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East Midlands Rail Franchise

Volume 659: debated on Tuesday 7 May 2019

To ask the Secretary of State for Transport to update the House on the bidding process for the East Midlands rail franchise.

As has previously been confirmed in a written ministerial statement and at the Dispatch Box on several occasions, Abellio was awarded the contract after presenting the Department with a compliant bid, following a rigorous competition that was consistent with public procurement rules. Our assessment of bids has been comprehensive and fair and I have absolute confidence in the process. It was a fair, open competition and Abellio provided the best bid for passengers, in which it demonstrated that it would not only meet but exceed the Department’s specifications. The Department’s procurement process is absolutely clear: submitting a non-compliant bid that rejected the commercial terms on offer, as Stagecoach chose to do, can lead to disqualification.

We have a winner. Abellio won the competition with a compliant bid. We are currently in the standstill period, which is a standard part of procurement practice. Within that period, the Department is able to answer unsuccessful or disqualified bidders’ questions, enabling them fully to understand the details of the decision that has been made. Towards the end of the standstill period, the Department received a request for further information from one of the bidders and, in view of that, we decided to extend the period until tomorrow, 8 May. After that, we will be looking forward to the mobilisation from the successful bidder, which will lead to improved services for those who use the East Midlands franchise. Abellio will invest more than £600 million in trains and stations between August this year and 2027. Meanwhile, the Government will continue their £1.5 billion upgrade of the midland main line, which is the biggest upgrade since its completion in 1870. That is part of our £48 billion investment to modernise our railways over the next five years.

During Transport questions last Thursday, the shadow rail Minister, my hon. Friend the Member for York Central (Rachael Maskell), asked about the non-compliance of bidders for the East Midlands rail franchise. The Transport Secretary, who is not present, dismissed her questions as inaccurate and incorrect. However, according to a formal legal disclosure from the Department for Transport, which was published on 15 April and sent with the full authority of the Secretary of State,

“All bids contained some non-compliances.”

The ministerial code requires Ministers to make truthful and accurate statements to Parliament, so will the Transport Secretary now correct the record and rectify the inaccurate and incorrect statement that he made to the House last week?

Given that all bidders for East Midlands were non-compliant, will the Minister tell us how the non-compliances of the respective bidders were assessed? The Department has mandatory and discretionary levers over non- compliances in franchise bids. Can the Minister explain how the criteria were applied during the evaluation of bids for East Midlands?

The leak of the Stagecoach bid details to Abellio during the bidding casts further doubt on the integrity of the process. Why did it take months for the data-breach investigation to start and why was it so limited? Given last week’s cancellation of the ferry contracts and now this latest debacle, is there not serious doubt about the Transport Secretary’s ability to procure services? Will the Minister’s boss sign off the East Midlands franchise contract this week, in view of the serious concerns about the transparency of the process? Given the appalling record of defending legal challenges to failed procurement decisions—Eurotunnel and P&O being cases in point—what contingency plans are there to defend future legal action against the East Midlands award?

In 2012, rail franchising went into meltdown on the west coast main line. Seven years on, it has never been clearer that it is not working and will never work. It needs to end, and to end now.

Let me deal with the hon. Gentleman’s questions one at a time. In a complex procurement process such as this, or indeed in other complex public sector procurements, it is a matter of course that there may be small technical non-compliances. These could include, for example, incorrect font sizes or submitting bids in the wrong format—in docx rather than in PDF, or vice versa. This does not constitute a material non-compliance, which would affect the compliance of the bid as a whole. What would be a serious issue would be something like the reallocation of risk, or acceptance or non-acceptance of the commercial terms that have been offered. That is where the difference between material and non-material would come in.

We have been clear at the outset that non-compliance risks exclusion and Stagecoach chose to put in a materially non-compliant bid rejecting the commercial terms on offer. In doing so, it is responsible for its own disqualification.

On the bid leak, I am aware that an email was sent incorrectly by Network Rail, which was received by one of the bidders, but that has been investigated and it was proved in that investigation that the email was not opened and none of the information that was possibly within it was accessed, so it has not been material to this award.

