West Coast Main Line
Good afternoon. The first item of business this afternoon is a statement by Keith Brown on the west coast main line. The minister will take questions at the end of his statement; there should therefore be no interventions or interruptions.
I am grateful for the opportunity to make a statement on yesterday’s decision by the Department for Transport to cancel the award of the intercity west coast franchise. I wanted to provide as much clarity as is possible in the circumstances on the impact on passengers and on the refranchising of rail services in Scotland. My immediate concern is that passengers are not adversely affected by the Department for Transport’s decision.
The department’s handling of the procurement process has been incompetent and shambolic. Most important, it has caused a great deal of confusion and speculation about arrangements for west coast services after the franchise handover date of 9 December.
Neither the Scottish ministers nor officials were made aware of yesterday’s decision in advance of the announcement. I have yet to see the detail of the DFT’s contingency plan and it is still not clear who will be operating train services in December. However, after finally managing to speak to the United Kingdom rail minister, I have his assurance that services will run to timetable, using the same trains and staff, and that tickets and bookings will be valid. DFT ministers said yesterday that our Administrations have a common interest in ensuring that there is no break in the service for passengers after 9 December.
In light of the mishandling of the franchise, I can understand that many people might be reluctant to give too much weight to DFT assurances. Although our powers in regard to rail remain limited, I and my officials will monitor the assurances carefully and offer all necessary assistance to ensure that passengers are not disadvantaged. I hope that that offers some reassurance for passengers, especially as we will be approaching the festive and holiday period at that time.
Let us be clear. What has happened represents a huge failure in public procurement. I want to be clear about the anger and frustration that I feel on behalf of passengers who rely on the west coast main line. The Secretary of State for Transport conceded that there were “completely unacceptable mistakes” in evaluating bids for the west coast franchise. The mistakes were so serious that he has been forced to cancel the current franchising competition. I understand that the flaws were discovered after detailed examination by Department for Transport officials and evidence gathering in preparation for legal proceedings that Virgin Trains brought after the decision to award the franchise to FirstGroup.
The Department for Transport has spoken to the four bidding companies, whose bid costs will be reimbursed. That scandalous waste of public money could have been avoided if the franchise had been awarded properly. A fresh competition will be started as soon as the lessons of the episode are learned.
The secretary of state has announced a review of the handling of the process, which will report at the end of the month, and a review of the DFT’s wider franchising programme, which will be led by Richard Brown, chair of Eurostar, and will report by the end of the year. DFT’s three live franchise competitions have been suspended.
The decision to cancel the award of the franchise has, of course, direct consequences for Scotland, for rail passengers and for the rail industry. The UK Government offered no discussion or advance notice of a decision that directly affects people who travel to and from Scotland on services that are crucial to the economies of our major cities.
I have been asked a number of times whether the DFT’s actions have implications for our rail franchise procurement. Let me be clear. Yesterday’s announcement is focused solely on failings and incompetence in the Department for Transport, not in Transport Scotland.
We are keen to offer our support for the wider review of franchising. The Deputy First Minister will seek to meet the Secretary of State for Transport as soon as possible, and the First Minister has already spoken to the secretary of state. The reviews and the recommendations that are made will provide lessons for us as well as for the DFT on how risk can be better assessed and on bidding and evaluation processes.
I reassure the Parliament that although lessons will be learned, our franchise procurement process is led by an expert team in Transport Scotland, which is free to draw on external expertise as and when required. That can only be right given the scale of taxpayers’ money involved and the importance of passenger rail services to Scotland’s economy and its communities. The franchise is the largest single Government procurement exercise that we conduct. No corners are being cut in that process; no false economies are being made.
On our current timetable, we are allowing at least 20 months to conduct the formal competition and, when the consultation that was launched last November is included, our process will last more than three years in total. In comparison, the DFT originally conducted a consultation in January 2011 in order to let a contract in April 2012, which is less than half the time that we have allowed for our process. It then delayed the process, but it still allowed only seven months from formal invitation to tender to contract award.
We are still awaiting the consultation on the trans-Pennine franchise, including on services to Scotland, despite the fact that that is due to hand over at the same time as the ScotRail franchise, the consultation for which took place last year. That is more than a year behind our timescale. Only last January I wrote to Theresa Villiers, who is no longer at the department, expressing concern over the timescale for the east coast main line franchise, which is also a vital service for Scotland.
As I set out in June, I will announce more details on the specification of our franchises around the turn of the year. Our more realistic timeline allows us to factor in any lessons that are learned as a consequence of the DFT debacle and the recommendations that are made by the independent review commissioned by the DFT.
