HC Deb 19 January 2004 vol 416 cc1075-94 3.32 pm
The Secretary of State for Transport (Mr. Alistair Darling)

With permission, Mr. Speaker, I should like to make a statement on the railways.

Last year, Britain's railways carried over a billion passengers for the first time in 40 years. That is a significant measure of success, and one that has been achieved despite all the well-known difficulties facing the industry. In those 40 years, the railways have suffered from substantial under-investment year after year. That was especially so in the years leading up to and immediately after privatisation under Railtrack. The Government will set out their spending plans through to 2008 in the spending review this summer. In advance of that, we need to look at the progress made through the increased investment that is already being put in place but, at the same time, we must look at the structural and organisational changes that we need to allow the railways to improve performance. That will enable us, as the spending review decisions are made, to publish proposals in the summer for a new structure and organisation for Britain's railways.

Following the history of under-investment, as a first step it was necessary to put in place increased investment. In July 2000, therefore, the Government announced public investment of £33 billion over 10 years, doubling railways investment over a five-year period. Total investment in the four years to 2006 will be almost three times the investment at the time of privatisation. That investment is now beginning to make a difference, but it has become very clear that the scale of under-investment and inefficiency in our railways that built up over decades was far greater than anyone believed at the time. The Hatfield accident in October 2000 exposed the poor state of much of the railways infrastructure. When Network Rail took over from Railtrack in October 2002 and started to go through the books, it became increasingly clear that Railtrack either did not know or did not admit to the sheer scale of the problems that were building up. It also became very clear that Railtrack had lost control of its costs. It had farmed out much of its decision making on what work was done, and therefore on costs, to private contractors. As everyone knows, forecast costs on the west coast main line were totally unrealistic, rocketing from £2 billion to £13 billion in just five years.

The recent regulatory review published last December confirms that the cost of upkeep of Britain's railways is £1.5 billion a year more than was thought necessary just three years ago. The review implied that Network Rail inherited a business from Railtrack with unit costs substantially higher than they ought to be. Network Rail is tackling these inefficiencies and is working to bring costs down. Taxpayers and fare-paying passengers alike need to know that their money is being well spent and that increased spending will improve performance. Cost control is absolutely essential.

The £64 billion public and private investment announced in 2000 is making a difference. Over a third of train rolling stock is being replaced, half of it on London commuter lines. Major projects are being delivered, like the west coast main line upgrade and the power supply south of the Thames. There is track and signalling renewal going on all over the country. There are now 1,500 more services every weekday than there were in 1997, and there has been a 20 per cent. increase in passengers since 1997. Reliability, which is highly dependent on track and signalling maintenance, and which fell dramatically after Hatfield, is improving, but it still has a very long way to go.

There remains a further and very serious difficulty facing the industry—that is, its structure and organisation. The way in which it was privatised has led to fragmentation, excessive complication and dysfunctionality that have compounded the problems caused by decades of under-investment. Quite simply, there are too many organisations, some with overlapping responsibilities, and it has become increasingly clear that that gets in the way of effective decision making and frequently leads to unnecessary wrangling and disputes. That is no way to run the railways.

The Government are committed to a partnership between public and private sectors. It happens on railways throughout the world. However, the long-term inefficiencies and costs of privatisation have, as time has passed, become an even bigger barrier to the success of the railways, so in the spirit of partnership between private and public sectors, we need to put right the problems that the authors of privatisation left behind. We need to build on that investment and on the structural changes we have already put in place, not only to put the railways on a sound financial footing, but at the same time to provide them with the right structure and organisation to take them through the next 20 or 30 years.

The Government will set out their spending proposals for transport at the conclusion of the spending review in the summer, but that money must be well spent now and in the future. It is essential, therefore, that the railways establish far greater cost control, so that the public and private investors know that it is efficiently and effectively run. Before they take on new projects, we need to be satisfied that there is proper control over existing costs and a significant improvement in performance. The public expect no less.

The Government remain committed to increasing spending on the railways because it is needed and because the railways are an essential part of the economic fabric of the country. Millions of people depend on it. The public rightly expect rigorous cost control—after all, we all pay for the railways through taxes and fares. That work has already started. For example, Network Rail is taking maintenance back in-house to control costs, and it is looking at other areas where it can do things more cost-effectively. The regulator's review, which I welcomed in my written statement on 15 December, identified substantial cost reductions, but more can and must be done.

As a country, we must be able to make informed choices and decisions about rail and other forms of public transport. Too often these costs are far from transparent. The Government also believe that the opportunity should be taken to consider how we can devolve more decisions on public transport, including rail, to the Scottish Executive and Welsh Assembly Government and at a regional level to PTEs—passenger transport executives—within a nationally coherent framework. Local transport decisions are often best taken by the people who provide the service and who pay for it. They can be better placed to know what is needed and how best to provide it, as well as being able to make sensible and informed decisions as between bus, light rail and heavy rail, for example.

However, structural change is not just needed in order to make better spending decisions. It is also needed if rail is to operate effectively and to meet the needs of passengers and other customers. Privatisation had some disastrous and far-reaching consequences for the railways—Railtrack's performance, for example—but the private sector has brought considerable increased investment, and in many cases train companies have provided innovation that was conspicuously lacking in the past. We want to build on that.

That is why the Government believe that renationalisation would not solve the problems that the railways face. What is essential is to put in place a structure that works and can deliver not just cost control but safe, reliable railways that work efficiently.

Since 1997, we have put in place reforms to deal with some of the worst effects of privatisation. Richard Bowker and the Strategic Rail Authority have worked extremely hard with the industry, bringing greater leadership and strategic direction to the railways, and they do so with our full support. The SRA is making much-needed changes to franchising, planning and route development.

