Rail
Good afternoon. The first item of business is a statement by Keith Brown on rail. As the minister will take questions at the end of his statement, there should be no interventions or interruptions.
I am grateful for the opportunity to make a further statement on the future of rail franchising in Scotland.
Members might recall my statement in October following the west coast mainline franchise debacle. In that statement, I mentioned that the Secretary of State for Transport had initiated both the Laidlaw inquiry to look into the course of events at the Department for Transport that led to technical flaws and ultimately the termination of the process, and the Brown review to look in detail at the implications for the remainder of the rail franchising programme and, in particular, whether changes might be needed to the assessment of risk and to the bidding and evaluation processes.
The Laidlaw inquiry reported today. I received a call this morning from Simon Burns MP, Under-Secretary of State for Transport, and was provided with a copy of the report at 11.40 am. The inquiry’s findings make it clear that there was inadequate planning and preparation, a complex organisational structure and a weak governance and quality assurance framework. I expect that in light of the report the DFT will want to revise its internal structure and processes. We in Scotland are clearly in a better place, but we are not complacent and are reviewing the findings to glean where we can make improvements.
The Brown review is expected to report at the end of the year and I await its conclusions with interest. Should its findings give us cause to change our procedures, changes will be made. It is obviously imperative that we absorb any lessons that are learned.
Speaking of lessons learned, I feel a sense of frustration in having to advise Parliament that, yet again, the United Kingdom Government offered no discussion about or notice of its proposals regarding the west coast mainline franchise. That is a ridiculous state of affairs when we are talking about a key service that directly affects millions of travellers to and from Scotland.
I understand that the deal struck between the UK Government and Virgin Rail Group is for a new franchise agreement to run for up to 23 months from 9 December 2012—this coming Sunday—to 9 November 2014, after which the west coast main line will be let under a longer-term franchise. It is reassuring that the previously planned timetable improvements from 10 December, which will at long last deliver regular hourly services between Glasgow and London, are to proceed. However, I await details from the UK Government about any benefits that it has managed to secure for Scotland as a result of the new agreement.
In this statement, I intend to set out three things: first, the procurement programme for Scotland’s rail franchises; secondly, the date on which the existing franchise will terminate; and lastly, some proposed benefits of the future franchise that I will now bring forward to the current franchise.
As members will be aware, there will be two rail franchises: a 10-year ScotRail franchise with the option of a break after five years; and a separate sleeper franchise for up to 15 years. Although each future franchise is an exciting proposition, I, like many others, recognise that they are distinctly different; that they serve different requirements; that they deliver different outcomes; and that they will be of interest to different bidders. Accordingly, they will need to be evaluated against criteria that are specific to each.
For those reasons, I have decided to run not a combined procurement exercise but two quite separate exercises to allow me to secure the best outcomes for each franchise. As well as running two exercises, I want to ensure that we do not overstretch either ourselves or bidders and I therefore intend to phase the procurement of the franchises to allow a smoothing of the peaks of the procurement tasks. That might be another lesson learned from the DFT situation. As a consequence, I intend to commence the procurement programme for the sleeper franchise in the spring of 2013 to allow sufficient time for any outcomes of the Brown review to be incorporated, if necessary. The ScotRail procurement will follow in the summer.
Although there is real benefit in the focus of having a separate sleeper franchise, the proof of the proposition will be seen in the quality of the bids received. Prudently, therefore, the timing of our procurement schedule would allow the sleeper franchise to be reincorporated into the ScotRail franchise if we were not satisfied with the quality of bids received. I should say that we have already received a very high level of interest.
I hope that members will note that I am seeking to manage risks through a measured, careful approach. That is particularly important when we note that the sleeper franchise is likely to be a contract in excess of £200 million. That is a sizeable sum, but it is dwarfed by a 10-year ScotRail franchise that may be in excess of £2.5 billion. That is the biggest procurement project that the Scottish Government will enter into. Such sums necessitate a cautious, prudent approach. We will not be rushed; we will not be hasty. There will be no risky short cuts to franchising in Scotland: our approach must be measured.
