away from the myth that Network Rail is a completely private sector entity, and let us see Ministers laying down, at least once a year, at corporate plan and Budget time, what they expect for the £3 billion-odd of Revenue subsidy and what they expect for the several billions of guaranteed investment moneys borrowed on the taxpayer tab. We need to see performance, and there have to be results to show for such a sum of money going into the business. I see no evidence from today’s debate, from reading the papers, or from previous debates on the subject that Ministers have seriously entered into the complicated but important task of setting feasible, limited objectives for the expenditure of that money, and determining how they will hold people to account if they do not achieve them.

On a point of clarification, the right hon. Gentleman may have missed the publication in July of the Government’s White Paper, which contained the high level output specification. That specifically states what we expect to buy from Network Rail in terms of performance and efficiencies. It sets out explicitly the statement of funds available. It sounds to me as if he has just described what we have already produced in July. He referred to that being done on an annual basis, however, and we are doing it on a five-year control period basis.

The Minister put it very nicely, but of course I have seen the high level outputs. I would not come to such a debate and do the House the discourtesy of not having read a little of the background material.

The Minister outlines the first part of the process, but it is necessary to take the high level outputs and the five-year plan and turn them into something that relates to the half-yearly and annual reporting cycle of a proper company—the Government say that Network Rail is, but I say that it is not. That process has to take place at a more detailed level through the eyeballing of senior management in the ministerial office.

When I was a middle-ranking Minister, one of the main things I did was to have annual corporate plan review meetings with the bodies that reported to me, and those were very serious meetings. I prepared very strenuously for them; I trust that the people on the other side did, too. They were rather foolish if they did not. I used those meetings to say, “You’ll be very pleased to hear from a Minister like me that you are going to get some money, but I really expect you to make that money work very hard. This is how I expect you to make it work hard. These are the rewards for success, and these are the penalties for failure.” That has to be a ministerial function, and if the Minister is going to insist on doing it through a so-called independent remuneration committee, he will have to hand pick that committee and brief its members so that he knows they are in line with his wishes.

As far as the top people are concerned, it is more important for Ministers to get involved. We need to see performance, and the Minister needs to see it in return for all this money. The money has to be limited. It is a huge task: we have a massive railway that needs injections of cash for growth and development. It is very clear that it is not being well run or managed at the moment.

I want to see medium-term reform. Even with the improvements I have suggested, I am sceptical about how well a Network Rail monopoly would work. I have been honest with the House. I do not think that Railtrack was brilliant, either, but Railtrack and Network Rail are not very different. They have the same principal problem, which is that they are monopolies, and it is difficult to make them responsive.

I have a slight preference for Railtrack because it had more of the disciplines of the market. It was driving efficiencies a bit better—decreasing subsidy and increasing investment. It had to respond to market disciplines on many of its borrowings and activities in a way in which Network Rail does not. The Government have relaxed the constraints on the railway track monopoly and that is why they have problems with overruns, delay, poor service and high costs.

The costs have mushroomed massively since the Government took office. The Government tell us that they have been fighting a battle over the past two years to get them down again, but the costs took off in the early Network Rail period because the disciplines were relaxed.

I would prefer a system whereby track and train were reunited and there was more contestability so that no one in the business felt they had a monopoly right in perpetuity. Of course, one has to give a regional train company, which also owns the tracks, a reasonable run at it or it will not make the necessary investment. One has to give such companies specific guarantees and they have to have a decent opportunity to make investing the capital worth while. However, they must also know that, at some point, they have to try again to maintain the franchise. The quid pro quo is that one has to tell them that they can sell on the capital that they have invested and the capital that they bought and inherited so that they know that, if they are unsuccessful, they will not wipe out their shareholders. There must be a penalty but it must not be so harsh that no one will take the risk or make the venture.

Contestability is also required. The ability to run across other people’s regions and to use the track more intelligently and better is necessary. An independent regulator or adjudicator, who can decide how the track can best be used, is also needed.

At the beginning of my speech, I referred to the tragedy of having fabulous routes that are not used enough. If one flies over southern England in a light aircraft at peak hours in the morning, one sees completely jammed roads, with vehicles bumper to bumper as people try to use cars, buses and motorcycles to get to work, and practically empty train tracks. The way in which the railways are currently run means that few trains an hour can be operated on those tracks. Typically, only 24 trains an hour can run given the existing technology. We need to operate far more than that to deal with peak hour demand. The railway is better for that than for dealing with off-peak demand because frequent services are required to make rail travel attractive. The best green advantages and time advantages of using the railways are obtained at peak times because the roads are congested and therefore polluting more. We need much more peak time rail travel.

How do we achieve that? There is an easy answer in the short term, before the technology and structure are fundamentally changed. If lighter weight trains are used, more of them can be run because they accelerate and brake more quickly. That happens on many networks abroad. In Britain, our system is over-engineered and heavy. Other hon. Members have referred to the complexity and absurdity of many of the rules for taking possession of the track for engineering works. I agree, but there is another set of rules for operating a railway that militates against using modern, state-of-the-art lighter weight trains, which are perfectly safe when used elsewhere and mean that more trains an hour can be operated.

