Rail Review

HC Deb 15 July 2004 vol 423 cc1547-64 12.40 pm

The Secretary of State for Transport (Mr. Alistair Darling)

With permission, Mr Speaker, I should like to make a statement, following the conclusion of the rail review that I announced on 19 January.

The railways provide an essential public service and underpin future economic growth. As the economy grows, demand for travel is increasing. Last year, the railways carried more than a billion passengers for the first time since the 1960s, so it is essential that we put in place the right organisation to run the railways, providing passengers with a reliable and efficient service.

This week's spending review has confirmed that we will be able to make record investment in rail. With increased investment, and with Network Rail now working in the public interest, it is right that we should now put the railways on a stable, long-term footing and tackle the remaining flaws left over from privatisation.

The proposals that I am announcing today streamline the structure and organisation of the railway. They provide a single point of accountability for performance, allow closer working between track and train, and also provide for greater local and devolved decision making. Together, these proposals will make sure that Britain's railways are run in the public interest, for the benefit of its passengers and freight customers.

I am publishing a White Paper today setting out these proposals in detail, and copies are available in the Vote Office in the usual way. Let me set out the key changes that I propose.

First, the Government will take charge of setting the overall strategy for the railways. It must be for Ministers, accountable to Parliament and to the electorate, to set the national strategy for the railways. The Government will set the high-level objectives, including the levels of performance. It is for the Government to decide how much money they are able to spend, and to be held to account for those decisions.

It follows, therefore, that the Strategic Rail Authority will be wound up, and that the majority of its functions, including all its financial obligations, will be transferred to the Secretary of State. The Department for Transport will take responsibility for awarding train operating company franchises. The Department will be restructured to reflect its new responsibilities.

As I said in January, the Government remain committed to maintaining strong, independent economic regulation for rail. That responsibility will remain with the Office of Rail Regulation, which will protect the rights of investors and railway customers and decide how much income Network Rail needs to deliver the Government's strategy. The office will ensure that the Government pay the proper price for what they buy.

Secondly, I turn to operational responsibility. Many of today's problems stem from the fact that, at the moment, no single organisation is in charge of running the railway on a day-to-day basis. In future, overall responsibility for the network will pass to Network Rail. The Government will set out what services Network Rail is to deliver, and Network Rail will take on new responsibilities, including leading industry planning, setting timetables and directing service recovery.

Too often, under the present system, companies have been able to pass the buck for poor performance. So, in future, Network Rail will be responsible for ensuring that the network delivers a reliable service through an agreement with the Government. It will be accountable to passengers and freight users for the network's performance. In consultation with its members, Network Rail intends to bring forward proposals to change its management and governance to reflect its new responsibilities.

Thirdly, the new structure will bring the operation of track and train closer together, allowing far closer working between Network Rail and the train companies. That will replace the current, sometimes confrontational relationship with one based on joint working.

The number of franchises will be reduced, and new arrangements put in place to allow for closer working between track and train operations—the importance of which the architects of privatisation failed to understand.

Experience his already shown—and the establishment of joint control centres is an example—that joint working results in improved performance. By providing for more efficient operation of the railway, these proposals will cut costs.

Under the new structure that I propose, there will be far greater clarity as to the responsibilities of track and train companies. Train operators will be able to concentrate on improving customer service and increasing passengers on the services that they run. When train operators' contracts are awarded, past performance will be taken into account, as well as key issues such as their proposals on costs and service improvements. The contracts will ensure that the Government can take operators off the railway if they repeatedly fail to deliver.

Controlling costs is essential. The White Paper makes it clear that the industry must do a lot more. We are spending record amounts to improve rail, but fare payers, freight customers and taxpayers rightly expect this money to be well spent.

My fourth key reform gives increased powers to the Scottish Executive, the Welsh Assembly Government and the London Mayor, as well as more local decision making in England, particularly the passenger transport executives. Many decisions affecting the amount of money spent on the railway should be taken at a local level, but current arrangements often do not allow local and regional bodies to play a full part in decisions affecting their area.

As I said in January, local transport decisions are best taken by people who know what is needed locally. They should be able to make informed decisions as to what works best and what they are willing to pay for. So let me set out what I propose.

In Scotland we will give the Scottish Executive responsibility for planning, specifying and managing services that operate under the existing franchise. As the level of service specified will impact on the rail infrastructure, it is right that, subject to agreement about the transfer of resources to the Scottish Executive, the Scottish Executive should specify the network they require and finance it. So although the infrastructure will be owned and managed by Network Rail, with these proposals the Scottish Executive will decide what they want and how to pay for it.

In Wales, the Government will devolve additional responsibilities to the Welsh Assembly Government, recognising the different patterns of service there. The Welsh Assembly Government will specify services and fares for local services within and bordering Wales, and they will be responsible for funding those services. There will also be scope for the Welsh Assembly Government to specify and fund additional work on infrastructure if they so wish.

In London, we propose to extend the Mayor's responsibilities for rail services within the Greater London Authority boundary. In the short term, we will work with the Mayor to rationalise fares and ticketing across the different types of public transport in London, giving a better deal for fare payers. We will also work to identify options for giving the Mayor an increased role for services that lie for the most part within the GLA boundary.

