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Rail 2020

Volume 565: debated on Wednesday 3 July 2013

[Relevant Documents: Seventh Report from the Transport Committee, Session 2012-13, Rail 2020, HC 329-I, the Government and Office of Rail Regulation responses, Session 2012-13, HC 1059, and the Rail Delivery Group and Passenger Focus responses, HC 81.]

Motion made, and Question proposed,

That, for the year ending with 31 March 2014, for expenditure by the Department for Transport:

(1) further resources, not exceeding £3,070,706,000, be authorised for use for current purposes as set out in HC 1074 of Session 2012-13,

(2) further resources, not exceeding £4,648,442,000, be authorised for use for capital purposes as so set out, and

(3) a further sum, not exceeding £6,414,882,000, be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Nicky Morgan.)

I am pleased to have this opportunity to debate the Transport Committee’s “Rail 2020” report, which we published in January. The report sets out our vision for the railway to the end of the decade. Our main focus was considering the Government’s plan to achieve efficiency savings of £3.5 billion by 2019, and its implications for passengers and taxpayers. Currently, the railway costs the taxpayer around £4 billion each year. These issues are highly relevant to today’s consideration of the departmental estimates.

It is important to put today’s debate into context. In many ways, the railway has been a success. The number of passenger journeys has almost doubled since privatisation from 735 million in 1994-95 to 1.6 billion in 2011-12; passenger miles travelled have doubled over the same period to 35.4 billion; and rail freight has expanded by over 60%, with 11.5% of freight now conveyed by rail. There has been investment in major projects such as Crossrail and Thameslink in London, with more ongoing or planned work to electrify 800 miles of track and improve rail services in the north with the northern hub.

Can the hon. Lady tell me whether she or her Committee have made any assessment of the “Rebuilding Rail” report, which says that we could reduce fares if we could reduce the fragmentation of the rail system by bringing the rail back into public ownership?

Addressing fares is an important matter, which I shall refer to later, although we have not specifically considered the report that the hon. Lady mentions.

An important aspect of our inquiry examined Government policy on franchising, particularly in relation to securing value for money. During our inquiry, franchising policy was thrown into disarray when the competition for the inter-city west coast franchise was cancelled as a result of major errors made by the Department for Transport. We published a report on that issue earlier in the year.

A number of serious mistakes were made by officials, but there were also policy failings for which past Ministers were ultimately responsible. The review of franchising that Richard Brown undertook at the request of the Department concluded that it was not sensible to let a 15-year contract for the west coast franchise without a break clause. He also drew attention to the difficulties caused by cutting back on resources while attempting to meet an ambitious timetable. The Department has now published a new timetable. The postponement in tendering for new franchises means a delay of 26 years, with consequential uncertainty for the industry and potential financial implications. I will return to that issue later.

Rail poses a number of policy challenges. Increasing numbers of passengers have led to overcrowding on some routes, and capacity constraints can rarely be resolved quickly or cheaply. It is also important to remember that rail investment is vital for regeneration as well as for relieving overcrowding. The provision of rolling stock is complicated and expensive. Fares are often too high and difficult to understand, and a wide variety of fares are often available for the same journey, from heavily discounted “advance purchase” tickets to very expensive “anytime” walk-on fares. The structure of the industry is complex, and there is suspicion that it creates opportunities for money to leak out of the system, some of it in the form of unjustified profits.

The rail subsidy peaked at £7 billion in 2007-08, and the previous Government asked Sir Roy McNulty to consider how to secure value for money. His report was published in 2011. His most striking conclusion was that there is a 40% efficiency gap between the UK railway and four European comparators: France, the Netherlands, Sweden and Switzerland. Reasons given for that disparity include the fragmentation of the rail industry, poor management, problems with franchising, and cultural factors. He made a wide range of recommendations aimed at achieving a 30% cost reduction in the industry by 2019.

Although the rail subsidy has fallen in recent years, it is higher now than in the years before privatisation. In real terms, the passenger railway costs 50% more than in the early 1990s, and there are a number of reasons for that. Increased demand has led to new capital projects and rolling stock.

My hon. Friend may be interested to remember a report by Catalyst which found that productivity under British Rail was, at that time, the highest in Europe. Since then, things have changed dramatically.

My hon. Friend makes a relevant comment.

As Network Rail’s debt has grown, more money is being spent on servicing that debt than ever before, and train operating costs have increased. Rail subsidy is necessary. Few rail lines would be profitable on a commercial basis, and even potentially profitable lines would lose passengers if the national network was cut back. There are good environmental and social reasons to subsidise the railway, and we were pleased to hear that the Government share that view.

Although the Government want to cut the subsidy, it is not clear what level of reduction they seek and under what time scale. Neither is it clear exactly where the subsidy goes at present. The Department should articulate more clearly why it subsidises rail and what taxpayers get for their money. We recommended that the Government consult on and publish a clear statement of what the rail subsidy is for and where it should be targeted. The Department’s reply was disappointing and focused on practical difficulties because of current funding arrangements. There is scope for much more work in that area.

This issue illustrates the lack of transparency in the rail industry. That has now started to change with recent work by the Office of Rail Regulation and the disclosure of wide variations in the financial performance of different routes and operators. Establishing why those variations occur will be crucial to ensuring that the rail subsidy is well spent.

Securing the efficiency savings indentified by McNulty will be challenging, particularly as they require different parts of the industry to work together in new ways. More than £1 billion is expected to be saved from train operating costs. I am concerned, however, that the savings have been put at risk by the Department’s problems with franchising. In many cases, existing franchisees will be awarded new contracts to run services for as long as four years. The Department will struggle to drive a hard bargain with existing operators without going to the market. I ask the Minister whether the Department’s decision to prioritise the re-tendering by 2015 of the east coast main line, currently operated by the Department’s company, Directly Operated Railways, will weaken the Department’s bargaining power as it seeks to extend franchises. It is clear that the Department does not want trains to be run by the public sector.

My hon. Friend is making a powerful point. Does she agree that the Government are trying to privatise the east coast main line for completely ideological reasons, and not for reasons of financial benefit? The east coast main line gives £563.4 million back to the Exchequer, which is almost twice as much as Virgin gave back over a two-year period. It also gets only one seventh of the subsidy per passenger mile, so there can be no other reason than ideology. The plan is undermining the Government’s negotiating position as they extend the other franchises by nearly 26 years.

I thank my hon. Friend for his comment. The Minister was questioned in the Select Committee and it became apparent that the Government’s decision was to do with Government policy. I, for one, did not hear a compelling value-for-money reason for the decision.

There are a number of ways of assessing whether a franchise delivers value for money. The letter that the Minister sent to the Committee on 4 June stated that, over the three years 2009-10 to 2011-12, the inter-city east coast franchise produced a net return to the Department of £563 million. The letter also stated that, over the same period, the west coast main line made a net return of £290 million. The Minister certainly did not accept that that meant that the east coast franchise produced better value for money, but I am simply presenting the facts in the letter as a contribution to the debate. One consequence of the decision has been the postponing of the re-letting of the west coast franchise by 29 months, to April 2017. The previous timetable had been announced as recently as November. It is a matter of concern that such constant change is unsettling for the industry.

We have already seen two direct awards to current operators, and neither has demonstrated how the Government can secure a better deal for passengers or taxpayers. In the case of the west coast franchise, we were told that there might be new services to Blackpool and Shrewsbury, but they have not materialised. The old Essex Thameside franchise paid money into the Department. The new one, a directly awarded contract to run until September 2014, will cost the taxpayer money. Will the Minister acknowledge that there will be problems in achieving the McNulty savings in the light of the franchising fiasco and its aftermath?

The Committee recommended that the Department should strengthen its commercial capability in relation to assessing franchises, that it should consider franchises being let and managed by a Department agency or arm’s length body, and that it should consider spreading premium payments over the full length of the franchise. We suggested that franchise periods of seven to 10 years would be appropriate while the situation was being reviewed. Indeed, a review is now taking place, and we hope to hear the Government’s conclusions shortly.

During our inquiry, the rail unions argued that the privatised structure was the main cause of inefficiency in the industry, and that renationalisation would bring costs down. McNulty rejected that argument, saying that renationalisation would

“take years to complete, cause major diversion of effort, incur massive costs, and delay progress on improvements”

that were under way.

It has been said many times that all that is needed to solve the problem is for the franchises to be awarded to Network Rail.

Having considered all the evidence before it, the Committee decided that McNulty’s proposed methods of achieving efficiencies should be given a chance, although some concerns were expressed. We felt that if the McNulty savings did not materialise, the arguments for more far-reaching structural changes would be compelling.

We have identified a number of issues that the Government must get right if the railway is to continue to grow and become more efficient. The McNulty recommendations include calls for ticket office hours to be reduced, for driver-only operating to be the norm, and for salary restraint. The Committee considers that any changes in staffing, terms and conditions and salaries should be made in the context of a wider programme of changes made throughout the industry and after full consultation with trades unions. Any changes in the numbers and duties of station staff should not be pursued solely to reduce costs, but should reflect changes in passenger ticket-buying behaviour, and should be designed to improve passengers’ experience at stations, including their perception of safety. We were very concerned about the possibility that reducing staffing at stations and on trains would make the railway less safe, particularly at night, and would deter women and vulnerable users from travelling by train.

Given that the train operating companies depend on public subsidies, does the hon. Lady agree that it is entirely wrong for those same companies to hand over an estimated 90% of their operating profits to shareholders, rather than reinvesting them in the staff and safety provisions to which she has referred?

That is a very interesting point. The thrust of our inquiry concerned how efficiencies could be achieved without jeopardising passenger safety. As I have said, the Committee felt that the McNulty changes should have a chance to succeed, but that if they did not, other measures should be considered. We intend to return to the issue of safety in the inquiry on policing the railway that we recently announced.

We have no objection in principle to the development of joint working between Network Rail and train operators through, for example, the Rail Development Group and rail industry alliances, but new arrangements must not compromise safety. We will consider that in more detail in our proposed new inquiry on safety at level crossings. The interests of the travelling public must be protected throughout the partnerships, and so must the interests of freight, which, by its very nature, cannot be involved in a partnership in the same way as passenger rail.

I have discussed financial aspects of franchising, but other aspects are also important. One question that remains unresolved is how the Government will fulfil their promise to put passengers’ interests at the heart of franchising. We have raised that in the Committee, but we have not yet heard a full explanation of how it is to be achieved.

The outcome of the Government’s long-awaited fares and ticketing review is also crucial. We were pleased to learn that the Department had ruled out the introduction of “super-peak” fares to reduce demand for the busiest peak-time services, but it remains committed to managing demand to reduce overcrowding. It is not clear how that will be achieved. We also welcomed the Government’s decision not to proceed with RPI+3% fare increases, but recognised that that left them without a clear policy on fares. Smart ticketing is another issue mentioned in our report on which progress has been slow. Can the Minister tell us when he will publish the report of the outcome of the Department’s review, which is already overdue?