The Government remain committed to the minute that I laid before the House on 3 February 2003 covering obligations to the SRA, their other financial obligations and the Government's other contracts. As the House would expect, we will remain at least as closely involved in expenditure decisions and in financial commitments to the industry and those who finance it. However, what is needed are railways that make the most of what both private and public sectors can offer. The first stage of reform was to set up Network Rail, a private sector company operating in the public interest, and it is already making significant progress in improving the performance of the track and signalling and getting a grip on costs. It has a clear focus to operate in the public interest and build safe, reliable and efficient railways, and it will continue to do so.

We need to build on that, with more fundamental reform. The second stage is therefore to streamline the remaining structure of the railways and to examine the way in which the industry works together, and the Government will be publishing their proposals in the summer. Two key principles will underpin those reforms. First, the railways must operate in the public interest, while protecting the legitimate interests of investors. It must be for the Government to decide how much public money is spent on the railways and to determine priorities. Of course, no Government Department can or should attempt to operate the railways, but the Government can put in place a structure and organisation that can do that effectively and efficiently, with a single point of decision making. Rail privatisation failed to recognise that there are some things that only the Government can determine in the public interest and that cannot be left purely to commercial interests.

Secondly, the principle of public and private partnership is right for the railways and it will continue. It brings in money from two sources, and that is important. We are spending £73 million every week on the railways and that is levering in a similar amount from the private sector. That is why the principle of independent economic regulation for the railways is essential and will be central to our proposals.

In many cases, the train operating companies have brought innovation to services that was lacking in the past, but we need to put in place the right organisation and structure so that both public and private sectors can focus on meeting passengers' needs and delivering value for money. As rail also makes a valuable contribution to keeping lorries off the roads, we want to ensure freight operators have access to the rail network on fair terms. We need the right framework to ensure that the railways can operate effectively and so that key decisions can be taken in the best interest of passengers to provide a more reliable service.

Our objective is a streamlined structure and organisation with clear lines of responsibility and accountability. Network Rail is already operating in the public interest, and with the right franchising arrangements so should the train operators, but we have a clear responsibility to examine the roles and relationships of all the other organisations with a view to streamlining the present structure.

The review will therefore look at the regulation of safety, which at the moment is the responsibility of the Health and Safety Executive, the Health and Safety Commission and the Rail Safety and Standards Board. Safety is of paramount importance, and all those involved undoubtedly work hard to ensure safe railways, but there is now a plethora of industry standards, some of which are over-cautious or are being applied in an over-cautious way. Safety regulation needs to be focused on the real risks to passengers and employees and should not be an obstacle to providing reliable services. We need the right organisation to do that.

Our reforms must make the structure as simple and as straightforward as possible. The complex structure at privatisation has contributed to the daily frustrations of the public, many of which are shared by the dedicated and committed people across the country working to improve the railways and deliver better services.

There will be many in the industry with ideas for reform. I am asking Richard Bowker and the SRA to evaluate ideas as they come forward, and then to let me have advice based on industry views, so that we can take them fully into account in reaching conclusions on the review. In the meantime, the priorities for the industry must be continually to focus on driving up performance and reliability and getting a grip on costs.

Passengers are rightly impatient. Improvements have been made but more needs to be done. We are determined to bring to an end the problems caused by decades of under-investment, compounded by an ill-thought-out privatisation. Rebuilding Britain's railways needs a long-term commitment and we are determined to deliver that.

I commend this statement to the House.

Mrs. Theresa May (Maidenhead) (Con)

I thank the Secretary of State for prior sight of his statement, such as it was.

This statement heralds the fifth change in the structure of the railways in nearly seven years of this Labour Government. They came in promising immediate benefits for the travelling public, but after seven years passengers are seeing no improvement on the railways, and for many services are getting worse. One in five trains run late, targets for increasing passenger numbers have been cut, and work on new lines has been scrapped. Little wonder that the Institute for Public Policy Research pronounced the 10-year transport plan dead and said that the political goal now appears to be keeping transport out of the headlines. The Government's treatment of Railtrack has undermined private investment; Network Rail has had its borrowings underwritten by the taxpayer; expansion plans have been abandoned or deferred; shorter franchises mean that train operators have less incentive to invest; and taking away the formula for controlled fares means that, for the first time, commuters are exposed to inflation-busting increases as performance continues to remain poor. What is the Government's answer? The Strategic Rail Authority wants to improve punctuality by making people's journeys longer and to make fewer trains run late by having fewer trains; and Network Rail wants to solve the problem of trains running late by changing the timetable. If it did not matter so much to passengers, it would be farcical.

The Government have done to transport what they did to health and education. Having obstructed those at the sharp end of the industry with regulation, targets and ministerial intervention, now, when they are failing to deliver, their answer is to set up a review, change the system and put decisions in the hands of the politicians. The statement makes one thing clear—this is not about finding the right structure for the railways, but about increasing centralisation and political control. The Government are tearing up the very structure that they created less than four years ago. Paragraph 16 of the statement says: There are too many organisations, some with overlapping responsibilities. Who created the Strategic Rail Authority? It was the brainchild of the Deputy Prime Minister. Who created Network Rail? It was the right hon. Member for Tyneside, North (Mr. Byers). This Secretary of State is having to clear up the mess left by his predecessors.

As ever with this Government, when there is a problem to be solved they do not look for efficiency and new ideas, but reach straight for centralisation, interference and bureaucracy. The statement takes 57 paragraphs to tell us that the Secretary of State is setting up a review. Anybody who wants to know more about the review could have learned more from the newspapers over the past few days than from the statement. Only last September, the Secretary of State said in evidence to the Select Committee on Transport: I am loath to start spending overmuch time on structural changes when I really want everybody in the railway industry to concentrate on delivery. I do not think the problems that we currently have can be brought back to any lack of powers I may have over the SRA or Network Rail … In relation to the SRA, there is no issue over the powers. Richard Bowker and I see eye to eye on everything that we do. Little wonder that Mr. Bowker is worried about his job.

