Oral statement to Parliament

Rail franchising

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

A statement about the refranchising programme and future of our railways.

The Rt Hon Sir Patrick McLoughlin MP

Mr Speaker, with permission I wish to make a statement about the future of our railways.

It is a positive future.

One that no one would have imagined 50 years ago tomorrow… when Dr Beeching published his report.

Or even 20 years ago…when the government privatised a railway still in decline. The industry is now booming.

Traffic has doubled since privatisation…from 750 million journeys a year…to 1.5 billion now.

There are more services and record levels of investment.

And our railways have the best recent safety record in Europe.

That hasn’t been achieved despite privatisation.

It has been achieved because of privatisation.

And today I am setting out a programme that can achieve even more.

Because for our country to compete.

And for jobs and growth.

We need a transport system that is second to none.

So we are spending unprecedented sums on infrastructure.

Things like Crossrail, the biggest construction project in Europe.

And the Northern Hub cross-Manchester link…which will transform services across the Pennines.

In return, it is right that we demand more from the industry.

Because for the money that passengers and taxpayers put in we should expect…ambition…innovation…and even better performance for passengers.

And this is the way to get it.

Mr Speaker, last year serious and unacceptable mistakes were made…when it came to refranchising the West Coast Mainline.

But I have put in place a new structure and processes in the department…as the Laidlaw report recommended.

In January I announced our initial proposals for the three franchises most immediately affected…the Great Western, Essex Thameside and Thameslink.

Today I can confirm that I am accepting the next stage of findings…from the Brown review into rail franchising.

I am also pleased that Richard Brown has agreed to chair a new Franchise Advisory Board.

I am publishing its terms of reference today.

The Brown review called for the full refranchising programme to be announced by the end of April.

I am pleased to be announcing it today.

I want to be as open as possible with the market…which is why for the I am publishing a Prior Information Notice to set out not just the programme for franchising….but the way franchises will be let…and the benefits they will bring.

In doing so I have applied 3 principles.

First, that passengers gain.

Second, that the rail industry thrives with growing companies and new competitors coming into the market.

Third that the taxpayer gains through a more efficient use of public money and less waste in the industry.

These 3 principles are the essential points upon which the future of our railways rests.

So let me turn to the detail of what I am announcing today.

A programme which will give great improvements to passengers…certainty to industry…and a fair deal for the taxpayer.

It provides stability, so that we can invest more. And it provides flexibility, so that different routes with different demands can be managed in different ways.

It also gives fair weight to passenger satisfaction, which has not always been respected as it should have been. With long-term franchises that can run for up to 15 years if operators meet the standards they promise at the start.

To ensure a competitive market we will hold no more than three to four competitions a year.

Starting with a smaller number, as the programme gets up to full speed.

And extending up to 12 current franchises to give certainty to passengers…and allow the full programme to get underway.

Mr Speaker, there are those who would like our railways to go back to the days of state ownership, decline and underinvestment.

They are wrong.

I share the view of the last Labour government, which is that franchising works. In 2009 on the east coast, ministers brought in Directly Operated Railways as a short-term stand-in.

They did what was needed in difficult circumstances. But the East Coast mainline, upgraded in the 80s, needs revitalising now.

New trains, to be built in the north-east, are now on order. Now it is the right time that we invite bidders to put forward proposals for investing in and improving services.

This will be the first of the new inter-city franchises to be awarded in 2014. In a programme that meets my three essential principles of better service, better competition and better value.

Mr Speaker I wish to make one final point.

The Beeching report was about closures and cutbacks.

But its 50th anniversary tomorrow…sees an industry marked by growth not decline.

Investing in High Speed Two for the future. As well as better services today.

That is why I am pleased to announce today the front runners in our fund to open stations. They are Lea Bridge, in Walthamstow. Pye Corner, in Newport West. And Ilkeston in Erewash.

I expect to announce further winners soon.

I commend this statement to the House.

Published 26 March 2013