In future we propose to enable the Mayor to buy additional services or to propose savings to services. We want to explore all the options, including the possibility of extending this to services beyond the GLA boundary. But that must be subject to consultation with train operating companies as well as neighbouring regional and local bodies before reaching a conclusion. Many London commuter services run well outside the GLA boundary and we need to ensure that the rights and interests of rail passengers outside London are protected.

The White Paper also acknowledges the valuable role of community railway lines, which we aim to put on a better financial footing, following the Strategic Rail Authority's recent consultation.

Passenger transport executives already manage transport provision in some of the main metropolitan areas of England. I propose that in future they will be able to buy additional services and to transfer funding between rail and other transport modes. So we will reform the funding arrangements and legislation for PTEs to provide more flexibility to make choices between rail and other forms of transport—bus and light rail, for example. These proposals amount to a significant devolution of powers across the country which will benefit the travelling public.

My fifth proposal covers a critical issue—safety. The Health and Safety Executive and Commission have done a great deal to improve safety, and over the years much has been achieved. However, we believe that it is essential to provide a very clear railway focus to safety.

The Government intend to simplify the safety regulatory structure of the railways. As part of that, we will therefore transfer responsibility for railway safety to the Office of Rail Regulation, which is independent of both Government and the industry. Safety is an essential part of railway operation. It should be in with the bricks. It needs a clear industry focus to make sure that safety is an integral part of operations. Our proposals will achieve that.

There are a number of other measures covered in the White Paper, including a better deal for freight operators. Rail carries 45 per cent. more freight than it did in 1995, and we want to see more of that. The White Paper makes proposals to encourage the continuing growth of freight. including giving freight operators more certainty about long-term access to the main freight routes.

The White Paper also includes proposals for a long-term strategy for the use of rolling stock to help the industry plan ahead more effectively. We need to get better value from rolling stock. The original leases were set at privatisation. The renewal of these leases in the same form would be poor value. So as passenger franchises are replaced, we will deal with these problems and drive a better deal for the public.

The White Paper also supports proposals for reform from the Rail Passenger Council Chair as part of the review. So we will create a more independent national structure for the RPC, giving passengers a stronger voice, but maintaining a regional presence.

In the light of the changes I propose, Richard Bowker, the chair and chief executive officer of the Strategic Rail Authority, will stand down and will leave his post in September. For the past two and a half years, he has shown outstanding leadership and a relentless determination to improve the railways. He has made a substantial contribution to the railways and leaves with my strong support and good wishes. I will appoint David Quarmby, who is currently deputy chair, to serve as chair of the SRA until it is closed, probably in the second half of next year. The board will appoint a chief executive to serve for the same time.

The SRA staff have achieved a great deal. I intend to build on the experience and the good work of the SRA and its staff as we restructure the railways. In the meantime, it is critical that everyone in the industry focus on driving up performance and improving costs. We will work with the industry to make the changes as quickly as possible. With the Office of Rail Regulation, we will take forward the changes to the arrangements for Network Rail and the train operators as soon as we can. Other changes I propose, such as in relation to the HSE, Strategic Rail Authority and devolved decision-making, will require primary legislation, which we will introduce as soon as possible.

At a time when the railways are carrying more people than they have done in the past 40 years, it is essential that we have a more customer-focused and passenger-friendly railway. I am streamlining the structure of the railway in order to improve standards and make rail more attractive for passengers. The proposals I am announcing today create a railway to serve passengers and freight. The Government will set the national strategy for the railways, Network Rail will be responsible for operating the network and track, and train companies will work closely together. We are putting the organisation of the railways on a stable long-term footing, backed by increased funding. We have set out a clear direction for Britain's railways, backed by the money they need. I commend this statement to the House.

Mr. Tim Yeo (South Suffolk) (Con)

I am grateful to the Secretary of State for an advance copy of his statement. The White Paper will be judged by what it does for passengers and for rail freight. Passengers have not had much from this Labour Government so far. After seven years, trains are less reliable, fares have risen more than other prices and promised improvements in the rail network have not been delivered. The east coast main line, Crossrail, Thameslink, the East London line were all promised in the 10-year plan or in Labour's election manifesto, but those projects remain stuck in the sidings with no firm dates for completion and conspicuous by their absence from today's statement.

Today, fewer trains run on time than when Labour came to power. Targets are set that have little chance of being met. Will the Secretary of State confirm that the Government's target for increasing passenger rail use has now been dropped? Four years after the Deputy Prime Minister set up the SRA, it is to be abolished. That may be a welcome admission by the Secretary of State of one of his predecessor's mistakes, but it is of little relevance to the customer.

I welcome the decision to move responsibility for safety to the regulator. However, shifting responsibilities around Whitehall and replacing one set of bureaucrats with another will not make trains more reliable, stations more comfortable or fares more affordable. Why does the Secretary of State think that he and his civil servants can run the railways better than the train operators? Why will giving more power to the rail regulator, to Network Rail and the Department for Transport solve the problems of the railways when the all-singing, all-dancing SRA signally failed to do so?