The Committee’s vision for rail included the following: a clear link between policy on rail and other aspects of transport policy; a strategic approach to policy making by the Department that does not sacrifice democratic accountability, assisted by a strong industry regulator and an effective industry leadership; clarity about the objectives of subsidising rail and how these can be achieved; more transparency about the costs of rail; passenger interests to be more clearly taken into account in deciding questions of rail policy; more modern, flexible fare and ticketing options and a clear long-term policy on regulated fares; and no diminution in existing safety standards.

The Government have struggled so far to set out their own vision for rail or to link rail policy to other transport priorities. The west coast main line franchising fiasco has knocked the Department off course and threatens to challenge efforts to achieve better value for money across the industry. Strong leadership is required.

Rail is increasingly popular. It is important that the Government’s investment in rail, as part of our transport network, secures value for money for both taxpayer and passenger.

It is a pleasure to follow, for the second successive Wednesday, the hon. Member for Liverpool, Riverside (Mrs Ellman), Chairman of the Transport Committee. Last week our discussions were about high-speed rail; this week’s discussions will be at a slightly more sedate pace.

These are encouraging times for railways in the United Kingdom. As the hon. Lady mentioned, since privatisation passenger numbers have doubled and freight is showing a healthy increase of about 60%. That compares very favourably with our counterparts on the continent. I believe it is fair to say we have had the fastest growth in rail usage.

We are also seeing a substantial programme of investment in our rail network, with large projects such as the electrification of the great western line and the midland main line and the opening of new rail lines, including, I am pleased to say, the east-west line through my constituency to connect Bedford, Milton Keynes, Oxford and Aylesbury, and, it is to be hoped, in due course going further east towards Cambridge and the East Anglian network.

The hon. Gentleman made some comparisons with the rest of Europe in terms of railway passenger numbers. Would he also make some comparisons about the levels of fares in this country and many other European countries?

I will happily do that. Indeed, I looked into this matter for a previous debate, as it is often claimed that our rail fares are the highest in Europe. Certainly if we compare immediate, walk-up, any time fares, we are comparatively more expensive, but if we look at the whole basket of fares, we compare very favourably. I urge the hon. Lady to look at an independent website compiled by regular rail users called “The Man in Seat Sixty-One”. It compares similar journeys on the continent and here, and for even very short-time advance fares we compare very favourably, so I do not accept that across the piece it is more expensive to travel by rail in this country than on the continent.

As my hon. Friend has been comparing fares between here and the continent, does he agree that we have greater scope to use different levels of fares to spread the use of our railways more evenly throughout the day, rather than having people crowding into certain rush hour periods? That would be a useful change that could be made, especially on certain lines.

I am grateful to my right hon. Friend for that. I think I anticipate where her question is leading—it perhaps relates to high-speed rail—and I hope she will forgive me for not commenting on that. However, I agree that there is potential for expanding rail use outwith the peaks. Although the whole west coast main line franchise process had to be suspended, FirstGroup’s bid submission contained an ambitious but, I thought, deliverable wish to increase patronage of the railways outwith the peaks. That will help to generate more income and bring about a shift from other modes of transport to rail.

On investment, I was mentioning some of the larger projects that are going on, but much smaller-scale, incremental improvements are being made, particularly on the west coast main line. Passengers in my constituency are already benefiting from the lengthening of the Pendolino trains from nine to 11 carriages; and on London Midland’s commuter lines the speed of many trains has already been increased to 110 mph and it is in the process of procuring additional carriages to provide more capacity on those trains. so substantial investment is being made at the moment.

That investment compares very favourably to the situation not that long ago—two or three decades ago—when our railways were in a period of marked decline. The Serpell report in the 1980s was commissioned by the nationalised British Rail, and its most radical option would have truncated the national network. There would have been nothing north of Newcastle, nothing west of Exeter and the network would have been reduced to the core inter-city lines in a bid to cut out loss-making lines and deliver the railways to profitability.

My hon. Friend will welcome, as I do, the transformation of rail services in Kent thanks to High Speed 1 and, in particular, the additional investment in extra trains and services resulting from the popularity of that new route.

I am happy to endorse the point that my hon. Friend eloquently makes. I have travelled on that line and seen at first hand many of the improvements that have been made.

The point has been made that the rail network requires subsidy to operate, and I agree with that. Many lines would not be profitable in themselves, but for social and environmental reasons they require subsidy. We need to take into account not just the operating profit and loss of an individual rail service, but the opportunity cost: the cost to the country if that rail line did not exist and people had to travel by car or another mode of transport. We can only imagine the congestion on the roads around our major cities if we did not have commuter rail lines. They might not, in themselves, be profitable, but the environmental and financial cost of having those passengers travelling by car or another mode of transport would just be too much to bear.

I welcome the Government’s commitment to continue to subsidise large parts of our rail network, but we cannot escape the conclusion that Sir Roy McNulty and others reached in their report, which was that we should be looking to make our network as efficient as possible, in order to achieve his aim of a 30% reduction in the unit cost. Our network is comparatively expensive to run compared with others. I believe that that is a product of history, not just of one approach, be it the franchise model or the nationalised model. It is a cost that has been built into the system over many decades, particularly because until relatively recently we have had a period of managed decline of our network and what investment there has been has been made on a “make do and mend” basis. Additional costs are hard-wired into our system, but the system we now have is sensibly evolving.

The hon. Gentleman is a serious student of the rail system in this country. There is not a lot in what he has said with which I disagree. He is trying to put the issue into its historical perspective, so let me put it into real historical perspective. When John Major’s Conservative Government privatised the railways in the 1990s, they came to this Chamber and told right hon. and hon. Members that there would be no subsidy. That was used as justification for selling the railways off at a lower price. Network Rail now carries a debt of £30 billion on its balance sheet, so I hope the hon. Gentleman will take into consideration the false prospectus that the Conservatives gave this House in the 1990s.

It is always a pleasure to take an intervention from my fellow Select Committee member. If the hon. Gentleman will forgive me, I will not rehash the debates of the 1990s as I am more interested in what happens from here on. In an earlier intervention, he made the point that the Government are seeking to return the east coast main line to private hands as a matter of ideology. Equally, I could argue that it is because of ideology that the Opposition want to renationalise it. I draw the hon. Gentleman’s attention to the conclusion of Richard Brown’s report on franchising, which concluded that the franchising model was not fundamentally flawed and that although the detail could sensibly be changed, the investment in and success of the railways could not have happened if the franchising was fundamentally flawed.

Let me turn to a number of initiatives that, I believe, can deliver a more efficient railway. The hon. Member for Liverpool, Riverside mentioned the development of alliances between Network Rail and train operating companies. That is a very helpful and sensible development. The one large-scale alliance, between Network Rail and South West Trains, has not been in operation long enough for us to make any sensible assessment of what savings it can deliver, but as the real expert, Nigel Harris, said in evidence to the Select Committee, it

“is the only game in town”

at the moment and requires a fair wind to achieve the savings that it hopes to.

Such alliances are not the only form of alliance available. One or two other examples provide evidence that such an arrangement can deliver useful savings and efficiencies in the railway. The project in Scotland to electrify the branch line to Paisley Canal on the Greater Glasgow network was an alliance between Network Rail, First ScotRail and Babcock engineering. They were able to electrify the branch line at a substantially lower than expected cost and two years ahead of the planned development because the power was devolved down to that level, meaning that the various experts and operators could get together and deliver the project very efficiently.

I am doing a fellowship with the Industry and Parliament Trust on the rail industry and I have spent a good number of days going around parts of the railway system. I have seen two separate examples of an alliance between a train operating company and the rolling stock manufacturer, which enables a much more efficient system of maintenance and refurbishment of the rolling stock. I visited the Kings Heath depot, jointly operated by London Midland and Siemens on the London Midland franchise, and—this will interest my hon. Friend the Member for Folkestone and Hythe (Damian Collins)—the Hitachi depot where the Javelin trains are maintained with Southeastern. Those depots are delivering a much faster and more efficient turnaround in train maintenance. They are not “grands projets” or exciting stuff, but they deliver a much better service for rail users at a much lower cost.

My hon. Friend mentions the Southeastern trains. He might have noticed that the Javelin trains perform much better in poor weather, as they can cut through the snow and, effectively, open up the lines for the more traditional services.

That is another excellent point from my hon. Friend. As we continue to procure new rolling stock, there is greater scope for the more efficient method of alliancing between operators and manufacturers.

Does my hon. Friend agree that alliances between Network Rail and local authorities are also extremely important in delivering local rail infrastructure projects, such as the Coventry to Nuneaton rail upgrade? We are working with Network Rail and local authorities, with funding from the Government, to deliver that important project.

I am happy to endorse that point. There is no one-size-fits-all model of alliance; different parts of the country will have different network requirements, and it is sensible to allow different arrangements to be established where they make sense.

Before leaving alliances, I want to sound two cautionary notes about bigger alliances, such as the one between Network Rail and South West Trains. First, they should not exclude open access operators, which I think offer a healthy alternative and competitive service on some lines. There is concern that too tight a deal between Network Rail and the dominant train operating company might—I put it no higher than that—exclude open access operators. I ask the Minister to keep an eye on that. Related to that, one of the witnesses to the inquiry that the Transport Committee is conducting into access to ports flagged up a concern that rail freight operators might be disadvantaged in securing paths on busy rail lines if too deep an alliance exists. Again, that is only one concern that has been expressed, but it is something to keep an eye on.

I agree that the Government’s review of ticketing offers considerable scope for encouraging more passengers on to the railway system and delivering that aspect of the network more efficiently and cheaply. There are all sorts of options, including smart ticketing and moving staff from behind windows on to station concourses to assist passengers; and more and more people will use their mobile phone to buy tickets and make reservations. The Select Committee heard evidence from some train operating companies that they will be able to deliver a more customer-friendly system of making reservations, rather than customers having to reserve some time in advance. There are considerable opportunities to boost numbers on our railways.

Another opportunity is offered by developing retail services at stations, from large destination stations such as St Pancras, where there is a considerable number of retail outlets, down to much smaller stations. As part of my IPT fellowship, I looked at Denmark Hill station.

Perhaps the rents from premises on stations will go to the railway industry, but profits will go to the retailers, so retail development at stations would not make much difference, I would have thought.

I must disagree. Airports derive a considerable part of their income from the retail space at airports, and I see no reason why railway stations could not do the same. I am not saying that it would transform the economic model of railways, but it would be a useful additional source of income.

As I was saying, retail development is happening at smaller stations. Denmark Hill station is a lovely Victorian building, which is being remodelled so that, instead of a fairly horrible little ticket office and coffee machine, there will be a swish café, making it a much more attractive environment that will encourage people to use the railway. There is a lot of scope in such developments. I would even suggest that, where the Government are trying to reduce Government real estate costs, they might consider moving services such as post office counters into railway stations. It would be a bit of joined-up government to have public services all available in one spot. That is just one little suggestion, but at the heart of all this is the ability of the private sector to innovate, provide different services and deliver what the customer wants.

