Railway Costs

HC Deb 22 June 2004 vol 422 cc1170-2

6. Mrs. Patsy Calton (Cheadle) (LD)

What steps are being taken to reduce costs within the railway industry. [179614]

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

We return to the cheery subject of railway costs.

As a result of the regulator's review, Network Rail is required to achieve efficiency gains of 31 per cent. over five years. The SRA is also working to reduce costs during the franchising process.

Mrs. Calton

I thank the Secretary of State for his answer. He will know that considerable costs have been incurred in the some what failed TCS or train control system on the west coast main line. Can he tell me whether the masts erected for the TCS system on the west coast main line are operational now for the purposes that we were led to believe they would fulfil? If they are not operational, when will they be?

Mr. Darling

The answer is that the masts are being tested at the moment. I shall certainly let the hon. Lady know when they come into operation.

Lawrie Quinn (Scarborough and Whitby) (Lab)

Given the immense costs associated with infrastructure investment on the railway and the skill shortages across the industry, can the Secretary of State tell us what recent discussions his Department has had with Network Rail in trying to fill those voids of skill shortages in terms of engineers and the people who will be involved in rebuilding the railway?

Mr. Darling

We have had discussions with Network Rail about that issue. It is one of the reasons why costs have gone up. After many years of under-investment, considerable sums are now being spent not only on the west coast main line, but on upgrading the power supply for trains south of the River Thames. A whole lot of other work is also being carried out, which has an effect on labour costs. Network Rail is looking to see what it can do to improve the situation. Taking maintenance back in house has saved a substantial sum. Indeed, Network Rail is spending a lot less than it thought it would have to spend to get the same amount of work, simply because of the efficiency that it is driving through, having taken over from Railtrack what was a pretty shambolic situation.

Mr. John Redwood (Wokingham) (Con)

Is anybody currently reviewing the optimal size of the network and thinking about closures of any portions of it? If so, will those involved consider conversion to busways or dedicated freight lorryways, rather than wasting those routes?

Mr. Darling

When I announced the review, I said that one of the things that we should be doing as a matter of course was keeping under review the new markets that were emerging for the railway, as well as the railway services that were not being so well used. The House will recall that, in January last year, when the SRA announced the removal of about 180 Virgin Cross Country services, many people were concerned. In fact, many of those services were not carrying many passengers. As a result of having taken them out, the reliability of Virgin Cross Country in respect of the remaining trains has improved. because the lines are less congested.

I have also said that passenger transport executives in particular need to ask themselves whether heavy rail is the right option and whether light rail or buses might be better. The cost of running heavy rail, especially if it is not carrying significant numbers of passengers, is substantial. The point that the right hon. Gentleman makes is one that I have dealt with previously. Provided that these matters are looked at sensibly, we might get a better deal for the travelling public in some areas.

Mr. Clive Betts (Sheffield, Attercliffe) (Lab)

I am sure that my right hon. Friend accepts that private investment is one way to reduce costs in the rail industry. Some of us were looking forward to the Central Railway project, which would have provided significant economic benefits to the north of England, not least to Tinsley in my constituency, where a major rail freight terminal was planned. Members of Parliament and local authorities in Manchester, Yorkshire and the east midlands support the scheme, and the company says that it cannot envisage a situation in which the project would require public funds. Will my right hon. Friend consider whether the project can go ahead, bearing in mind that the Government say that they cannot support the proposed private Bill?

Mr. Darling

Unfortunately, I cannot see a way forward for that project, which is a point that my hon. Friend the Minister of State made clear earlier in the year. I favour bringing private money into the railways—the Government spend about £77 million a week on the railways, and a similar amount comes in from the private sector—but I was not satisfied that sufficient private money was available to pay for the Central Railway project. I feared that, when the project was half built, the promoters would come to us and say, "We are awfully sorry, can you take it over?" On a number of occasions, I asked the promoters to guarantee that that would not happen, and they could not do so, which is why the Government made it clear that they could not make such a substantial commitment. I am keen to obtain private sector money, but if such private sector projects are to go ahead, we must be sure that they can be delivered.

Mr. Tim Yeo (South Suffolk) (Con)

In a spirit of helpfulness, which is appropriate at this early stage of my relationship with the Secretary of State, I shall suggest how to dispel the black cloud that hangs in his office on the issue of railway finance. Will he confirm that the dual regulatory system imposed by the Labour Government has substantially increased the costs carried by the rail industry? Does he agree that the burden that those costs place on passengers and taxpayers could be cut at once if the Government admitted their mistakes and rationalised the operations of the Strategic Rail Authority and the Office of the Rail Regulator?

Mr. Darling

I am pleased to hear that the hon. Gentleman wants to have a close and cordial relationship. In that spirit, I point out to him that on 19 January this year, I announced a review of the railway industry, and that review is examining the structures that he complains about. The SRA does not add greatly to the cost of the railways, but the structure set up under privatisation, which includes numerous interfaces between private companies, is undoubtedly costly. We set up the review to control costs and to obtain a better organisation to run the railways. If the hon. Gentleman and I can agree on that point, our relationship will be fruitful, cordial and perhaps even lasting—I look forward to seeing him on the Opposition Front Bench for many years to come.