South-Eastern Rail Franchise

(Urgent Question): To ask the Secretary of State for Transport if he will make a statement on his decision to delay, yet again, the award of the south-eastern rail franchise.

In June 2017, the Department for Transport announced that the shortlisted bidders for the south-eastern franchise competition were: South Eastern Holdings Ltd; London and South East Passenger Rail Services Ltd, a wholly owned subsidiary of Govia and the current incumbent; and Stagecoach South Eastern Trains Ltd, a wholly owned subsidiary of Stagecoach Group plc.

Subsequently, in December 2018, the Department exercised an extension with the existing south-eastern operator, London and South Eastern Railway, until 23 June 2019 to allow further time for the competition to identify the next operator for the franchise. The Department is now in the process of negotiating a further direct award which, subject to a successful negotiation, will run until 10 November 2019, with an option to extend the agreement until April 2020. We are taking these steps to ensure continuity of services for passengers. This additional time is necessary to deliver the best possible outcome for passengers and taxpayers alike. We will update the House in the usual way as soon as this work is concluded.

I am grateful to the rail Minister, but he has not quite explained why such a mess has been made of this franchise. Can he confirm exactly when my constituents, who already pay the second-highest fares in the home counties, will get the long-promised new carriages? Can he explain why, if the franchising system is now under review, he has been able to award an eight-year franchise for the east midlands? Finally, can he explain why the compensation in respect of last year’s timetable chaos is not going to the two stations most affected in my constituency, Shoreham and Eynsford, when the two operators enjoy common ownership? Is it not time to restore confidence in the whole franchising system?

I thank my right hon. Friend for those questions. He has been a strong and tenacious champion for rail passengers in his constituency, raising issues with me and speaking in Westminster Hall debates. I share his impatience to get the benefits that are emerging from our franchises to his, and indeed to all, constituents. This is a huge and complex piece of public procurement, and it is right to take the time to make sure we get it right and to finalise this competition. The area is one of the most complex on our network; it has a mix of high-speed and commuter services, with a highly intensive use of infrastructure. I cannot tell him the date on which we will be able to make the announcement. This is a live competition involving market-sensitive information. There is an established method of communication to the House and the markets, so I cannot answer him and am able to say little on that point today.

I can confirm to my right hon. Friend why the east midlands franchise was awarded, with the rail review taking place. That was simply because it was considered that with the east midlands franchise award and this one we could get the benefits to passengers before the work of the rail review came into play. On compensation in respect of the two stations he mentioned, I will look at that carefully. On the point about the compensation following the May 2018 timetable changes, there were some significant problems, but they were not everywhere. The issue was to get the compensation to those who had been most affected. They received compensation that I think was appropriate, but I will check out those two stations and write to him as quickly as possible.

So here we are again: a Transport Minister forced to the Dispatch Box to defend the actions—or, in this case, the lack of action—of the ever-failing Secretary of State. Following four delays on the south-eastern franchise, we now know that the Government are planning a direct award. After 12 other direct awards, including on south-eastern, is this approach being taken to avoid the embarrassment of failure further down the road? Two monopolies, Govia and Abellio, are left in the competition to run Britain’s most beleaguered franchise. Following a litany of failures under Govia, highlighted in Chris Gibb’s report two years ago, and a lacklustre response by the Secretary of State, who, frankly, should have brought the franchise under direct operation, the travelling public are being failed.

What discussions has the Minister had with the trade unions, as the hard-working staff face further uncertainty, not least over their jobs and pensions? Will he also confirm that there is no intention to cut pensions to staff through this franchise process? Are the Government going to stall on all franchises until the conclusion of the Williams review, which is undertaking a comprehensive look at why our rail system is floundering? If so, when will this report be published? In the light of revelations this weekend that sensitive confidential information was leaked from Stagecoach into the hands of Abellio during the east midlands process, what changes has the Minister made in his Department to ensure that commercially confidential information is not shared with competitors in this broken process? How are the Government measuring past failure of these rail monopolies? In the light of evidence, will he then rule out their bidding, as he has for other companies involved in other franchises?

With 176 million journeys being made each year, how can these passengers have any confidence that they will not pay the price for failure—something they have had to endure under the current award? They are paying some of the highest fares in exchange for one of the worst services, so it is clear that this franchising fiasco must end. If the Secretary of State will not take back control of our rail, Labour will.

I thank the hon. Lady for her questions. We are negotiating a short direct award to allow the competition to reach its end. This is not the end of franchising, which has been a significant ingredient in improving and turning around rail performance in this country. It has led to our having more services and passengers and at a greater level of safety than at any point in our country’s history. Franchising has been part of that success. This is an issue not of failure but of making sure that we get it correct.