What made the Secretary of State change his mind about his structural review? Was it because the SRA's strategic plan, which was due to be published this month, set out a bleak picture of the railways, highlighting projects that the Government have failed to finance and saying that the perception too often remains that the railway is not run to benefit its customers"? Of course, passengers did not need a report to tell them that; and they did not get the report, because the Government blocked it.

At paragraph 48, the Secretary of State talked about the train operating companies. As well as saying that they have brought benefits to passengers, as indeed they have, he said that with the right franchising arrangements they should operate in the public interest. Will the Secretary of State confirm that he will maintain in their franchises the independence of the train operating companies in providing services to customers? With the SRA standing between the Government and Network Rail in financial terms, the Chancellor has managed to keep Network Rail's debt off the Government's balance sheet. Will the Secretary of State confirm that the review will look into the financing of Network Rail, and if that leads to the Department for Transport taking over some of the SRA's powers, will that mean that the Chancellor can bring Network Rail's £21 billion debt on to the balance sheet?

In paragraph 42 of his statement, the Secretary of State says that "independent economic regulation" is "essential". Yet in paragraphs 38 and 45 he challenges the authority of the independent economic regulator. Will he confirm that his review will include a review of the role of the rail regulator, just over a year after he confirmed that he was happy with that role and with the powers of the regulator? After nearly seven years of a Labour Government who promised improvements in 12 months, passengers see no improvement on the railways. For many, services are getting worse. We have heard 57 paragraphs of words from the Secretary of State that will do nothing to improve service to the passengers who travel on our railways. The statement might have been acceptable six months after the Government came to office; seven years on, it is an indictment of their transport policy. All that they offer passengers is months of uncertainty and yet more change and increased bureaucracy.

With the 10-year transport plan in shreds and the Government failing to deliver any improvement for passengers, their answer is centralisation and more political control. As in health and education, the Government are failing to deliver on transport. The statement is an indictment of their transport policy, proving what passengers know—that the Government have done nothing in seven years to improve the railways and will do nothing in the next 18 months to make the lives of passengers any better.

Mr. Darling

The hon. Member for Maidenhead (Mrs. May) is fast gaining a reputation for travelling light when it comes to policy. She has no policy on roads, as we found out last December, she has no policy on airports, and she appears not even to have a policy on railways. Some of her criticism about the review that we are about to conduct might have had more weight if not for the fact that her fellow shadow Cabinet member, the hon. Member for Havant (Mr. Willetts), who is, I understand, in charge of policy development—no wonder someone other than the hon. Lady is in charge of that—said in The Daily Telegraph in December: It was the wrong model…I freely accept that this structure is not right. I would not defend the way in which we carried out railway privatisation. It would appear that at least one part of the Conservative party recognises that the way in which the railways were privatised in the early 1990s was wrong. It has not worked, and the hon. Gentleman would not even seek to defend it. The hon. Lady's attack on us for facing up to those problems and putting in place a structure that will enable the railways to develop over the next 20 to 30 years is therefore somewhat undermined by her own colleague.

The hon. Lady asked me about investment. It would be interesting to know at some point, and before very long, whether the Conservatives are in favour of more or less money going into the railways. More money is going in, and people rightly want improvements. The west coast main line, for example, will see increased journey times when the first phase is completed this year.

Mrs. May

Taking longer.

Mr. Darling

Of course they are taking longer: work is being done on the railways for the first time in 30 years, and that is why there are some delays.

The hon. Lady asked about Railtrack, and I cannot help but get the impression that that is the one thing she cares passionately about. She speaks about it with a fondness that I find astonishing when I consider that company's record.

The hon. Lady asked about franchises. They were put in place by the Conservatives in 1995, and they were not the best deal for the travelling public. They did not specify the level of services that ought to be provided in terms of reliability, passenger comfort, cleanliness and so on. They have been changed and that has resulted in improvements.

The hon. Lady criticised the fact that fares increased, but what is her policy on fares? Is she promising that a future Conservative Government will not increase fares? I do not think so. She asked about regulation. I said in the statement that as long as the public and private sectors are working together, independent economic regulation is required. However, I later stated what is blindingly obvious—it is ultimately for the Government to determine the amount of money that they are willing to spend on transport. We are spending substantially more on that than the Conservatives did.

It is difficult to do anything other than conclude that the hon. Lady has no substantial criticisms of the fact that we are considering the structure. We have made changes since 1997; improvements are being made to the railways but the current structure clearly could not take them through the next 20 or 30 years. That is why it must be changed.

John Thurso (Caithness, Sutherland and Easter Ross) (LD)

I am grateful to the Secretary of State for the usual courtesy of allowing me to have a copy of his statement in advance. He is right to draw attention to the historic under-investment that many rail historians would date back to the Government settlement for 1942. That is notable because that Government included a Liberal Minister, so we can therefore all share the blame.

The Secretary of State is also right to draw attention to the failure of rail privatisation, which was rushed through and botched. The effect should be neither underestimated nor forgotten. However, does he accept that the Government have had long enough in six years to diagnose the problems and begin to effect a cure?

The statement has been much trailed. Speculation about its contents has been all over the media throughout the weekend. However, it is a damp squib; a feast was promised but we have only the appetisers. I suspect that it changed somewhat over the weekend. Will the Secretary of State clarify that when he states that it must be for the Government to decide how much public money is spent and to determine the priorities, he has accepted that they have a duty to formulate a clear strategy for rail travel, in not only the short but the long term?