I am confident of the competence and professionalism of Transport Scotland staff. This Government has an excellent track record on procurement, and recent examples of that are the M74 and the Airdrie to Bathgate rail line. We will, of course, draw on yesterday’s events and the forthcoming reviews to maintain our strong record but, without pre-empting the review, I do not think that it is credible to lay all the blame on civil servants. The new Westminster franchising policy has been changed to a preference for 15-year contracts with no break or revenue review clauses. That policy ignores the difficulty of accurately forecasting revenue over 15 years.
When I announced the details of the next ScotRail contract, I made it clear that the 10-year contract would have an option for a break after five years. That will address one of the difficulties that the DFT is experiencing. We will ensure that the sleeper franchise contains appropriate provisions to address the forecast risk and that the Scottish Government shares in the return on its investment.
I urge the Secretary of State for Transport to take the opportunity of the review to address those wider questions, as it would be a missed opportunity to narrow down the reviews simply to issues of technical process. Rather than another patch and mend, a different model is required.
The current legislation—primarily the Railways Act 1993—envisaged a railway that was specified and funded in the public interest, but which was provided by the private sector. The result is a fragmented and inefficient model. We are doing all that we can in our powers to make that model work as best it can. We are committed to a deep alliance between the operator and Network Rail for the next franchise, and we are proceeding with the franchise process in a timely and competent manner. However, in 2012, the current model is not fit for purpose, and I have repeatedly raised that concern with the UK Government.
Our powers to give Scotland the rail services that it needs are limited by UK legislation. Giving this Parliament competence to have full legislative control for rail would be the simplest and most effective way to ensure that Scottish ministers have the flexibility to consider the full range of options to deliver rail services in Scotland, including public sector models. The UK Government’s decision is further evidence of why Scotland needs the powers of an independent Parliament so that it can take full responsibility for its own rail services.
I thank the minister for an early copy of his statement. This is a fiasco of jaw-dropping proportions and begs the question how much David Cameron knew before he reshuffled most of his transport ministers out of their brief.
The west coast main line is a vital artery that transports passengers into Scotland, but enables people who live in places such as Lockerbie in my constituency to access work and leisure opportunities in Glasgow, too. I hope that the minister will represent all passengers, including those who travel within Scotland, in his discussions with the UK Government.
The minister said that he wrote to Theresa Villiers last January about the east coast main line service. Given the concerns about the franchising of the west coast main line and its importance to Scotland, when did he first try to contact UK ministers about that? Did he just wait for UK ministers to get in touch with him?
Will the minister join UK Labour in supporting a Government takeover of the west coast main line, at least while the contract is being retendered? Does he agree that the debacle strengthens the case for our public rail service to be run on a not-for-profit basis?
The points that Elaine Murray makes about political ramifications at Westminster are important, but what concern me are the interests of passengers in Scotland, which she also mentioned, and the implications for the ScotRail franchise.
Elaine Murray asked what representations we have made. I mentioned the letter to Theresa Villiers. We also wrote to Justine Greening, in May 2012. We asked for additional rail powers, not least because, as we have said previously, the franchising process is extremely expensive and the level of risk involved means that we cannot get the best return for rail passengers. We have made those points.
We were told that we had no say in and no ability to influence the process for the west coast main line, although we were asked for our comments. The comments that we made were based on improving services to Scotland. Within the limited powers that we have, we have done everything that we are allowed to do to influence the process. If we had been more involved in it, we could have offered the benefit of the experience that people at Transport Scotland have from dealing with the ScotRail franchise, which might have helped to avoid the present situation.
I hope that future Westminster Governments that have any control over Scotland—if there are any such Governments—will listen to what we in Scotland say. The fact that the UK Government did not listen to what we said is exemplified by the fact that the first that all of us heard of its decision was on the airwaves yesterday. It cannot be right that the memorandums of understanding that we have with the UK Government—and the so-called respect agenda that we were told that David Cameron would follow—were thrown out of the window at the first chance. We must be kept informed, not because we are important people, but because the people whom we represent have a right to proper services.
I thank the minister for advance sight of his statement and congratulate him on the way in which he has managed to spend much of the past 36 hours stirring up unjustified concerns about the continuity of the west coast rail service.
