Railway Franchises (Hansard, 26 October 2004)

§ Lord Davies of Oldham
My Lords, potential bidders are already able at pre-qualification stage to state their track record and the Strategic Rail Authority has taken this into account. This process will be refined further following the recently published White Paper, The Future of Rail, which proposes that evaluation of past performance will be a factor in awarding franchises.

§ Baroness Scott of Needham Market
My Lords, I thank the noble Lord for that reply. Is he prepared to say whether the new refinements will include improved transparency both for the industry and for passengers? 1171 Does he not concede that where there are examples of perfectly well run franchises being replaced by operators with a less good record elsewhere, it leaves open the question that bidders have offered too much for too little, and that at some point the public will be required to bail them out?

§ Lord Davies of Oldham
My Lords, although past performance is to play a part in the criteria, the House will recognise that the main features of those criteria are the nature of the bids and commitment to the improvement of the future service. Those will be the most important elements of the criteria for all bids. However, it must be recognised that past performance does have its part to play, although the Government, on behalf of the community, have a direct interest in ensuring that bids promise both improved performance and can establish the basis on which that improvement can be achieved. That is what we expect to see in the bids for the considerable number of franchises which will fall due in the fairly near future.

§ Lord Barnett
My Lords, in declaring an interest as someone who has used the train to travel backwards and forwards between Manchester and London for more than 40 years, can I ask my noble friend to emphasise in his assessment of these matters the fact that Virgin Trains, which presently runs the service, has now come up with Excuse No. 75 for its delays and cancellations? I hope that he can give an assurance that both past and current performance will play a part in assessing whether that company's franchise should be renewed.

§ Lord Davies of Oldham
My Lords, I hear what my noble friend says and I am aware that many Members of this House and of the other place have suffered considerably as a result of the under-performance of the West Coast Main Line over the years, together with a significant section of our community. However, it will be recognised that a substantial element of those delays has been related to the renewal of the track, which has involved massive investment over the past decade.
I emphasise a point that I have made on previous occasions: this is the busiest main railway line in the whole of Europe. As a consequence, renewal of the track has presented some significant problems. Nevertheless, Virgin Trains will have to stand the test of past performance, and no doubt it will attest to the fact that its cross-country services have performed somewhat better than the West Coast Main Line. However, it is certainly the case that the criteria that will be established for operating the West Coast Main Line will take into account the fact that the substantial investment in track renewal on the line is now nearly complete.

§ Viscount Astor
My Lords, in the Government's White Paper, The Future of Rail, published in July, the Secretary of State announced plans to hand over 1172 responsibility for rail services in London to the Mayor. Can the noble Lord say what role Ken Livingstone will have in awarding new franchises for London?

§ Lord Davies of Oldham
My Lords, under the present arrangements, the Strategic Rail Authority will continue its role so far as concerns franchises, but the noble Viscount will recognise that it needs to take into account the local dimension of the services being provided. Not all franchises cover long-range, cross-country routes, and those which operate for London commuters are of great significance to the London economy and London society. Around 1.5 million commuters travel into London each day and therefore it is not surprising that the Mayor of London expects the local voice with regard to the provision of rail services to be heard at the appropriate time.

§ Lord Faulkner of Worcester
My Lords, turning to the case of the east coast franchise, which is being subject to the process of bidding at the moment, does my noble friend agree that it would be deplorable if a quality provider of the service were to be ditched in favour of an operator who offered just a cheap and cheerful one by proposing, for example, to take out train catering? What more does GNER have to do to demonstrate that it should win the franchise again, given that the franchise has cost the taxpayer nothing in terms of subsidy and, indeed, is contributing £6 million, as well as substantially increasing the number of trains and the number of passengers using them?

§ Lord Davies of Oldham
My Lords, I shall not make a judgment from this Dispatch Box on the bidders invited to tender for that particular franchise. I have indicated that past performance will play its part. Moreover, my noble friend is right to point out that GNER can boast of a good performance. Nevertheless, let me be absolutely clear: future commitment and plans will be the main criteria for a successful bid. So far as the east coast franchise is concerned, other bidders are submitting strong bids, and of course under procurement law we must be fair to all bidders—new ones and those operating the existing franchises—when we invite bids.

§ Lord Bradshaw
My Lords, is the Minister aware that the whole franchising process is flawed? Does he not agree that it needs to be revisited? The first lot nearly all resulted in bidders grossly exaggerating what they would deliver if they were awarded the franchises. Most of them failed and some went bankrupt. If we are driven into a situation where the lowest price wins, what is to stop bidders again exaggerating what they will deliver and thus letting down not only the Government and Members of this House, but also every customer and passenger in the railway system?

§ Lord Davies of Oldham
My Lords, the noble Lord's criticism of the first round of franchise awards has some merit. We all know the unfortunate consequences of failures in certain areas. However, we have learnt a lot 1173 from that experience. We now have in place rigorous criteria, ones that will have the benefit of scrutinising the past performance of train operating companies.
The suggestion made by the noble Lord builds on the concept introduced by my noble friend Lord Faulkner; that is, that the cheap and cheerful might succeed. However, it is not the case that the cheapest bid will necessarily succeed. In each case the successful bid will be that which provides and guarantees the highest quality of service and the best value for money. They may not necessarily be the cheapest bids, but they will represent good value for money for consumers, which is the most important feature.