If the Government have begun to accept their responsibilities, when will the Secretary of State present genuine, concrete proposals? Is not it the case that too many bureaucrats regulate the railways and that there needs to be considerably fewer? What role is there for the SRA if the Government are to make strategic decisions? Is not it rather perverse to put the SRA in charge of collating the review when surely it is one of the review's major subjects?

The Secretary of State rightly highlights the high costs in the railways. Given that when I raised the matter on 6 January the Minister of State said that the number of consultants seemed extraordinarily high, will the right hon. Gentleman confirm that the review will specifically examine such costs?

Last year, on 1 July, the Secretary of State said that the priority for everyone in the industry is to focus on improving performance…Another major re-organisation would distract…from that. Has he changed his mind or is not the review major? If he has changed his mind, what factors made him do that?

The Secretary of State accepts the need for a strategy for 20 to 30 years. I agree with him. Will he publish a White Paper when the review is complete? When can we read and debate genuine proposals? Will he confirm that the review of structure will include not only the regulatory regime but the industry, especially the track-train interface?

The statement commends itself more for what it does not say than for what it says. If hard-pressed passengers are to get a safe, reliable and affordable network, the Government need clearly to sort out their strategy for the future. The statement is barely the first stop on the journey.

Mr. Darling

On the hon. Gentleman's last point, the Government could have said nothing and simply published proposals in the summer, but I believed that it was right to say that we are conducting a review. It is better to be open and up front, and it is difficult for the Government to get the views and opinions that they need from people without explaining the reason for requesting them. I have not the slightest doubt that if I had simply come to the House and said, "Right, this is what we are doing," the hon. Gentleman would have condemned me for not considering the matter or taking the time to work it through.

In answer to the hon. Gentleman's question, we shall be publishing proposals in the summer and I would then like to get on with it. We do not want to spend ages debating the matter after that. His point about investment is quite right. Ever since I got this job, I have been making the point that under-investment has not been confined to one particular party, and if the Liberals wish to plead guilty as well, that is fine by me. I did not know they were guilty, but if the hon. Gentleman is entering a plea on their behalf, I shall not quarrel with him. The serious point is that one of the reasons why there are so many delays is that not enough money has been put into solving the problems involving track and train and some of the older rolling stock. During the time leading up to privatisation, investment almost dried up. The Tories hoped that the private sector would bring all the necessary investment in, but that simply did not happen. The investment is now coming into place, but it is taking some time.

The hon. Gentleman is right to say that we need a structure to take the industry forward 20 or 30 years; we do not want to see successive changes in that regard. In the meantime, however, there is no reason whatever for anyone working in the industry to take their eye off the principal objective, which is to drive up reliability.

Lawrie Quinn (Scarborough and Whitby) (Lab)

May I welcome the Secretary of State's statement? I am sure many people in the industry will also do so, because it is part of the continuing journey towards delivering a realistic railway industry. I speak as one who has personal professional knowledge of that industry. The Secretary of State was right to mention the need for partnership and the need to devolve responsibility down to communities. He will know that the SRA has been very successful in working with many of the rural railways around the country, including the Esk Valley line in my constituency. Will he tell the House whether the review will include those rural railways, which represent a lifeline for many remote communities? Will he also work closely with the SRA officers who have done so well to achieve a degree of realism in terms of delivering an effective and efficient rural railway system?

Mr. Darling

I am grateful to my hon. Friend, who knows a lot about the railways, having worked in the industry for many years. I should like to make two points. I said in my statement that we needed to determine whether we could devolve further decision making to local level, because bodies such as passenger transport executives and councils are often better placed to know how best to provide local transport such as rail, light rail and bus services. I certainly want to see more of that happening. I am also grateful for my hon. Friend's general welcome for the proposals. There is a recognition in just about every corner of all the areas from which we would expect to receive comment that reform is needed. It is only the Conservative party that is harking back to the old days of privatisation.

Mr. James Clappison (Hertsmere) (Con)

The Secretary of State has announced a review of the regulation of safety. Will that review consider the need for a quicker and clearer acceptance of responsibility in the case of serious incidents, such as those that took place at Hatfield and Potters Bar? Is he aware that the second anniversary of the Potters Bar incident is now approaching and that, in spite of repeated reports from the Health and Safety Executive, there has yet to be a formal acceptance of responsibility for that dreadful incident? Is he also aware that the position of the families involved, in respect of compensation, remains inadequate, although their main concern is that no one else should be put through the terrible experience that they have gone through?

Mr. Darling

In relation to compensation, my understanding is that discussions are taking place between Railtrack, which has accepted liability for the purpose of reaching a settlement, and those representing the families. It is true that there continues to be an argument between the solicitors acting for both sides, and we would all like to see that resolved as quickly as possible.

In relation to the hon. Gentleman's central point, one of our objectives must be to speed up the way in which these incidents are investigated, which is why we set up the rail accident investigation branch. That was widely welcomed in the House last year. We must also ensure that there is a clear point of responsibility for the running of the railways, not only in the event of an accident but on a day-to-day basis. The hon. Gentleman's point on that matter was extremely well made. Finally, the decisions to prosecute are taken independently of the Government, and while I would dearly like to see them speeded up, that is not a matter in which any Government can properly intervene. However, on health and safety, on speeding things up and on having a clearer point of identification of responsibility, the hon. Gentleman is right.

Mr. Ronnie Campbell (Blyth Valley) (Lab)

I welcome my right hon. Friend's statement, but can he tell me what is going to happen to the Blyth and Tyne line? A lot of money has been spent over the last five or six years to reopen it, yet we have heard absolutely nothing from his Department. What is happening there? Will we get our line reopened?

