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House of Commons Hansard
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South-Eastern Rail Franchise
23 April 2019
Volume 658

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(Urgent Question): To ask the Secretary of State for Transport if he will make a statement on his decision to delay, yet again, the award of the south-eastern rail franchise.

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In June 2017, the Department for Transport announced that the shortlisted bidders for the south-eastern franchise competition were: South Eastern Holdings Ltd; London and South East Passenger Rail Services Ltd, a wholly owned subsidiary of Govia and the current incumbent; and Stagecoach South Eastern Trains Ltd, a wholly owned subsidiary of Stagecoach Group plc.

Subsequently, in December 2018, the Department exercised an extension with the existing south-eastern operator, London and South Eastern Railway, until 23 June 2019 to allow further time for the competition to identify the next operator for the franchise. The Department is now in the process of negotiating a further direct award which, subject to a successful negotiation, will run until 10 November 2019, with an option to extend the agreement until April 2020. We are taking these steps to ensure continuity of services for passengers. This additional time is necessary to deliver the best possible outcome for passengers and taxpayers alike. We will update the House in the usual way as soon as this work is concluded.

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I am grateful to the rail Minister, but he has not quite explained why such a mess has been made of this franchise. Can he confirm exactly when my constituents, who already pay the second-highest fares in the home counties, will get the long-promised new carriages? Can he explain why, if the franchising system is now under review, he has been able to award an eight-year franchise for the east midlands? Finally, can he explain why the compensation in respect of last year’s timetable chaos is not going to the two stations most affected in my constituency, Shoreham and Eynsford, when the two operators enjoy common ownership? Is it not time to restore confidence in the whole franchising system?

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I thank my right hon. Friend for those questions. He has been a strong and tenacious champion for rail passengers in his constituency, raising issues with me and speaking in Westminster Hall debates. I share his impatience to get the benefits that are emerging from our franchises to his, and indeed to all, constituents. This is a huge and complex piece of public procurement, and it is right to take the time to make sure we get it right and to finalise this competition. The area is one of the most complex on our network; it has a mix of high-speed and commuter services, with a highly intensive use of infrastructure. I cannot tell him the date on which we will be able to make the announcement. This is a live competition involving market-sensitive information. There is an established method of communication to the House and the markets, so I cannot answer him and am able to say little on that point today.

I can confirm to my right hon. Friend why the east midlands franchise was awarded, with the rail review taking place. That was simply because it was considered that with the east midlands franchise award and this one we could get the benefits to passengers before the work of the rail review came into play. On compensation in respect of the two stations he mentioned, I will look at those carefully. On the point about the compensation following the May 2018 timetable changes, there were some significant problems, but they were not everywhere. The issue was to get the compensation to those who had been most affected. They received compensation that I think was appropriate, but I will check out those two stations and write to him as quickly as possible.

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So here we are again: a Transport Minister forced to the Dispatch Box to defend the actions—or, in this case, the lack of action—of the ever-failing Secretary of State. Following four delays on the south-eastern franchise, we now know that the Government are planning a direct award. After 12 other direct awards, including on south-eastern, is this approach being taken to avoid the embarrassment of failure further down the road? Two monopolies, Govia and Abellio, are left in the competition to run Britain’s most beleaguered franchise. Following a litany of failures under Govia, highlighted in Chris Gibb’s report two years ago, and a lacklustre response by the Secretary of State, who, frankly, should have brought the franchise under direct operation, the travelling public are being failed.

What discussions has the Minister had with the trade unions, as the hard-working staff face further uncertainty, not least over their jobs and pensions? Will he also confirm that there is no intention to cut pensions to staff through this franchise process? Are the Government going to stall on all franchises until the conclusion of the Williams review, which is undertaking a comprehensive look at why our rail system is floundering? If so, when will this report be published? In the light of revelations this weekend that sensitive confidential information was leaked from Stagecoach into the hands of Abellio during the east midlands process, what changes has the Minister made in his Department to ensure that commercially confidential information is not shared with competitors in this broken process? How are the Government measuring past failure of these rail monopolies? In the light of evidence, will he then rule out their bidding, as he has for other companies involved in other franchises?

