§ Mr. John Heppell (Nottingham, East)
I shall start by giving a brief explanation of the Robin Hood line. I recognise that the Minister will know the details, but other hon. Members may not.
The Robin Hood railway line is being constructed in three stages. It was instigated by Nottinghamshire county council with the assistance of the district councils along the route of the line. The plan is to provide a regular rail service from Nottingham city, through Ashfield and Mansfield and, finally, to link in with the existing railway in Worksop. It will serve a corridor that takes in about 750,000 people in an area of the country which everyone would agree has been one of the worst hit by colliery closures.
The line serves an area of high unemployment and it will assist in the region's economic regeneration. It will relieve congestion, both along its corridor and in the city of Nottingham. It will reduce accidents on the roads and move people from road to rail—from car to public transport—in a positive way. It will do so not by road pricing or the regulation of cars, but because people will recognise that it is the best form of transport for that route. In social, economic, health and environmental terms, it is a winner.
Stage 1 of the line, which was opened in 1993, is already a success. Before that, market research had suggested that patronage of the line would increase steadily—and double—over a five-year period. As often happens, the market researchers were proved wrong. In the first year of the line's opening, its patronage was double the expected figure. The five-year figure was achieved within one year, and the patronage has been maintained despite problems such as the signalmen's dispute, which interfered with the operation of the line.
Just this week, the patronage figures reported to the executive group dealing with the line show that there is now a weekly average of 10,000 trips. One does not need to be an expert on transport, an accountant or a statistician to recognise just what impact that will have on the county of Nottinghamshire and the city of Nottingham. Those who use the service are travelling safely and arriving at their destination quicker. Those who do not use the service are finding less traffic on their routes and less difficulty with parking. Those in the city of Nottingham are experiencing the benefits of fewer cars and less pollution.
Stage 2 of the line was commenced under an agreement between Nottinghamshire county council and Regional Railways Central in March 1994. In April 1994 the British Railways Board was split into two companies by the Government, and the problems began. I have instigated today's debate to highlight the problems for the future developments of the Robin Hood railway that have been caused by extra costs, both capital and revenue, which are all outside the county council's control. A large proportion of the problems has arisen because of rail privatisation.
To stress the urgency of the problem I shall quote from a report of this Monday, 6 February, of the Robin Hood line executive group sub-committee. Paragraph 9 states:Railtrack have informally indicated that a guarantee of additional funding to meet the capital cost shortfall of up to £2.6 million will be required from the county by April/May. Without such a 312 guarantee, they say they would have to halt works because of the financial implications of their contractual commitments with the BR infrastructure units engaged on Stage 2 track and signalling.If the money cannot be guaranteed, the work on the line will stop.
I want to thank the right hon. Member for Kettering (Mr. Freeman), who is now Minister of State for Defence Procurement and the hon. Member for Epping Forest (Mr. Norris), the Minister for Transport in London, who have taken a personal interest in the line. I hope that by the end of today's debate, when I have heard his reply, I shall be able to thank the Minister for Transport in London even more.
Today's debate is not about privatisation—we had that last night. I do not agree with privatisation and my opposition to it is recognised, as is the Labour party's opposition to it. I do not want to criticise Government officials—I have nothing but praise for the officials at the Department of Transport, who have had many helpful and positive meetings with the county council, Railtrack and the regional director of the new regional integrated offices, and who still express support for the scheme in principle. They recognise that the position has changed dramatically in a way that could not have been foreseen and are exploring possible mechanisms for applying for extra funding for stage 2.
However, I have some worries about some of the correspondence. First, the correspondence seems to suggest that there is no acceptance that some of the extra costs have been caused by privatisation. The suggestions have come not from officials, but from leading politicians. Secondly, even if there is a recognition of the reasons for the extra costs, the Government may not respond positively because Nottinghamshire is not a passenger transport authority and does not have a passenger transport executive. Thirdly, there are difficulties with funding for stage 3 and other transport initiatives identified in the Greater Nottingham rail development strategy, such as the Greater Nottingham light rapid transit system—a unique partnership between Nottinghamshire county council, Nottingham city council and the private sector.
