Westminster Hall: West Coast Rail Franchise

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John Stevenson:

I beg to move, that this House has considered the West Coast rail franchise.

It is a pleasure to serve under your chairmanship today, Mr Brady, for what is my first Westminster Hall debate of this new Parliament.

I should mention that I am the chair of the all-party group on the west coast main line. The group takes a keen interest in the line; we have met the operator and the franchisees, and recently we visited Euston station itself. I also thank and pay tribute to the West Coast Rail 250 group for its support and assistance, and for being a source of information. It is the secretariat to the all-party group and it has been of much use to us.

The forthcoming franchise is extremely important for the west coast rail line. The line is, in my view, the most important inter-city line in the country. It connects the great cities of our country—namely London, Glasgow, Manchester and Birmingham—and it links many smaller cities and major towns on the west coast of the country. Of course, I could not neglect to mention my own constituency, the city of Carlisle, which is a key railway city. Indeed, there are four railway lines that connect into Carlisle: one going to the west coast of Cumbria; one going to Newcastle; there is, of course, the famous Settle to Carlisle line; and of course there is the inter-city connection between Glasgow and London. So, the west coast line is one of the most significant and indeed vital transport links for the west of the country.

The line was originally built between the 1830s and the 1880s. It was not built as one line; it was a series of lines that ultimately got connected together. That period was the key time for investment in the line, but between 1955 and 1975 most of the line was electrified. In total, there are about 700 miles of track.

After world war two, as we all know, the railway system went into decline. There was a lack of investment, a lack of interest in the network and a decline in passenger numbers. That was true for many rail lines across the country; many lines were shut and so were a number of stations. Fortunately, the inter-city connections continued. Even though they may have had issues, they remained in use.

Then we started to see the revival of the railways in the 1990s, with the introduction of the franchise arrangements, which remain the arrangements today. On the west coast, about 17 stations are under the franchisee, although Network Rail continues to manage three of the key stations, namely, Euston, Manchester Piccadilly and Glasgow Central. On top of that, there are a number of other stations that are not part of the franchise. From an employment point of view, the west coast rail company—effectively, Virgin Trains—employed just over 3,000 staff in March 2015.

We have seen a dramatic increase in passenger journeys. In the 18 years since the start of the franchise system, the number of annual passenger journeys in Britain has risen from 845 million in 1997-98 to 1.65 billion in 2014-15, which is a faster rise than for any other major European rail system. In the past three years on the west coast line itself, annual passenger journeys have gone up from 30.4 million to 34.5 million, so that from the start of April 2014 to the end of March 2015 4.3 billion passenger miles were travelled. Indeed, passenger journeys have grown by around 20% between 2010 and 2015.

The majority of the demand for rail travel on the west coast line is for journeys to and from London. There are around 300 train services every day on the west coast line, with journeys to and from London accounting for 63% of those services. Typically, journeys on the line are long-distance journeys, with approximately 60% of them being over distances greater than 100 miles. Of the journeys made, around 66% are for leisure, 23% for business and 11% for commuting purposes; many of the commuter journeys are made with season tickets.

The London terminus at Euston, which is obviously essential to the west coast line, is the sixth busiest station in the country, and outside London the stations at Birmingham New Street, Manchester Piccadilly and Glasgow Central are three of the four busiest stations in the country.

Simon Burns Conservative, Chelmsford: I was extremely interested to learn about the number of journeys and of passengers using this important line up the spine of the country. Does my hon. Friend agree that by about 2024 it is expected that capacity on the west coast main line will be 100% and bursting at the seams? That is why it is so important that we move ahead with building High Speed 2, to provide some extra passenger capacity.

John Stevenson: My right hon. Friend hits the nail on the head with regard to the key issue about HS2, which is capacity. He is absolutely right that on many parts of the west coast line capacity is already becoming an issue, and that situation will continue as we approach the 2020s. Therefore it is vital that we invest in the rail network and HS2 is very much part of that.