On 4 October I advised members that I would not countenance compromising the procurement programme. I was clear that it would take at least 20 months to deliver the programme. Inevitably, starting the procurement exercise in the summer of 2013 for the refranchising of ScotRail has implications for the length of the current franchise. However, the current franchise contract gives me, as minister, discretion to decide the end date of the current franchise within the range of 9 November 2014 to 30 May 2015. ?Accordingly, I have been considering what the best contract end date would be for Scotland’s rail passengers and for the rail staff affected by the change. ?I have looked for a date that will strike a sensible balance; that allows us to maintain our prudent procurement programme while providing a suitable period to take full account of emerging views from the Brown review; and that allows us to conduct a handover at a time that will not cause undue disturbance to passengers or staff. I have therefore decided that it will be sensible to plan for the franchise handover at the end of the 2014-15 financial year on 31 March 2015.
I turn briefly to service specifications. I will be in a position to share more details on the precise specification of the future franchises next year. However, I am keen to ensure that service benefits are realised at an early opportunity. I am pleased to announce a number of benefits; I had intended to deliver them in the next franchise, but they will now commence in the current franchise. That underlines this Government’s commitment to a passenger-focused railway.
I want to ensure that the rail service is an attractive, affordable option. I am pleased to advise that I have successfully negotiated an early fares cap with First ScotRail. I confirm that peak fares will be capped in January 2014 and 2015 to the retail prices index, which will deliver benefits two years earlier at no additional cost to the franchise subsidy.
I want to encourage greater off-peak rail use. I want attractive fares that will encourage commuters, when they can, to switch to off-peak services and better spread the demands on our rail services. I want greater use of the train, rather than the car, for leisure travel. Successful negotiations with First ScotRail have resulted in off-peak fares being frozen after 2013. Provided that the RPI remains below 3.5 per cent each year for the remainder of the franchise, off-peak fares will not increase by a single penny after 2013. Those benefits will be delivered at no extra cost to the subsidy.
I realise that for many travellers improved services are as important as lower fares. In 2014, there will be, for example, more frequent services between Glasgow and Ayr, improved services to Oban, additional Sunday services between Aberdeen and the central belt, and improved commuter services serving Aberdeen.
I am also in a position to advise today that advance works for Stirling-Alloa-Dunblane electrification have been approved. We are working with Network Rail to prioritise delivery of that project within its 2014 to 2019 programme.
I have set out our measured approach to procurement, outlined the process timetable, confirmed the date of the handover from the existing franchise, and provided details of some early benefits. I hope that Parliament notes that although we are ambitious for the future of our rail service, we are cautious in the management of its realisation. Good management is what taxpayers, passengers and those who operate our railways expect of a responsible Government. That is what we intend to deliver.
The minister will now take questions on his statement. I intend to allow about 20 minutes for questions.
First, I thank the minister for the opportunity to have early sight of his statement. However, it is disappointing that, once again, members of the Scottish Parliament have learned of the Government’s intentions for the rail service in Scotland through the columns of a national newspaper and tweets rather than in the chamber.
The 10-year ScotRail franchise will have a break point at five years. Will the minister commit—this time—to genuine consultation with stakeholders on whether the contract should be broken at that point?
I note the announcement of the approval of the advanced works for the Stirling-Alloa-Dunblane electrification, in which I am sure the minister has a keen interest. Does that signify a reinstatement of a part of the Edinburgh Glasgow improvement programme, which was dropped from the programme in his July statement? If so, are other EGIP reinstatements under consideration? Many of us would hope that they are.
Finally, in drawing up the franchise, will the minister and Transport Scotland ensure that there is sufficient flexibility to allow additional services and routes to be included, such as—and here I am being parochial—an early-morning service between Carlisle and Edinburgh, via Lockerbie?
First, I cannot be held responsible for what appears in the columns of newspapers. I made the statement first of all to Parliament before making it to anyone else. I think that that is the right way to go about things.
The terms of the five-year break will be the subject of discussions with the potential bidders. However, we have made that decision already; we have said that we will do that. I concede that there is some information to go with that about exactly what will happen and what the context will be in relation to, for example, the rights of partners on either side to break the agreement. That will become more evident when we go into the franchise detail in the coming months. We do not intend to consult specifically on that matter, other than in the discussions that we will have with potential bidders.
We have never dropped the Stirling-Alloa-Dunblane works or other parts of EGIP. We have always said that those will continue in future phases. What has been announced today concerns the advance works that are required, and which are on-going in any event, such as vegetation clearance and—not that I want to be parochial—two bridge heightenings that are taking place in my area. All I am saying is that Network Rail, in discussion with the Scottish Government, has agreed that all those advance works will proceed. Some parts of EGIP will proceed in the first phase, and some will proceed subsequently.