Mr. Howard Jackson thought that it might be worth while lobbying the Chancellor of the Exchequer as he was his local Member of Parliament. I need quote no more than the first two sentences of the letter that the Chancellor of the Exchequer wrote in reply to Mr. Jackson. It states:Dear Mr. Jackson,Thank you very much for your recent letter about the mounting costs of the Robin Hood Line. I do not accept that these costs are in any way related to the privatisation policy.The Chancellor of the Exchequer goes on to ask questions about how much the scheme is costing council tax payers and whether the council is wasting money on silly schemes—it is that sort of letter.
It does not surprise me that the Chancellor should wish to dismiss the idea of the extra costs of privatisation. When we discussed the Railways Bill in Committee, the Government, the Chancellor and some of the Ministers promised that privatisation would result in savings, but that does not seem to be so. Capital costs are increasing by £2.6 million and everyone accepts that the budget has exceeded the sum anticipated. British Rail and Railtrack have some questions to answer on the total sum. The figures produced by Eurolog, a leading consultant on the 313 subject which has conducted a risk analysis of the project for the project manager employed by Railtrack's major projects division—not by the county council—leave one in no doubt. They showed the biggest extra cost. I have the report entitled "Robin Hood Line, Stage 2, Project Manager's Report to Nottinghamshire County Council " in front of me. It points out that more than £1 million—one third of the total capital costs—of the extra cost results from the privatisation and reorganisation of British Rail.
That increase is not peculiar to the Robin Hood line project. The report includes a general analysis of cost increases in BR projects. The Robin Hood line, with a 15 per cent. increase in cost, is doing quite well. Eurolog's general analysis suggests that the cost of most projects has increased by 25 per cent. Appendix B of the report spells out those costs: the cost of maintaining organisation headquarters increased by 5 per cent.; finance, warranty, risk and profit increased by 7 per cent.; and staff fixed overhead costs increased by 10 per cent. Most significant costs were caused by privatisation—by accountancy changes, contractual arrangements and new profit margins.
That is not just Eurolog's view. I have received a letter from Robert Horton, who I believe is still in charge of Railtrack, in which he says:I must stress that these charges are as a result of Railtrack being separated from British Rail following the implementation of the Railways Act 1993.I think that spells it out very clearly. He continues:While this results in some increases in our management charges because of the more complex arrangements, the vast majority of increases arise directly from the increased prices from our suppliers who remain part of British Rail".I am not interested if the Minister chooses to claim that those costs are not related to privatisation. For the purposes of this debate, I merely wish to identify the costs that have resulted, not from the development of the scheme, but from changes in Government policy. I am quite happy for the Minister to call them something else. He may say, for example, that there is a new accountancy regime and that the money will be recycled. However, he must accept that the costs have not resulted from the project development.
The problem has an added dimension because revenue costs, as well as capital costs, will increase. In a letter to the Chancellor of the Exchequer, the director of planning and economic development says that the increase in costs can be attributed to privatisation. He goes on to say:With regard to operating costs, under the 'old regime' it would have cost the County Council £125,000 per annum including cover to hire a 2 car Class 150 train from Regional Railways Central. This was a commercial charge including depreciation and interest charges. We are now informed by the Train Operating Company that the latest indicative leasing charge received from the Rolling Stock Companies … for a 2. car Class 150 train is £256,000 per annum including cover.That is an increase of more than 100 per cent. in leasing charges. As the county council was told by the then Minister for Public Transport and the present Minister of State for Defence Procurement, the right hon. Member for Kettering, that it could not purchase the trains but had to lease them, it has no choice but to meet that increase. Railtrack has also informed the council that access charges will increase substantially due to the change in charging principles, profit margins and increases passed on by BR.
314 I do not care what the Minister calls those increases. However, they are significant increases for the Robin Hood line project which the council cannot be expected to bear alone. That brings me to my point about Government responsibility for the extra charges.