The current engineering director of Network Rail, with whom I have had conversations, accepts that lighter weight trains could make a difference. It would be a great prize, which Ministers might like, if one could run, for example, 40 rather than 24 trains an hour. I hope that they will take seriously the proposition that, if one used trains that can speed up and slow down more rapidly—of course, signalling changes would also be required to deal with that, but they could be made within the system budgets; it would be much cheaper than building new track—a big improvement in the railways could be achieved. My hon. Friends the Members for Rugby and Kenilworth and for Macclesfield (Sir Nicholas Winterton) pointed out that under this Government the railway is going in the opposite direction—unless one lives at a terminus or near a large principal station on a main line, all the expensive works may lead to a deterioration in the service because the fast trains may not stop in one’s town or city. The fast trains occupy much track space and time because they need good clearances for a long time for safety reasons as they belt along the main line route. If there are not enough bypasses or additional railway track, they clutter the track and reduce the frequency of the more mundane commuter short-hop services, which may be more important to a good travel system.

I hope that the Ministers will consider, in the investment programme, the balance between the glamorous, fast services to a few major cities and the important daily services that people in Rugby, Macclesfield, Wokingham and all the other places represented in the House this evening need. Those services are also needed to provide a greener and better alternative for people’s travel plans.

Our debate rightly focuses on the unacceptable events over Christmas and new year. Even Ministers agree that the delays were unacceptable and that a mistake was made. They say that they need a further period of reflection and inquiry to discover the mistake. Most of us believe that we know what the mistakes were from what we have read and seen. The statements and apologies made so far imply that the events were caused by a management failure by Network Rail.

I do not believe in public hanging or crude prose, which some people might believe to be appropriate in the circumstances. Far from it. I believe that we get the best out of people through incentive and motivation. However, when errors are so big and their impact is so great, there must be a penalty. I believe that it should be a financial penalty on senior management rather than, “There, there. Please make sure it doesn’t happen again.”

The Government say so often—there are many examples in recent weeks—that they will learn the lessons. I have heard nothing in the debate so far, especially from the Secretary of State, that makes me believe that she has learned any lessons. She has learned no lessons about how to get value for huge sums of public money; how to control a so-called not-for-profit independent private company, which is a creature of the state; how to choose good people and persuade them to do a good job; or how to turn an incompetent Government into a competent one.

I want to live in our great country and enjoy its facilities. I am afraid that so many facilities that the public sector owns are not well run. There is an aura of incompetence about them. When the Minister sums up, he will use all the buzzwords and buzz phrases that are on the pager or in the briefing, along with the civil service line to take, followed by—if ministerial briefings still contain it—“defensive”, for when a Minister is under pressure or things are getting bad and, over the page, “Now you’re on your own. Bad luck.” We want to go beyond that. It would give me great pleasure if the Minister said, “A lot of what you said is sensible and we will try to work out a better way of employing top managers at Network Rail.” It would be wonderful if he said that the Government would work much harder to get discipline over spending £3 billion a year of Revenue subsidy and several billion of investment and break down the high level outputs into management units that make sense and can be built into people’s incentive packages. It would be good if he said that the Government would reconsider the programme’s balance because they did not want to end up with people in Edinburgh, Glasgow and London being happy but those in Rugby, Kenilworth, Wokingham, Macclesfield and so on were not being happy because their services had been worsened by the hugely expensive investment programme.

My hon. Friends on the Front Bench tabled a fairly narrow motion because the anger of the country is currently focused on what went wrong at the weekend and over the long Christmas and new year holiday. However, there is also a strong feeling in the country that we would like to be greener—in some circumstances, travelling by train is greener than using other means—but the service needs to be accessible, friendly and feasible. We do not feel that the railway industry is ours, except when it needs someone to pay the bills, and we do not feel that, managed by the effectively nationalised monopoly of Network Rail, it is customer friendly. Apart from events over the Christmas period, it does not appear to look to a future of frequent services, lower fare packages and opportunities to use the trains that people want.

I hope that the Minister will take the opportunity to reflect a little more on the mismanagement, realise that it was not a one-off and that it will happen again unless there is some fundamental change in the Government’s approach to railway management.

There is no doubt that the rail industry in the UK is challenged by its own success. The 40 per cent. increase in passenger numbers that we have witnessed over the past 10 years and the projected continued growth in numbers is something that the rail industry in general and the Government need to respond to positively. I am delighted that the Government have indeed responded positively, with the White Paper recognising the need for continued investment in the railways, both in the short term, through the provision of longer carriages and longer platforms to accommodate them and the renewal of many outdated stations in order to make the facilities that they provide more fitting for the numbers being carried, and in some of the major projects in which the Government are investing, such as at Birmingham New Street station and in Reading, as well as Crossrail, which we debated comparatively recently, in which £16 billion is being invested.