With 176 million journeys being made each year, how can these passengers have any confidence that they will not pay the price for failure—something they have had to endure under the current award? They are paying some of the highest fares in exchange for one of the worst services, so it is clear that this franchising fiasco must end. If the Secretary of State will not take back control of our rail, Labour will.

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I thank the hon. Lady for her questions. We are negotiating a short direct award to allow the competition to reach its end. This is not the end of franchising, which has been a significant ingredient in improving and turning around rail performance in this country. It has led to our having more services and passengers and at a greater level of safety than at any point in our country’s history. Franchising has been part of that success. This is an issue not of failure but of making sure that we get it correct.

Have I discussed the franchise bid with the trade unions? No, because the bids are assessed by officers of the Department for Transport, who anonymise them. It is important, market-sensitive information. Such information runs through a standard procedure, of which the hon. Lady should be aware; it operates in councils, in the Government and in devolved Assemblies, too. I have of course met the trade unions, and I was able to confirm with them that my aspirations for the rail industry include the careers of those who serve the industry. The Chair of the Transport Committee, the hon. Member for Nottingham South (Lilian Greenwood), asked about the same point in an urgent question just before the Easter recess. I do not want to see any cut to pensions; I want to see those who work on our rail services retire with secure and stable pensions. Nevertheless, we are talking about pensions from a private business, not something that comes from the Government.

The work on the Williams review is under way. I am sure the hon. Lady will have seen some of the evidence papers and heard about the emerging thinking that Mr Williams has discussed in some of the speeches he has made over the past few weeks. We look forward to seeing the output of that review. Franchising has been an ingredient in the turnaround of our rail industry that has been so fantastic for this country. The question now is how we take that to the next stage, which is what the Williams review is all about.

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My constituents are as anxious as anyone about the reasons that lie behind this continuing delay, but they are even more anxious that the improvements we have all been promised under the new franchise do actually happen. Will my hon. Friend assure me and my constituents that the improvements, particularly the extra capacity on the high-speed line, will be available when the franchise is eventually awarded?

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My right hon. Friend asks about how the bid may finally be judged. I cannot comment on the work in progress, but I can say that an invitation to tender was published in November 2017. It was the result of a significant consultation, to which there were 10,000 or so responses. I am as anxious as my right hon. Friend to get the benefits of that invitation to tender out to the constituents whom he serves so well, and as fast as possible, but I cannot give an answer today on who will win the franchise. That work is carried out separately by officials, away from Ministers, and the information is anonymised because it is so important and market sensitive, but his point will have been heard by all those in the industry.

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The south-eastern franchise was originally due to end in 2014. The failure of the west coast franchise delayed that ending until August 2018, and now the direct award to Govia could be further extended. It is hard to understand why, if the Government still believe in competition for rail services, the Department for Transport seems absolutely unable to run a competition for this franchise. Will the Minister clarify how many compliant bids were received for the south-eastern franchise and how many were received for the east midlands franchise that was awarded two weeks ago?

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The hon. Lady makes the point about whether franchising is dead; no, it is not, because of course we managed to award a franchise only in the week before Easter recess. As a process, then, franchising is working. Can we get the benefits out to passengers as fast as possible? That is of course what it is all about, but these are complex questions and it is appropriate that we take our time to get it right. On the number of compliant bids, the issue of pensions obviously attracted a lot of attention in respect of the east midlands bid. We have two pension-compliant bids for the south-eastern franchise and look forward to making the announcement as soon as we possibly can.

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Will my hon. Friend assure me that this further delay to the award of the franchise will not hold up long-awaited works for Petts Wood and St Mary Cray stations to become fully accessible—something for which residents have been campaigning for many years?

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I thank my hon. Friend for that question. I share his enthusiasm for the access-for-all process and the recent announcement of extra funds and where those funds will be targeted by the Under-Secretary of State for Transport, my hon. Friend the Member for Wealden (Ms Ghani). I can tell him that design work on the stations selected will be starting over the summer, with construction as soon as possible thereafter. I know that he is anxious for the benefits to serve his constituents. So am I and so is the Under-Secretary of State, who I know is listening. She has indicated that she would be very happy to meet him to take the matter forward.