I refer the Under-Secretary of State, who is in the Chamber, to his letter of 23 December to Nottinghamshire county council. The second paragraph on page 2 states:You also suggest that Nottinghamshire should be treated on the same basis as the Passenger Transport Authorities when it comes to funding of any cost increases brought about by privatisation. There is, however, an important difference. The PTAs and PTEs have statutory responsibilities in relation to the provision of rail services, and it was only reasonable that they should receive compensation for the increased cost of discharging these responsibilities.In other words, passenger transport authority areas will receive compensation, but Nottinghamshire will receive nothing because it is not a PTA. That response would be fair enough if it were not for the fact that that aspect of privatisation was brought to the attention of the then Minister, the right hon. Member for Kettering, during the passage of the Railways Bill.
A letter sent to me by the head of strategic planning and transport prompted me to raise that issue. He said:One key issue (agreed by all commentators) is the lack of any shire county recognition in the Bill. This seems deliberate because there is a difference to PTEs/PTAs. Admittedly the PTEs have a statutory role in providing rail support for their areas … but even when the subsidy agreements end and are replaced by the new regime, the Bill still gives PTEs a 'planning' and consultative role … which they think is inadequate. This omission specifically in relation to Nottinghamshire is worrying, particularly since Nottinghamshire is the biggest urban area outside the Metropolitans; indeed the County Council's initiatives on Rail and LRT puts the County in the 'big league'.I will be brief because I want the Minister to have an opportunity to reply to those points. In response to that letter, the Minister made some very reassuring noises in Committee. I must admit that I was fairly reassured and I thought that the Minister had made some sort of commitment to examine the situation after the Bill became law. However, when I read what the Minister said in an attempt to nail down a commitment, I found that he did not say that at all.
In a letter to the leader of Nottinghamshire county council, the Minister said:The fact that Shire Counties are not given the same powers as the PTEs in the Railways Bill should in no way be taken as an indication that the Government is not mindful of the valuable role that the Shires play in promoting public transport in their areas. We are keen to preserve local authorities' powers to support local rail services. Indeed, for the first time we are making clear in legislation the status of local authorities and PTEs as 'competent authorities' under EC legislation for the purpose of paying PSO grants.I found the Minister's answer to the letter very reassuring, however, it now seems to be far from the reality of the situation.
I am worried not just about the Robin Hood line; I am also concerned about future transport initiatives. I can see my county and my city being disadvantaged by the fact that the area is not a PTA and I would be happy if the Minister would make it a PTA. In light of local government reorganisation, I am concerned about how future initiatives like the Robin Hood line will advance. How will stage 3 of the Robin Hood line go forward? How will the Greater Nottingham light rapid transit system develop?
315 I am concerned about the other services being developed as part of the Greater Nottingham area rail development strategy, such as the Nottingham to Ilkeston line, the Nottingham to Bingham, the Nottingham to Sandiacre and the Nottingham to Gedling services. All of those developing local services will be disadvantaged because the rules work against Nottinghamshire but not against PTAs.
§ The Minister for Transport in London (Mr. Steve Norris)
I congratulate the hon. Member for Nottingham, East (Mr. Heppell) on having secured this debate on the Robin Hood railway line. He has always been assiduously interested in railway matters. I had the dubious pleasure of spending several months of my life in Committee considering the Railways Bill, and that pleasure was added to by the presence of the hon. Gentleman and his hon. Friends the Members for Streatham (Mr. Hill), whom I am happy to see in his place, and for Sherwood (Mr. Tipping), who I know is interested in this line.
Let me say on a very sad note that I did not have the opportunity yesterday to extend my personal sympathy to the hon. Member for Fife, Central (Mr. McLeish), who has suffered a grievous personal loss. I know that he would have been here, and I welcome the opportunity to express my personal sympathy. I note that my right hon. Friend the Secretary of State for Transport was able to do so yesterday on his own behalf.