Why on earth does the Secretary of State think that putting Ken Livingstone in charge of trains is a good idea? How will that affect those rail users whose journeys begin and end outside the area for which the Mayor is responsible, none of whom had the chance to vote against him last month? What discussion of that extraordinary proposal has taken place with the train operators? Why cannot they, rather than Whitehall bureaucrats, decide when trains should run, and thus respond to consumer demand?

Is not the best way to encourage extra investment in the rail network to give the train operators longer contracts, subject to strict performance criteria, so that they have the incentive and the stability to invest more money for the benefit of their customers? How will the new system of fewer franchises actually work? Over what period will train operators be able to plan and run their services without interference from politicians or bureaucrats?

During the dying months of the SRA, how will franchises be allocated? Will subsidies, which already cost the taxpayer £14 million a day, go up or down as a result of the White Paper? How will Network Rail be made more accountable to passengers under these proposals? How will the new governance of Network Rail ensure that it operates in the interests of taxpayers and customers?

Why will not the Secretary of State concentrate on the actual experience of the rail user? Commuters catching trains at Colchester or Manningtree experience conditions that have scarcely changed in half a century. No other business could survive by treating its customers in that way. No airport expects its passengers to stand around in the wind and rain, waiting for departures. What will the Secretary of State's structures and processes now do about those simple but important and basic challenges? What in the White Paper makes it likely that more freight will be carried on Britain's railways? Will the Secretary of State restore the grants to encourage that, which he withdrew last year?

What the Secretary of State has announced today is another example of fat Government. Instead of slimming down the bureaucracy, as his advance spin promised, bureaucrats will have a bigger role. Instead of the railways being set free, commuter services in the south-east will be burdened with an extra layer of fat and bureaucracy. These proposals give Ministers and bureaucrats a bigger role in running the railways, when what was needed was a smaller one. The winners from this review are the Department of Transport, Ken Livingstone and Network Rail, not the long-suffering railway passengers, who will search the statement in vain for specific proposals to address the reliability, cost and capacity issues that are at the top of their concerns.

Mr. Darling

I appreciate that the Opposition are at a disadvantage when a White Paper is published. It probably was not possible for the hon. Member for South Suffolk (Mr. Yeo) to read it cover to cover, but that is a pity, because about 75 per cent, of the questions he asked would have been answered there. However, I shall attempt to deal with some of them.

It is important that people recognise the distinction between what is properly the province of Government—deciding how much money will be spent and setting the high-level objectives for railways—and what is properly the province of train operating companies, which is whether the 7.42 from Manningtree will run or not. The White Paper proposes the proper distinction. The Government, not the SRA, will deal with the high-level strategy and spending.

I understand why the hon. Gentleman is a little nervous of addressing spending, because the Opposition's policy is to spend £1.8 billion less on transport than we now propose. It is not surprising that he does not want to go into that issue. He must recognise, however, that Government will be responsible for high-level strategy, and day-to-day operations will pass to Network Rail. If he looks at the document, he will see that the structure will be massively streamlined, compared with the one that existed in the past.

The hon. Gentleman asked about London. We are not proposing to give the Mayor power over trains outside the GLA. We are saying that for those railway lines within London. it makes some sense that the Mayor should have some say over them, because they are complementary to tube and bus services.

Mr. Yeo

What a muddle.

Mr. Darling

The North London line is wholly within the GLA and is used by people because there is no tube line or bus service. Surely it makes sense that the Mayor should have some say over the trains that run on that line. If the Mayor decided, for example, that he wanted more stopping trains within the GLA boundary, but the trains in question originated from outside the area, the issue would need to be discussed with people who live outside the boundary. We are not talking about transferring all power over those trains to the Mayor. Why does not the hon. Gentleman look at what is actually being proposed?

The hon. Gentleman mentioned longer franchises. One of the problems with privatisation was that it was thought at the time that if franchises were awarded for a long period, such as 25 years, there would be more investment. What happened was that the costings in those long-term franchises proved to be hopelessly unrealistic. That is one of the reasons why costs got so out of control—the botched privatisation for which the hon. Gentleman was responsible.

There will be fewer franchises. In relation to the changes in governance involving Network Rail, it will bring forward proposals in the next few days. We are providing greater streamlining of the organisation of the railways. It will be infinitely better than the dog's breakfast that the Tory party left this country.

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

I thank the Secretary of State for his courtesy in sending me both a copy of his statement and a letter in response to the letter I wrote him as a submission to the rail review. I appreciate that he could not reply sooner and I am grateful for his courtesy in replying at the earliest opportunity.

I welcome much that is in the statement. The Secretary of State will know from our recent transport debate and the correspondence to which I have referred that he and I have reached many of the same conclusions. That is largely because common sense and logical analysis of the problems lead to some pretty obvious conclusions.

The travelling public are fed up with politicians bickering over blame. They simply want a safe, reliable, affordable railway on which they can count and, subject to the detail of the White Paper, the conclusions of the review should lay the framework for achieving their desire.

The railways have been dogged by over-complex and competing bureaucracies—I would even go so far as to say adversarial bureaucracies—and I have long argued that they need to be simplified. The review clearly accepts that. I welcome the proposed arrangements for strategic leadership by the Government and for operating responsibilities to lie clearly with Network Rail.