Mr. Darling

I may be wrong—if I am, I will say so to my hon. Friend—but I think he met my hon. Friend the Minister of State to discuss the matter. [Interruption.] My hon. Friend the Minister of State says from a sedentary position that he met some of our colleagues from that area—our hon. Friend was not present—and that they discussed the matter. Today's announcement is not about specific lines; it is about the organisation and the structure of the railways. However, the Department and the SRA are looking at that particular project. I am sorry that my hon. Friend was not able to be at that meeting, but I am sure my hon. Friend the Minister of State will be happy to meet him.

Sir Brian Mawhinney (North-West Cambridgeshire) (Con)

The Secretary of State is always right to draw attention to cost control, and I was in danger of taking him seriously until he mentioned PTEs. He can have cost control or devolution to PTEs, but he has been in the job long enough to know that he cannot have both. More fundamentally, as far as trains are concerned, what remains of the Government's 10-year transport plan?

Mr. Darling

In relation to the latter point, the 10-year transport plan put forward investment of £33 billion of public money, coming to a total of £64 billion when it included private money. The right hon. Gentleman is a former Secretary of State for Transport, although I cannot remember precisely when that was. It must have been—

Sir Brian Mawhinney

When fares were brought down by the Secretary of State.

Mr. Darling

Oh no. The right hon. Gentleman put in place a fare structure that he must have known was unsustainable over the long term, as he well knew. He would have welcomed the fact of being able to have more money going into the railways. I think I am right in saying that the time with which he is concerned was precisely that when British Rail and the newly privatised railways did not have enough money being spent on them. However, I agree that cost control is essential, whether that involves Network Rail or a PTE. It does not matter where—cost control is absolutely essential.

John Austin (Erith and Thamesmead) (Lab)

I welcome the review announced by my right hon. Friend the Secretary of State. He will be aware that my constituents and I endure one of the worst rail services on record and that, with the termination of the Connex South Eastern contract, we are in the unique position of having a publicly owned railway. I understand that there is a possibility that it may remain in public ownership, albeit not British public ownership, as Danish state railways is one of the potential bidders. For the present, the Strategic Rail Authority runs the service. Would it not be sensible to allow the SRA to gain experience of the problems of running a railway and, if it succeeds in providing an improvement, to extend that policy to other franchises?

Mr. Darling

I understand the point that my hon. Friend makes, but, as I said in my statement, the review will be looking at all aspects of the railway organisation, including the SRA. In relation to Connex, he, along with everybody else, welcomed the end of that franchise, but he would agree that there is still a long way to go before we can say that there has been a dramatic improvement. Again, two things are necessary. One is the money going into the system; the other is proper management.

Mr. Peter Luff (Mid-Worcestershire) (Con)

May I urge the Secretary of State to reconsider his proposal to devolve more powers and decision making to PTEs? Does he understand that an area such as Worcestershire, which is on the edge of a powerful PTE such as Centro, constantly plays second fiddle to the centre, and our services suffer as a result, while investment decisions to extend station platforms, improve signalling arrangements and improve track—small enhancements that would transform our services—slip? Please, Secretary of State, abandon that particular suggestion.

Mr. Darling

I appreciate the hon. Gentleman's general concern, but the point is that there are areas covered by PTEs where more sensible and rational decisions can be taken as between rail, heavy rail, light rail and bus when formulating transport policies. Rail should not be considered in isolation. I understand perfectly well that many areas of the country do not have PTEs. We must ensure that they get their right share of investment and that they get the appropriate services. We are not talking about devolving all decision making, but as about a fifth of rail travel in this country is regional it is right to ask whether, where it is appropriate and where we can ensure that there are no adverse or unintended effects on other services, we might devolve further power to those PTEs. That is certainly something that should be looked at closely.

Mr. Gordon Prentice (Pendle) (Lab)

My right hon. Friend said that 1 billion passengers were carried by rail last year, but as millions of them were standing or squashed together my question is about the relationship between the train operating companies and the leasing companies. Why are there not enough carriages in so many trains? Is it because the rolling stock is not available or because the leasing costs deter train operating companies from putting on a proper service?

Mr. Darling

The reasons for overcrowding vary from line to line. However, one reason why we decided to bring forward investment that will see the replacement of more than a third of all rolling stock was to get more capacity into the network. Indeed, my hon. Friend will know that there are many more commuter trains and there is new rolling stock on the long-distance lines, which will provide additional capacity. No matter whether the investment is public or private, however, there are always questions about how much the railways actually cost. As more and more people use the railways, which we want to encourage, we want to ensure that there is no impediment to getting additional capacity—if that is what is needed—and to getting trains on the line. We are replacing more than a third of the rolling stock, which will improve trains. Furthermore, the new stock is generally a lot more comfortable than some of the old stuff that is coming out of service.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC)

Does the Secretary of State acknowledge that vertical integration will be an important theme in the forthcoming review? In his statement, he referred to the fact that he wanted freight operators to have access to the rail network on fair terms, but why has there been a moratorium on freight access grants for the last nine months?

Mr. Darling

The reason is that the SRA has an obligation to manage its budget, and to ensure that if costs increase in one element it considers what it does elsewhere. Freight grants are, of course, still being paid out; the moratorium is on new applications.

Of course, we need to look at vertical integration, but I have to caution the hon. Gentleman: on the west coast main line, for example, where there are 13 train operators, the case for vertical integration may be less well made than where there is only one operator and one owner of the track. Where there are various operators, however, a system is being put in place whereby one person takes day-to-day control of services, so that if there is a problem on the line one person can take decisions about which trains run, which trains may need to be turned around early and so on. When one person is responsible for day-to-day management of the railways, it makes a difference in terms of the reliability of services.