Elaine Murray mentioned additional services. I take on board her points. We will make more details available once we get into the greater specification of the franchises. The issue of additional services in particular parts of Scotland can be covered at that stage.
I thank the minister for advance sight of his statement and welcome the fact that, regardless of what might be contained in it, the statement goes a long way towards ending many of the uncertainties that we had after the previous statement and the circumstances that surrounded it.
I welcome much of what is proposed. The news that there will be an extension of the west coast rail franchise should also be welcome. However, the criticism that the Government has chosen to level at its counterpart in the south should be taken with a pinch of salt, as this Government wades towards the inevitable deep water of the Clyde and Hebridean ferry services issue. We will see what develops.
I welcome the scale of improvements but, like Dr Murray, regret that many of the cuts that have been announced to EGIP will result in a failure to deliver the service improvement between Edinburgh and Glasgow that would have been possible under the next franchise. Instead we have a promise of jam tomorrow.
Nevertheless, I ask the minister to say quite clearly that the statement and his ambitions for the next franchise vindicate the current structure of the rail industry as it is organised in the United Kingdom and in Scotland, and invite him to give confidence to future bidders by giving a genuine commitment to the structure of the industry in the long term.
Alex Johnstone could really have picked a better day to ask for a pronouncement that the franchising system has been vindicated. I do not know whether Mr Johnstone saw any of the debate at Westminster earlier, but the criticisms that have been levelled at the UK Government, the DFT and the franchising process itself have never been more pronounced. It is perhaps not the day to say that the process has been vindicated.
Alex Johnstone might be aware that I, the cabinet secretary and, previously, Alex Neil have written to UK ministers to say that we believe that the franchising process is one of the most expensive and drawn-out ways of procuring rail services. We have asked for greater discretion to decide our own way forward with regard to how we procure rail services, but we have been refused that discretion. That can come only through constitutional change or a change of mind on the part of the UK Government; that is nowhere in prospect, given that the UK Government has made clear that it wants to try to mend and continue with the franchising process.
Mr Johnstone’s first point was about uncertainties. It is worth pointing out that the uncertainties are not all gone. We do not know what the Brown review will come up with. This morning, I had a very frustrating phone call with the under-secretary of state in which I said that we are trying to proceed with the franchise process at the same time as the UK Government is reviewing the whole basis of franchising. The fact that it is doing that without even giving us the courtesy of a call to tell us what was in the report makes the situation very difficult. However, we have taken on board everything that has been evidenced so far in the Laidlaw inquiry and everything that we know about the problems at the DFT to ensure that we meet any challenges that arise.
In relation to the Clyde and Hebrides contract, there may well be deep water and we do not expect plain sailing. Nevertheless, we are confident that we can negotiate those waters carefully. We have done that so far in relation to the Clyde and Hebrides services and we will continue to do so.
Alex Johnstone’s final point was on the Edinburgh to Glasgow line. The improvements that are expected are a different set of propositions from the amount of money that we are spending on the line. There seems to be a great focus within both Opposition parties on the fact that we should spend more on it. We have said that 80 per cent of what we propose can be delivered for that price, with the rest of it following either in phase 1, or even quicker if that is thought possible in our discussions with Network Rail.
It is perhaps best to focus on the massive improvements and the massive investment of £650 million that we will put into improving services not just between Edinburgh and Glasgow, but in associated areas. I think that we have a pretty good track record to build on.
A number of members want to ask the minister a question. I urge members to keep their questions brief and encourage the minister to keep the answers brief, too.
What gives the minister greater confidence that we are in a safer position than the Department for Transport?
I will be as brief as I can, but there are a number of points to make. We are not pursuing the high-risk long franchise with a complex gross domestic product adjustment that was at the centre of some of the problems that the DFT encountered. We have announced a 10-year franchise with the break option that I mentioned, which provides the opportunity to de-risk the franchise for ourselves and for the parties that bid for it. Crucially, we are allowing 28 months for the franchise process. We have also set up a dedicated commercial unit—something that did not happen down south—and ministers are fully engaged in the key policy and programme decisions. Those things give us more reassurance about our process than we had about what happened down south.
Does the minister agree that the extension to the current franchise allows more time for us to consider different options for running the next franchise, including a not-for-profit model? Will he agree to meet trade unions and other parties that are keen to promote such a model for the future?