I am interested in and supportive of the general concept of railway improvements such as those to the Robin Hood railway line. One could call it a de-Beeching process, and I have been heartened by the extent to which much of my work is concerned not with closure orders, but with proposals for the opening of lines up and down the country. In London, we have the East London line, which, in effect, will bring back into use a piece of line that exists all but for track and trains; fortunately, the main infrastructure is complete. We have a good example of that in today's debate.
I am sure that the hon. Member for Nottingham, East will not mind me saying that my hon. Friend the Member for Gedling (Mr. Mitchell), my right hon. and learned Friend the Chancellor of the Exchequer, the Member for Rushcliffe (Mr. Clarke), and others of my hon. Friends representing Nottinghamshire have lobbied me assiduously about the line. I pay tribute to all the local representatives of all parties who played a part in raising its profile.
I might, of course, be tempted to make a mild political point were I not conscious of where I am standing. If I were to make that mildly political point, it might be to point out that the town of Mansfield—which has a population of more than 100,000—lost its passenger railway in 1964. That was the result of a study instigated by the previous Conservative Government and implemented by the then Labour Government. For the next 30 years, Governments of both persuasions—but notably Labour Governments—did absolutely nothing to bring back into use the line of which the hon. Member for Nottingham, East speaks so supportively and persuasively. I should point out to the hon. Gentleman that a Conservative Government have provided resources 316 to bring the railway back to life. I know that the hon. Gentleman, with his customary fairness, will wish to acknowledge that and I am happy to put it on record.
§ Mr. Norris
I hope that the hon. Gentleman will not mind if I do not allow him to intervene.
We all agree entirely that the Robin Hood railway line is a valuable addition to the rail network. Let us look briefly at the success so far. Stage 1 opened in May 1993 between Nottingham and Hucknall and Newstead. The Bulwell station opened in May 1994. I was pleased that the Department contributed some £367,000 in supplementary credit approvals for that purpose.
Construction of stage 2 is now well under way, but problems on site have meant that the work is now running several months behind. We all agree that the engineering task was considerable. The total line from Nottingham to Mansfield is 19 miles.
While I do not wish to detract from the achievements, stage 1 was the easy part; it involved bringing an existing line up to passenger standard, when it had formerly been used only for freight traffic. There is no line at all between Newstead and Kirkby in Ashfield and the engineers have had a task not dissimilar to that of the great railway builders of the past age. Rather than constructing a tunnel, they have had to clear the old Kingsway tunnel of the colliery shale which had been deposited there. It was quite a challenging engineering task.
Unforeseen ground conditions at the portal to the tunnel meant delay to the bulk earth works and that was later exacerbated by the prolonged rains last November. Working on a railway line is, of course, not the same as building a road. There is a limited number of accesses to rail link sites, which makes it difficult to increase activity dramatically to make up time.
I should say something about our commitment so far to the reopening of the line. It is fair and square in line with our policy for traffic decongestion and encouraging a shift away from the private car towards public transport. The hon. Member for Streatham will know that I am signed up to that policy, as he is. We share a great deal in this area. It means buses as well as trains and light rail schemes where they represent value for money.
The public response to stage 1 of the Robin Hood line has been encouraging and, with park-and-ride facilities at the new Sutton Parkway station, there is further encouragement for people to leave their cars behind, either at home or at the station.
We are currently providing £6.5 million towards stage 2, £2.55 million of which is in the form of a section 56 grant. Such grants are available only for projects of exceptional merit for reasons of size, or, in this case, of a cross-boundary nature, where it is right to spread the costs beyond one local authority. That grant is justified primarily in terms of benefits to non-users—in other words, the traffic congestion benefits—and on the ground that the costs associated with those benefits cannot be met directly from revenue.
The hon. Gentleman has highlighted a number of difficulties affecting the scheme. The first involves capital costs. Nottinghamshire county council notified us that the cost of the full scheme has now risen from £16.6 million to £19.1 million.