I welcome in particular the devolution to the Scottish Parliament of the SRA's responsibility for Scotland, as well as the proposals for Wales, London and the passenger transport executives in England. However, will the Secretary of State again confirm that the appropriate financial resources will also be transferred with those responsibilities?

It is right that Network Rail should have clear responsibility for delivery, which obviously requires strong governance. When will the Secretary of State be able to tell the House his thoughts about that? Does he anticipate restructuring the stakeholder board? At 120, it must be unwieldy to say the least—if not unworkable.

The suggestions for franchisees seem sound, but does the Secretary of State agree that three of the small franchises—namely, c2c, Chiltern Railways and Merseyrail—are among the best performers and that they will not easily fit into a larger franchise? On this occasion, will he accept that small is actually beautiful?

Strong and independent regulation is essential for the railways. I have argued that there should be one regulator for economic, safety and environmental matters, which is also broadly accepted by the review. Does the Secretary of State see the Civil Aviation Authority as a role model that could be adapted for use with the Office of the Rail Regulator? Will that office review the safety regulations so that there is an appropriate balance between the need for safety and economic drivers? I am pleased that the Government have recognised the basic inefficiency of the rolling stock companies and I look forward to studying the Secretary of State's proposals in detail.

Finally, I note that legislation will be required. In the light of the Secretary of State's acceptance of so many of the points that I have put to him, my colleagues in the House and in another place look forward to working constructively with him to help put the necessary legislation in place and, more important, to help deliver a 21st-century rail network for the long-suffering passengers of Britain.

Mr. Darling

If the hon. Gentleman can co-operate with his noble Friends in another place that will be very welcome—it does not always happen. I agree with much of what he said. To his credit, the Liberal Democrats actually have a transport policy, which is more than can be said for the official Opposition.

In response to the hon. Gentleman's questions, Network Rail will be proposing changes in its governance over the next few days. Obviously, that is a matter for the company.

On budgets and the transfer of resources, I want to move to a situation where PTEs actually know how much they are spending on the railways. There is a revealing table in the White Paper, which shows exactly some of the costs for heavy rail in the regions. PTEs will be able to make sensible choices as to whether to invest in heavy rail, light rail, buses and so on.

The hon. Gentleman asked about franchises and mentioned three that work well. I want to reduce the number of franchises because it is important that they are more closely aligned with the track organisation. I attach particular importance to that, but the exact shape and size is something that we shall need to look at.

I welcome the hon. Gentleman's comments on safety. There may be parallels with the CAA, if only to show that safety and economic regulation can sit in one regulator. What is important is to achieve the railway focus to which I referred.

I am grateful to the hon. Gentleman, and look forward to seeing how the Liberals maintain that steady course over the next year or so.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) (Lab)

Is the Secretary of State aware that every traveller who is fed up with the constant muddle in which the rail industry has had to exist for the past 10 years will welcome his clarity? Will he ensure that the system whereby one company blames another is not continued in the future and that we have clear lines of responsibility, so that we—the Government and the taxpayers, who are paying for the system with greater sums than ever before—are not only given value for money but can see who wastes the cash and makes impossible the service to which every passenger is entitled?

Mr. Darling

I very much agree with my hon. Friend. We need clarity as to who is responsible for what. The Government accept responsibility for funding and the electorate are entitled to hold them to account on that. If a new Government came along who wanted to slash spending on transport, they would have to be held to account for that. We need similar clarity on operations, so that we can see who is responsible for trains running on time and, critically, as my hon. Friend pointed out, for spending money. As ever, I am grateful for what my hon. Friend says.

Mr. John Horam (Orpington) (Con)

Is the Secretary of State aware that about 50 per cent. of all passenger rail journeys are made by Londoners, yet last year London received only £73 million in revenue subsidy while the rest of the country got £1 9 billion? Now that the right hon. Gentleman has taken new powers to himself, which I welcome, will he address that matter urgently?

Mr. Darling

The hon. Gentleman is right: the London commuter network is the most heavily used part of the system. Obviously, subsidy is directed to the network as a whole, but as we move towards more transparent budgets and can see where the money is being spent, sensible decisions can be taken. However, before the hon. Gentleman calls for more subsidy, he might want to have a word with his hon. Friend the Member for South Suffolk (Mr. Yeo) who is advocating a £1.8 billion cut in transport spending.

Mr. Paul Truswell (Pudsey) (Lab)

My right hon. Friend will be aware that rail congestion in west Yorkshire is greater than in most parts of the country, including the south-east. That is certainly true of the three lines that serve my constituency—Wharfedale, Harrogate and Leeds to Bradford. Can he assure me and my constituents who use those services that the new structures will be able to identify and deliver the renewal of rolling stock and the increase in capacity that is desperately needed to meet not only existing demand but the demand we hope to generate with the opening of new stations?

Mr. Darling

Yes, I can. Part of my proposals for west Yorkshire would give the passenger transport authority greater power to decide what is required. Obviously, the Government can take an overall strategic view as to the size and shape of the railways nationally, but decisions about what happens locally and how transport is provided—whether by heavy rail or other modes—are best taken locally. We want to move towards a situation where there is greater transparency about what happens so that there can be far better decision making than there is at the moment.