All that is welcome, but there is no doubt that hon. Members in all parts of the House were angered and disappointed by Network Rail’s performance over the Christmas and new year period. However, it is important to put that into context. The right hon. Member for Wokingham (Mr. Redwood) talked about Railtrack, the predecessor organisation, having been—I think I quote him correctly—“rudely terminated”. However, there were few in this Chamber or elsewhere who shed tears at its termination. Whatever one thinks of the overall effect of the rail industry’s privatisation—whether one thinks, as I do, that the whole thing was botched and resulted in fragmentation, or whether one thinks otherwise—there are few who mourned Railtrack’s passing or who, having looked at the performance of what replaced it over the past few years, would fail to see Network Rail as a significant improvement. That said, I and all right hon. and hon. Members would acknowledge that the experience of rail passengers over recent weeks is intolerable and must never be repeated.

I listened with interest to the hon. Member for Chipping Barnet (Mrs. Villiers), who spoke for the Opposition, to see what alternative she would offer to Railtrack, alongside the criticisms that she made, many of which I agreed with, some of which I did not. What we heard was no credible alternative. We heard a call for reform and repeated calls for more accountability for Network Rail, but no credible alternative. She was challenged by a number of hon. Members on the Labour Benches to produce such an alternative, but consistently failed to do so.

To give credit to the right hon. Member for Wokingham, he at least offered an alternative. As I understand it, he offered an alternative that would integrate the operator of the track with the operator of the trains at a regional level. That is at least an alternative, although one may debate whether it is a credible one. However, we did not hear any alternative at all from the Opposition Front-Bench spokeswoman. It would be interesting to see whether we shall hear such an alternative in the time remaining. I would happily give way if an hon. Member on the Opposition Front Bench sought to offer one.

The hon. Gentleman may not be mindful of the fact that Merseyrail Electrics has indeed proposed such an alternative, but it has so far been regarded rather dimly by his Government.

As I have already indicated, I am firmly of the opinion that the arrangements that the Government have put in place for Network Rail are a dramatic improvement on what preceded them and that they have performed very well indeed, despite the lamentable failures of recent months. However, I repeat that we have not heard any alternative to that, to go alongside the criticisms that we heard from those on the Opposition Front Bench.

Similarly, we heard criticisms from Opposition Front Benchers and others to do with the effect of fare increases on the fare payer, but again, the Opposition signally failed to offer any credible alternative to funding for the railways or investment in them, other than through the fare box or the taxpayer. They suggested that there was indeed such an alternative, but failed to identify it.

I hope that when the hon. Gentleman reads what I said, he will agree that I set out an alternative and indicated where the money would come from.

Indeed. I recognise that such an alternative was put forward from the Liberal Front Bench; I was referring specifically to those on the Conservative Front Bench, who consistently failed to identify such an alternative, despite being challenged by Labour and Liberal Members. It is the Conservatives’ motion that we are debating and it is they whom I criticise for failing to provide any credible alternatives, to go alongside the criticisms that they have levelled.

In general, Network Rail has delivered. It faces an enormous challenge in meeting the Government’s ambitious programme of renewal for our railway infrastructure. We are undoubtedly at a time when rail is again seen as a mode of transport for the future. We were all heartened by the enthusiasm generated by the completion of St. Pancras and the linking of High Speed 1 to the station, as well as by the potential for the benefits of that to be fully exploited. Many of us also feel considerable frustration that the Government cannot as yet commit to further high speed lines throughout the UK, to take advantage of the enthusiasm generated by St. Pancras and the linking of High Speed 1 to it.

That said, there is now undoubtedly not only a challenge, presented by increased usage of the railways, but a considerable expectation that the improved services will be delivered, that the infrastructure will continue to be improved in order to enable that to happen and that Network Rail is the only credible way of ensuring that that takes place. Network Rail has much to be proud of, in how it has delivered for the passenger and on behalf of the people of Britain, and how it responded to the Government’s agenda. However, it undoubtedly also has much to learn from the events of recent weeks. One can only hope that the investigation that the Government have instigated into those events will enable them to learn for the future and to deliver, as I hope we all expect they will do, in the months and years to come.

I want to make a brief contribution. Oddly, I want to put in a small word of praise for Network Rail—I say “oddly”, because there are plenty of negatives that I could mention, such as delays and costs on the west coast main line, as well as the lack of interest in Lime Street station, Liverpool’s main rail terminus, in the city’s capital of culture year. I could also mention the muted support for the Merseyside dock expansion and the unforgivable opposition to the vertical integration of Merseyrail, as well as the extraordinary salaries paid to Network Rail’s top executives. I want to park all that and be positive, although not simply because Network Rail is currently spending £6 million on Southport railway station.