It occurs to me that if all the retail outlets and hotels were, perhaps not renationalised, but taken back into, say, Network Rail, all the income and profits would go to the railway sector, rather than retail.

The hon. Gentleman seems to have a rose-tinted view of British Rail. I gently remind him of the nationalised British Rail catering options, from the curling cheese sandwiches to the tea and coffee that were indistinguishable. I would support private innovation in that field.

I am sorry that the hon. Gentleman has such strange views of the old British Rail, which I accept was starved of investment under successive Governments, but certainly the breakfast on the east coast main line was excellent.

I am too young to have been able to enjoy the east coast main line in those years, so I cannot comment, but from what I remember of the old British Rail Scottish region, the catering offer was not—

Has the hon. Gentleman sampled the catering offer and customer comfort on ScotRail, because I rather suspect it is not much better?

I have been on a number of trains in Scotland and had a thoroughly enjoyable experience. I do not know which services the hon. Lady has been on, but the last time I took a ScotRail train it was rather good.

If the Minister will forgive me, I want to touch on two local issues. First, I mentioned earlier the welcome investment that Virgin and London Midland are making in their rolling stock, which when all is delivered will achieve a considerable increase in capacity for my constituents. Until we get that, we have a problem with overcrowding, particularly during the evening peak. I have written to him about that before and so am just giving a gentle nudge to see whether we can reach a temporary arrangement between London Midland and Virgin to allow some London Midland passengers to use Virgin trains in the evening peak in order to spread demand.

Secondly—I made this point this last week—when we look at the second phase of high-speed rail and where the east-west line will intersect the proposed high-speed line in Buckinghamshire, perhaps it would be sensible to look at an intermediate station to allow people in Milton Keynes and the rest of Buckinghamshire to access the line.

In conclusion, the railways are in a good place. The problems and challenges we face are the product of success and increased patronage. The investment that is being made is welcome. I heartily endorse the different investments the Government are making and look forward to our achieving another golden age for the railway network.

My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), in her usual expansive and thoughtful way, gave a very detailed assessment of her Committee’s work, particularly in relation to rail franchises. Its excellent and extremely thorough report on public support for the railways and the implications of Government spending plans, as well as the subsequent report on the collapse of the west coast main line franchise, paints a worrying picture of an overcrowded, overpriced and, at times, dysfunctional railway system that needs continued public support.

The Committee also expressed a view on the delicate balance that needs to be struck, but which is not always achieved, between the Government seeking savings and seeking, at times, to micromanage while at the same time not always listening to rail users and lacking accountability, specifically in relation to the franchise process.

From a south-west perspective, we have the great western main line carrying 50% more passengers than it did 10 years ago. Network Rail states that the line is full. In 2002-03, 72 million people used the line, and in 2012-13 the figure was 110 million. The Reading to Paddington trains account for six out of 10 of the most overcrowded journeys in the UK. There is simply no more space for extra trains at peak times to relieve those pressures at the moment.

As the Select Committee acknowledged, the competing pressures mean that freight lines—so important, although that is perhaps not always fully recognised by the House—commuter lines and community lines, as well as intercity services, are almost at breaking point in some areas. On the main line between Penzance and London there is at times single-track running, in part because of the topography. Lines run along the seafront at Dawlish, and locals have concerns about that as the sea level rises.

To the great anger of people living in the far south-west, there is a sense that none of the problems is likely to be resolved because investment in rail has been made elsewhere in the country under successive Governments. We know from answers to parliamentary questions that transport and rail spend per person in the south-west is lower than virtually anywhere else in the country.

I am sorry to disturb my hon. Friend’s flow. She was talking about the competing demands for freight and passenger capacity. Does she not agree that if freight could be dealt with by alternative infrastructure investment, freeing up the main lines for passengers yet again, that would make a real difference?

That argument can certainly be made by people in the south-west, in respect of whether there is scope for realigning the routes for the main line and allowing freight to use some of the older lines. However, the issue is complicated and hugely expensive, as I am sure the Minister would be the first to tell me. There are a lot of people, certainly in the south-west, with a lot of good and interesting ideas. Were the money available, I am sure that Governments of all complexions would be prepared to consider them.

The investment started under the last Labour Government at Reading and in Crossrail will improve reliability and connectivity. However, the geographical constraints on the tracks’ infrastructure in the south-west will continue severely to limit the maximum line speed and extend journey times. If we are serious about reducing pollution and car use, it should not be quicker to drive from Tiverton or Exeter to Plymouth than to take the train.

The fragility of the south-west’s infrastructure has been ignored repeatedly. The recent severe floods affecting the signalling near Taunton, washing away the line at Cowley bridge, has served only to reinforce the view in the south-west that people in Whitehall do not have a clue about the potential for economic growth in the region.

I agree that railway resilience is a particular issue in the south-west and Cowley bridge has been a particular problem. However, does the hon. Lady welcome, as I do, the fact that many millions of pounds are now being invested in the Cowley bridge problem, in particular to make sure that cabling is above the likely water level in the event of further flooding? Does she welcome and recognise that progress?

That work was essential. We cannot continue with a situation in which severe weather conditions completely wipe out the links to the far south-west. No Government of any complexion would ever have been forgiven for not ensuring that the signalling around Cowley bridge in particular was made more resilient.

I was about to mention some of the important pinch points highlighted by Network Rail in the region, including Cowley bridge. Others were Chipping Sodbury, Hinksey, Whiteball tunnel, Athelney, Hele and Bradninch, Flax Bourton, Patchway tunnel and the Exeter diversionary route, all of which eventually need to be progressed. I fully accept that there is a restricted funding envelope, but how that limited funding is prioritised across the country can give or take away hope from rail users and local authorities, particularly in the south-west.

The latest solution for the problem at Exeter, over and above the lifting of the cabling and signalling, and put forward by the Environment Agency, appears to have been effectively to put a barrier across the section of rail if the flooding comes back, to manage the water flow. That effectively closes the south-west off for business. Plymouth has no airport and if either the M5 or the A303, which is not yet dualled, close at the same time, as has happened more than once, financial losses in the region will be significant, running into millions of pounds.

The weather troubles of last winter showed precisely the need for improvements to infrastructure in the south-west. During that period, First Great Western’s public performance measure for trains arriving on time fell to 80%. We should acknowledge—I am sure that Government Members who use the service would do so—the work that the staff of First Great Western undertook at that time, which was well over and above their usual call of duty. That includes everybody from drivers to station managers to the man who was tweeting the problems on the line—as well as the engineers, of course, who were out in all weathers trying to mitigate and cope with the effects of landslides and flooding.

And, of course, the emergency services. I thank the Minister; he is absolutely right.

The rail network is our lifeline. Ministers and officials, as well as those involved through other organisations such as the Environment Agency, who clearly have a responsibility for tackling adverse weather conditions, must understand that the transport network and the environmental infrastructure network have to work together and we have to come up with solutions that work for both. We cannot have parts of the country simply being cut off.

The growth in demand for travel to the south-west for its cities and leisure activities continues to grow, and that is a really good thing. Of course, many of these travellers and visitors are expected to arrive by rail. Indeed, 24,000 people arrived at Castle Cary to go to the Glastonbury festival last weekend, including a member of my staff, who has probably just about recovered. Many businesses are keen to establish themselves in the south-west because of the quality of life there, but they voice concerns about the transport linkages.

Yet now we have had a backtracking on promises made to MPs, commuters, local authorities and rail user groups regarding the great western franchise. The visit made by the Secretary of State, with a fanfare of trumpets, was welcome. However, on almost the same day, others were being told—officials were talking to officials in local government—that the service upgrades that we had all fought for and believed we were getting were being taken away: no early-morning train to Plymouth, no extra three-hour journeys from London, no wi-fi. Improvements could happen only if a third party—a local authority or business—was willing to contribute. It was always very unlikely that First Great Western would be willing or able to take on the additional financial risk over the shortened period of the revised franchise. There was perhaps a hope that the local enterprise partnerships could step in to assist with the recommended Heseltine regional funding, but the Chancellor knocked that on the head when he reduced so drastically the amount going to the regions.

If the Government are serious about getting growth back into the economy, they must look at the transport infrastructure in all the regions and not be totally fixated with High Speed 2. How can local authorities invest when they have just learned that their budgets are going to be cut further by the Government, with another 10% having to be found? Many are asking how they can be expected to fund and support long-distance services.

The franchising and re-franchising process has, at times, been disastrous. The Transport Committee has rightly raised serious concerns and made recommendations, one of which advised the Government to look at wider policy objectives such as the promotion of sustainable end-to-end journeys, the quality of the passenger experience, and, crucially for Plymouth and the south-west, social and economic development. It is far from clear that any of these factors have been considered with any seriousness specifically in relation to the great western franchise. Where is the joined-up government in all this? The delay and uncertainty around the great western franchise is deeply damaging to the region. Other areas are now suffering because of the failure of the franchise process. Staff on the affected lines are concerned that the pressure on the companies is leading to cost-cutting and an increase in casualisation of posts, and from the companies’ perspective there is a risk to share prices and, ultimately, viability.

There are justifiable reasons—environmental, economic and social—for public subsidy of the rail network, but it is not clear that the Government are getting value for money. There should be greater transparency on where the subsidy is going. It would also be good if we could have some explanation of why the home countries of the overseas-based companies running lines in the UK—they are usually in Europe and include France, Germany, Holland—have fares that are, on average, a third lower than they are here. Are we subsidising some of those routes in Europe?

My party rightly wants to give the travelling public some hope by using funds more wisely, scrapping the costly privatisation of InterCity East Coast and reforming the ticketing process. Introducing a legal right to the cheapest ticket will help, because people are struggling to use public transport as the cost of living rises and their wages fall.

Our rail links nationally are a vital part of our infrastructure and are essential to the growth and prosperity of our regions because of their ability to move people and freight. In many parts of the country, however, they are hampered by the failure of the franchise process, the failure of the infrastructure and resilience planning and the failure of this Government.

When Thomas Telford was invited at the end of his career to help with the engineering of some new railway projects, the inventor of this country’s modern road network declined the offer, not because he did not admire railway engineering and the extraordinary speeds that these amazing new machines could achieve—he admired them very much—but because he understood that the railway itself had a necessary monopoly that the road did not. Part of the attraction of the road to Thomas Telford was that once it was built, it allowed someone to travel at any time they pleased in their chosen method of transport, but the railway, for all its brilliance, did not.

That is not to say that the railway is not a useful or brilliant invention. It has been central to the progress and advancement of our country and all developed countries across the world. However, the railway has an intrinsic problem—this is recognised by Sir Roy McNulty’s report, the various commissions instigated by the Department for Transport and, indeed, the Transport Committee report—namely its inability to get the market to work in the normal, functioning way that it would elsewhere.