Mrs. Louise Ellman (Liverpool, Riverside) (Lab/Co-op)

I commend the Secretary of State for his commitment to rail and for his efforts to unravel the disastrous privatisation undertaken by the last Conservative Government. Does he agree that the trebling of subsidies under privatisation, from £1.3 billion to £3.8 billion, is an indictment of Tory policy? Will his review lead to less fragmentation and will he look at public sector solutions such as the successful body Merseytravel?

Mr. Darling

Merseytravel is an example of a line where punctuality and reliability have dramatically improved. However, it would probably be unfair to the rest of the network to compare every aspect of it with Merseytravel, as that railway is fairly self-contained.

On the subsidy, I caution my hon. Friend to this extent: one of the reasons why the amount of money going in has increased is that more services are running and more people are being carried, but a lot more money is being put in for track and train alike. One reason why the money dried up at the time of privatisation was that the then Government's response to the problems of the railway was to pass everything over to the private sector and hope that it would come up with the money or, alternatively, that the whole thing would wither away. That did not happen, however, and, whether for roads or rail, it is important that the Government maintain adequate investment. We are committed to that, although I am not sure whether everyone else in the House is.

Peter Bottomley (Worthing, West) (Con)

It is a matter of record that I have a brother-in-law who is a railwayman.

Is the Secretary of State's statement—unchanged since the end of last week—designed so that Richard Bowker keeps his job and Tom Winsor loses his, or the other way round? Has he deliberately failed to pay tribute to the Deputy Prime Minister, who made similar announcements about the future of the railways, and the right hon. Member for Tyneside, North (Mr. Byers)? Why has he drawn such a veil over the past six years? To whom can people apply if they want to improve their rail service? He said that the details of individual lines are not for today or the review; but, if I want the Worthing service to run three times an hour, not twice an hour, to whom should I apply?

Mr. Darling

First, I know very well that the hon. Gentleman's brother-in-law runs a railway—and a good railway service at that. In relation to the points he makes about individuals, I am afraid that it is inevitable now that we will read speculation about individuals. Frankly, it is ill founded. I have the greatest respect for Richard Bowker, who runs the SRA. He has done a good job in sometimes difficult circumstances. In relation to the fragmentation to which the hon. Gentleman refers, yes, that is a problem. One of the things that I should like to put an end to is the situation where it is sometimes uncertain precisely whose fault it is if a train runs late or not at all. Indeed, that was one of the consequences of privatisation, for which I think the hon. Gentleman voted.

Clive Efford (Eltham) (Lab)

Does my right hon. Friend agree that the structure of the railways has been exposed through the investment that has been provided, in the sense that the structure created at the time of privatisation is incapable of bringing about improvements and that what we have done is attempted to tinker with that structure? The review must bring about a root-and-branch alteration in the structure of the railway. Does he also find it surprising that the SRA thinks that this state cannot run a railway yet will consider another state to run a franchise in respect of the former Connex contract? Does he agree that the travelling public will find that somewhat surprising? In reviewing the railway, does he not think that we should put aside some of the dogma about everything that is private being correct and in the interests of the travelling public, and that, where the state can prove that it can run a railway effectively, we should consider that and compare that efficiency with any contract that we let in the future to ensure that we get value for money?

Mr. Darling

I was putting dogma to one side when I said that both public and private sectors have a role to play, but I think my hon. Friend was going in the opposite direction. I have always said that the public sector has an extremely important role to play. I have never taken the view that the public sector was blame or fault-free in the past. Just about everyone sitting in the Chamber will remember that, on one or two occasions, British Rail was not everything that it might have been when it comes to the model of a railway company.

In relation to who runs Connex or anything else, what matters to passengers is not whether it is public sector or private sector, but whether it actually works—that is the key thing.

In relation to my hon. Friend's point about the last six years, which was touched on by the hon. Member for Worthing, West (Peter Bottomley), we have done two things over those six years: first, we have begun to tackle the huge investment backlog and, secondly, we have sought to deal with the problems that related to privatisation, one of which was the complete collapse of Railtrack, which could not carry on; it ran out of money and something had to be done about it. The second problem in relation to the SRA was that it was necessary—people widely accepted this—to have some strategic direction to the railways. We have done that. However, we have now reached the next phase, where we need to put in place an organisation that can take the railways forward over the next 20 to 30 years. I think that that is right—so, evidently, does the hon. Member for Havant, who speaks for the Conservative party on policy and is on record as saying that the way in which the Conservatives privatised could not be defended and they had to find a new way to run the railways. I am surprised that his colleagues have not read his comments.

Mr. John Redwood (Wokingham) (Con)

Will the Secretary of State in his review consider the possibility of reuniting track and train in common privately owned regional companies and abolishing the SRA? I have a great deal of sympathy with him, given his unruly inheritance of those dreadful quangos and a botched renationalisation by the right hon. Member for Tyneside, North (Mr. Byers)

Mr. Darling

I congratulate the right hon. Gentleman in two respects: he accepts that there was a problem after privatisation, and he has a policy, although it is not necessarily one that I would go along with. He is right to suggest that the whole question of track and train needs to be considered, and the precise model will be considered as part of the review.

Mr. Dennis Skinner (Bolsover) (Lab)

Is the Secretary of State aware that, over the past six years, there have been about half a dozen major statements about the railways? They started with one on the channel tunnel rail link when private money could not resolve the problem. Private money could not deal with Connex; private money could not deal with the Jarvis/Norris contracts; and private money could not deal with Railtrack. Is it not becoming increasingly obvious that privatisation, which has run for about 10 years or more, has failed, and that we ought to be thinking about another manifesto commitment that says that we will take the railways back into public ownership? Is that too much to bear?

Mr. Darling

Not for the first time, I have to disappoint my hon. Friend. We are not proposing to do that. I do not think that the problem is having public and private money and investment and operations on the railways. What is wrong is the structure that was set up.