Funnily enough, the line is not just about trains and stations; it is also about the track itself. In recent years, we have seen significant investment—of almost £10 billion— in the track on the west coast line. That investment has led to a huge improvement in capacity, reliability and punctuality. As a user of the line myself, I have certainly seen significant improvements in the punctuality of the service, and in the level and quality of customer services provided at both stations and on the trains themselves. However, quite clearly there are still many issues that remain to be dealt with, one of which many colleagues will understand—wi-fi. Overall, however, there have been big improvements since the start of the franchise system.

Also, we must not forget the benefit that there is to the taxpayer from the franchise system. Between 2008 and 2015, the overall payment to the Exchequer from the franchisee was roughly £650 million and over the entire franchise period nearly £1 billion has been paid to the Exchequer. As for passenger satisfaction, in autumn 2015 overall journey satisfaction with the existing west coast franchise was 91%, which was 4% higher than the average for the long-distance sector. Clearly that is good, but there is also room for improvement.

Indeed, the areas where the west coast franchise could improve were identified by the Transport Focus group in its report. The group highlighted the areas that passengers were most concerned about: availability of seating at stations; car parking facilities; luggage space on trains; toilet facilities; and of course value for money in the price of the tickets. Overall, therefore, comparing where we are today with where we were in 1997, when the franchise scheme started, I would say that the west coast service is much improved, but there is still room for further improvement.

Also, it would be neglectful of me if I were not to mention the aborted attempt at the franchise renewal a few years ago. Without doubt, that was a considerable setback for the Department for Transport and it will undoubtedly have put back investment and development of the service. I appreciate that we now have an interim arrangement under a direct award, which expires in April 2018. Clearly, that has been the short-term solution.

I also acknowledge the contribution that Virgin West Coast makes. It has done an excellent job. Quite clearly, it will be in competition with other rail transport companies for the next franchise, but at least it has set a benchmark that we can build upon.

There have been improvements within the direct award scheme, with investment in stations, the provision of wi-fi at stations and one or two other things. However, the situation is not the same as it would be with a full franchise; there has not been the same level of necessary improvements or the same commitment, which are what we wish to see.

I do not want to go into the many reasons why the previous franchise did not happen; we need to look forward and not to the past. Suffice it to say that I hope the Government have learned from the experience, and so far my contacts with the Government have been positive.

The really important thing is where we are today and how we can ensure that we get the new franchise right. It needs to be right for passengers.

Karen Lumley Conservative, Redditch: I thank my hon. Friend for securing this debate. Does he agree that some of the reported proposals, including reports that there might be cuts in services to stations such as Birmingham International, would have a detrimental effect on the west midlands economy and Birmingham International airport?

John Stevenson: One of the reasons for having this debate was so that hon. Members could have the opportunity to highlight key issues for their own area. I am delighted that my hon. Friend has been able to do so and I am sure that the Minister will be listening keenly.

Caroline Spelman The Second Church Estates Commissioner: My hon. Friend is very kind. Birmingham International airport is in my constituency. Is my hon. Friend aware that a reduction in service at Birmingham International train station would threaten that regional airport? It is a significant international airport, serving a region the same size as Denmark, and it already does not receive a service from London in time for passengers to catch the early morning flights.

John Stevenson: My right hon. Friend makes a valid point. Indeed, we must not lose sight of the fact that there should be integration within our transport system, between the railways, the airports and the road and bus networks.

The important thing about the new franchise is that we get it right. It needs to be right for passengers, fair for the taxpayer, right for the industry and right for those who work in the industry—we must not overlook their contribution to the network. Therefore, the level and quality of service, investment in all aspects of service and ticket pricing are some of the key issues. I am sure that other Members will have their own issues, but I want to concentrate on four in particular.

First, there is the customer and service level. It is often the small things that matter, particularly to passengers and customers, and there is key evidence of issues that customers want the forthcoming franchise to address. These include car parking—the pricing, the number of spaces and the availability at key times. Another issue is luggage and storage on trains. Many people have commented that the storage is at the end of each carriage and they would prefer it to be closer to where they are sitting. They have also commented that there should be more space for luggage. Toilet facilities and wi-fi clearly need improvement. Wi-fi has improved at stations, but there is definitely an issue—I speak from personal experience—on the trains themselves, and customers are keen to see wi-fi improved.