The interesting thing about the railway is that, over time, it has found different competitors. Despite the fact that its technology is intrinsically the same as that it began with 200 years ago, it continues to compete with road—over the past 50 or 60 years it has competed with it on speed—and increasingly with flight. Rail, as well as its regulation and franchising arrangements, must therefore be seen in its wider context as a competitor with other modes of transport around the country.

It is important to understand why the Government are progressing with the reprivatisation and refranchising of various lines. Ideology is important and has been brought up by several Opposition Members, but privatisation has worked not because of ideology but because it is the most practical and pragmatic way of getting the railways to work. In fact, the entire railway system, which was instigated by the Victorians and which spread around the world to America, France and elsewhere, was a product of private enterprise.

I will in a moment.

The system would not be with us today were it not for the massive investments—many of which failed as a result of the risk of capitalism—that made this extraordinary invention possible. Before I allow the hon. Lady to intervene, I recall that in a previous debate she told me about the efficiency of the German railway system, but when I reminded her afterwards that it is now a private system she could not believe it. One of the reasons this country is having to rebuild the railway network is the decades of underinvestment. That is not necessarily a product of various Governments; it is the natural result of a nationalised system whose control rests in the Treasury’s hands.

On that very point, there is still significant state involvement in German railways. What does the hon. Gentleman have to say about the fact that 60% of Britain’s rail operators are owned by European state rail arms? Our high rail fares are being used to subsidise rail services in Germany and beyond, which seems crazy to me.

The hon. Lady did not admit to the role of the private sector when I spoke to her about German railways. Of course, there is a role for the state—that is what we are discussing. Any railway has a necessary monopoly: only one train can travel at a time and it has to be owned by somebody. Unlike road, it is not possible for two trains to travel on the same track at the same time, so the state has to intervene at some point in order to regulate and subsidise, as it does with road travel.

We have seen the results of privatisation since 1995. Rail travel has increased by 133%. It is at a higher rate than in the 1920s in absolute numbers. Rail freight has also increased to a point that would have been impossible to imagine in the 1960s and 1970s.

The hon. Gentleman is raising, yet again, a correlation, not a cause and effect. Railway usage has gone up despite privatisation, not because of it.

The hon. Gentleman is a marvel of this House and is respected deeply by many Members on both sides of the House. However, he must see that the graphs of declining rail use up to 1995, for both freight and passenger, were turned on their heads after privatisation. That is not just a correlative effect, but a causal one.

I am interested in the hon. Gentleman’s history lesson. He is right that the early railways were pioneered by private enterprise. However, by the time they were nationalised, many of them were in a dire state. That was the case not just in this country, but around the world. Rail passenger numbers went down after the war because there was a rise in car ownership and because of the development of road transport. The reason Germany has good railways is that a British civil servant planned the system after the second world war.

This is an interesting parlour game and we should pursue it at greater length outside the Chamber. The hon. Gentleman is right that the railways were on their knees after the war. That was partly a result of the war and partly a result of the rise of the car.

It is interesting that this necessary monopoly that was challenged profoundly in the second half of the 20th century is now able to compete successfully with motor vehicles and planes, precisely because of the investment from the private sector. As a result of that investment, the subsidy per passenger kilometre has gone down considerably since privatisation, even though the total subsidy has gone up.

My hon. Friend is making an important argument. It has been argued that the decline of the railways was caused by the success of the car. However, car ownership in this country has accelerated since 1995. The increase in passenger numbers therefore shows that privatisation has had a huge positive effect on the railways.

I agree completely with my hon. Friend. I will come on in a second to the link between his constituency and mine.

I will give way in a while, if I may.

The Government are continuing a strategy. There are, rightly, arguments about whether the franchising process was got exactly right, but to my mind, John Major’s privatisation of the railways was one of his most significant acts. It has transformed the way in which—[Interruption.] Opposition Members laugh, but they ignore the fact that we now have some of the safest railways in Europe, second only to Luxembourg, which we did not have before privatisation.

The hon. Lady shakes her head, but she should listen to the facts. We have the fastest rate of passenger growth in Europe. We have the safest railways in Europe after Luxembourg. That is the result of privatisation, which has made a significant difference.

The ideologues are the Opposition Members, including the shadow Secretary of State for Transport, who espouse the ideology that dare not speak its name. She wants gradually to bring the railways back into public ownership and undo the extraordinary progress that has been made.

The hon. Gentleman has a very selective view of history. He obviously does not remember—perhaps he was still at school—the period between privatisation and the effective renationalisation of Network Rail, when there were a number of tragic rail accidents in this country because of the inefficient way in which privatisation was carried out and the lack of investment. He must take into account that the effective renationalisation of Network Rail was how the investment was got right.

I am giving a bit of history because it does inform our discussion of the franchise process, which is the core of the report. I am not going to start trading statistics, but over the period of Railtrack, rail safety improved and we were going up the European safety league table. The reason so much money had to be invested—very successfully with private help—was the years of underinvestment by a series of Governments, Conservative among them. I disagree with the hon. Gentleman’s intervention on that point, not least because the facts on the safety of the rail network under privatisation speak for themselves.

How do we get this franchise system to work so that rail companies can compete with their natural competitors, the motorways and the airlines? I plead with the Government to do as much as they can. I know that the advice they have had recently has been to shorten slightly the long franchises that have been planned, but the longer the franchise rail companies can get, the better their ability to invest in rolling stock, customer service and improving the capacity and punctuality of their services.

Those of my constituents who have had the misfortune of having to commute on the Ipswich to London line for a long time will say that the best improvements they have seen were under the first franchise—as I am sure my right hon. Friend the Minister will agree—which was quite long and had the loosest possible terms. It allowed the then Anglia franchisee to put maximum efforts into improving performance. The last Government did many good things in rail, but one of the bad things was to have far too tight a control over the franchises, stipulating to the dot and comma how the services should be delivered. Unsurprisingly, the bidders for those franchises went in at the lowest possible price, bidding on the specification provided by the Government, and the improvement in service flattened and, in some cases, reversed. We need as loose a franchise framework as possible, and as long as possible so that the private sector can invest as fully as possible in the services without being second-guessed by the doubtless otherwise brilliant officials at the Department for Transport.

We need to see other improvements, and I am glad that the Committee recommended them in its report. We need transparency in subsidy. The system is still not good enough at identifying where subsidy goes. I have tried to understand how much subsidy goes in to the great eastern main line. Network Rail and the Office for Rail Regulation are not good at disaggregating subsidy in sufficient granular detail. I have questioned them about control period 5, but it is almost impossible to get a decent idea of the quantity of subsidy or public investment we are likely to get in our line, which makes it very difficult for us, as public representatives, to fight for our constituents.

Transparency is also important for the way in which the franchise system develops. When privatisation was introduced, there was only one profit-making line in the UK and there are now many that turn a surplus. Effectively—and I know that the Minister disagrees with me slightly on the detail of this—fare income is transferred from one part of the country to another. Roughly £30 of the £74 standard fare ticket from Ipswich to London is paid in premium which is moved, effectively, to those parts of the country that need a subsidy. That is unfair on my constituents, especially those who are paid the same bad wages that some people in subsidised areas are paid. They rightly demand a social subsidy so that they can get their rail service for less than they would otherwise.

If a lot of our fare income is being moved to other parts of the country, it makes it difficult for us to get the investment we need. We should have more transparency about how the premiums are moved so that we can achieve some sort of parity for investment.

I turn now to a discussion of the east of England, and I know that the Minister has a constituency interest there and, therefore, a profound knowledge of the area. Only two regions of England outside London are net contributors to the UK Exchequer: the south-east and the east. Since the 19th century, the eastern region has suffered some of the worst levels of investment. Historically, there has been a poor level of investment in the main line from London to Norwich, with hand-me-down carriages and levels of service that other parts of the country have long forgotten about. The region has contributed to the UK economy in the past five or 10 years, but investment is needed for that contribution to continue. The region is not demanding new motorways or A roads, but investment is required for people to able to get from London, Ipswich and Norwich to the midlands. That would lead to growth that would make a significant contribution to the UK economy.

We are profoundly grateful for the investment that has occurred in the past few years. It was promised for many years, but not delivered. We will soon have a direct line between Felixstowe and Nuneaton, the constituency of my hon. Friend the Member for Nuneaton (Mr Jones). Thereafter, I hope we will have a direct line from Nuneaton to Coventry. I hope—the Minister will speak on this later—that there will be a new bypass loop north of the Minister’s constituency of Chelmsford, which would release capacity and improve performance between London and Norwich. All of these plans, in addition to Ely North junction, have been long promised and long talked about. They are at last being delivered, and for that we are very grateful. However, we need new trains on the new track; not now, not immediately or in the next few years, but within the new franchise that will be set in 2016. We need the new trains that have been provided to the rest of the country and have been denied to us. Whenever the rest of the country is finished with a new train, it is passed on to East Anglia. That is no longer good enough.

Well, it has been true since the 19th century. I hope that at some point we will get the new trains that will release the economic potential in Ipswich and Norwich that has so long been denied to my constituents and their forefathers.

We are making good progress. My hon. Friend the Member for Milton Keynes South (Iain Stewart) is now able to say that the railways are in a good place, something that would have been unutterable 10, 15, 20 or 30 years ago. We need investment to continue, we need to release the power of the private sector and we need to be able to continue the miracle of rail privatisation.

I will not spend too much time on the public-private argument, because that would go on for ever and we would probably never agree.

I mentioned that the Catalyst report of some 10 years ago found that British Rail had the highest productivity of any rail system in Europe. That was not because it was performing ideally, but because there was so much underinvestment that it was working “miracles on a pittance”, in the words of Tom Winsor, who was the rail regulator some years ago. He went beyond that to say that BR handed the rail system over to the private sector in good order. There was desperate underinvestment, but it did its best in difficult circumstances.

As a commuter of 44 years on Thameslink and its predecessors, I love railways. Their renaissance has been a wonderful thing and I want it to continue. I have always thought that railways would be the transport mode of the future, not the past. If one goes back 20 or 30 years, one recalls that they were regarded with utter cynicism by the Department for Transport. A senior official was put on to the BR board, as was the custom in those days. He arrived at his first meeting and said that he had come to oversee the demise of the railways—that was the attitude. Everybody thought that the great freedom-loving individualists would go by car, not by this collectivist, socialist system called rail. Nevertheless, we have seen a renaissance in the investment and use of the railways. Indeed, just about the only way to guarantee to get to a place on time is to go by rail. I could not possibly drive to Parliament at peak times; it would be impossible. I remember that my father used to drive from the suburbs of London into Kensington every day, but people could do that 50 years ago. It would not be possible now. People have to go by public transport—or, specifically, by rail. Railways are wonderful things.

Does my hon. Friend agree that increasing congestion on the roads is one reason rail usage has gone up, not the great privatisation, which is what the hon. Member for Ipswich (Ben Gummer) thinks is the reason?

