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Rail Franchising

Volume 527: debated on Thursday 5 May 2011

The Government published “Reforming Rail Franchising: response to consultation and policy statement” on 19 January this year. In it we set out, among other things, our commitment to longer franchises, less prescriptive service requirements, and the transfer of stations to train operators. The Department is now considering, within the framework, the detailed invitation to tender for the intercity west coast franchise.

Since the Adjournment debate on South West Trains, I have received thousands of letters and e-mails from long-suffering passengers around the country who are having to put up with suburban trains on mainline routes. Is it not time that we had minimum standards of comfort set out in rail franchise agreements, and should not companies that ignore such concerns not have their franchises renewed?

I appreciate my hon. Friend’s campaign on that point, but the simple fact is that on many of our suburban railways, particularly those going into London, we have limited capacity. Trains are already at maximum length, and the number of train paths is already at the maximum capacity of the railway. Taking out seats to make them larger, which I think is my hon. Friend’s point, would simply mean more commuters standing, and those commuters who join the train closer to London are vehemently against that, so the Government have no plans at the moment to specify the size or configuration of seats in commuter trains.

Will the Secretary of State expand for us on the benefits that he expects passengers to get from changed patterns of franchising? In particular, will they benefit passengers in Wiltshire, especially those who would like to travel on the proposed trans-Wilts railway, which would improve considerably our north-south travel patterns in the county?

As my hon. Friend will have anticipated, I specifically had passengers in Wiltshire in mind when we designed our franchising proposals. The key thing is to drive down the cost of our railways. We have to make them more efficient, and we have to close the productivity gap between them and competitive railways in Europe to relieve the pressure on both the taxpayer and the fare payer. The changed franchise specifications will give train operators incentives to drive down costs—something that, frankly, they have not been incentivised to do under the current system.

The Secretary of State made a point about less prescriptive service requirements, but will he give a guarantee that stations such as Runcorn mainline station and Widnes station in my constituency, which have seen a significant increase in passengers in the past five years, will not, as a result of his reform of franchising, have a reduction in the number of stopping trains?

I understand the hon. Gentleman’s point, and our intention is to maintain services while creating sufficient flexibility at the margin to allow franchisees to operate their businesses in a way that makes them more efficient. That is a complex balancing act. Nobody wants train services to be reduced as a consequence, but if we are absolutely prescriptive about the timetable, down to officials detailing the precise time of every train stop at every station, the scope for improving the efficiency of our railways will be severely limited. It is a balancing act, and we are determined to get it right.

Is not the point, certainly on intercity franchises, that the concentration is on improving journey times for long distances, which has an adverse effect on small commutes, for example from Chester-le-Street in my constituency to central Newcastle, which is only a 10-minute commute, but is a well-used service? As a result of the way in which franchises are structured, fewer trains are stopping to carry commuters on that vital route.

The hon. Gentleman is right. We need to get the balance right between long-distance intercity services, where stops disadvantage long-distance travellers, and short-range commuter services. In many cases, it is not appropriate for long-distance intercity trains to have a service pattern that is organised around the local commuter travelling pattern. We need local commuter trains to deliver that.

These are complex issues. Our view is that train operators are best placed to deliver services to their users in a system that incentivises them to deliver the services that passengers want. That system has not existed hitherto under the revenue-sharing arrangements in which the Government collect most of the additional revenue taken at the fare box by the train operator. Putting those incentives back in place will deliver better services and greater efficiency.

Will the new rail franchising arrangements enable the Secretary of State to take steps to ensure that fares do not rise at the huge rates that we have seen recently, but begin to level off? Will he also make sure that it is simpler and easier for people to understand what they ought to pay for a particular trip?

The hon. Gentleman makes two good points. First, the fare system is incredibly complex and, secondly, passengers face high fare levels—we fully appreciate that. The only way in which we can tackle high fare levels is to make the railway more efficient. We are determined to do so, and we will receive and publish shortly the report by Sir Roy McNulty on value for money on the railways, which will make proposals to achieve that objective.

I am glad that the issue of fares has come up, because on 9 March the Secretary of State attended a presentation on the findings of the rail value-for-money review, which he will publish later this month. I have a leaked copy, which includes a recommendation that in future rail franchises should have

“more freedom to set fares”.

Does he stand by what he told the House on 27 January, when he said that the objective of the review was

“to reduce the burden on both the taxpayer and the fare payer”?—[Official Report, 27 January 2011; Vol. 522, c. 426.]

Yes, absolutely—that is the key objective of the McNulty review. The hon. Lady will know, if she wants to look at this objectively, that we have severe crunch-points on our rail system, where the current pattern of fares is driving perverse behaviour. The 18.59 train north from Euston on a Friday evening is virtually empty, but the 19.01 train is packed, with people standing, and the police preventing others from joining the train for safety reasons, and that is because of the way in which the fare structure works. We must be able to use the pattern of fares to address crowding, and to avoid the perverse incentives that have been created.

Can the Secretary of State explain some quotes in the document that suggest that he will allow franchisees to do what they want with fares? For example, the document states that he needs

“to consider in letting future franchises: more freedom to set fares”

and should

“encourage TOCs to take a more commercial approach to fare setting”.

There are other such quotes in the document, which seems to suggest that he will allow train operating companies to charge whatever they want.

The hon. Lady is confusing herself. The document from which she has quoted is, I think, Sir Roy McNulty’s presentation to the seminar to which she referred. It is not a Government document.

Would my right hon. Friend explain why passengers in the Greater Anglia franchise area face the possibility of having three different train operators within 18 months, which is likely to cause confusion to them and to staff? The only beneficiaries would appear to be the companies that supply the paint to change the carriages.

The decision was taken to let a short management contract for the East Anglia franchise because it is our intention to let a longer-term contract and we wanted the opportunity to incorporate the findings of the McNulty review into the franchise specification before doing so.