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Further to his letter of 10 April in which the Under-Secretary of State assured Members that robust scrutiny would be used in this decision-making process, can he please reassure my beleaguered constituents in east Kent that that scrutiny will also apply to the exorbitant fare rises, constant delays and disruptions, arbitrary timetable changes and removal of services?

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I can most certainly provide the hon. Lady’s constituents with the assurance that she is seeking. We will obviously be focusing on fares. We want to make sure that the travelling public get a great deal, which is why we have frozen regulated fares in line with inflation for the sixth year in a row. It is also why, in January, we saw the launch of the 16 to 18-year-old railcard, which will come into play later this year. So will there be attention on costs and scrutiny of fares? Of course there will. We will be maintaining that. This policy, which has delivered its sixth year, against Labour’s intentions, will be continued.

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Will the Minister please confirm that the City Thameslink service from Maidstone East will still be delivered before the end of the year? It is desperately needed and it has been promised on a multitude of occasions.

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My hon. Friend has been a very diligent campaigner on this issue. I know that it matters a lot to her and to her constituency. She has been a real vocal champion on this issue specifically. However, this is also an industry-led process and we are working with it to deliver the benefits as soon as possible. I cannot comment immediately on that matter because it is not part of this franchise but, of course, I will check the information and keep her posted on progress.

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If the rail review recommends that suburban services in the London area be transferred to London government, will the Government allow south-eastern suburban services to be transferred in that way to maximise integration of transport services in London?

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That is a very interesting question. I would expect the rail review to make some interesting recommendations about devolution. I am personally a fan of devolution, but we had better see what it says before commenting on the outcome.

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I note my hon. Friend’s statement today on the south-eastern rail franchise. I am, of course, bitterly disappointed that we have not made any progress on this matter. In the meantime, my constituents continue to suffer a poor service into London. It is also disappointing, but rather ironic, that, just like the rail service, all we seem to see from his Department is continual delay. As he is well aware, improvements are desperately needed to our service in the borough of Bexley—and not later this year, next year or sometimes never. Our constituents are paying more money for a poor service. What we are expecting is a decision so that we can look to a better future and the travelling public from Bexley have a better service. At the moment, they do not.

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My right hon. Friend makes a very important point. He is a diligent campaigner on rail issues for his constituency. We saw that at an important level when there was the landslip earlier this year. He was a great champion in making sure that the voices of his travelling constituents were heard in this House. I cannot yet tell him when we will be making the announcement on the decision on who wins the south-eastern franchise competition, but I can tell him that I am extremely keen to get the benefits that the franchise will bring to his constituents. I will make sure that he is kept fully posted on progress.

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There appears to be a serious issue around rail pensions. The Minister has said that there are two pension-compliant bids on the table. Could he tell me whether the Department has made any changes to the franchise specifications in respect of pension obligations, and what conversations have been held with the Pensions Regulator regarding the deficit?

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The Pensions Regulator is an independent body and the pensions that we are talking about are those of private companies, so the role for the Government is not a direct one. Operators are currently liable for the full pensions risk during their franchise term. These competitions—including the east midlands competition, which was mentioned by the hon. Member for Nottingham South (Lilian Greenwood)—included a risk-sharing mechanism with the Government that actually reduced the risk to which operators are exposed. Under this mechanism, the operators retain risks that they are able to manage. There have been some changes, but they are about risk-sharing for the future; so there was a notable change in the franchises.

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It is disappointing that, like so many Southeastern trains, the south-eastern franchise is itself delayed. My constituents expect the new franchise to give them improved services, to reduce overcrowding, and to introduce Delay Repay 15, smart ticketing and flexible season tickets, which are all really important. Will my hon. Friend ensure that, although the franchise is delayed, these improvements will not be? Could they be introduced in advance of the new franchise, rather than our having to wait for so long?