Sir George Young (North-West Hampshire) (Con)

Members on both sides of the House will welcome the increased investment in the railways since privatisation, but the Secretary of State knows that many worthwhile projects are no longer in the plan. Will he have another look at the length of franchises? With a two-year rolling franchise, there is little incentive for a train operator to invest in improved stations or car parks. Will he consider increasing the franchise lengths so that such incentives can be restored?

As the SRA no longer stands behind Network Rail, can the Secretary of State confirm that Network Rail's borrowing will appear on the Government's balance sheet? So far it has not done so. Finally, will he not lose sight of the role of rail in a sustainable and coherent transport strategy? Rail fares are rising ahead of inflation—way ahead of motoring costs—and he has abandoned the growth targets for use of the railway, so in the statement that he has just made is he not running the risk of not capturing the full potential of rail?

Mr. Darling

I certainly am not. As I said in my statement, it is worth bearing in mind that last year Britain's railways carried more passengers than at any time since the early 1960s. That is a measure of their success. Despite all the difficulties railways are doing well. Although punctuality is not nearly as good as it should be, it is improving.

Mr. Christopher Chope (Christchurch) (Con)

That is the success of privatisation.

Mr. Darling

No, it is not. I think the hon. Gentleman will find that it has something to do with the phenomenal growth in our economy over the past seven years, as well as the not insubstantial sums of public money that are going into the railways. However, because someone will no doubt ask about it at some stage, I will give him this: several train operating companies have brought some flair into getting passengers to use them. I have always said that.

On the last point raised by the right hon. Member for North-West Hampshire (Sir George Young), he need have no fear. I gently point to the right hon. Gentleman, however, that he and his hon. Friend the Member for South Suffolk (Mr. Yeo) may well ask why we have not built this line, that line or the next one, and we may say, "Yes, we will do as much as we can", but if they cut £1.8 billion from transport spending, they will not be able to build any of those lines.

In relation to the franchise length, I agree with the right hon. Gentleman that we need to award franchises that are of sufficient length to give companies an incentive. As I have said, we need to take into account not just costs and performance, but how a company behaves in the first part of its franchise. However, I am wary of moving to something like a 25-year franchise—indeed, I would net agree to that—which was suggested about 10 years ago. For example, the figures included in the Virgin franchises in 1995–96 have proved wildly optimistic. That does no one any good at all.

In relation to the financial obligations, I said in the statement and the White Paper says that they will transfer to the office of the Secretary of State.

Mr. Eric Martlew (Carlisle) (Lab)

My right hon. Friend referred in his statement to the valuable role of community railways. I wonder whether he could expand on that, especially with regard to branch lines in rural areas, such as the west Cumbrian line and the Oxenholme to Windermere line. How will the White Paper affect them? What more local control will we have over the railways?

Mr. Darling

The White Paper deals with local community railways and refers to the recent SRA consultation. The idea is that certain railway lines, which may not be viable under the present system, could be operated much better. It does not include specific suggestions, but sets out a framework for decision making in the future. I have been impressed by the fact that a number of working community railway lines would almost certainly have been shut if they had not been transferred to the control of local people. That is something that I want to encourage.

Hugh Robertson (Faversham and Mid-Kent) (Con)

The Secretary of State will be aware of the real concern felt in my constituency and that of my hon. Friend the Member for Ashford (Mr. Green) about the SRA's proposed cuts to the Maidstone to Ashford line. As a result of the right hon. Gentleman's statement today, will he confirm whether the Government's consultation with the Integrated Kent Franchise will still report as planned in the autumn?

Mr. Darling

I am well aware of the concerns in Kent about the current consultation. It is very clear that, whatever is proposed, if there is a difficulty in one part of the country or another, that is something for the SRA to resolve. I appreciate that it will be very difficult to resolve all the various conflicts, but, obviously, we must have a go. For the avoidance of doubt, the SRA will continue to be responsible for those matters until it is closed, probably in the second half of next year.

Mr. Graham Stringer (Manchester, Blackley) (Lab)

I congratulate my right hon. Friend on an excellent response to the analysis in the Select Committee report, "The Future of the Railway". I particularly appreciate the devolution of both power and cash to passenger transport authorities, so that they can determine what goes on in their areas. A huge quantity of money is spent on heavy rail over which local people have no control or say, but will he assure me that waiting for the legislation to enable that transfer will not delay implementing the extension of the tram system in Greater Manchester?

Mr. Darling

I am very grateful to my hon. Friend for raising that issue. He has long held the view that there ought to be greater openness, so that PTEs can take informed decisions about whether to provide heavy rail, light rail or bus services. There are a number of light rail schemes, but they are not dealt with specifically in the White Paper, which is about the proposed structure. I have always made the point that, in relation to any rail scheme—heavy or light—or indeed any other transport scheme, we must be satisfied that it stacks up and provides value for money.

One of our problems with light rail schemes, as my hon. Friend well knows, is that the costs have doubled in the past two or three years and what is proposed is half as much as originally planned. The Government cannot sign up to things that do not represent value for money. Some of the changes that I have announced today, whereby we are increasingly able to identify regional transport budgets, will ensure that PTEs and local authorities will also be able to make more informed judgments about where they are prepared to spend their money. That is obviously of interest to the Government.