My hon. Friend is absolutely right. We have seen people travelling longer distances to work and growth in the economy, particularly in London and the south-east, leading to much more commuting from longer distances to take advantage of lower house prices further from London, and so on. The amount of travelling that people need to do has increased enormously. The only way they can do it is by rail. I speak as someone who is sometimes asked by people, “How long does it take you to drive to London?”, to which I say, “I don’t know and I’ve never done it”—why would I, from Luton to London every day? That is my view of rail. I have been a passionate supporter of railways for a long time.

However, since privatisation we have seen a surge in costs, not just on the operating side, but on maintenance and track renewal. Time and again when Labour was in office, I raised with Transport Secretaries the fact that the costs of maintenance and track renewal had gone up by four or even five times since privatisation. The reason was largely to do with the move towards more contracting and away from direct works. That contracting involved lots of lawyers and layer upon layer of project management, all of which meant bureaucratic cost, which is still the situation now. Indeed, after some time maintenance was brought back in-house. The problem was that the bad habits established while it was contracted out continued and the same people who operated in the contracted-out version carried on doing the work in-house, so there was not much difference. We have to look back to how things operated in the days of BR, when they were done much more efficiently.

Direct employment of engineers is crucial in that. Rather than having project managers running schemes, with layer after layer of project management, and engineers employed as consultants, we should have engineers directly employed by Network Rail and running schemes from the top, not being brought in as expensive consultants.

May I draw the hon. Gentleman’s attention to the example I gave of the electrification of the Paisley Canal line? It involved the train operating company, Network Rail and Babcock engineering, a private contractor that delivered the project considerably under budget and two years ahead of schedule.

There are undoubtedly examples of good practice, but there are many, many examples of bad practice, involving cost overruns and things being done expensively.

Having an engineer at the highest level in projects is crucial. Project managers cannot make judgments about technology in the way that an engineer can. We need track engineers, signal engineers and people with all those kinds of skills, which are gradually disappearing because we are not training enough in-house. In future, I hope there will be a move back towards direct employment of engineers. So that is where we are.

There is also a need to invest in infrastructure. We are talking about “Rail 2020”, not longer-term investments in things such as HS2, which we debated only last week. That is all years away—it might even be parked in a siding, which I would not object to either, although that is another view. Obviously I welcome the electrification plans. They are tremendous, but other things could be done—and need to be done quickly and could be done inexpensively—to make major improvements. As I said last week, upgrading the east coast main line, for example, could make a tremendous difference, even simply by doubling the viaduct at Welwyn. At the moment, there are just two tracks over the Mimram. If there was another viaduct, there would be four tracks and the bottleneck would be overcome. That would cost something, but nothing like the billions we are talking about with HS2. If we had east-west flyovers at Peterborough and Newark, it would free up the track for fast operation.

As I mentioned last week, a 1990 test run was undertaken by BR to see how a fast train could operate from King’s Cross to Edinburgh. Remarkably, the line was cleared for the test run and the train ran to Newcastle in two and a half hours, with a two-minute stop there, and then onward to Edinburgh in three and a half hours. That showed what could be done if the track were upgraded on a regular basis. Three and a half hours to Edinburgh is eight minutes faster than the time HS2 is now advertising. It is not heavily trafficked, and if we took the freight off the east coast main line, we could—with longer trains, more modern signalling and a bit more of an upgrade—get much more capacity on that line very cheaply. I should mention, of course, that King’s Cross could also serve Leeds in that way in an hour and a half. With a 140 mph operation—the sort of speed that is possible not throughout the line, but for much of it—this King’s Cross to Leeds service could bring more capacity.

The problem with the west coast main line is essentially the London to Birmingham route. As I said last week, there is an easy way of overcoming the problem by upgrading the Paddington to Birmingham Snow Hill route through Banbury. A 125 mph operation on that line would be relatively easy, with longer trains, a bit of upgrading and more modern signalling. That could effectively double the capacity for getting to Birmingham, and it would not be difficult or expensive. Paddington will be on the Crossrail route. From the City, then, someone could travel Crossrail to Paddington and straight through to Birmingham Snow Hill in the centre of Birmingham, overcoming a major problem. The station proposed for HS2 is rather further away from the centre than Snow Hill is, so some of the advantage of that is lost. Going further north, there is a stretch of 10 miles or so with three-track working north of Rugby. If it were made four-track, it would overcome a bottleneck and increase capacity going through to the north-west. As I said, things could be done that are not expensive and they could be brought in quickly, so that by 2020 all these things could easily be in operation.

Most important of all, we have to look at investment for freight. I have personally been heavily involved in a freight scheme idea—it is not a pecuniary interest, but a political interest—and I believe we need new freight infrastructure. If we could get all the freight off the existing main lines on to dedicated freight infrastructure, we could solve enormous problems. Freight and passengers do not mix well, as they have different operating speeds. Passenger trains tend to go faster and are more reliable, whereas freight goes on long, slow and heavy trains, which do not fit well with passengers.

There is a scheme to overcome that problem—at least on the north-south line linking the main conurbations. I have proposed the GB Railfreight route, and last week I put in a submission on behalf of colleagues to Network Rail for its consultation on freight. The GB Railfreight route would be a dedicated line going all the way from the channel tunnel to Glasgow, linking all the main conurbations in Britain.

The important thing about freight, of course, is that 80% of it goes by lorry and trailer, not by container, so we would need to have a freight route capable of taking lorries on trains. Without that, we will not see the big modal shift from road to rail that we need. This scheme proposes precisely that, taking the largest lorries on trains. This is happening all over the continent of Europe with dedicated routes. New tunnels are being built through the Alps that are capable of taking through the largest sized freight. If we could run trains directly from Rome to Birmingham or from Berlin to Glasgow without interruption by passenger trains on a dedicated freight route capable of taking lorries on trains, I think we would see a transformation of the links between our regions and the continent of Europe, which would also breathe new life into the regional economies that so many Members represent. That scheme is a realistic proposition. It could be built quickly and cheaply, and all it needs is a nod from the Government. I have met previous Secretaries of State and officials from the Department for Transport and put the case to them, and it is a realistic prospect that I hope will be taken seriously. It has the backing of supermarkets, hauliers and so on.

One important point I wish to make to the Minister is that such a scheme would use existing track route, under-utilised lines and old track bed. Only 14 miles would be new line, and nine of those would be in a tunnel. Two routes would have to be electrified to a sufficient gauge to take lorries on trains: Gospel Oak to Barking, and Wigston to Chesterfield in the midlands. If on those routes the gauge was raised to a sufficient level and able to take full-scale lorries on trains, the scheme would work. Those lines will be electrified—rightly so; we welcome that—but if they could be raised to a sufficient gauge to accommodate that sort of freight, it would be a tremendous advantage. If that is not done and the freight scheme goes ahead later, we will have to do the work all over again, which would be an expensive irrationality.

That is what I suggest. The scheme would take up to 5 million lorry loads off our roads every year. It would take all the north-south traffic off the west coast main line, the east coast main line and the midlands main line, and breathe new life into the economies of Scotland, the north-east, the north-west and south Yorkshire. There could eventually be a link to south Wales and Birmingham, and of course to London and the south-east, and it would link directly to the continent of Europe.

Trains currently take lorries from the continent through the channel tunnel, but they can get only as far as the terminal at Barking where they are lifted off. They cannot get past Barking because the gauge is not sufficient to accommodate them. In a sense, the first phase of the scheme is already operating, but we want Governments and Network Rail to grasp hold of the idea and build the freight line that we think will transform Britain’s transport infrastructure. I hope that what I have said is helpful to Ministers and of interest to fellow hon. Members.

I thank my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) for her contribution, and for the work she does as Chair of the Transport Committee not only on rail but on all transport matters. As we have heard, passenger numbers are growing and the amount of freight on our railways has increased, and it is important to bear that in mind when talking about the future structure of railways in the UK. The argument made by the hon. Member for Ipswich (Ben Gummer) that those increased numbers were somehow down to the fact that John Major got privatisation so right stretches his ideological point a little far. As my hon. Friend the Member for Luton North (Kelvin Hopkins) said, in recent years the increase in car ownership and congestion mean that many journeys cannot be made by road within a sensible time, and—quite rightly—people are using the railways.

An efficient and well structured rail system for the UK is not only important to provide the transport links we rely on for individual travel and freight; it is also vital for our economy, especially in regions such as the north-east of England. That is why investment in our railway system is so vital. We have heard a lot of talk over the past few weeks about the capital investment projects outlined by the Government, but over the next two years we will actually see a reduction in the transport budget of some £300 million. A lot of the investment projects that have been outlined are jam tomorrow, or even jam a very long way into the future. Capital investment in our railways now would not only improve the situation in the ways outlined by my hon. Friend the Member for Luton North, it would stimulate the economy. Such investment would not be wasted; it would boost the economy of the United Kingdom and it would certainly improve the economies of regions such as the north-east of England.

We had a debate on High Speed 2 last week. When I opened the Daily Mail this morning, I found myself in a rather difficult position, because I found myself agreeing with Lord Mandelson. That has to be a first, although I was not sure that I could believe what I was reading. Some of the points he raised were perfectly legitimate, however. The investment in HS2 is going to be enormous and, I have to say, regions such as the north-east will see very little benefit, even when, in the longer term, the high-speed route reaches Newcastle or beyond.

There has been a silly argument about high-speed rail being an alternative to regional air transport in this country. I do not agree with that; I believe that the two can compete alongside each other, as the hon. Member for Ipswich said earlier. For someone travelling from the north-east to Bristol, for example, flying is a better option than taking what is at the moment a long train journey. I do not think that the investment in high-speed rail will produce greatly reduced journey times to Birmingham and beyond. I also fear that it could sap scarce capital investment from the existing rail network.

We have to thank the Victorians for many things, and our existing rail network is one of them. It was a good example of their forward thinking. I accept that, under nationalisation, a number of Governments starved the network of investment, and that that led to some of the problems that we now face. However, that should not take away from the achievements of British Rail, including the introduction of the high-speed InterCity 125 service. That was so far-sighted that the service is still running today.

As my hon. Friend the Member for Luton North has said, we could achieve some quick and relatively inexpensive changes to the north-east main line for a fraction of the cost of HS2. Those changes would have a dramatic effect on journey times and, as he said, they would achieve a modal shift as we moved freight off the roads and on to the railways. Before we embark on the full investment in HS2, those proposals need to be looked at seriously. They are doable and relatively cheap, and they would benefit many regions of this country, not 20 or 30 years in the future but now.

I agree with everything my hon. Friend has said—not just the compliments he has paid me but the earlier part of his speech, with which I strongly agreed. The outside estimate for the GB Freight Route scheme is £6 billion, which is a tiny fraction of what is being proposed for HS2.

My hon. Friend makes a very good point. We also need to consider the multiplier effect of such a scheme, and the economic benefits to regions such as the north-east. There would be benefits in reduced journey times, and in the increased amount of freight on the railways. The climate change cost would also be reduced as we got freight off the roads, and the scheme could create regional expansion in areas such as County Durham.