Have I discussed the franchise bid with the trade unions? No, because the bids are assessed by officers of the Department for Transport, who anonymise them. It is important, market-sensitive information. Such information runs through a standard procedure, of which the hon. Lady should be aware; it operates in councils, in the Government and in devolved Assemblies, too. I have of course met the trade unions, and I was able to confirm with them that my aspirations for the rail industry include the careers of those who serve the industry. The Chair of the Transport Committee, the hon. Member for Nottingham South (Lilian Greenwood), asked about the same point in an urgent question just before the Easter recess. I do not want to see any cut to pensions; I want to see those who work on our rail services retire with secure and stable pensions. Nevertheless, we are talking about pensions from a private business, not something that comes from the Government.

The work on the Williams review is under way. I am sure the hon. Lady will have seen some of the evidence papers and heard about the emerging thinking that Mr Williams has discussed in some of the speeches he has made over the past few weeks. We look forward to seeing the output of that review. Franchising has been an ingredient in the turnaround of our rail industry that has been so fantastic for this country. The question now is how we take that to the next stage, which is what the Williams review is all about.

My constituents are as anxious as anyone about the reasons that lie behind this continuing delay, but they are even more anxious that the improvements we have all been promised under the new franchise do actually happen. Will my hon. Friend assure me and my constituents that the improvements, particularly the extra capacity on the high-speed line, will be available when the franchise is eventually awarded?

My right hon. Friend asks about how the bid may finally be judged. I cannot comment on the work in progress, but I can say that an invitation to tender was published in November 2017. It was the result of a significant consultation, to which there were 10,000 or so responses. I am as anxious as my right hon. Friend to get the benefits of that invitation to tender out to the constituents whom he serves so well, and as fast as possible, but I cannot give an answer today on who will win the franchise. That work is carried out separately by officials, away from Ministers, and the information is anonymised because it is so important and market sensitive, but his point will have been heard by all those in the industry.

The south-eastern franchise was originally due to end in 2014. The failure of the west coast franchise delayed that ending until August 2018, and now the direct award to Govia could be further extended. It is hard to understand why, if the Government still believe in competition for rail services, the Department for Transport seems absolutely unable to run a competition for this franchise. Will the Minister clarify how many compliant bids were received for the south-eastern franchise and how many were received for the east midlands franchise that was awarded two weeks ago?

The hon. Lady makes the point about whether franchising is dead; no, it is not, because of course we managed to award a franchise only in the week before Easter recess. As a process, then, franchising is working. Can we get the benefits out to passengers as fast as possible? That is of course what it is all about, but these are complex questions and it is appropriate that we take our time to get it right. On the number of compliant bids, the issue of pensions obviously attracted a lot of attention in respect of the east midlands bid. We have two pension-compliant bids for the south-eastern franchise and look forward to making the announcement as soon as we possibly can.

Will my hon. Friend assure me that this further delay to the award of the franchise will not hold up long-awaited works for Petts Wood and St Mary Cray stations to become fully accessible—something for which residents have been campaigning for many years?

I thank my hon. Friend for that question. I share his enthusiasm for the access-for-all process and the recent announcement of extra funds and where those funds will be targeted by the Under-Secretary of State for Transport, my hon. Friend the Member for Wealden (Ms Ghani). I can tell him that design work on the stations selected will be starting over the summer, with construction as soon as possible thereafter. I know that he is anxious for the benefits to serve his constituents. So am I and so is the Under-Secretary of State, who I know is listening. She has indicated that she would be very happy to meet him to take the matter forward.

Further to his letter of 10 April in which the Under-Secretary of State assured Members that robust scrutiny would be used in this decision-making process, can he please reassure my beleaguered constituents in east Kent that that scrutiny will also apply to the exorbitant fare rises, constant delays and disruptions, arbitrary timetable changes and removal of services?

I can most certainly provide the hon. Lady’s constituents with the assurance that she is seeking. We will obviously be focusing on fares. We want to make sure that the travelling public get a great deal, which is why we have frozen regulated fares in line with inflation for the sixth year in a row. It is also why, in January, we saw the launch of the 16 to 18-year-old railcard, which will come into play later this year. So will there be attention on costs and scrutiny of fares? Of course there will. We will be maintaining that. This policy, which has delivered its sixth year, against Labour’s intentions, will be continued.

Will the Minister please confirm that the City Thameslink service from Maidstone East will still be delivered before the end of the year? It is desperately needed and it has been promised on a multitude of occasions.

My hon. Friend has been a very diligent campaigner on this issue. I know that it matters a lot to her and to her constituency. She has been a real vocal champion on this issue specifically. However, this is also an industry-led process and we are working with it to deliver the benefits as soon as possible. I cannot comment immediately on that matter because it is not part of this franchise but, of course, I will check the information and keep her posted on progress.

If the rail review recommends that suburban services in the London area be transferred to London government, will the Government allow south-eastern suburban services to be transferred in that way to maximise integration of transport services in London?