I invite the minister to restate what he said in his statement—that he has now received full assurances that there will be full continuity of service through and beyond the present hiatus. Further, does not the minister feel a bit guilty about the way in which he has criticised the UK Government for not informing him, in his view, quickly enough about the problems? I contrast that position with the minister’s recent behaviour in managing—quite deliberately—to forget to tell Parliament about the changes to the Edinburgh to Glasgow improvement programme. Instead, he made a press announcement four days after the start of the recess. There is an issue about pots and kettles here.
I turn to the serious process of tendering for such contracts. Is it not a little ironic that the minister should be so critical of the west coast main line process when, only two weeks ago, he announced that there would be a three-year interim contract to deal with the delay in the awarding of new contracts for the Clyde and Hebrides ferry services? Such foot-dragging and political manipulation leave the minister in a very difficult place, which must, at least, be spoiling his view from the moral high ground.
The obvious thing to say is: good try, but it is not going to work. I see that we have an uncommonly—almost uniquely—good turnout of Tory back benchers. I wonder why that can be.
Alex Johnstone says that the concerns about the process are unjustified when it is quite clear that people across the country are extremely concerned about it, not least because £40 million of taxpayers’ money has been thrown down the drain—and that is just the start of it. The suspension of the other processes may give rise to substantial claims against the taxpayer, not the UK Government. There has been a massive squandering of public resources. When there is the slightest hint of what Alex Johnstone believes to have been misuse of resources in this place, he will shout from the rooftops, but he has nothing to say about what the UK Government has just done. People will be appalled by the lack of concern that the Scottish Conservatives have shown for people here.
I do not know how Alex Johnstone has managed to drag ferries into the proceedings. What he calls the interim contract, we call the new contract. Can he be certain that the UK Government will not go to the European Commission and ask for another contract for Virgin Rail on this service? If that happens, will he criticise the UK Government?
It would have been extremely important for the Scottish Conservatives to have said, “This is wrong. Whatever else is going on here, it is wrong that the Scottish Government was not told. It is wrong that the people of Scotland did not have that level of involvement.” It is a real missed opportunity on the part of the Scottish Conservatives that they have not done that.
I share the minister’s anger at this shambles and waste of public money. Is the minister concerned that the UK Government’s incompetence in its handling of the tender could discourage much-needed investment in infrastructure? How will the Scottish Government ensure that that does not affect Scotland?
That is an important point, given that the system we have in relation to rail franchising relies on interest from the market. If we treat the market with the contempt that has been shown by the UK Government, and if we do not put in the resources to run the procurement exercise properly, the market will of course take a look at that. The real worry now is what we do if we are to continue to have, under the current Government, a market-led, franchise-based system for procuring these services. Who would want to get into a contract with a Conservative-Lib Dem coalition when it runs things so shoddily? It is not just me saying that; anyone who was watching the television coverage last night would have heard all sorts of industry experts say it.
Virgin had promised investment in new services and station upgrades at Motherwell in my constituency. Naturally, I am keen to ensure that that takes place whatever the outcome of the current debacle. Will the minister ensure that support for that development is prominent in any representations that he makes?
The key issue in that regard is that the process by which we were to have the stations investment fund, which was the new franchise, is seen to be sound. If the review that has been commissioned by the UK Government comes back in a couple of months’ time—when we will have taken the leap into the franchising process here in Scotland—and suggests fundamental changes to the franchising process, that is where the uncertainty lies. That is crucial.
Notwithstanding that, it is my intention that we will run a proper, sound process that has the time and the resources that are necessary to make it go through without risking challenges to it. If that happens, and we have that level of certainty, the stations investment fund—to which I think that John Pentland was referring—should be secure.
Following on from John Pentland’s question, Virgin had also suggested that if it had secured the franchise, it would have run a service to London that would have called at Cumbernauld station in my constituency. That would have been greatly welcomed by my constituents. Whoever ends up securing the franchise, will the Scottish Government work with them on whether such a service can be operated?
Yes, we will. It is in our interests and the interests of rail passengers to do so. As I have said before, during the process we made a number of representations to the DFT about improved services in Scotland. We do not even know whether those representations were listened to, because we do not get that kind of response under the current process. However, it is my intention to work with whoever operates the service, and indeed with the UK Government, because there is a great deal that it could learn from us. Unfortunately, we are likely to get more co-operation from the UK Government than we are from the Scottish Conservatives.
I thank the minister for sight of the statement. The minister spoke repeatedly about the regrettable waste of taxpayers’ money resulting from this episode. He is absolutely right. However, I remind him that last year it was revealed that his officials wasted millions of pounds over a tendering process for the relatively small Borders rail project. With that in mind, what procedures has he ensured are in place to guarantee a smooth and cost-effective bidding process for the vitally important ScotRail franchise in 2014?