The hon. Gentleman said that franchising is dead and buried. I could not disagree more. Franchising has been a significant part of the turnaround of our rail industry. It has led to more entrants into the market. It has led to investment from the private sector. It has led to over £10 billion of investment. It has led to a renewal of focus on customers in the rail sector. It has been an ingredient in the turnaround we have seen, with the more than doubling of passenger journeys on our railways over the past 20 and a bit years. So franchising has been a success. We of course need to evolve it because what we face now is how to take the process on to the next stages. That is the question that the Williams review has been tasked to solve.

Mr Williams is starting to give us some of his thinking. He has made speeches at various rail conferences. We look forward to receiving his report in the early summer, with a view to a White Paper in the autumn.

The comment from the hon. Gentleman was that the Secretary of State had misled the House. The Abellio bid was won in a competitive franchise process and it won with a compliant bid. The comments by the Secretary of State were, therefore, accurate. I am aware of the media story, but it is wrong. He does not need to correct the record. The Abellio bid was compliant and has been won in an open, fair and consistent way. We look forward to seeing the benefits of that for the passengers on the East Midlands network.

Can the rail Minister confirm that under the terms of the new franchise passengers from Kettering will enjoy the reintroduction of two trains an hour going north from Kettering, which had been taken away, extra seat capacity on the Corby to London service and the introduction of electrification to Kettering by 2020?

My hon. Friend makes, as ever, a wise point on behalf of the constituents he serves so well. The point about this franchise, and indeed all our franchises, is that they bring benefits for the travelling public. This franchise will do just that. It will be delivering more trains from Kettering, it will be delivering more seats from Corby, and the Government as a whole through their electrification of a significant part of the midland main line will be delivering the electrification that he specified. So his constituents will be receiving a better service in both quantity and quality as a result of this franchise award.

I trust the hon. Member for Kettering (Mr Hollobone) will go about his business with an additional glint in his eye and spring in his step, buoyed by knowledge of the approbation he has received from the Minister on the Treasury Bench describing him as “wise”; I have a feeling it will be framed and appear in an important and public part of the hon. Gentleman’s home.

There will be concern in Chesterfield that the East Midlands rail service currently provided by Stagecoach will no longer be in place. In terms of what the Minister is able to tell us about the process, how many fully compliant bids were there? In terms of the process going forward, what benefits will constituents in Chesterfield see when we move to Abellio trains?

The Department wants to provide bidding feedback to those who have been unsuccessful or disqualified, but it has never given bidding feedback in public in relation to losing bids. That would not be particularly fair on those who have bid, and there are commercial confidentiality points that could have market implications, so we have never done that. I am aware that some of the bidders have made public statements themselves, but that is up to them. I do not think it is up to me. The people of Chesterfield will be able to look forward to an enhanced service. We have put out an interactive map that details the benefits for all the different areas of the franchise award. It is publicly accessible on the Department for Transport website and the hon. Gentleman might be interested in looking at that. Separately, I will of course write to him with the details of what will happen for the people of Chesterfield as a result of this franchise award.

Can the rail Minister assure me and the House that he will continue to ensure good value for money for taxpayers and for passengers, unlike Labour, which allowed fare rises of 13% during its time in government? I was once a resident of the east of England and therefore used the rails.

I am absolutely clear that we will continue to seek good value for money for fare payers and taxpayers through the franchising process. The amount of money that is being invested in our railways is at a record level, because the Government believe strongly in rail underpinning our economy and our move for clean growth. Fares are obviously a matter of some concern, but I remind my hon. Friend that we are in the sixth year of freezing fares in line with inflation, which is in marked contrast to the fare system that we inherited when we came into government. I think there were fare increases of up to 10% in the previous Government’s last year. We will focus on delivering not only better value but better quality and quantity at that better value.

Never before have I heard a question on East Midlands trains that begin at St Pancras and terminate in Sheffield being asked by someone from north of the border, but the hon. Member for Gordon (Colin Clark) is always welcome to come and enjoy the midland main line.

In any event, this is a serious matter, and I pay tribute to the hon. Member for Middlesbrough (Andy McDonald) for raising it. As the hon. Member for Chesterfield (Toby Perkins) said, there will be concern about this franchise and the manner in which this has been done. My hon. Friend the Member for Nottingham East (Mr Leslie) and I met Abellio on Friday, and I put that squarely on the table. I have a concern about the level of expectation. The Minister rightly speaks about new trains being introduced, about refurbishment and about bi-mode trains, but none of that will come on stream for at least three years: there are high expectations, but they will not be delivered.