My hon. Friend referred to the channel tunnel rail link and the same point applies to the franchises. The second thing wrong is that the Tories set them up in a way that was doomed to fail, because they were wildly optimistic in the assumptions they made. What was wrong with the privatisation was principally the way in which they botched it and left something that was completely fragmented and dysfunctional.

Mr. John Horam (Orpington) (Con)

Does the Secretary of State agree that one of the groups of people who have particularly suffered from the constant dithering over different kinds of structure are London commuters? Will he undertake to give high priority to giving them a better deal and to dealing, in particular, with the problem of overcrowding that we discussed last Transport questions? The solution is not just about new trains—although I welcome what he said about that—but about having longer trains and longer platforms.

Mr. Darling

The hon. Gentleman is right about London commuters, except that he will bear in mind the fact that one of the big problems that we face at the moment is that Railtrack failed to put in hand the upgrading of the power supply south of the River Thames. We are now putting that right and work is well under way. In addition, half the new rolling stock that is on order is going into London commuter lines—much of it to Connex and the southern railway as well. Yes, there need to be more carriages in some instances, but he will no doubt have heard what I said about health and safety. One of the problems that I want to sort out is, for example, the business of putting on an extra carriage. When there is a need to extend the platform that should not end up in our having to re-do the whole station, as that would make the whole process totally un-cost-effective. That is why we need to consider safety generally.

Although I have a great deal of sympathy for what the hon. Gentleman says about the problems faced by London commuters, I would be hesitant about blaming all those problems on the fact that I am now looking at the future organisation. Many of the problems were caused by a lack of investment in the past.

David Winnick (Walsall, North) (Lab)

Since privatisation has clearly not worked and there is hardly a person in the country who does not realise that it was totally botched by the previous Government, why is my right hon. Friend so absolutely determined and dogmatic against bringing the whole system back into public ownership? Is he aware that there will be a great deal of disappointment in the Labour movement and among many Labour Members of Parliament—some present; some not—who will say that what is now proposed is not the solution? The solution is public ownership, and my right hon. Friend and the Prime Minister should be bold enough to recognise what is really required.

Mr. Darling

Perhaps I may give just one reason to my hon. Friend. Each week we spend about £73 million of public money on the railway. It brings in about the same sum from the private sector each week. If we get rid of the private sector, that is £73 million a week that we need to find. I do not think that there is anything dogmatic about saying that it would be a bit hasty to chuck that overboard.

Mrs. Patsy Calton (Cheadle) (LD)

In the statement, the Secretary of State said that Network Rail is taking maintenance back in-house to control costs. I agree with him about that. However, a parliamentary answer that I received last week from his Department indicates that maintenance costs have only increased by 7 per cent. over a seven-year period. The real increase has come in the upgrade programme in which, in the first four years up to the general election, costs were on an exponential upward curve. After a slight blip in the general election year of 2001, they are now again on an exponential upward curve. The cost of the upgrade programme in 2004–05 will be in the region of £3 billion for the west coast main line, so how does he know that this exponential increase in expenditure will—

Mr. Speaker


Mr. Darling

Let me make two points. First, on maintenance costs, Network Rail estimates that bringing maintenance back fully in house will save it about £300 million a year, which will be a result of the Jarvis's of this world, and other companies, not doing that work. On the upgrade work, the original cost of the west coast main line, about which the hon. Lady knows something, was about £2.5 billion. Five years later, that had reached £13 billion, but the actual cost will be something like £7.5 billion. The reason for that is purely and simply that Railtrack did not know, did not admit to or was unable to control the costs. However, the costs are now being brought under control.

Mrs. Anne Campbell (Cambridge) (Lab)

While expressing my gratitude for one of the great successes in my area—the very good new Cambridge-Norwich service—will my right hon. Friend ensure that any new management structures that may be put in place will be able to tackle effectively the real problems for commuters on Cambridge-London services: overcrowding, and continual delays and late runnings?

Mr. Darling

Yes, my hon. Friend is right, because anyone who uses the line knows that there have been problems with punctuality. Further problems have been caused by the fact that the route has become increasingly popular, because as Cambridge continues to grow, more people commute. It is thus important that we have a structure capable of running those railways. I am also grateful for her point about the Cambridge-Norwich railway line, which has been a great success.

Mrs. Jacqui Lait (Beckenham) (Con)

Will the Secretary of State's statement delay and/or change the terms of the franchise currently held by South Eastern trains?

Mr. Darling

While we are considering the review, the day-to-day running of the railways has to continue. We consider all franchises that come up for renewal and decide whether it is appropriate for them to continue in their present form or whether changes are necessary. The railways must continue their day-to-day business of running, and we must ensure that we continue to improve their reliability and efficiency.

Mr. David Watts (St. Helens, North) (Lab)

When my right hon. Friend does his review, may I urge him to give as much power and responsibility as possible to passenger transport authorities? Given Merseyside's past experience—frankly, the rail service went down the tubes when the private sector had control of it—will he give us an assurance that he will not be driven by the dogma of the Opposition and that he will give PTAs all the support that they need?

Mr. Darling

As my hon. Friend knows, what matters is what works. The brutal truth is that some private sector operators are not terribly good, but, equally, some public sector operators are not very good either. As I said a few moments ago. what matters to passengers is that trains run on time and when they are supposed to and that they have a decent standard of cleanliness and comfort. That is what is important, so who provides the services is not the issue.

Chris Grayling (Epsom and Ewell) (Con)

The Secretary of State will recall the Government's 10-year plan, which was published well after privatisation, well after his Government took office and, indeed, after the Hatfield crash. Will he confirm that it contained a variety of rail modernisation projects to which the Government were committed, such as work on the east coast main line, the upgrade to South Central and South West Trains, work in Manchester and Birmingham and Thameslink 2000? Will he confirm that none of those projects will now be completed by the end of the period covered by the 10-year plan, which is in about six years time?