I am following the hon. Gentleman’s argument with interest, but would he not agree, given the funding for the northern hub, the improvements to northern rail services and the totemic importance of HS2, that there is now a strategic shift, supported by those on both Front Benches, in favour of high-speed rail coming to the north-east? That must surely be a very good thing.

I fear that we will have exactly what we experienced in the early days of the channel tunnel, when trains travelled at high speed through northern France and then came to a slow stop at the other end, crawling into Waterloo. The idea that someone would travel to Birmingham or Manchester by high-speed rail and then continue the journey on the current CrossCountry network is ridiculous.

The hon. Gentleman, representing a north-east constituency as he does, will be well aware that travelling to Birmingham, for example, is very difficult at the best of times. Even if journeys to Birmingham and Manchester were speeded up marginally, travelling to the eventual destination could take a further two hours. If the hon. Gentleman has ever travelled from Durham to Manchester, he will know that it takes about two hours, and sometimes involves changing trains at York. As my hon. Friend the Member for Luton North has suggested, the investment that is being proposed could reduce those journey times now, at a fraction of the cost of HS2.

I hope that I do not sound too much like the little boy who pointed out that the emperor had no clothes on, but I have seen a great many projects such as this, and it is clear to me that the Government have become starry-eyed about HS2. In the last Parliament, Lord Adonis became starry-eyed in the same way, saying that this was the big idea that would solve the problems of the United Kingdom’s railway network. I am sorry, but I do not agree.

Both the hon. Gentleman and I contributed to Lord Adonis’s review of the north-east for the North East local enterprise partnership. Consideration of HS2, the northern hub development and an increase in connectivity between the various regions of the north-east formed a pivotal part of that review. I respectfully suggest that the lessons that we discussed and apparently learnt at that time seem to have been forgotten by the hon. Gentleman, given the speech that he is delivering now.

The hon. Gentleman may have had the privilege of contributing to Lord Adonis’s report, but I was never even asked for my opinion. I think that many things in that report are complete nonsense, and that it has been given a status in the north-east far beyond its content. What my hon. Friend the Member for Luton North has proposed would increase connectivity in the north-east at a far lower cost than HS2, and would, I believe, be of more benefit to the north-east.

It interests me greatly that the hon. Member for Hexham is now enthralled by Lord Adonis’s report and believes that it is the answer to the problems of the north-east’s economy. I am afraid that I do not share his view, and I think that if he talks to people in business and to his parliamentary colleagues, he will find that many of them do not share it either. The debate about the investment in HS2 needs to take place, and I hope that it is not too late for some of the decisions that have been made to be reconsidered.

One assumes that the hon. Member for Hexham (Guy Opperman) would travel to Newcastle on HS2, and would then take a slower train from Newcastle to Hexham. In fact, in 1990 a train on a British Rail test run travelled to Newcastle in the same time that it would take on HS2.

Exactly—and if we are talking about the scarcity of capital, we should consider the upgrading of links to Hexham. In my constituency, some existing lines could be opened up. The Leamside line, for instance, could take freight off the main routes.

Let me now say something about East Coast. My hon. Friend the Member for Blackley and Broughton (Graham Stringer), who is not in the Chamber at present, wondered why the Government were in such a rush to return to privatisation. As he said, the line is contributing to the Exchequer, and is performing well in terms of punctuality and the quality of the service that it provides. Investment in rolling stock is clearly needed. However, the staff have worked hard to ensure the success of the line since renationalisation. They should be given credit for that, and for the tremendous loyalty that they have generated among the travelling public.

May I draw the hon. Gentleman’s attention to one of the recommendations of Richard Brown’s review of the franchising system after the west coast main line issue? He said that

“it is very important that the franchising programme is restarted as soon as possible.”

I would suggest that that is a reason for bringing forward the franchising process for the east coast main line.

That may well be the case, but is it going to be good for the taxpayer? We currently have a very successful operator contributing to the taxpayer, so why automatically go down this route, unless there is an ideological reason of wanting to ensure that the operator moves from the public sector back into the private sector, which is clearly the position of the hon. Member for Ipswich (Ben Gummer)?

One of the other conclusions of the Brown review was that the pause in the franchising programme was having knock-on effects in the railway procurement industry, and that delay could interrupt the important investment in long-term projects. That is one of the reasons Brown concluded that the franchising timetable should be restarted as soon as possible.

I am going to come on to the issue of franchising in a moment, but the hon. Gentleman’s point is based on the assumption that the Government would not invest in the rolling stock now for a nationalised company. The idea that the new rolling stock will be provided only by a private provider is not a good enough reason for saying that we should not at least examine the reasons for keeping the company in public ownership.

This is not just about the rail network itself; it raises issues around rolling stock and guaranteeing jobs in this country in providing new rolling stock, including through new investment in the north-east by Hitachi, which is very welcome and is locating a new factory at Newton Aycliffe.

How local people can influence the franchising process is a key issue. My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) raised the important point of the transparency of the process, and there is a constituency issue that I have been campaigning on for a number of years now: the stretch of the east coast main line that goes through my North Durham constituency from Chester-le-Street into Newcastle. Chester-le-Street has now increasingly become a commuter town for Tyneside and Teesside. It takes less than 15 minutes to travel from Chester-le-Street into Newcastle, and if it was in south-east England it would therefore be seen as an obvious place to commute to work from. In the mornings and early evenings there is an hourly, and sometimes a half-hourly, service, but throughout the rest of the day the timetable is intermittent, and later in the evening when people want to travel into Newcastle for entertainment there is a limited service.

I pay tribute to the campaign of the stationmaster at Chester-le-Street, Alex Nelson. He has been arguing for an hourly stopping service from Chester-le-Street to Newcastle. We have met Northern Rail to make the case for that, and the point it keeps making to us is that the franchising model puts an emphasis on inter-city routes, rather than stopping services. It is clear from the public meetings I have had about this issue over the past few years that there is huge interest in Chester-le-Street to ensure it gets an hourly service into Newcastle not only at peak times, but throughout the day and at weekends. That would serve to reduce the number of cars travelling to Newcastle and alleviate congestion. We need to think about how local people can have a voice in determining issues such as the train service from Chester-le-Street, which is not only important for local people, but which benefits the economy of Tyneside. A study has recently been undertaken on widening the western bypass, as we need to get the cars off that. One of the easiest ways of doing so is to invest in the likes of an hourly stopping service from Chester-le-Street.

Finally, I wish to discuss the wider transport picture in the north-east. I congratulate the seven local authorities in the north-east which are coming together in a strategic partnership to examine economic development. Not only that, but one of their key objectives is to look at a joined-up transport policy. This debate is about rail, but we cannot look at that in isolation; we need to consider how it joins up to other public transport networks, be it the buses or the Metro system in Tyneside. It also needs to be as easy as possible for people to transfer from one mode of transport to another. One thing I would like the authorities to back is some kind of Oyster card, whereby people could travel using different modes of transport in the north-eastern region. That would make travel a lot easier, and the new authority may well be able to push forward with such things. The investment we need in our rail network is not only vital for the purpose of people travelling; it is vital to the future economic benefit of this country and certainly of regions such as the north-east.

Order. Before I call the hon. Member for Edinburgh East (Sheila Gilmore), I remind hon. Members that at 6.25 pm the Front Benchers need to start their speeches.

In recent months, I have been spending a lot of time working on issues relating to the east coast main line and the proposal to re-privatise it. The Backbench Business Committee was good enough to grant a debate on that some two weeks ago, which gave many of us an opportunity to explain why we had severe concerns about what was happening. In a lot of these debates it is interesting to see how we reprise a lot of our own prejudices—we are probably all a bit guilty of that—and we heard repeated the old mantra about British Rail’s soggy sandwiches and drinks that were like coffee or tea. However, some of us can also recall some pretty good things about British Rail. As a student, I was able to send my luggage in advance, door to door. None of the privatised rail companies has, at least as yet, repeated that. When my children were going to university, it was difficult to send their luggage. No doubt a lot of people now drive their children there and back, but we did not do that. There are good and bad things here. If we, on both sides of this argument, constantly raise those issues without having a proper debate, we will not progress things much further.

One advantage of the east coast line having been operated by Directly Operated Railways in the past few years is that we have been given something of a comparator. The Minister is fond of saying, “There is nothing really to compare. Every area and every franchise is different, so it is not a fair comparison.” Nevertheless, this arrangement has given us something that is perhaps as close as we are ever going to get to an ability to try out a comparison. It is a pity that the Government do not seem to want to allow it to continue so that we can see what is happening over a longer period.

Obviously, today’s debate is about looking more widely at railway issues and where they are going to be in the next few years. The things that have exercised the Government and the Transport Committee are the McNulty report, the cost of Britain’s railways and McNulty’s stark conclusion that our railways cost 40% more to run than comparable networks in Europe, many of which are state-run. If we had still had a nationalised railway at the time of McNulty and it had been found to be 40% more expensive, there would have been a huge outcry from many people about how dreadful it was and how we must do something about it. In some ways, one could start to construct the argument that it is a sign of the failure of the entire process of franchising and privatisation over nearly 20 years that we are in this position. We were promised that the system would be innovative and cheaper but that just does not seem to have happened. We should be having some serious discussions about why.

The Transport Committee has considered the problem and tried to analyse some of the reasons behind it. We have heard a number of suggestions about how we could achieve the efficiencies identified by McNulty. He considered staffing, closing ticket offices and cutting the number of train guards, but as the Transport Committee rightly said, safety issues must be considered, including people feeling safe when they travel. We do not want to compromise safety and we must ask what savings can be realised in such circumstances, particularly as McNulty was looking for substantial savings of £3.5 billion.

McNulty also suggested closer working between Network Rail and individual train operating companies—what is now called alliancing in the language of transport. A key driver of increased cost since privatisation has been the fragmentation of the industry to try to create competition when it is inherently difficult to do so with the split between track and stations and the operation of trains. The difficulty with alliancing is that it will not—or probably cannot—be rolled out on routes with multiple operators. Network Rail therefore said that from that point of view it does not expect to save much money, so, on that basis, we must ask how it would actually work.

McNulty also mentioned raising income from retail and we discussed that today. There have been changes in places such as the new King’s Cross station and the new St Pancras station. Sometimes, one walks into a station nowadays and wonders whether one is in a station or a shopping centre. It can even be quite difficult to find out where the platforms are, and people get quite disoriented. Whether such an approach is feasible anywhere other than in the big mainline stations must be considered with some degree of caution. Much of people’s travelling life is spent in relatively small stations in small places and people want to get there, get on their train and go, rather than have a shopping experience. One reason it works for the airlines is that people are required to arrive at airports very early and have a lot of time on their hands. In my view, one of the advantages of rail travel is that passengers are not required to spend a lot of time waiting. That is not to say that the idea is not a good one, to some extent, but the notion that we can achieve huge income and therefore efficiencies through such an approach is doubtful.