Then we have congestion. Carlisle, I have to confess, is a quiet station compared with many others, but at Euston there is what many call the Euston sprint—people charging for the train, sometimes in an unedifying manner. There is clearly room for improvement on that in the franchise in the future. Customers’ views and opinions need to be heard, and there needs to be an appropriate conduit between the customer—the passenger—and the train companies and, indeed, on into Government. In my own experience, customer care has been positive overall, but customer service questionnaires demonstrate that there is still a lot of room for improvement.

Then we have ticket pricing. What is the Government’s overall aim? What balance do the Government want to see between the taxpayer and the passenger? What about the link between the retail prices index and the consumer prices index? What about competition? Those issues need to be addressed in the forthcoming franchise. I appreciate that revenue raising and the balance between the taxpayer and the passenger are important for the Government, but they are also important for the passenger and the taxpayer.

David Mowat Conservative, Warrington South: I congratulate my hon. Friend on leading the charge on this issue. The things he has listed are best addressed if there is proper competition in the franchise process. Does he agree with me and the National Audit Office that unless the Government get at least three or four participants in the bidding process there will be a risk of inadequate competition? Does he also agree that, although Virgin has given an adequate service—in some ways, a good one —the Government must ensure that it does not have too big an incumbency advantage in the bidding process?

John Stevenson: My hon. Friend makes two valid points. There must be competition. We need to encourage many different businesses to come in and challenge Virgin for the franchise, to ensure that we get the best possible franchise for the taxpayer and the passenger.

We need transparency and simplification. The ticket-pricing system needs to be easier for the consumer—the passenger—to understand. I accept that there are technological changes going on, and it would be interesting to hear from the Minister how she wants to drive them forward. I am old-fashioned, and when I go on the train I have my tickets in my hand while many people get out their mobile phone. Such advancements are positive, but I am interested in the emphasis that the Minister wishes to place on them in the new franchise.

The third issue is clearly Euston station itself. As I have mentioned, it is the sixth busiest station in the country, and to a significant number of passengers it is the only station that matters. We have HS2 ahead, and there will be a huge change at Euston with the substantial development works there. How will the Government ensure that the works are done in a timely fashion, and what will they do regarding the certain disturbance over a long period? There will be an impact on timetabling and a restriction on the innovation that train companies can bring about, and there must be a question over the punctuality that services will be able to attain during that time. There will be a reduced number of platforms, which will clearly affect the next franchise. The customer—passenger—experience will be a concern, as usage could be affected. There is a commitment for the timetable to continue as it is, but if we get to a stage when trains are not arriving on time, there will be a danger that passengers start to look elsewhere—to other ways of getting to and from London. I am, therefore, very interested to hear what the Minister has to say about the proposed Euston development.

Then we come to station investment. I have talked about Euston. Clearly investment there is a key issue for many, but we must not forget the smaller towns and cities up and down the west coast line, for example Preston, Milton Keynes and my own city of Carlisle. Will the Minister confirm that the stations—I think there are 17 in total—will come under the control of the franchisee rather than of Network Rail? Will she also confirm that any leases that are produced between Network Rail and the franchisee will allow the maximum amount of investment and a high degree of flexibility? Most important, will she confirm that there will be a mechanism for the payment of residual value in the event of a change at the end of a franchise? The all-party group is very concerned about that, because in the last proposed franchise we had confirmation that a residual value clause would be incorporated into the agreement, but that turned out not to be the case. We are, therefore, seeking reassurance that such a mechanism will be included in this franchise. It has been mentioned in the past that the northern franchise has an element of that mechanism, but our investigations and discussions have shown that the present clauses are inadequate and need to be beefed up in the new franchise.

I firmly believe that, with a residual value clause and encouragement by the Government to invest in stations, we can go beyond the passenger rail experience to opportunities for business, retail and other such things. If I may use my own constituency and railway station as a good example, Carlisle is a prime centre for investment and a real opportunity for an ambitious franchisee. However, we need the mechanisms to be in place.