317 I should explain that the construction of stage 2 is being managed by Railtrack's major project division under the guidance of Railtrack's midland zone, which is the sponsor, and that the value of the work is around £9 million. The civil engineering contract for the rail link, but not covering the track work and signalling, is the responsibility of Nottinghamshire county council and its own contractors on site.
It is the work on the rail link that has caused slippage to the project for the reasons that I have already explained. That has affected Railtrack's own costs and a contingency has been allowed within the £2.5 million increase for an extension of the signalling installation work within the present contract end date. That, in turn, means extra supervision and project management costs.
Despite what the hon. Gentleman said about spiralling costs, I think that he understands that they are not solely, or even mainly, the result of railway privatisation. Clearly, there are costs associated with the restructuring of the railways, but they are very much outweighed by previously poor estimating, some changes to the scope of the project and contingencies.
Over the past months Railtrack has attempted to regularise the position, establishing proper contractual relationships so that each party knows the amount being charged for the work carried out. They have moved, as far as possible, to a position of fixed-price contracts, where possible by competitive tender, given time scales and other constraints. The objective has been to give the county council as much confidence as possible over the anticipated final cost of the project.
My Department is in close touch with the county on the project and my wish to see stage 3 through to a successful conclusion is undiminished. In many ways it is the key element to the entire scheme.
We acknowledge that there is a funding gap and we have asked the county council to submit further information so that we can consider all the implications. I hope that, with continued co-operation, it will be possible to deal with the current difficulties.
The hon. Gentleman referred to increases in operational costs because of rolling stock leasing and track access charges. We have already accepted—I made this point to the county council—that the changes could affect the financial performance of the new service. I told the council that if the effect proved significant, it should be brought out in the further documentation that we have requested, and we would then reconsider the funding position and the split between grant and borrowings.
In regard to track access charges, I understand that the five-year operating agreement with BR to expire on 31 March 1998 was deliberately intended to give a degree of 318 shielding from full charges during the initial period. My Department was not a party to that agreement, but it is one that the county council and the British Railways Board, and subsequently Railtrack, negotiated. Future infrastructure charges will be subject to the scrutiny of the Rail Regulator.
Stage 3 would take rail services to Worksop. Funding for local authority transport capital investment is made available through transport policies and programme. On the basis of TPP bids, a decision is taken on resource allocation and we normally make an announcement in mid-December.
In that context, we now have in place the package approach. Packages are essentially about a coherent local transport strategy for the area concerned. Nottinghamshire has done well in that respect. I pay tribute to that and £1.6 million has been allocated to the Greater Nottinghamshire area package for 1995–96.
Nottinghamshire included stage 3 in its TPP bid on the basis that work could commence in late 1996. It might be argued, therefore, that any bid for funding was premature at this stage. We have told Nottinghamshire county council that we are not able to fund stage 3 this year as a value for money case has yet to demonstrated, but it is open to the county to make a bid in its next TPP for resources in 1996–97. Incidentally, those bids are expected by 31 July each year.
We would like the county council to carry out some more work on the scheme appraisal, which currently shows a significant shortfall not covered by the decongestion benefits. Although we will be happy to work with the county council over the coming months, and stage 3 is relevant, we must concentrate on completing stage 2 satisfactorily in the next few months.
I appreciate the hon. Gentleman's concern about differ-ent treatment between passenger transport authorities and his own authority. He was right to quote from my letter to him of 23 December. As I stated in that communication, PTAs and PTEs have statutory responsibilities as against those of transport and highway authorities, which have in this sense discretionary responsibilities. It would be unreasonable to place too much reliance on that as an argu-ment for dealing in a fundamentally different way with infrastructure that ultimately will serve the same markets and people doing the same things. I indicated that I am pre-pared to examine that aspect but I do not want to set hard and fast rules now, except to say that it is clearly of import-ance to a scheme of this sort.
I share many of the aspirations of hon. Members representing constituencies in the area in question, and my hon. Friend the Member for Gedling has found time to join me on the Front Bench as an indication of his own concern. I will certainly look at the matter again.