The Transport Committee states that if the efficiencies are not achieved, we must go back and consider the whole way in which the industry is structured to see whether that is the best way to make the railways work for us. If the McNulty proposals that the Government are working through do not achieve those savings, we will still have a serious problem ahead.

It is good that we are here. Our predecessors 40 years ago would have been surprised to find that we are in the Chamber discussing the railways with such enthusiasm, as they thought they were becoming a rather niche interest. However, there is a question about whether we are in this position because of privatisation, as some speakers have suggested, or whether we have seen a change all over Europe in how people travel. The initial attractions of car transport have diminished, particularly in a crowded island such as Britain. It must be said that much of the investment that has gone in since privatisation and that is still going in is from the public sector. It is not coming from the private operators, regardless of what was promised, so we as taxpayers are subsidising the railways. Perhaps that is the right thing to do, but whether it is the right thing to do through privatisation, so that we are, in effect, subsidising the profits made—where they are made—is a completely different question. As my hon. Friend the Member for Luton North (Kelvin Hopkins) said, we must not confuse correlation with causation.

I congratulate the Transport Select Committee on the “Rail 2020” report, which combines an informative overview of the rail industry with some acute analysis of the challenges it faces. It certainly provoked a thoughtful debate this afternoon, albeit not necessarily one that involved a high degree of consensus. I suspect that the challenges to franchising in particular have deepened since the report was published last year. If the Committee were to repeat its inquiry today, perhaps its conclusions would be even stronger.

When the McNulty report was published in 2011, it was widely acknowledged that the rail industry was in need of reform. Privatisation had left us with a fragmented and opaque system—a system that incurred massive costs and offered little accountability for the money being spent. Contrary to what the architects of privatisation had promised, subsidy had increased in real terms since the mid-1990s—

And passengers faced some of the highest fares in Europe, as well as often bewildering pricing structures. The Minister says, “Under your Government” from a sedentary position, but that is precisely why we commissioned McNulty to look at how to achieve efficiencies.

The Committee’s recommendations on financial transparency, fares and ticketing reform and devolution were welcome, but implementation has been delayed by a Department that seems to have been overtaken by problems of its own creation. In the past year, we have witnessed the collapse of the franchising system, which has cost the taxpayer at least £55 million. Those are the direct costs; that figure does not cover the fall in orders that is hurting the supply chain or the uncertainty that still hangs over the industry, nor does it reflect the damage that has been inflicted on the Government’s own efficiency plans—both points well highlighted by my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman).

The Government intend to find £3.5 billion of industry cost reductions by 2019. An annexe to the “Rail 2020” report states that while

“Some of the savings are already in Network Rail’s plans, most of the rest have to be secured by passenger train operators and their suppliers…via the next generation of franchises.”

Does the Minister accept that analysis? If he does, what does he believe the cost to the taxpayer will be in deferred efficiencies, owing to the much extended delays to the franchising programme?

Against that background, Ministers have taken the politically motivated decision to make the privatisation of East Coast their top priority. At the same time as they are agreeing lucrative extensions for private operators, at great cost to the taxpayer—for example, it was recently reported in the trade press that the c2c contract extension came in £17 million over budget—for ideological reasons the Government are disrupting the one stable part of the network. Since the last private operator walked away, East Coast has returned £640 million to the taxpayer and invested £40 million in the service; it makes the second highest contribution of any operator to the Treasury; and it has significantly improved passenger services.

East Coast provides an interesting test of the Government’s commitment to openness. Despite Ministers’ stated intention to improve transparency, they are trying to have it both ways when it comes to East Coast. The Government cannot both laud the Office of Rail Regulation’s breakdown of the industry’s finances, as they did in the formal response to the “Rail 2020” report, and dismiss the figures that show East Coast to be most efficient operator. It is simply not credible.

The Government have even invented a new measure to bolster the comparison between Virgin Trains’ and East Coast’s premium payments while conveniently ignoring subsidy going the other way. As the net payment figures show, East Coast comfortably paid more to the Treasury over the past three years, but Ministers have tried to give the opposite impression. It is not policy led by evidence—it is just the opposite—from a Government determined to push through privatisation, which will not benefit the railways or passengers.

We have seen no progress on fares and ticketing either. The Government’s review was originally due to be published in May, but we are now told that it will be published at some point in the summer. The Minister will surely appreciate the irony when he next lectures East Coast on punctuality. I hope that the review will now bring forward serious proposals for reform, because at present passengers often find it difficult to secure the cheapest tickets, especially from automatic ticketing machines. The definition of peak and off-peak is not always obvious, and as a consequence some passengers find themselves with huge bills through no fault of their own.

Passengers also rightly feel aggrieved when they have to use a replacement bus service but are not entitled to compensation, regardless of the inconvenience to their journey. Those are the sorts of issues that the fares and ticketing review should be looking at. The Transport Committee was right to call for so-called super-peak tickets to be ruled out. They would penalise those commuters who have no choice but to travel at peak times. I urge the Minister to go further than he had done previously and rule out granting train operating companies the right to redefine peak time periods. I also ask him to give the House a categorical assurance that operators will not be given additional powers to price commuters out of peak time periods.

There is a technical problem with the hon. Lady’s suggestion. Currently, with the Government setting peak times, we end up with the ridiculous situation that people leaving London to go to Ipswich, Norwich or Chelmsford in the morning are on empty trains and paying £74, but if they are going into London they are of course on packed trains and paying £74. The Government have set the peak time rules for many years, so the franchisee cannot make an elastic arrangement to encourage people to take the train when it is empty and discourage them when it is full. I suggest that that is in the commuter’s interests.

I suggest that the people who stand to suffer as a result of that are those who have no choice about when to travel. If people have a choice, they will not travel on peak trains. Those who have no choice will be stung by having to pay whatever price is asked.

As the McNulty report put it, we have a fare structure that is complex, often appears illogical and is hard for the uninitiated, or even the initiated, to understand. The answer is not new, unreasonable super-peak fares. We fully support the development of smart ticketing schemes, a policy closely linked to the devolution agenda. Transport for London and Centro have demonstrated how strong local transport authorities can successfully introduce smart card schemes, making rail and other forms of public transport more convenient for everyday use. We believe that regional partnerships are best placed to introduce new schemes, drive forward integration with other modes of transport and decide their own priorities for developing local rail services.

However, the pattern of dither and delay from the Department for Transport is also affecting the devolution agenda. Were it not for its extensions to the Northern Rail and TransPennine franchises, we could have seen an earlier decision on devolution, with the new settlement starting next year. We want to see an ambitious model of genuine devolution, learning from the success of continental models, that can be extended to other areas, including the west midlands.

Unfortunately, we have already seen some reductions in local facilities. Although they are not as high profile as the cuts to passenger services we have seen in the past, we are concerned about ticket office closures, especially as some seem to be going ahead by stealth, using the McNulty review as cover. Last year, leaked e-mails from the Department for Transport revealed that Ministers had decided to approve closures and let train operating companies take the blame. That was an unacceptable way for closure decisions to be taken. I hope that Ministers will take note of the Campaign for Better Transport’s “Going Local” report, which drew together evidence from London Overground and Merseyrail. The evidence suggested that staffed stations and ticket offices led to increased passenger numbers, lower levels of fare evasion and increased passenger satisfaction.

There are simply better ways to save money than closing ticket offices. Of course we need more efficient railways. Network Rail has delivered substantial efficiency savings since Labour ended the disaster that was Railtrack, and the rolling programme of electrification, which the last Government committed to, will help reduce operating costs.

However, as McNulty helps to establish, although technology can bring about savings, the greatest challenge is fragmentation. Privatisation has left us a system with a 40% efficiency gap as measured against European comparators. Fragmentation has built in additional unnecessary costs at every level and we need a serious debate about how they can be addressed. On the Government’s response, it is too early to quantify properly the impact of alliancing and there are real concerns over the accountability of the Rail Delivery Group, which must not be used as an excuse to diminish ministerial responsibility.

We must also be alive to the danger that through alliancing, non-dominant operators will be excluded from decision making. That is especially true in the case of freight operators—a danger acknowledged by the hon. Member for Milton Keynes South (Iain Stewart). If there are increased disputes over access rights, that will only generate a higher administrative burden for the regulator.

To conclude, I should say that the Government have tied themselves so closely to the stalled franchising system that they have left the industry in stasis. Awards are being extended for up to four years at a massive cost to the taxpayer, on top of the £51 million net payment that the Government made to operators in the last financial year. The paralysis caused by the collapse of franchising has hit the supply chain’s order books, threatening jobs and skills. Ministers have made restoring franchising a point of political pride, even to the extent of privatising the successful east coast service, instead of seriously examining alternatives. That is what Labour is committed to doing, and why we are conducting a thorough review of the rail industry that is not hampered by ideological baggage.

The “Rail 2020” report made some useful recommendations for reform, but it also noted that there could be a case for structural changes. In the light of the franchising fiasco, we should seriously examine the alternatives, instead of remaining ideologically wedded to the failed models of the past.

I begin by adding my congratulations to the Transport Committee on its important report, which comes up with a number of important and interesting recommendations. As the hon. Member for Liverpool, Riverside (Mrs Ellman), the Committee Chair, will know, the Government have responded in full to the recommendations, and on a number of issues we have considerable sympathy and agreement with them.

Like the Select Committee’s, the Government’s vision is for a transport system that is an engine for economic growth—one that is environmentally sustainable and promotes quality of life in our communities. Rail offers commuters a safe and reliable route to work. It facilitates business and leisure travel, connects communities with their public services and workplaces and transports millions of tonnes of freight around the country, relieving congestion on our roads and bringing huge environmental benefits.

It is easy for some to criticise our railways, but as the Transport Committee itself noted:

“In many ways the railway has been a success in recent years.”

We have made tremendous progress. As hon. Members, including my hon. Friend the Member for Milton Keynes South (Iain Stewart), have said, since privatisation passenger journeys have almost doubled—from 735 million in 1994-95, to more than 1.5 billion in 2012-13. That point was made by the hon. Member for Liverpool, Riverside in her introductory comments. There are some 4,000 more services a day on our railways than in the mid-1990s. Rail freight, which the hon. Lady also mentioned, has grown by over 60%, with traffic reaching over 21.5 billion net tonne km in 2012-13.

With an ageing network built in Victorian times, coupled with underinvestment over a number of decades by successive Governments, operating today’s railway is a task of colossal proportions, but we are getting better at it. GB Railfreight has been ranked as the EU’s most improved rail network. Passenger satisfaction is up by about 10 percentage points in the past decade. Punctuality is up by about 12 percentage points, with just under 91% of trains arriving on time last year compared with just over 79% in 2002-03. That rather meets the point made by my hon. Friends the Members for Milton Keynes South and for Ipswich (Ben Gummer)—that the performance and the quality of service today is better than it was under British Rail, to which the hon. Member for Luton North (Kelvin Hopkins) is wedded, as we have now heard on at least two occasions in the past week. As other hon. Members have said, we are among the safest railways in the world.