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I will have a look at my hon. Friend’s point. The key benefits that have come into our rail services over the past few years have come in through the franchising process, as it has brought in private investment. That investment has purchased or leased new rolling stock, which has meant a transformation across the country for the travelling public. My hon. Friend is as impatient as I am that the benefits that we are seeing come to fruition for her constituents, and I will of course work to deliver them as fast as possible.

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The franchise specification promised extra capacity, new rolling stock, greater frequency of trains and 15-minute Delay Repay, but my constituents will now not see those improvements for at least another seven—perhaps 12—months. What specifically is the Department going to do to improve services for passengers on Southeastern throughout the period of the franchise extension?

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We are working to bring the franchise decision to a conclusion as fast as possible, and to get the benefits that will come with that decision right across the franchise as quickly as we can.

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The delay to this franchise is not only a delay to the people of Tonbridge and West Malling, and to the towns and villages around the area; it is also a delay to a strategy that the Minister already announced—the 15-minute delay compensation. I do hope that his initial statement that this scheme will wait until a change of franchise will no longer apply, and that he will instead introduce the change from a 30-minute to a 15-minute delay compensation now. If we are to wait still further, it will cost commuters in the wonderful towns that I have the privilege to represent, as they will have to pay more for delayed services.

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Delay Repay 15—a compensation system that will give any passenger who has been delayed by 15 minutes or more 25% of their fare back—will be a part of all future franchise awards. We have recently been able to make some in-franchise changes in other areas, such as on Northern and Great Western. I will look into my hon. Friend’s point. I am aware of how well this scheme has been received where we have been able to make the changes. It is not quite as straightforward as saying that we can do this immediately, but I know that he is hungry for that benefit and I will do what I can to help him achieve it.

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I do not quite understand how the Minister can anonymise the two bids when there are only two bidders, one of which is the existing franchise. Setting that aside, this franchise is fraying at the edges. There have been yet more delays this afternoon because of a broken down train. Is it not time that the Department for Transport spoke to the Mayor of London about London’s suburban services and sorted out this mess once and for all?

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The process for the assessment and award of bids is handled away from Ministers and by the content of the bid rather than by the bidder’s name, so these things are handled in a way that is perhaps a little different from that which the hon. Gentleman suggests. I have had a conversation with the Mayor, but not on this issue. He came to the Department for Transport seeking a loan facility of over £2 billion to help with the completion of Crossrail. We were able to help with that. It is of course a loan that will need to be repaid, but the loan has been made and he is, I believe, drawing down on it. He needs to answer some questions about the long-term viability of Transport for London’s finances.

On the performance on the network, of course there is more to be done on every single franchise. I want to make sure that we have services that are on time, every time. Ninety per cent. of trains on this franchise have been on time over the past few months. When I looked at the performance figures earlier today, I saw that it was 97%. But of course nobody wants to have any delays, and that is why this is my top priority.

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Rail users and constituents of mine on the Maidstone East line and the Medway Valley line from Chatham are fed up with being forced to pay through the nose to use a service beset by delays, lack of information and poor-quality rolling stock. Continuous delays in deciding the next franchise provide no incentive for the current franchise holder to make any investment to improve services for those users. What can the Minister do to ensure that passengers receive the service that they pay for now rather than in the future—for which, like Southeastern’s, the timetable keeps changing?

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My hon. Friend has been a champion for her travelling public. I know that because she has made this point to me on a number of occasions, both in this House and in meetings outside. On the management of the franchise, there is, as with all franchises, a performance regime that is operated through the Department for Transport. Whenever we see franchises failing in any way, we take action right away. I say what I have said to other colleagues across the House: I am impatient to see the benefits of this franchise award out there as soon as possible. Consequently, I will be making sure that we get this decision made as fast as we possibly can, and I will keep her informed of progress.

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This is the fourth time that the award of a new franchise has been delayed. Commuters from my constituency and from others across the south-east have been facing delays, cancellations, and overcrowding on trains. The continued delay is preventing long-term investment and improvements, placing millions of passengers at a disadvantage. Will the Minister therefore provide an update on the timeline for the award, be transparent about the reasons for the repeated delay, and outline a long-term view on the viability of the franchise system as a whole?