Having heard from Tweedledum, we now hear from Tweedledee. This is a real chance for the coalition parties in this Parliament to say, as Patrick McLoughlin has said, “There has been a major mistake here. We are sorry.” Instead, ferry contracts and everything else are being dragged in as they try to distract people from what has happened.
We will work to ensure that the ScotRail franchise proceeds in the way that it should and that there is no lack of certainty for the bidders, because they need that level of certainty that the process that they are entering into has some integrity to it. However, it is not all in our hands. First, we have to run a franchise operation despite the fact that we have major misgivings about that process. Also, the review by the UK Government, which I have mentioned, could fundamentally affect that. If Jim Hume is able to put any pressure on the UK Government and his colleagues in that Government who are responsible for this situation, that would be helpful in ensuring that we get the right services for Scotland.
Has the minister been in touch with FirstGroup, given that it is a major transport company headquartered in Aberdeen that employs thousands of people in Scotland and the rest of the UK and has taken a severe blow on the stock exchange as a result of UK Government incompetence?
Of course, the Scottish Government, not least because we have not been part of the process, cannot talk about preferred bidders. Also, because we are about to have a new process for that contract, we cannot talk about the particular improvements that might be possible as a result of that. However, yes, I spoke both to Virgin and to FirstGroup not just immediately after the award of the contract, because there are implications for both, but because we had a good working relationship with Virgin previously and we have a working relationship with FirstGroup.
As the member suggests, it is an absolute scandal that because of this issue a prominent Scottish company lost a fifth of its stock market value in a few hours yesterday. It is right that we continue to work with FirstGroup, not least because it currently runs services here in Scotland.
The minister said in his statement that we require a different model going forward. Can he give us any indication whether it is likely that in the interim period a non-profit Government-controlled company will run the railway? Will he be seeking powers for Scotland so that we could run railways with a non-profit method in future?
Richard Baker learned from my lips yesterday that we can accept non-profit bids under the current process, although he had denied that in an interview beforehand. I can confirm to John Mason that it is possible for non-profit organisations to come forward. They have to be able to demonstrate a level of expertise and experience of running rail services and there are people in Scotland who can do that. I cannot go out and invite them to come forward, but they have the ability to do that.
As to what the UK Government will do, I really do not know as we do not have any more information. As things stand, I have received no communication about the reviews other than a letter from the UK minister. I tried to get hold of him all yesterday morning and when he eventually phoned back—I was told that he was phoning in the next three minutes and then in the next five minutes—he said, “I want to talk to you because”; I thought that that was bizarre, given that I had been trying to talk to him. I got no more clarity on the process of the reviews other than the fact that they will be decided fairly soon, so we still do not know what the scope of those reviews will be.
To return to John Mason’s point, of course we made representations about the nature of franchising and the ability to open that up. We do not have the power to do that, but the UK Government does—although there are still European criteria requiring the separation of track and train, which is another constraint that we have to observe. However, not-for-profit organisations are perfectly free just now to bid for the ScotRail franchise.
In the space of a week, the Government has gone from defending the process to suspending officials over a blunder that has cost £40 million. Does the Scottish Government agree that the only way to rebuild confidence in the Department for Transport and its tendering process is for there now to be complete and total transparency? Should the UK Government disclose all the relevant documentation, will the transport minister here in Scotland do likewise?
We do not have any documentation relating to this particular bid because we have not been involved in it, but I think that the member’s general point about the need for transparency on how the UK Government has ended up in this situation is a good one. Given that the first of the two reviews that have been called for will look at this particular process, we will wait and see what information is put in the public domain.
The member may be aware, as I am, that apparently two of the main problems were the fact that passenger numbers were not properly calculated and, incredibly, that inflation was not factored into the figures. Those seem to me to be basic requirements of a tendering process—especially if as many people as we are told were involved were involved, including not just civil servants but consultants, as well as a great deal of scrutiny by a great number of ministers. I think that it is right that we see as much transparency as possible, not least because we are obliged to follow more or less the same process that they followed and we want to know what mistakes were made so that we can learn from them.
It is interesting that more humility on the subject seems to have been shown by Patrick McLoughlin MP than by some of his Tory colleagues in this Parliament. Nevertheless, can the minister seek assurances from the United Kingdom Government that whatever inquiry is set up will be robust and independent, given that it will be led by Downing Street and rail industry insiders?