Mr. Darling

I am not sure that I can do that. I think the hon. Gentleman will find that the 10-year plan was published in July 2000 and that the Hatfield crash occurred a few months later. The plan marked a significant departure for railway planning because it set out railway spending over 10 years—that had previously been done annually. He mentioned several projects. I think he mentioned the west coast main line, work on which is going ahead. Work has been done on the east coast line and work is ongoing on the southern power upgrade. As I said to the hon. Member for Beckenham (Mrs. Lait), the day-to-day work of the railways must continue. However, we must continue to bear down on costs and improve reliability.

John McDonnell (Hayes and Harlington) (Lab)

I welcome my right hon. Friend's statement. Despite some of his comments today, many of us see it as the first step on the inevitable path toward bringing rail back into public ownership. During the review, will he urgently meet the trade unions that represent the work force that supplies the industry, which has endured privatisation? Will the review cover the possibility of introducing a consistent approach on conditions and pay throughout the industry?

Mr. Darling

The review is looking at the structure and organisation of the railways rather than at pay and conditions. On nationalisation, I know what my hon. Friend thinks, and he has always thought that. I just do not happen to agree with him; I think that the railways benefit from both public and private involvement.

Simon Hughes (Southwark, North and Bermondsey) (LD)

When the Government did their welcome reinstatement of London regional government five years ago, they set up Transport for London to co-ordinate the main roads, the buses and the tube, but they resisted requests to make sure that commuter rail services in Greater London were integrated into the city's strategic transport planning. Will the Secretary of State say whether he is willing to look again at that and at least contemplate the idea of an agency or authority, linked to the current London strategic government, which makes sure that the transport services used by London commuters, the largest group in the country, are coordinated with other services throughout the capital?

Mr. Darling

I am not sure that we need yet another agency to do that. The problem with the hon. Gentleman's suggestion is that most London commuter services do not stop in the London area but go some considerable way outside it. My guess is that people who want to get on and off those trains outside the Mayor of London's jurisdiction might have something to say if he—or, perhaps in future, she—was in charge of them.

Mr. Barry Gardiner (Brent, North) (Lab)

Does my right hon. Friend agree that the plethora of organisations and their conflicting interests have resulted in unacceptable delays to repairing the rail infrastructure, but that putting the infrastructure right more quickly may result in greater disruption now, while minimising today's disruption will result only in more problems for longer? He is right to act now and to streamline the decision-making structure to get the necessary work done.

Mr. Darling

For some time, the industry has recognised that it may be better, because more work can be done, to close a railway line for two or three days than to try to take possession of it and perhaps do only a hour or two of work each night. That work is starting now. Work is done at bank holiday time, and it is always said that there will be chaos and confusion, but that does not always materialise. However, most people realise that that is a better way to maintain a railway than to try to do the work piecemeal.

Dr. Vincent Cable (Twickenham) (LD)

Does the Government's definition of the right franchising arrangements involve long-term contracts and commitments or the short lease arrangements favoured by the SRA in cases such as that of South West Trains?

Mr. Darling

The problem with the long-term franchise arrangements that we inherited was that when franchises were signed all sorts of promises were made about an initial subsidy followed by money coming into the Treasury over 10, 15, 20 or 25 years. As the hon. Gentleman knows, it is incredibly difficult to forecast what revenues might be in 25 years. The second thing that was wrong with those franchises was that in many cases they gave the operator a concession to operate services, but there was not much specification about what should be delivered. I cannot therefore promise the hon. Gentleman a return to the Tory-style privatisation model of franchises because I do not think that they were particularly good, and nearly all of them resulted in the promises that were made coming to an end many years before they were supposed to.

Mr. Harry Barnes (North-East Derbyshire) (Lab)

I am not against attacking rail privatisation, but why are the Government attacking rail privatisation in the name of rail privatisation? How will we improve rail regulation with continuing privatisation, devolution to assemblies and greater regulation by passenger transport executives? Even in the late 19th century, Alfred Marshall. who was no socialist, believed that railways were natural monopolies and that action needed to be taken with them on those lines.

Mr. Darling

I know that my hon. Friend was an academic at some point, and the first part of his question sounds like the sort of thing that students might be invited to discuss; perhaps later on we will have the opportunity to develop that idea over a glass of something. The whole point of the review is to look at all the options that are available to us. If I correctly understood my hon. Friend's point about local decision making, I can tell him that there are parts of the country where that might be a more efficient and effective way of running things.

Mr. Kelvin Hopkins (Luton, North) (Lab)

I congratulate my right hon. Friend on his statement and welcome it as another milepost on the long track back to public ownership. Does he accept—I have raised this point with him before—that the cost of track renewal is four times as high in the private sector as it was in BR days and that the public got four times as much track for their money under BR as they do under the privatised system? Will he institute a thorough investigation of costs in the industry, with a view to getting back to the efficiency that we saw under BR?

Mr. Darling

There are two points. First, I do not think that anyone can be in any doubt that vigorous cost control is necessary. Costs in the industry have risen far faster than they should have, and cost control, particularly under Railtrack, was not adequate. Secondly, I add a word of caution in respect of British Rail. The Government are spending more, partly because we want to put money into the railways and partly because the true scale and nature of the network became apparent only after Hatfield. As Network Rail began to go through Railtrack's books, it discovered the backlog of investment that had built up over years. British Rail was a master at managing whatever the Government of the day happened to give it, which sometimes meant making do and mending rather than putting in place proper investment. Therefore, comparing today's figures with those under BR is not always comparing like work with like work. I agree with my hon. Friend—nobody could disagree with this proposition—that if we are to spend money on the railways, we must ensure that we get value for money and that costs are brought under control.