As a former member of the Select Committee on Transport, I recall the demise of Railtrack and the ensuing chaos. For years after that, all we got was retrenchment and battening down the hatches. Anyone who approached Network Rail in those days with a suggestion for rail would get a lecture about bringing down costs and running existing track efficiently—in fact, about mere coping. In those days, a business case for rail expansion was viewed as a contradiction in terms—an oxymoron, something best left to the dreams of anoraks. Now, however, as a result of the rail utilisation strategies—I believe I am the first to mention them—Network Rail has moved. It has done so ever so tentatively, but it has moved, and on to the front foot. It seems to recognise that small-scale improvements and small adjustments to networks can add functionality, capacity and utility to the rail system, bringing with them passengers, profitability and environmental and economic gain. It will probably cost less than the small change from Crossrail—I welcome the fact some of my fellow victims from Crossrail are in their places today—and will in all probability deliver huge gains for the region.

In Lancashire, for example, the rail utilisation strategy revealed desperately poor connectivity between the Preston city region and Merseyside, yet lines from both conurbations arrive in the modest town of Burscough, which has separate stations, unlinked by rail, half a mile apart, severed by Beeching and simply missing a curve. Were this in London, such connectivity would have been delivered decades ago, but because it is in the north-west, it is a struggle to get it done. At least now, however, Network Rail has conceded that there may be a case for such improvements: that is progress, that is new, that is to be applauded. Real applause will follow if the Network Rail, the operators and the transport authorities follow up the words with the money and actually do something.

I want it put on record that Network Rail is slightly, if tentatively, on the front foot. It is thinking ahead a little and talking of growing the railway, so it is not all bad news.

I am pleased to contribute briefly to this debate and delighted to follow the hon. Member for Southport (Dr. Pugh), who made a succinct but constructive contribution, based on his knowledge of his area. I commend him and I also wish to pay tribute to my right hon. Friend the Member for Wokingham (Mr. Redwood) who, in a very long but worthwhile speech, made a huge contribution to the debate. He assessed the position of our railways over a number of years and put forward some firm propositions about how to run a more effective railway service than we do now. I happen to agree with my right hon. Friend. I believe that we need to put track and rail together and go back to the regional railways that we used to have before nationalisation. That would create co-ordination and an identity that would dramatically improve the morale of the UK rail network. I also commend my right hon. Friend for the frank way in which he expressed himself, making a very positive contribution to a debate that could easily have been wholly negative and destructive but has turned out to be positive and helpful. I hope that in his reply, the Minister will display the same constructive approach.

My hon. Friend the Member for Rugby and Kenilworth (Jeremy Wright) focused most of his remarks on Rugby because he knows the area well. I happen to know it, too, as I served on the Warwickshire county council for six years and I lived in the area for five years.

I want to focus my remarks on Macclesfield and I want to take up with the Minister the matter that I raised in my intervention—whether it is appropriate for local services to suffer because of the demand for faster rail services from the major cities and urban areas to London. I asked that question because my own station of Macclesfield is going to suffer. I explained in my intervention that Arriva Trains, which has taken over the cross-country services that were previously run by Virgin Rail, is cutting local services, preventing trains going to Manchester to the north and Birmingham to the south from stopping at Macclesfield because the track is required for the increased number of inter-city trains that will be travelling much faster from Manchester to London. That strategy leaves out certain important profit centres such as Macclesfield.

The hon. Gentleman makes an interesting and valid point about inter-city services having priority on the railways, but does he acknowledge that not only passenger services but freight services are potentially affected?

Of course I do. I have always believed that freight should travel by night rather than by day in order to allow more passenger services to use the rail infrastructure during daytime. I hope that the system can be organised to allow freight to travel by night, which I hope answers the hon. Gentleman’s question.

I believe that my hon. Friend has until 6.30, but I am grateful to him for giving way. He mentioned the west coast main line and the position in Macclesfield, but does he accept that the same thing is happening elsewhere—in Lichfield, for example, where we are going to have even fewer trains than we enjoy now because of the importance of bringing down vast numbers of people down from Manchester, Liverpool and Glasgow? That should not be happening at the expense of important places such as Lichfield and Macclesfield.

Of course, I agree with my very good and honourable Friend. He is making the same point as our hon. Friend the Member for Rugby and Kenilworth. Rugby is also going to have fewer services because many more passenger trains are going to sweep through Rugby, sweep through Lichfield, sweep through Nuneaton and sweep through Macclesfield on the way from Manchester to London. That is letting down the people who are based in important profit centres en route and it is not offering the best or best value-for-money use of our rail infrastructure. The Minister must have an influence over these matters. It is no good saying that it is all up to Arriva Trains or Virgin Rail. By the way, I note that Virgin is very unhappy about losing the franchise in the north-west. Personally, I deeply regret that it has, because Virgin was extremely efficient and provided an excellent service.

Network Rail not only has to provide the signalling and track infrastructure necessary to get trains from A to B and B to C and so forth, as it also has to utilise the available land and ensure, in co-operation with local government, that there is adequate car parking close to or in the proximity of major stations such as that in Macclesfield. I have sought to put Network Rail in touch with the borough council and the county council in Macclesfield in order to treble the parking spaces. If we are to get people out of their cars, as the Government say they want to, not just for long journeys like Macclesfield to London but also for journeys like Macclesfield into Manchester, having more parking spaces will become even more important in the future.