That is a real concern. As I mentioned, the Deputy First Minister will be meeting the secretary of state and I imagine that one of the items on the agenda will be to ensure that the review processes that have been ordered are robust. We have to do that because there is a real job to rebuild the confidence of the industry, as well as that of the public, that these processes can be conducted properly. That is a very important point. As I said, the First Minister has already spoken to the secretary of state and the Deputy First Minister will have an early meeting with the secretary of state, at which I am sure that point will be raised.
I thank the minister for the advance copy of his statement and I share his dismay at the complacency that is being shown by members on the Conservative and Liberal Democrat benches over this issue. The fiasco of the franchise arrangement is indication—if we needed more indication—that rail lines on the east and west coast should remain in the public sector. With regard to the last part of his statement, will the minister confirm—[Interruption]. Members should take the matter seriously. Will the minister confirm whether the Scottish Government intends to remove the legal barrier to public sector train operating companies, if it acquires the powers for this Parliament to do so?
Patrick Harvie is absolutely right on his first point. It is a very serious issue that involves a huge amount of money, and yet all we have from the Opposition parties are attempts at distraction.
Within an independent Scotland we would acquire powers that would open up a range of different opportunities to all the parties, who could put them to the electorate.
The final question will come from Mark Griffin, who can take his time. The minister can take his time with the answer.
Thank you, Presiding Officer. Unfortunately for your timetable, my question is relatively brief. I will keep it so for the benefit of members.
My questions follow on from John Mason’s question. What discussions has the minister had with his officials in Transport Scotland about the possibility of a not-for-profit model of delivery of rail services? Does he have any plans to promote that type of service in Scotland?
There have been substantial discussions on that in the run-up to the process. It was also canvassed in the consultation process that we carried out well in advance of the procurement exercise that we are about to enter into. The option was canvassed and I spoke about it with officers and others. There were also discussions with the trade unions, who were very interested in that particular aspect.
We have made it clear that legislation allows us to accept a bid from a not-for-profit body, although that body has to be able to demonstrate experience in running a rail services. Not many in Scotland can do that, but members can probably think of one or two. If a body can do that, there is nothing to prevent it from making a bid—there is no barrier. However, I cannot promote a particular bid. The Government cannot do that and it has to be seen to be impartial, but the possibility is there.
I will help out the Presiding Officer by making a final comment about the point at which we were told about this. I see in today’s Daily Mail—a fine newspaper indeed—that a Downing Street insider spoke about why the announcement was made at one minute past midnight. They said:
“It was unusual”—
I think it was—
“but the Secretary of State decided to act as soon as he was made aware of the facts. It had to be done outside of financial markets. Calls had to be made and key people alerted.”
I do not know who the key people were, other than perhaps Richard Branson and one or two others, but I think that the people of Scotland should have been among them. That ready contempt for the interests of the people of Scotland is one of the most disturbing aspects of this episode.
John Scott, to the rescue.
From the discussions so far, are there any immediate lessons to be learned for the Scottish refranchising?
I know this only from reading the media, of course, but two of the obvious points—I have mentioned them already—are passenger numbers and the calculation of inflation. Those are two things that seem to have caused some trouble and which have made it into the public domain.
As the member can imagine, I have had a number of discussions with Transport Scotland officials and, as I mentioned earlier, with the minister of state. There are some things that industry insiders would say are of concern. The DFT is considering a vast number of franchises. It has changed the franchising process and there are question marks over whether sufficient resource went into managing that process in the DFT—that comes from industry insiders.
Another point concerns the length of time. We had our rail consultation last year, well in advance of the franchising process. We have given ourselves a further 20 months. We are very close to starting that process, although obviously we have to take stock of what has just happened. Of course, we will take on board for our franchise any lessons that can be learned from what has happened in this case.
Does the minister recall the fact that, in our TV interview yesterday, it was I who reminded him that it was completely within his powers to pursue a not-for-profit model for the railways in Scotland? He cannot promote any one bid for not-for-profit delivery, but he can promote the concept. I ask him actively to promote the concept of a not-for-profit model in Scotland, as I encouraged him to do only yesterday. He seems to have forgotten that.
The camera does not lie and everyone can see what happened yesterday. Richard Baker was blissfully unaware of the fundamentals of rail franchising, which is quite worrying. I was happy to set him straight then and I am happy to say now that, of course, we welcome bids if they come forward from not-for-profit organisations, but we cannot promote individual bids. He should also know that a fundamental of public procurement when the exercise is competitive is that we cannot favour one bid over another. We would welcome not-for-profit bids as we would any others.