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My view on the franchise system as a whole is that it has been a part of our improvement in our rail performance as measured by the number of services, the number of passengers, and the quality of journeys over the past few years. The benefits of a privately run industry have been profound. I cannot answer the hon. Lady’s question because this is market-sensitive information. There is information that will need to be announced to the markets and to the House in the normal manner when the decisions are made.

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I happen to agree with my hon. Friend the Minister about the benefits that come from franchising. Having said that, perhaps he will take this point in the spirit in which I make it when I say that if one was paying someone to discredit the franchising process, the way his Department has gone about it could not be bettered—it is an utter shambles. In order not to add insult to injury to my long-suffering constituents, will he return to the very fair point made by my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat)—that the very least the Department can do is to ensure that if the company seeks an extension to the current franchise and continues to get financial benefit, it shall be obliged to bring in 15-minute Delay Repay straight away, and not wait?

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The issue for me is how to ensure that the trains are run on time every time, but when things go wrong we need a compensation scheme that is fair to the traveling public. I share my hon. Friend’s impatience to get the benefits that will come from this franchise award to the constituents he serves so well. I will keep him updated on progress, including on DR15.

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As the Minister knows, the contract for the rolling stock for the London underground deep tube was awarded to a company that intends to build the majority of the rolling stock in Austria, having promised that it would be built in the UK. What guarantees can he give that the company awarded the new south-eastern rolling stock contract will build the trains in the UK and provide work for train companies such as Hitachi in Newton Aycliffe in my constituency?

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The hon. Gentleman is a great champion for that rail company in his constituency. He has told me about it on a number of occasions, and I hope to visit the plant shortly. I have met the company, and I am aware of the quality of its product. I cannot direct where a private company places an order. We are in an open market economy—we have competition, which delivers passenger benefits, value and passenger experiences that were never possible when this railway was nationalised. I am sure that those who are making the purchasing decisions will be aware of the point he makes and of the merits of British manufacturing.

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These delays are regrettable, but they at least give the Minister an opportunity to look again at the terms of the franchise. I was pleased when the Oyster card system was extended to Dartford, to cater for my constituents. Does he agree that any new franchise contract should include a term to ensure that smart ticketing is extended beyond the current boundaries?

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My hon. Friend makes a wise point, as ever. Smart ticketing is a part of the rail future right across the country, not just in Dartford. The pay-as-you-go extension has been very popular across the south-east. The benefits of smart ticketing are profound, including convenience for passengers and the ability to change tickets more easily, and we are trying to ensure that they are part of all franchises.

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The Minister has referred to the Williams review several times. Keith Williams has already warned about the Government “micromanaging” the rail industry and driving passengers away. He has also said that the current franchise system is damaging to innovation. Does the Minister agree with those comments?

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There are points in the current operation of the franchise system that can be improved, but micromanaging from Government is not helpful. The Labour position is to micromanage everything from Government by nationalising the railways, so there is—[Interruption.] There is a little bit of inconsistency in what the hon. Lady says.

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My constituents will be disappointed with this delay, but I have every faith that the Minister will get this right. The Transport Committee has looked at the franchising process in a number of reports. It is very complex and detailed, and as a result it can be expensive and litigious. Will there be an opportunity to simplify the franchising process, so that we do not experience such delays when making decisions?

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I hope that simplification of the structure of the industry, including the franchising process, will be one output of the Williams review.

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On a point of order, Mr Speaker. I seek your guidance. I went outside into Parliament Square to speak to members of Extinction Rebellion who wanted to exercise their right to come into Parliament to lobby their MP. I am holding over 100 letters to MPs. What guidance can you give those people who are unable today to exercise their right?

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I have been attending to my duties in the Chair, so I cannot comment on what restrictions on access to or egress from the estate have applied, either as a matter of policy or on account on the very large number of people who may be around. In so far as the hon. Lady is seeking to give voice to the concerns of her constituents and others who are campaigning on this subject, she has found her own salvation, because she has made the point, she has held up the letters and it will be on the record in the Official Report, and I think therefore honour is served.