In conclusion, the key issues include Euston, the impact of HS2 on the franchise and what the Government intend to do about it. Further reassurance is needed that investment in the west coast line will be maintained even though a lot of money will be spent on the HS2 line, and the Minister must continue to ensure that Network Rail considers opportunities to increase capacity on the west coast line in addition to the increased capacity from HS2. More specifically, we need to put the consumer—the passenger—at the centre of the franchise, and pricing and customer service are important aspects of that.

For me, one of the most important things is station investment. We must not lose sight of the fact that the smaller stations up and down the west coast are equally important and matter to many people in different ways. I ask the Minister to undertake to include a residual value clause in the forthcoming franchise agreement, otherwise it will be a huge missed opportunity.

I await with interest the Minister’s comments, and her assurances that the upcoming franchise will lead to improvements in those areas and in the service. We must ensure that the west coast main line continues to play its part, and indeed improve, as one of the most important pieces of infrastructure in our country.

…later

Drew Hendry Shadow SNP Westminster Group Leader (Transport): I always try to co-operate with the Chair and make sure to keep to the point, Mr Brady.

I congratulate John Stevenson on securing this important debate. It is always good to start these debates with points of agreement, and he made a number of good points. He said that this was a vital development for the west coast; I absolutely agree. He discussed the need to improve seating, toilets, luggage space and value for money for consumers and users, as well as parking and other facilities that people need to use the train network effectively. He rather skimmed over the franchise bid process—he went past it in his own version of the Euston sprint—but he can rest assured that I will cover that in a little more detail; not too much, but a wee bit. He mentioned what he described as the small things, although actually they are big things, as I think he knows; as he said, they are important to people. Unless we get the big things right—the developments at Euston station, which he referred to, and the franchise—those other things will be much more difficult to tackle.

Mr Cunningham rightly discussed the need for a better passenger experience, the effect on Coventry and Birmingham and the need to ensure that the Government are taking into account the connections required. That must happen all along the line from Euston to Glasgow and Edinburgh.

Mark Pawsey rightly pointed out that the franchise must be handled right, and I will come to that point. He also discussed the need for new trains. As we have seen, the SNP Scottish Government’s franchise deal includes new trains and new stations across Scotland as part of the arrangement. There are lessons to be learned there.

My hon. Friend Alan Brown also mentioned the franchise. He talked about the knock-on effects, which are very important, and he made the great point about the cost to the public being equivalent to the cost of putting in place the wi-fi that is currently missing from passengers’ journey experience. He spoke about the ability to put into practice innovations, such as audio-visual accessibility, that make a huge difference to the travelling public who may need assistance. I underline his call for the Minister to update us on the commitments made during the direct award; I hope that we will hear from her on that. It would be remiss of me not to underline the great work done by Wabtec in his constituency on refurbishing rolling stock.

The west coast line is important to Scotland. Five Scottish stations are affected—Lockerbie, Carstairs, Motherwell, Glasgow and Edinburgh—so it is important that the Scottish Government have a say in the franchise process. I was pleased to see the Minister nodding when that came up earlier—I hope we will get a commitment from her on that. Passengers must have a safe, fast, frequent, reliable and punctual service that connects Scotland to London and the intermediate locations that have been mentioned, with on-board facilities and fares that attract passengers to the rail network and retain them.

Indeed, the UK Government can take lessons from the SNP Scottish Government on how to conduct a franchise process while offering passengers a fair deal on ticket prices and fares. After the shambles of the 2012 franchise bidding process, the UK Government must ensure that the next franchise process has the public’s confidence and that it will be able to deliver value for money for passengers. The cancelled franchise process for the west coast main line brought the whole franchise bidding process into disrepute, leaving the public with no confidence in the Government to conduct major rail franchise bids. In fact, the Public Accounts Committee said in 2013 that

“the Department did not apply basic processes properly.”

Crucially, the Committee also said:

“This is not the first time we have come across this situation.”

The Laidlaw inquiry found that there was a damning failure and that the public were left with a lack of confidence. That cannot be allowed to happen with this franchise.