Just running today’s railways is not an option. We have the fastest growth rate of any of the major European railways so the Government have committed over £16 billion to running and expanding the network between 2014 and 2019. We are providing capacity for an extra 140,000 commuter journeys into our major cities during the morning peak. Schemes such as Crossrail, Thameslink and the northern hub cross-Manchester link will have a transforming effect. They will increase capacity and connectivity and reduce journey times. [Interruption.] It is interesting that the hon. Member for North Durham (Mr Jones) is chuntering—I think that is the right word—from the Back Benches. He seems to be able to get away with it in a way that others cannot.

Order. The Minister will resume his seat. Let me be clear and explicit. There is a saying about pots and kettles. It is a point so obvious that I think it is within the comprehension of the Minister of State, who should now continue uninterrupted with his speech.

Improved rail links to major ports and airports will support inward investment, trade and connectivity.

Electrification will provide faster, more reliable services on the midland and great western main lines and elsewhere. We have confirmed funding for the completion of electrification of over 324 route miles and added a new requirement for a further 537 route miles. That means that we are funding electrification of 11% of all route miles in England and Wales. Our programme contrasts with the approach of the previous Administration, under whom fewer than 10 miles of track was electrified during their 13 years in power. By 2020, about three quarters of passenger miles travelled in England and Wales will be on electric trains, compared with just 58% today.

We have provided a £300 million fund to improve passenger journey times. There is £200 million for stations across England, including £100 million to support accessibility. A further £200 million will build a better network for freight.

I am delighted about the massive investment going into railways; I am sure we all support that. Does the Minister agree, however, that it is important to preserve the existing old corridors that could be used for rail travel in future? Will he undertake to make sure that the Woodhead tunnel in particular remains a possibility for rail travel in future?

I have considerable sympathy with what the hon. Gentleman says. It is important that we consider opening new railway lines or reopening lines that have been removed but whose beds remain in place where there is demand and need for them and if the business case backs it up. Tunnels are an important and topical issue that has come across my desk and we are looking at it very carefully.

May I underline the importance of keeping old route lines open or free for potential reopening? Work on the western section of the east-west rail project has been very easy because the line is still there, but there are difficulties on the Bedford to Cambridge and East Anglia section because part of that track has been built on.

My hon. Friend makes an extremely valid point. We have to learn from some of the mistakes of the past and what happened to the railways post-Beeching. I accept what my hon. Friend says.

We are well on the way to delivering a new high-speed railway for Britain, bringing extra capacity, faster journeys and better services and changing our economic geography. I am sorry that the hon. Member for North Durham is not as enthusiastic about this exciting way of improving connectivity, journey times and increasing capacity. [Interruption.] The hon. Gentleman is chuntering, but I am surprised—

Order. Actually, the hon. Gentleman was not chuntering. There are many Members who do chunter in the House, in some cases extremely noisily, and an exemplar of that approach is the right hon. Gentleman. I suggest that it would be in his own best interests, of which he is not always the most appropriate guardian, that further references to chuntering by him might seem singularly inappropriate. Continue.

Well, let’s move on.

I was just saying that I am surprised and disappointed that the hon. Member for North Durham does not share the enthusiasm of his colleague the Leader of the Opposition for the new high-speed railway. I hope that he will be reassured, however, that rail is thriving. It makes a vital contribution to the UK’s economic competitiveness and the Government’s investment ensures that that will continue.

The Government recognise, however, that we need to work to make rail even better. As recent surveys have shown, although passenger satisfaction is high on average across Great Britain, it can vary significantly across franchises, and although nine out of every 10 trains are running on time, with historically high levels of performance, punctuality is not yet as good as it should be, particularly on long-distance services, but also on London, south-east and regional services. Finally, the railway still costs more than it should.

We fully understand the importance of achieving the McNulty savings, which have been mentioned by the hon. Member for Liverpool, Riverside and others. Our railways must become more efficient and financially sustainable. It is crucial that we ease the pressure of fares on hard-working families and reduce the burden on taxpayers, which is another issue of concern, not only to members of the Transport Committee, but to other hon. Members who have taken part in this debate.

That was the challenge in the Government’s rail Command Paper: how to reduce the costs of running the railway while keeping the passengers at the heart of everything we do. We are making progress. Network Rail will have delivered 40% efficiencies over 2004-2014 and the regulator recently announced a new 20% target for 2019. Further efficiencies will be made through the programme of franchising competitions and the initiatives of the Rail Delivery Group. The key message is that aligning incentives between train operators and Network Rail is one of the most important reforms to drive down costs and bring passenger benefits.

Will the Minister set out how that has been set back by the delays to franchising, which he seems to be glossing over? Questions have been asked about whether his Department is up to the task.

The hon. Lady is labouring the point a bit. It has been made quite clear—[Interruption.] If the hon. Member for Scunthorpe (Nic Dakin) keeps quiet and listens, he will get the answer. This matter obviously causes amusement in every part of the Chamber.

Order. The Minister of State is a slow learner, but he must try to grasp the point that it ill behoves a right hon. Gentleman who regularly shouts, hollers, chunters and accuses other people of all sorts of things from a sedentary position to make something of the fact that somebody else mutters from a sedentary position. I gently advise the Minister to raise his game and operate at the level of events. Minister of State, continue with the speech and the reading thereof.

As I was saying in answer to the hon. Member for Nottingham South (Lilian Greenwood), the Secretary of State made it clear last September that what happened with regard to the west coast main line was unacceptable and apologised for it. Even more importantly, he set up the Brown inquiry and the Laidlaw inquiry. I will not rehearse what they did, but the Brown inquiry came up with recommendations to ensure that we learn from that mistake and that it never happens again. We have a new franchise timetable, in keeping with the recommendations of that report, to ensure that we minimise the opportunities for that mistake to happen again.

I must make progress, because it is almost time for me to finish.

The Rail Delivery Group is showing how collaborative working across the rail industry can secure improvements in asset programme and supply chain management. We are working through our franchise programme to facilitate regional partnership working arrangements and alliances between train operators and Network Rail, as has been mentioned by a number of hon. Members.

No, because I am running out of time.

Those arrangements could involve joint working to improve performance and planning for engineering works or to reducing delays and disruption for passengers. Integrated control centres can deliver smoother and more efficient network operations.

The Rail Delivery Group brings together Network Rail, freight operators and passenger train operators. It provides leadership for the industry, and offers a coherent and focused response to the investment and operational challenges laid down by the Government. Network Rail is enhancing its accountability with a new transparency scheme to publish more information and data that are of interest to the public.

There is not plenty of time. I am not speaking until 7 o’clock because the hon. Member for Liverpool, Riverside would like to make a brief winding-up speech.

Network Rail has appointed a public interest director to articulate taxpayers’ views at the highest levels in the company.

Responding to the Government’s rail Command Paper, the Transport Committee published its report on “Rail 2020” in January this year. As I said earlier, we have welcomed that report and the Select Committee’s support for our strategy, which is focused on making the existing structures and responsibilities in rail work better. We are not throwing everything up in the air and starting again, given the cost and disruption that that would be likely to entail.

We are confident that our strategy can bring rail to the cutting edge of efficiency by 2019. To do so, the industry must take advantage of new technologies by looking to introduce smart ticketing and making ticket machines easier to use. The hon. Member for Nottingham South asked when that will happen. I reaffirm that it will be during the summer. Passengers will continue to be able to get help and advice from a member of staff about buying a ticket when they can currently do so. Train operators must also look at driver-only operations for trains. This is already standard practice on 30% of existing franchise services, including many commuter services in London and Glasgow.

Crucial to the debate about rail is the Department’s role in letting and managing franchises for passenger rail services. This was discussed at length by several hon. Members during the debate. The Government’s firm belief is that franchising gives us the best possible basis for doing what we want to do with rail. The most liberalised railways in Europe have seen the highest growth in the last 15 years, with the UK and Sweden first and second respectively.

The Government are committed to ensuring that we continue to have private sector innovation and experience in our railways. As hon. Members will be aware, in March we announced a new rail franchising programme, covering every rail franchise for the next eight years. It builds on much of the authoritative work undertaken by Richard Brown, as I have said. Supporting our franchising relaunch, we have now published a new guide about how franchising competitions are run. This is information that we want to be generally available and accessible to all. It will give certainty to the market and to suppliers throughout the industry and support major investment in our rail network.

To grow a railway that will support passengers and our economy, we need that railway to be financially sustainable. Our rail strategy aims to achieve that, while putting passengers at its heart.

I thank hon. Members for their varied contributions in this constructive debate. Underlying all the contributions was support for the continued expansion of the railway. Privatisation separated both ownership and operation of train and track, and it is ironic that the solution being put forward now to deal with some of the problems that rail services face is to enable them to work more closely together.

I listened carefully to the Minister’s reply to the questions I put, but I have a couple of other points to put to him. In relation to franchises and securing passengers’ interests, we need to know more about what weighting will be given to securing those interests when assessing the award of franchises in the future. I asked the Minister to say what the financial implications would be of the cumulative 26-year delay in awarding franchises, but I did not hear a response. I hope that we will be able to get one, as it has implications for the industry as well as for the Department. I am pleased to hear that the fares and ticketing review will be published shortly. I note that it will be “during the summer”: I hope that will be sooner rather than later.

Those are all important issues and it is essential that they are resolved to enable the railway to continue to expand and grow. We need proper franchises that reflect value for money for passengers and the taxpayer, and we need to ensure that fares are fair and not unaffordable. We must not price people off the railway.

I know that the Government will produce more information about how the franchise system will develop in the future, and we look forward to that. The Committee will continue to consider all these issues, which are all ongoing and extremely important. Strong leadership is required to resolve them, from both the industry and the Department. The aim of the Committee’s work in this area will be to produce a more effective and efficient rail service. Rail is already popular, but it can be more efficient and fares can be brought down—at least, the rate of fare increases can be stopped.

I hope that this debate, and the range of views we have heard, will help Ministers to address those issues, and I hope that we will secure more effective leadership from both the Department and the industry.

Question deferred (Standing Order No. 54).

The Speaker put the deferred Questions (Standing Order No. 54).

Department of Health


That, for the year ending with 31 March 2014, for expenditure by the Department of Health:

(1) further resources, not exceeding £50,475,001,000, be authorised for use for current purposes as set out in HC 1074 of Session 2012-13,

(2) further resources, not exceeding £2,414,054,000, be authorised for use for capital purposes as so set out, and

(3) a further sum, not exceeding £50,292,107,000, be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.

Department for Transport


That, for the year ending with 31 March 2014, for expenditure by the Department for Transport:

(1) further resources, not exceeding £3,070,706,000, be authorised for use for current purposes as set out in HC 1074 of Session 2012-13,

(2) further resources, not exceeding £4,648,442,000, be authorised for use for capital purposes as so set out, and

(3) a further sum, not exceeding £6,414,882,000, be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.

The Speaker then put the Questions on the outstanding Estimates (Standing Order No. 55).