Both the Government and the city of Manchester want to implement some form of toll or a congestion charge, but if there is no capacity on the railways, how are my constituents going to get to work in Manchester? The bus services are totally inadequate, so the only alternative to the car is the train, but if the trains are not running as a result of reduced services, all I can say is that it shows how the Government are not joined up at all. They are trying to achieve objectives, but in the process, they are dramatically undermining the ability to change travelling behaviour and get more people onto public transport. In my area of Cheshire, east Cheshire and Macclesfield, public transport is inadequate. Reducing the number of local trains will create even further difficulties.

I shall be meeting the managing director of Arriva Trains in the next 10 days, so I hope that the Minister will take this issue seriously and not send another reply to my letters, saying merely that the fast trains are going to get the automatic right to the track and that local trains will be treated akin to second-class citizens. That is not the way to operate. Will the Minister take this matter seriously?

Rail can answer, in a major way, some of the problems of getting to and from work, but unless we have the necessary number of trains and the necessary capacity on the track and on individual trains—which means longer platforms and more carriages on each train—we shall not be able to achieve the Government’s objectives in respect of climate change and carbon dioxide emissions.

I feel terribly strongly about this. I sometimes travel down by train, although I do not always do so, and I do not share the dislike of cars—almost a phobia—felt by the hon. Member for Lewes (Norman Baker). People in this country demand mobility, and cars can give it to them. In the countryside, by the way, 4 x 4 vehicles are necessary.

I ask the Minister please to respond to the genuine concern that is expressed about the way in which our rail services are organised. In an era in which the Prime Minister says that he wants a Government of all the talents, I am only surprised that he has not asked my right hon. Friend the Member for Wokingham to advise him on rail structure; but I really do want a constructive reply from the Minister. He is a decent guy and I like him. Can he come up with the answer to what has been asked in this debate?

We have had an excellent debate. The stimulus for it was, of course, the overruns in track maintenance and disruption to thousands on the west coast main line and at Liverpool Street, but inevitably the speeches covered wider issues.

My hon. Friend the Member for Rugby and Kenilworth (Jeremy Wright), in his lawyer-like manner, presented an excellent forensic analysis of the problems that have confronted his constituents. It was thought provoking and extremely well argued. We were also fortunate enough to hear from my right hon. Friend the Member for Wokingham (Mr. Redwood), who, in a truly memorable speech, gave a history lesson reminding us that British Rail was not the paragon of virtue that some seek to remember, and that nationalisation is no model for the running of a railway. He also reminded us of something that some may wish to forget: that the right hon. Member for Kingston upon Hull, East (Mr. Prescott) praised privatisation for increasing passenger traffic. My right hon. Friend was, of course, right to point out the Network Rail is the creation of this Government. At the heart of his reasoning—which is why it was so correct—was the fact that Network Rail has £18 billion of debt guaranteed by the Government, and relies on the Government for its revenue subsidy.

We also heard a well-argued and thought-provoking plea from my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) that his constituents should not be left behind in the development of high-speed services that might be introduced when the route from London to Manchester is speeded up.

Along with others, I welcome the hon. Member for Lewes (Norman Baker) to his new role as Liberal Democrat spokesman. I was interested when the hon. Member for South Thanet (Dr. Ladyman) described his speech as “good”. We always feel worried when that is said in case the next words are “and original”, and we are told that the good bits were not original and the original bits were not good.

The only part of the speech from the hon. Member for Lewes with which I strongly agreed was the part in which he said that the Government had not focused on capacity. The speech from his colleague, the hon. Member for Southport (Dr. Pugh), was succinct and positive. I wondered whether the positive element was caused by the fact that so much was being spent on capacity improvements at Southport, but I am sure it would be ungenerous of me to suggest that that was the only cause.

We heard an interesting speech from the hon. Member for North Ayrshire and Arran (Ms Clark), who is not present now. She was honest enough to state that she favoured public ownership—not a sentiment that will necessarily endear her to those on her Front Bench or, indeed, guarantee her promotion. The hon. Member for Llanelli (Nia Griffith), who also seems to have disappeared, spoke of the lack of Sunday and holiday services. The hon. Member for Leicester, South (Sir Peter Soulsby), who is present, expressed some disappointment with Network Rail, but complained that he had heard no alternative suggested from the Conservative Front Bench. I cannot remember too many alternatives coming from the Front Bench of his party when it was in opposition, but I can give him the glad tidings that we are undertaking a rail review. We are taking our time over it, and coming up with measured, costed proposals that he will be able to see later this year.

The expansion of the debate beyond the issue of overruns is hardly surprising. Members recognise that the problems with Network Rail run far deeper than the shambles that we saw over the new year. The motion calls on the Government to take steps to make Network Rail more accountable and efficient, and that is only right. Even this “not me, guv” Government must accept that they created Network Rail, and that if Network Rail is failing they must correct it and take some responsibility.