The west coast main line serves five stations in Scotland, as I have said, and is one of the main routes that links passengers in Scotland with Liverpool, Manchester, Birmingham and London. At the time of the cancelled process, as my hon. Friend the Member for Kilmarnock and Loudoun mentioned earlier, the Scottish Government were going through their own franchise process for ScotRail, which had to be put on hold with absolutely no notice to Ministers in the Scottish Government. Keith Brown, the Scottish Cabinet Secretary, said:

“We had no advance notice of this decision being made. Obviously it does have implications for the line itself…what I would like to do is be involved in that discussion with the UK government to say what is best for rail users in Scotland.”

That is a fair request.

John Stevenson: The hon. Gentleman makes a fair request to the UK Government; may I make a fair request to the Scottish Government? Carlisle station is a station for the Scots as much as for the English. If the opportunity arises for investment in the station from the Scottish Government, will he support that?

Drew Hendry Shadow SNP Westminster Group Leader (Transport): Absolutely. I hope the Minister will act on the hon. Gentleman’s promotion of Carlisle by committing to look into connecting the new borders railway with Carlisle. Perhaps that is something we could investigate as well. It would benefit many more people.

As I said, at the time of the franchise process, there was no communication with the Scottish Government. On the basis of the Minister’s comments, I am hopeful that that will change in future years.

As for the passenger experience, people in the 21st century have a right to enjoy a train journey. There ought to be a focus on working with others to deliver improvements to stations and to the passenger experience. The points that the hon. Member for Carlisle made when he spoke about improving the passenger experience are all vital to ensuring that overcrowding is reduced, that ticketing is sorted out properly and that integrated journeys are increasingly facilitated across all the stations in England and across the border into Scotland as well.

The UK Government should ensure that the new franchisee makes fares affordable across the piece. The Scottish Government have already taken action to ensure that fares are affordable across the Scottish rail network, by ensuring that their new franchisee will continue to limit regulated peak fare increases to the level of the retail prices index. Regulated off-peak fares will also be limited to increases of 1% below RPI for the lifetime of a 10-year franchise. The Scottish Government are making the best of the system that the UK Government continue to persist with. The Conservative UK Government introduced railway franchising in the 1990s, and the legislation precludes any public sector organisation from bidding to operate a railway service. No such barrier applies to state-backed organisations from Europe or elsewhere. That is patently unfair, so I hope we can look at how we can adjust that.

The SNP tabled a new clause in the Scotland Bill that would have devolved rail services in Scotland, giving Scottish Ministers full powers and flexibility to decide who would run such services. However, like every other SNP amendment to the Scotland Bill, it was voted down by MPs. The new clause also sought to ensure that the provisions of the Railways Act 1993 allowed direct awards to be made, to the full extent possible under European law, for the operation of rail passenger services such as the ScotRail Caledonian sleeper.

As a result of the franchise deal in Scotland, passengers and staff will enjoy an enhanced range of benefits, with advance fares between Scottish cities starting at £5, a commitment to pay at least the real living wage—the one applied in Scotland—to all staff and subcontractors, at least 100 apprenticeships and a guarantee of no compulsory redundancies.

…later

 

Nadine Dorries Conservative, Mid Bedfordshire: John Stevenson, do you have any further comments?

John Stevenson: Thank you, Ms Dorries, for the opportunity to say a few additional things. I appreciate the contributions of all hon. Members on what is an important issue for many people up and down the west coast. The issue affects businesses, individuals, tourists, our major conurbations and of course the smaller cities and towns right up the west coast of our country. The next franchise is a real opportunity for the industry, users and the taxpayer. The Minister kindly touched upon the key issues that will be incorporated into the franchise. My all-party group will certainly take a big interest in the franchise, and we look forward to her coming to a meeting of the APPG at some point to discuss aspects of it. We will certainly take up residual value with her, which is an ongoing issue for us. Passenger issues and what happens at Euston are also critical, but I like to think that the future of the west coast rail line is positive.

Question put and agreed to.

Resolved, that this House has considered the West Coast rail franchise.

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