Sir Nicholas Winterton (Macclesfield) (Con)

I welcome the reduction in franchise numbers. I also warmly welcome the closer working relationship between operators and those who control the track. However, may I pick up the point, which was made strongly by my right hon. Friend the Member for North-West Hampshire (Sir George Young), that the Secretary of State and the Government should consider the length of franchises? Unless the franchises are of a certain length, those companies will not be able to make the necessary investment in car parking facilities at stations. The need for safe, reliable parking at Macclesfield station is critical to getting people off the roads and into trains for journeys to Manchester or south to Birmingham and Stoke. Such investment is very important to my constituency.

Mr. Darling

The hon. Gentleman makes a very good point. Many train operating companies have not just put money into their trains and on-train services, but built car parks. and some run minibus and bus services to round up customers and take them to the stations every morning. That is the sort of thing that we want to encourage. I want to ensure that franchises are sufficiently long to encourage companies to stick in there and make that investment.

Past performance ought to be taken into account because we are entitled to ask, "Okay, what did you do for the first part of the franchise? What might you do in the second part?" Obviously, cost and performance are critically important. As I told the right hon. Member for North-West Hampshire (Sir George Young), my reservation is that, if the franchise is too long, the numbers bid sometimes become unrealistic, but I am very grateful to the hon. Member for Macclesfield (Sir Nicholas Winterton) and other hon. Members for the general welcome that they have given to our proposals. Indeed, the only sour note so far appears to have come from the hon. Member for South Suffolk (Mr. Yeo).

Mr. Iain Luke (Dundee, East) (Lab)

I welcome transferring the SRA's responsibilities to the Secretary of State, but I am concerned, as the representative of a north-eastern Scottish constituency, that the funding given to the Scottish Executive to upgrade the line north of Edinburgh is sufficient. Colleagues and I have recently had discussions with the SRA, which has decoupled the prioritisation of investment north of Edinburgh, and we have had discussions with the Minister for Transport in the Scottish Executive, and they have told us that they have no money. I hope that any devolution of responsibility will involve sufficient money to ensure that the much-needed investment in north-east Scotland's railway lines can go ahead soon.

Mr. Darling

I am aware of the problems that my hon. Friend sets out in relation to the lines in the north-east of Scotland. Upgrading the line between the central belt and Aberdeen was an issue when I lived in Aberdeen in the 1970s—it is not new. In relation to what I propose in respect of Scotland, it is right, especially as most services in Scotland are discrete to Scotland, that the Scottish Executive ought to have a greater say, and they can decide to spend more or less. That is a decision that they should properly take.

In relation to rail finances generally, however, the House should understand that the cost of running the railway, especially now that we are clear about the state of the network, has risen very dramatically in the past five years or so. Although there will be improvements—a lot of money is going into the railways—obviously, choices must be made about what can be done and when, so people must be realistic about that.

Pete Wishart (North Tayside) (SNP)

I, too, welcome the statement, especially the part that relates to Scotland. We in the Scottish National party and our colleagues have argued long and hard that there has been an overwhelming case for the transfer of rail powers to the Scottish Parliament and, indeed, to the Welsh Assembly. I am glad that the Secretary of State now sees the clarity of that case. Will he say a little more about how the resources will follow the transfer of powers? I am still unclear about how Scottish objectives will be pursued by the Scottish Executive. In his guise as the Secretary of State for Scotland, does he agree that, when it makes overwhelming sense to devolve such powers, as it does on the railways, he will continue to consider such cases in the future?

Mr. Darling

I am proposing a substantial change in the arrangements for the railways. Of course, the Scottish Executive got a very good settlement, consequential on the announcements that my right hon. Friend the Chancellor made on Monday. It is obviously for the Scottish Executive to decide how to deploy those resources, and it is encouraging that they are now spending more than £1 billion on transport for the first time ever, I think. That is good news. The hon. Gentleman might want to reflect on the fact that the reason why Scotland's expenditure is going up is that the Chancellor was able to make those resources available because of the strength of the UK economy. Of course, that would all be at risk with separation.

Liz Blackman (Erewash) (Lab)

My right hon. Friend will know that I have raised the absence of a station at Ilkeston with him before. Indeed, it is the only town of its size in the east midlands that does not have a station. The Government are currently funding a link road to join the town with the motorway, so a station would make an ideal transport hub. In the light of his statement, what comfort can he give to my constituents that a station will arrive sooner rather than later?

Mr. Darling

Tempted though I am, I would probably be better not to make any specific promises. The White Paper deals with the structure and organisation necessary to run the railways rather than specifics. We will need to consider whether a station can be established in Ilkeston. We are spending a lot of money on the railways, but people must understand that the cost of running the railway and the regulatory review that took place at the end of last year have put a substantial pressure on our budget as a whole. Yes, we want improvements to transport across the piece, but we need to ensure that we bear down on costs because every time that we do that, additional money might be available to do other things. I shall bear my hon. Friend's point in mind, but the White Paper does not deal with matters in such specific deal.

Mr. David Tredinnick (Bosworth) (Con)

The Secretary of State tries to claim credit for the increase in passenger numbers over the past 40 years, but in reality, the dramatic increase was caused by the privatisation of the railways by the Conservative party. All the issues with which he is dealing relate to the success of privatisation. That needs to be stated because it is not said often enough.