My real question to the Minister is this. It is my understanding that those train doors that have to be slammed—the ones where people have to reach up through the window to turn the handle on the outside when they want to open or close the doors—are rightly going to be made unlawful in order to comply with rules, regulations and laws covering people with mobility difficulties. Can he confirm that, in order to satisfy those laws, there will have to be new trains? Can he also confirm that that cannot be done in time for January next year? In that event, what are the Government going to do?

I am sure that expectations are high; they always are higher at the start of a franchise. We have been talking about the customer benefits that will flow from the £600 million that Abellio is investing in trains and stations along the franchise. I understand the right hon. Lady’s point about how benefits can sometimes be delayed, and there has, on occasion, been a sense of jam tomorrow in the delivery of timely upgrades for our railways, but this is a positive announcement and it should be welcomed as such. I recognise that change can cause challenges for people who are used to dealing with a particular operator. That is inevitable whenever we have a change of franchise operator—[Interruption.] May I just make one more point, Mr Speaker?

Blurt it out I will. In terms of PRM compliance—compliance with regulations covering passengers with reduced mobility—I am extremely keen that all our train operating companies should have trains that are PRM compliant by the end of the year. That is the expectation that we have of them.

East Midlands services that run from Cleethorpes extend to Lincoln and Newark. In the not-too-distant past, we used to have services through to Nottingham, Leicester and even more exotic places. Could the Minister give an assurance that Abellio will look at extending the services out of Cleethorpes? Will he urge it to ensure that they are not provided by a single unit? The services, particularly those to Lincoln, are frequently overcrowded, especially after they stop at Market Rasen in the constituency of my right hon. Friend the Member for Gainsborough (Sir Edward Leigh).

I am not sure we can describe Leicester as an exotic destination, but I understand the point that my hon. Friend is making. It is a key part of the economy and the central part of this country and its connectivity is therefore very important, as he highlights. I will have to check and have a further conversation with Abellio and then write to my hon. Friend with the answer to his question.

There have been press reports again today regarding who is responsible for pensions, particularly in relation to Virgin contracts and Stagecoach. Can the Minister clear that up? What is he trying to achieve? Who is responsible for paying the pensions?

The responsibility for paying train operator pensions is the responsibility of the train operator. That is the case with the franchises that have just been awarded and are being considered, and it has always been the case since franchising came into form 25 years ago. There are no plans to change that. Train operators have the responsibility and we expect them to fulfil it.

Is the Minister confident that the new contract will deliver positive benefits for rail users in Corby and east Northamptonshire and that the transition from the old contract to the new will be seamless?

There will be significant benefits for the constituents whom my hon. Friend serves so well. Those benefits will be in the form of new trains and significantly increased capacity, particularly with the connectivity into London. There are significant benefits for those he represents. There is obviously operational risk with the handover from one franchise to the next, but many of the staff will TUPE over, as is standard when a franchise changes. I expect all sides to go through the process with good will to ensure that customers are at the centre of their thinking.

I wonder whether there is a way to formalise this slot as an urgent question to the Secretary of State for Transport, because this is clearly a weekly event that could be formalised in the parliamentary calendar.

My question to the Minister is this: what is the Secretary of State’s responsibility when it comes to making market-sensitive information available? Given how leaky the Government are, was it appropriate to leave nine days between disqualifying Stagecoach and announcing its disqualification?

After the decision has been made within the Department for Transport, there has to be a period of communication with other Departments, such as the Cabinet Office and the Treasury. That is entirely standard in public procurement. It is not a question of the Government sitting on their hands within the Department. There was a standard process. That is typical in rail franchises, as it is in other parts of public procurement. I am aware of the press story, but it is simply wrong.

The Minister will be aware that the East Midlands service between Derby, Stoke and north Staffordshire, run by East Midlands Trains, is inadequate. It is often only one carriage and overcrowded. Can he assure me that that service will be improved under the new franchise?

I can assure my hon. Friend that the service will be significantly enhanced. That enhancement will take the form of more services, particularly earlier in the day, including on a Sunday—I know he and others along that route have campaigned for that. The trains themselves will be new and much bigger. I am aware that the service is often a single carriage and is absolutely full. That is an indication of the pent-up demand along that line. That is why we will be seeing more services to meet that need.