On 19 December, Passenger Focus expressed disappointment at Network Rail’s indication that there would be overruns during the new year period. Before Christmas, Virgin Trains asked the Office of Rail Regulation to take enforcement action against the likely disruption over that period. In other words, the problems on the west coast main line and Liverpool Street did not come out of the blue; they were anticipated and expected. The question to which we have failed to receive any answer, and which must be answered by the Office of Rail Regulation inquiry, is “Why did Network Rail not act at that stage?” Why did it not reschedule lesser works so that thousands of people would not be disrupted and uncompensated?

Time after time this afternoon we heard the Secretary of State say that we must wait for the review. The Government must accept that, in letters to Members, the management of Network Rail has already accepted a large part of the blame. One of the questions that the Minister might wish to answer is “When did the Secretary of State know of the likely problems?” Did she know before Christmas, and did she speak to Mr. Coucher then? If she did not—given the clear statement by Passenger Focus and others that there would be problems over the new year—she has been negligent.

As we all know, what actually happened was exactly what had been predicted: work on the west coast main line was not finished on time. For commuters in the constituency of my hon. Friend the Member for Rugby and Kenilworth, however, that is not news. During the current financial year alone, they have experienced 150,000 hours of delay. Perhaps the Minister will answer the question that the Secretary of State chose not to answer: do the Government still believe that the west coast main line upgrade will be delivered by December 2008, and if not, when do they expect it to be delivered?

Liverpool Street station was shut on 2 January following the overrun of a 10-day engineering project to replace a bridge. Andy Chivers, managing director of the National Express One franchise, rightly described that as a “major failure”. He also declared that Network Rail had not delivered on assurances that it had given him before Christmas. The Minister might care to address the following questions. Why could Network Rail not predict the likely problems at Liverpool Street? If it did predict them, whom did it tell and what did the Department do about it? This was a failure of project management systems. Who was in charge? When did Mr. Coucher tell the Department? When did Mr. Coucher know, and when did Mr. Henderson, the engineering director, know? Whom did he tell, and when? When did the Secretary of State know, and what action did she take? The short answer to the second part of that question must be “none”.

If this were an isolated incident, we would be disappointed. We would be asking, as Passenger Focus has, “Where is the compensation for the passenger?” and “Has the industry understood the problems?” If it were an isolated incident, however, we would not be having this debate. The trouble is that for all the comments about learning lessons, it was not an isolated incident. Even as we stand here today, there are Network Rail overruns in Scotland. There are systemic problems with Network Rail that need to be addressed: its efficiency, its accountability, its priorities and the way in which it delivers services to passengers.

What happened over the new year in 2008 was certainly not an isolated incident. The Government disbanded Railtrack, created and then disbanded the Strategic Rail Authority, and then created Network Rail. We were led to believe in a brave new world created by the Government: never again would there be an incident, never again would there be overruns, and never again would there be accidents. What nonsense! Network Rail has had a history of overruns and accidents. In the last two years alone, its record reads like a catalogue of mismanagement, inefficiency and incompetence. In March 2006 it was fined for failing to provide proper information to other TOCs. In September to October 2006 there were derailments at Waterloo, where the rail accident investigation branch catalogued a failure of reporting and fault management systems and supervision errors, and at Greyrigg. In March 2007, it was fined for overruns at Paddington.

In July 2007, Network Rail was fined £2.5 million for failing to complete re-signalling at Portsmouth. At that point, the ORR concluded that Network Rail had failed adequately to evaluate and mitigate the risks associated with the project. That might sound rather familiar to constituents of my hon. Friend the Member for Rugby and Kenilworth, for that appears to be exactly what happened there over the new year. Far from learning any lessons, Network Rail seems to have failed to address those lessons.

Mr. Coucher—following the lead of the Government, who seem to say, “It’s not our fault, it is always someone else’s”—has sought to blame his contractors. This is feeble at best and disingenuous at worst. It is feeble because these projects have long lead times, contractors need to procure supplies and TOCs need up to 15 months’ notice. If that were so, the question we should be asking is whether the complete scheme was identified on time and agreed, and what interaction Network Rail was having with its contractors.

It is feeble to blame the contractors, partly because only a bad workman blames his tools. It also implies a complete failure of oversight, of management supervision and of management. The accident report for Waterloo shows that failures have happened whether functions have been taken in-house or not.

The hon. Gentleman has found Network Rail guilty as charged and there are certainly other issues with which it could be charged. However, I am not quite clear what the sentence is. What is the hon. Gentleman’s remedy to deal with this matter?

I am just coming to that point, but I agree with my hon. Friend the Member for Macclesfield. Network Rail is not properly accountable and it needs to be made so, but do not take our word for it. This morning, one could have read Tom Winsor’s remark that

“Network Rail is a company supposedly answerable to its stakeholders…they have no power.”

Lord Berkeley, a Labour peer, said:

“I think it would be helpful to Network Rail and all the people that use the network if there were greater accountability”.

Network Rail's structure ensures that it is accountable only to itself. My hon. Friend the Member for Chipping Barnet has already highlighted the problem of fines and has said that she believes that the ORR might require extra powers. She is right.