The right hon. Gentleman might want to address the reality of the discontinuation of the Nottingham-Hinckley-Coventry line that goes through my constituency. He is now taking more powers for himself, so if I write to him will he undertake to examine Railfuture's proposal to reinstate an existing dive-under tunnel at Nuneaton?

Mr. Darling

Again, we are hearing a plea for more money to be spent on the railways. I return to this point: the Conservative party is committed to cutting £1.8 billion from the transport budget, so it is in no position to call for more money for a dive-in tunnel, a new station or anything because it would not make money available. As for what I said about additional passengers, I have never tried to claim credit for the transport system over the past 40 years—I was not responsible 40 years ago. What is happening now with our growing economy enabling more people to travel by our trains and additional public money for the railways is to the credit of the Government, but it is the shame of the official Opposition that they want to cut the amount spent.

Joan Ruddock (Lewisham, Deptford) (Lab)

I congratulate my right hon. Friend on his statement and especially the extension of the Mayor's responsibilities for rail services in the Greater London area because of the increased integration that I believe that will deliver. Is he aware that my constituents have the fourth highest dependency on public transport services in the country and that we need the East London line to be extended? That is currently an SRA project that is expecting SRA funding, so can he give us any assurance that the long overdue project will go ahead?

Mr. Darling

As I said, the White Paper deals with the structure and organisation of the railways. As my hon. Friend knows, the SRA and the Department have been examining several projects, including the East London line and other London projects. I will be able to say something about those things, but I must be careful to remind hon. Members again that there are huge cost pressures on us. I have always made it clear that London's rail infrastructure needs to be extended, but we must consider how that is paid for and when it happens. Today's announcement was purely about the structure of the railways.

Mr. Eric Forth (Bromley and Chislehurst) (Con)

Will the Secretary of State explain how the Evening Standard was able to say with such confidence: Ken Livingstone is set to be handed control of the entire London rail network"? It mysteriously seemed to know the content of the statement before it was given. In that context, will he expand a little further on the mysterious part of his statement saying, Many London commuter services run well outside the GLA boundary"? Can he name any that do not?

Mr. Darling

In relation to the London Evening Standard, I suggest that the right hon. Gentleman directs his comments to the editor rather than to me. I do not know why the story was written. The story in the first edition of the Standard is not right, as I said earlier. The right hon. Gentleman should actually read the White Paper, although I appreciate that that would require rather more effort than he sometimes applies to such matters, because he would see that the proposals are rather different from what appears in the Evening Standard. I am told, although I cannot promise the House of this, that the second edition is rather different.

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

I welcome my right hon. Friend's statement, especially the element about giving more powers to passenger transport authorities. If he is worried about whether the strategy will work, I refer him to the Merseyrail system. It was the worst train system in Britain, but since it transferred to the PTA, it has become the second best and most reliable service. Will he see whether he can support that scheme even more?

Mr. Darling

The White Paper refers specifically to Mersey Electrics and records what it has done. I know that its reliability is pretty good, but it is worth remembering that it has a discrete network, so it is fortunate that no other trains, apart from the odd freight train, go on to the lines. The arrangements for Merseytravel are set out, and my hon. Friend will have every reason to be happy with what is proposed.

Dr. Vincent Cable (Twickenham) (LD)

Further to the answer that the Secretary of State gave to the hon. Member for Lewisham, Deptford (Joan Ruddock), how will the new governance regime involving the London Mayor impinge on the Crossrail project? Does he intend to make a full statement on that subject before the end of the parliamentary Session?

Mr. Darling

I hope to be able to say something about Crossrail in the not too distant future.

Mr. Michael Clapham (Barnsley, West and Penistone) (Lab)

I welcome most of my right hon. Friend's statement, but I am a little worried by his proposals on safety. Will he say a little more about why he has decided to move responsibility for safety from the independent health and safety inspectorate to the Office of Rail Regulation, and confirm that that is not being done because of cost pressures?

Mr. Darling

Absolutely not; safety is absolutely paramount. We thought about the transfer long and hard, and I tell my hon. Friend and the House that the ORR is as independent as the Health and Safety Executive. There is no question of safety being anything but independent from both the Government and the industry—that will remain.

We are undertaking the transfer because given everything that happened in the past, and especially due to European directives on safety, it is much better to have an organisation that can focus on railway safety. We can thus simplify the structure and apply ourselves to the risks faced by the industry. For example, although attention is obviously given to passenger fatalities due to people falling off trains, the vast majority of people killed on the railways are trespassing or suicides. The industry has not examined that risk sufficiently, so we need an organisation with a clear focus. I have, of course, discussed the matter with Bill Callaghan, the chairman of the Health and Safety Commission. Although his view was different to mine, he told me that he and the rail regulator will work closely to ensure that the transfer works. I will do nothing to prejudice that because I want the transfer to take place properly so that it will help people. I think, on balance, that my judgment is right.

