MP attacks 'Dick Turpin' rail operators
The House of Commons has heard that taxpayers have been 'held to ransom' by 'Dick Turpin' rail operators who have surrendered their franchises unexpectedly. The accusation came from Labour MP Rosie Cooper at the start of a Westminster Hall debate on the award of the Intercity West Coast franchise to FirstGroup.
The debate was essentially about the ePetition which calls for the West Coast franchise decision to be reconsidered. It has now attracted just over 173,000 signatures.
The Transport Committee has already questioned representatives from FirstGroup and Virgin Trains, as well as the new transport secretary Patrick McLoughlin and the DfT permanent secretary Philip Rutnam. The Committee had questioned the contentious issue of how likely the franchise was to fail, and how large the financial buffer or 'subordinated loan' provided by the franchise holder should be. Virgin's would have been £40 million, as against roughly £200 million from FirstGroup, although Virgin has claimed that First's loan should have been £600 million.
The debate's sponsor Rosie Cooper, who represents West Lancashire, wanted to know what negotiations had taken place with the DfT about the amount of risk, and described £200 million as 'very small'. She maintained that 'a number' of train operators had 'handed the keys back', 'such as the East Coast Main Line'.
Two operators have surrendered their franchises early on East Coast in recent years – GNER and National Express. Before that, the only unscheduled halts had affected the Connex South Central and Connex South Eastern contracts, which were terminated by the Strategic Rail Authority in 2001 and 2003, plus the unsuccessful bid by Virgin to continue with its CrossCountry franchise in 2007 after a period of control by the Strategic Rail Authority in connection with the delayed West Coast Main Line modernisation project.
The current First Great Western franchise is also ending three years early in 2013, but in this case the franchise holder decided not to continue with an optional contract extension.
Ms Cooper saw at least some of these abandonments as setting an ominous precedent. She said: "I believe that Members want to be assured that that will not happen again and that taxpayers have an assurance that they will not be held to ransom by Dick Turpin train operators asking them to stand and deliver, having secured the contract on a bogus premise, taking their profits and scarpering when it is time to deliver the promised high return."
MP Daniel Kawczynski said: "I hope that the hon. Lady is not referring to any train operators as Dick Turpin-type figures," to which Ms Cooper responded: "Oh, I think there are a lot of Dick Turpin-type figures about. I would very much like to hear from the Minister on this precise point: has the Department applied its own rules or not? Given the whole handling of the process, a judicial review has been applied for, which has left us in a position where re-nationalising the line is being considered."
Various MPs then spoke vigorously in support of either bid, but several repeatedly questioned the Department for Transport's calculations of risk.
Towards the end of the three-hour debate, recently-appointed transport minister Stephen Hammond replied on behalf of the Government. He warned his audience that he could only go so far in answering the points which had been raised, or it "would probably mean I had the shortest ministerial career in history, and I do not propose to do that this afternoon."
He added: "I do not need to be reminded—I am sure that hon. Members do not either—that in cases where there is a legal challenge, it is difficult to answer all the questions that may be asked. As I said earlier, if I appear reticent, it is not any wish not to be transparent, but simply that when matters are subject to the judicial process, it is impossible to make broader comment."
In answer to the concerns about risk, he said: "In designing the franchise, some … comments and recommendations, particularly the Public Accounts Committee’s recommendations following the failure of the East Coast Main Line, have been taken into account. We therefore required First West Coast Ltd to provide a third party-backed guarantee, the largest guarantee ever required.
"The Government are confident that the Department is putting in place the right contingencies in the time scale, should the process not be completed. We expect the legal issues to be resolved so that contingency plans will not be necessary."
"The Department is confident that we have taken the right decision in the interests of taxpayers and passengers. We expect to sign the contract soon, but we intend to defend the judicial process robustly."
The next major development is expected to be the announcement of the date for a preliminary High Court hearing of Virgin's challenge of the DfT's decision.