Where else should accountability for Network Rail lie? Should it lie with the non-executives, who awarded themselves a pay rise of 18 per cent. on average last year and are supposed to be holding the executive body to account? In yesteryear, the then, and hopefully soon to be again, Labour Opposition used to lecture us about fat cats. At least those privatised companies delivered. In the world of new Labour, a failure to speak out or to provide accountability earns people a self-awarded 18 per cent. pay increase. Causing disruption to thousands of people earns the chief executive a £466,000 salary and £76,000 in bonus.

The short answer is that Network Rail is not a private sector company but a public sector one. This Government created Network Rail. The Secretary of State today has sought to hide behind the ORR. It is typical of an exhausted Government, clamouring for any credit they can find but shirking any responsibility. The Secretary of State failed to answer the key questions today. When did she know? What action did she take? Increasingly, she is a Secretary of State out of touch with the needs of the travelling public. Network Rail is in danger of hitting the buffers.

If, after the new year chaos, the travelling public and the TOCs view Network Rail as not fit for purpose, that is equally so of the Government and the Secretary of State. The Government have a responsibility to ensure that Network Rail works. It is a failure: the failure of the Government. The travelling public, who suffered fare increases of up to 14 percent and often travel in sub-human overcrowded trains, deserve and have a right to expect better.

This has been a very good-humoured debate—at least the middle of it was; the beginning and end have been less so.

I will come back to my prepared comments, because first I want to make it clear that mistakes have been made and Network Rail has issued an apology. Passengers have paid the price for the mistakes made and that is unacceptable, as both sides of the House accept. The hon. Member for Wimbledon (Stephen Hammond) has said that Network Rail is a failing company. That speaks more to his wishful thinking than to the facts. Nothing would please the Conservative party more than to have Network Rail painted as the same basket case as Railtrack. It is simply not the case.[Official Report, 23 January 2008; Vol. 470, c. 16MC.]

Network Rail came to the rescue of Railtrack. When Railtrack was drowning in its own inefficiencies, and costs for the updating of the west coast main line had gone to above £20 billion with no prospect of the project finishing, it was Network Rail that came in and rescued the project, which is now delivering at a cost of £8 billion. It was Network Rail that helped push performance up by more than 10 per cent. as measured by the industry standard public performance measure. It is the outstanding engineering experience of Network Rail that is leading renewal and expansion of the rail network at Birmingham New Street, at Reading, on the west coast main line and through Thameslink.

My hon. Friend the Member for North Ayrshire and Arran (Ms Clark) spoke about her concerns about the involvement of private industry. I do not agree with her. I do not think that the involvement of the private sector in the rail industry is a bad thing. I think that it has brought innovation and efficiencies to the rail industry. She is a solid supporter of the railways and I take seriously what she says. However, in some areas we will have to disagree. I do agree with her that passengers must get the best possible service. I have said on a number of occasions that the railways are not run for politicians or for the industry itself; they are run for passengers.

The hon. Member for Rugby and Kenilworth (Jeremy Wright), in a positive and emollient speech, asked Ministers to address Network Rail’s failings. He might be interested to know that, on 12 November last year, the hon. Member for Chipping Barnet (Mrs. Villiers) told The Daily Telegraph:

“The fat controller is still there in Whitehall”—

of all the ministerial team, I think she was probably referring to me. She continued:

“It is a real concern that Ruth Kelly (the Transport Secretary) has more control over the industry than the days when people were eating British Rail pork pies.”

If that is a genuine concern of the Opposition Front Bench, the hon. Gentleman has to accept that that comment was made in a pejorative sense. Presumably the hon. Lady does not believe that Government involvement in the industry is a good thing, yet here we have the transport Whip, the hon. Member for Rugby and Kenilworth, telling Ministers that they must micro-manage Network Rail.

I am sorry but I am not giving way, because I have a limited amount of time.

The hon. Member for Rugby and Kenilworth made some other comments about services to his constituency. He might be interested to know that, at Rugby, there will be a trebling of services from Rugby to Birmingham, Coventry and Northampton. There will be an accelerated service to London, and a new semi-fast service to Crewe giving new connections to Liverpool, Manchester and Preston. There will be a major increase in capacity in all Rugby services. The upgrade of the west coast main line will be good news for all his constituents.

My hon. Friend the Member for Llanelli (Nia Griffith) talked about Sunday services and she is right; we want to move to a seven-day service. The right hon. Member for Wokingham (Mr. Redwood) gave a speech that I thoroughly enjoyed. There were some things he said with which I agreed; I will not go into the detail at the moment. However, he has the dubious distinction of being Railtrack’s last and proudest defender. He said that there was no difference between Network Rail and Railtrack but that he generally prefers Railtrack. It says something about the self-delusion of members of the Conservative Cabinet at that time that even now, after what has happened to Railtrack, they still believe that Railtrack was not an ignominious failure.