Angela Watkinson (Upminster) (Con)

I heard with great alarm that the Mayor for London might be allowed to become involved in commuter services starting outside London and running into London. Two such lines run through my constituency: the Southend-Fenchurch Street line run by c2c; and the Southend-Liverpool Street line, which is run by the renamed Great Eastern—it is now inexplicably called "one", which means that every carriage looks like a first-class carriage. Will the Minister explain what sort of powers the Mayor might be given?

Mr. Darling

I understand that people who read the first edition of the Standard might have got a wholly erroneous impression. I propose that there is room to give the Mayor a greater scope to specify what is needed for services that run wholly in the Greater London authority—I referred to the North London line, for example.

Mr. Oliver Heald (North-East Hertfordshire) (Con)

It is called the Northern line.

Mr. Darling

If the hon. Gentleman could contain himself for once, he might actually learn something. I appreciate that he has nothing worthwhile to say, so perhaps he should not say anything.

On commuter services that run outside London, the Mayor could say that he would like to pay for more services to stop within the London boundary. Conversely, people coming from, say, Southend might want a fast service into London with few stops. Reconciling those two interests will require plenty of discussion. I have made it clear, both in the White Paper and my statement, that the rights and expectations of people living outside London must be taken into account. There is no question of the Mayor being given control of those services outside his area. If there is an argument for providing more stopping trains and to provide more services, the question is whether that could be accommodated. I would have thought that that required a common-sense approach, not the scaremongering in which the hon. Lady's colleagues are indulging.

Lawrie Quinn (Scarborough and Whitby) (Lab)

May I congratulate my right hon. Friend not only on his excellent statement, but on the negotiations that he undertook with the Chancellor of the Exchequer on transport spending? May I also be the first Back-Bench Member to thank, as the Secretary of State did, the staff of the Strategic Rail Authority for their work in preparing the way forward for Britain's railways? In particular, I draw attention to the leadership of Richard Bowker, especially on community rail partnerships and the blueprint outlined.

On freight, does my right hon. Friend propose to undertake discussions with the Office of the Deputy Prime Minister to improve the transport planning arrangements to allow depots to provide access for more goods to go on to the rail network?

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I appeal for very short questions and precise answers. I am letting the statement run beyond the original time estimated so that all hon. Members get called.

Mr. Darling

In relation to my hon. Friend's three points, I am always grateful to the Chancellor. That does not, however, get us away from the fact that our budgets are still under pressure. I want freight to be encouraged. Indeed, I am greatly encouraged by the freight companies that have made it clear that they want to go out and win new business. I entirely agree with what my hon. Friend said about Richard Bowker.

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

Does the Secretary of State understand that there will be considerable concern in Worcestershire about his proposal to extend the powers of the passenger transport executives? We have such poor commuter services because Birmingham and the conurbation specify their services in preference to Worcestershire commuters. Given that he is also talking of giving the Welsh Assembly powers for services bordering Wales, many of which come to Worcestershire, we could be hit by a double whammy. In addition, I invite the Secretary of State to answer the question he did not answer—

Mr. Deputy Speaker

Order. No, I do not think that we will have an extra question.

Mr. Darling

My proposals on devolution are primarily directed at those services that operate within the areas covered by PTEs and so on. In all parts of the network, there are obviously choices to be made and decisions to be taken between services that run within a local area and those that run further afield. [Interruption.] If the hon. Gentleman would be quiet for one minute, I might be able to answer his question.

The hon. Gentleman is right to be concerned about the tension between people who live well away from PTE areas who rely on services that go into those areas. That is obviously something that we need to reconcile, a point that I made earlier.

Hugh Bayley (City of York) (Lab)

My right hon. Friend's decision to pin down the bureaucracy and to provide a clear strategic framework for the railways, and his ability to win extra money from the Treasury to deliver the strategy will be widely welcomed in a railway town like York. Now that the parameters have been set, when will the SRA publish the route utilisation strategy for the east coast main line and when will the refranchising formally start?

Mr. Darling

I hope that the answer to both those questions is "shortly". It is most important that the change does not hold up developments that need to be put in place to ensure that the railways operate over the next few years. I hope that we can do those two things as soon as possible.

John McDonnell (Hayes and Harlington) (Lab)

May I give credit where credit is due? Today's announcement shows that the Secretary of State is slowly but surely reinventing a much improved British Rail. Unfortunately. he has not gone far enough in bringing the train operating companies back into public ownership. However, will he at least end the private sector preference, so that if the public sector is operating successfully—as it is with south-east trains—it is not forced into the private sector?

Mr. Darling

Not for the first time I must disappoint my hon. Friend. We are not re-creating British Rail and I think that the public-private partnership works. The performance of south-east trains is improving, but so is the performance of a number of other train operators operating around London. I am afraid that we will have to disagree—but nothing new there.

Mr. Gordon Prentice (Pendle) (Lab)

Will the new arrangements make it easier for disused railway lines to be reopened, or is the shape of the network to be entirely with Network Rail?

Mr. Darling

The Government have to decide how much they spend and the general overall strategy for the railways. Network Rail, through its industry planning process, will have to decide whether markets mean that new lines might be profitable or old lines might change. That happens with all types of transport because it is necessary to take account of where people are.

If I understand my hon. Friend correctly, he is referring to community railway lines. They have been successful in keeping lines open that might otherwise have closed. That is acknowledged in the White Paper and we want to build on it.