My hon. Friend the Member for Leicester, South (Sir Peter Soulsby) talked about high-speed lines. He has mentioned the issue before, and he knows that it is still under review by the Government, and we will make further announcements on it in years to come.

The hon. Member for Southport (Dr. Pugh) made some praiseworthy remarks about Network Rail. They were, I felt, less than enthusiastic, but he was welcoming of the utilisation strategies produced by it.

The hon. Member for Macclesfield (Sir Nicholas Winterton) talked about the need for car parking at Macclesfield. He also talked about the Government seeking modal shift in respect of the importance of getting people out of their cars and on to the railways. He can search the Library and the online version of Hansard as much as he likes, but he will not find any comment by me encouraging—or dictating to—people to get out of their cars. It is the Government’s intention to provide people with informed choices, and to allow them to make decisions about which modes to use. The fact that 40 per cent. more people are using the railways today than 10 years ago says a great deal about the stewardship of the railways under this Government.

I agree with something that the hon. Member for Chipping Barnet said. There would indeed be fewer network rail possession overruns under a Conservative Government, and that would be for one very obvious reason: there would be far fewer engineering works. The west coast main line upgrade, Thameslink, Crossrail, Reading, Birmingham New Street—funding for all those projects, which are so vital for the expansion of the railway, simply would not be guaranteed under a Conservative Government.

The Conservatives always like to dispute Labour claims that they are planning to cut public expenditure. When it comes to the railways, however, we already have a cast-iron guarantee that investment would be reduced, and reduced significantly. The hon. Member for Chipping Barnet stated on her own website:

“The worrying thing is that the franchise payments the government has agreed with rail companies mean these increases are likely to continue well into the future.”

On 17 July, she stated in the House—wrongly, of course—that the Department for Transport set the franchise payments for the train operating companies and that those payments were solely responsible for increased fares. There we have Tory transport policy to date: train companies do not like paying premiums. I wonder how the hon. Lady came to that conclusion—perhaps she commissioned research from the university of the blindingly obvious? Of course they would prefer not to pay premiums, but if a train operating company is making large profits on a franchise given to it by the Government, why should not some of the profits go back into the transport budget? That is what is happening. However, like her predecessor on the Front Bench, the hon. Member for Epsom and Ewell (Chris Grayling), the hon. Lady wants TOCs to be given subsidy only from the public purse, regardless of how profitable a franchise might be. The disappearance of those premiums would present a net loss to the rail budget, so where would the cuts fall?

Let us turn to the Opposition motion, which states that Network Rail should be held more accountable—more accountable than what? Should it be more accountable than its predecessor, Railtrack, perhaps? How accountable was that organisation, set up by a failing Tory Government to oversee the decline of the railways—an organisation whose first priority was not maintaining the railways in a safe manner, but providing dividends to its shareholders? The hon. Lady waxes lyrical about the injustices of poor TOCs having to pay some of the profits back into the rail budget, but I have yet to hear her complain about Railtrack shareholders receiving their dividends while track maintenance was ignored and lives were put at risk.

How should Network Rail be held more accountable, according to the hon. Lady? That point was ably made by my hon. Friend the Member for Leicester, South. Her remarks earlier today shed no light on the matter. It was up to Eddie Mair on the BBC Radio 4 “PM” programme last week to elicit some details, and we are all grateful to him for that. Eddie Mair asked, “How would you fix what you clearly believe are structural problems in the railways?” The hon. Lady replied, “Well, we’re looking at a range of options to ensure that Network Rail does become more accountable to its customers.” Eddie Mair then asked, “What are the options for making Network Rail more accountable?” The hon. Lady said, “Well, we’re looking at a range of options at the moment. We’re carrying out a rail review, which we will be publishing shortly.” Eddie Mair’s next question was, “But can you give us no further ideas?” The hon. Lady responded, “There are a range of options we are looking at, but I can’t give you details as yet, but they will be published shortly.”

The hon. Member for Wimbledon said in his summing up that the Conservative rail policy will be published later this year. I think he also said the same thing last year—he said then that it would be published later in the year. So, that is clear then: the Conservative party regrets to announce the late arrival of its railways policy and any inconvenience that that may cause.

We have an expanding railway. We have record passenger numbers totalling more than 1 billion in the past three years. We have cheaper regulated fares in this country than we had 10 years ago. We have the youngest train fleet in Europe. For the first time in 50 years, we have a Government who are actually able to plan for expansion in our railways. A Conservative party which created Railtrack and starved the rail industry of vital investment is in no position to give lessons to this Government.

Question put, That the original words stand part of the Question:—

The House proceeded to a Division.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.


That this House applauds the Government for taking decisive action to correct the flaws of rail privatisation; welcomes the fact that the railway is carrying 40 per cent. more passengers and 47 per cent. more freight than in 1997 with improving punctuality and safety standards and record investment in infrastructure; and looks forward to seeing the results of the investigation by the Office of Rail Regulation into Network Rail’s performance, following the unacceptable engineering overruns experienced by passengers during Christmas and the New Year.