We are willing to engage with the trade unions and have done so regularly. I met them this week. As I have said before, within the current constraints that Westminster lays down for franchising, it is possible for a not-for-profit option to come forward. We cannot create that ourselves; other people must bring that forward. However, we will engage with the trade unions and others on such issues.
Will there be an option in the next franchise to allow for improved connection between rail and bus transport? We do not want a monopoly, but we could do with some improvements.
As I have said before, a vital part of the next franchise process will be an obligation on bidders to demonstrate links between, for example, bus and rail. Initiatives such as plusbus, rail and sail and smart, integrated ticketing will be central to the next franchise. Some bidders may provide bus services as well as rail services, but some may not. That is why there is an obligation on all those who bid to come forward with ways to properly integrate the different transport modes.
The minister has stated that advance works for the electrification of the Stirling-Alloa-Dunblane line have been approved. Will the minister outline when the electrification work is due to go ahead? That is a vital component of a possible direct Stirling to London service run by Virgin that would potentially start in 2016 and would call at Cumbernauld station, benefiting my constituents massively.
Once again, we are responding to a very late announcement, which in this case concerns possible direct services to Stirling. Nothing could have been done about it in advance of 2014 in any event. The advance works for the electrification of the Stirling-Alloa-Dunblane line are continuing and we have said that the next phase will be delivered in whole between 2014 and 2019. We will keep an eye on any opportunities that arise—such as the one that the member has mentioned, as described in the press today—for direct services to Stirling. The advance work is going on anyway and no time is being lost in relation to that. We will consider the Virgin announcement. The electrification was, in any event, due to be delivered between 2014 and 2019.
Will the specification for services to the Highlands in the next rail franchise include better provision for luggage and cycles to cater for holidaymakers and better provision for disabled passengers? Will the general comfort of passengers and the provision of adequate toilet facilities be given more consideration, given that we are talking about long journeys of several hours and that the current rolling stock is inadequate in that respect?
I have a great deal of sympathy with the points that Dave Thompson makes. Bidders for the next franchise will be asked to demonstrate how they will improve the comfort and the suitability of longer-distance trains over the life of the franchise.
I thank the minister for early sight of his statement. I agree with his point about the importance of the discussions that should have taken place between his Government and the UK Government prior to the statement that was made in the House of Commons earlier.
Does the minister accept that the Scottish Government consulted on ending the Highland sleeper service to London 12 months ago, following which the UK Government offered him and his colleagues £50 million to replace the Caledonian sleeper fleet, on the basis that funding would be provided jointly by Holyrood and Westminster? Does today’s statement mean that that welcome investment has now been agreed, to the great benefit of overnight passengers between London, Inverness, Fort William and Aberdeen?
I can confirm that the provision of £100 million of funding—£50 million from the UK Government and £50 million from the Scottish Government—for the sleeper services has been agreed; that was confirmed some time ago. The initial offer of £50 million included a condition that it was to be spent within a period of five or six months, which was never really credible in the context of the replacement of rolling stock. We have an agreement with the Treasury that that money can be spent over a period of time.
In the “Rail 2014” consultation, we did not consult specifically on ending the sleeper service. We always said that we saw a real opportunity to increase patronage levels on it. Our work has been about expanding rail services, which we are demonstrating through today’s announcement.
What emissions reduction targets are to be included in the new franchise agreement? What scrutiny measures will be put in place to ensure that the targets are met?
As the member will be aware, ScotRail has a number of initiatives in that regard, which include the provision of driver training that seeks to improve emissions levels. For example, since the start of the current franchise, ScotRail has been required to operate a driver simulator facility, and an eco driving module has subsequently been implemented. All drivers are assessed on an annual basis.
It is difficult to isolate the scheme’s benefits, because it is coupled with other interventions such as coasting boards, but fuel savings of more than 2.5 per cent—the target that ScotRail set—have been identified. The new franchise will include a requirement to monitor and target carbon reduction, which will contribute to meeting the requirements of the Climate Change (Scotland) Act 2009.
In July this year, I wrote to the minister to ask him to take note of the fact that it is cheaper to buy a single from Dundee to Perth and another single from Perth to Glasgow than it is to buy a direct ticket from Dundee to Glasgow. In that letter, I asked him to extend the regulated fares zone to include Dundee. In August, the Cabinet Secretary for Infrastructure and Capital Investment—
Can we just have a question, Ms Marra?
I was told that officials would be asked to look at ways of addressing that situation under the terms of the existing franchise. What progress have the minister’s officials made in finding a solution under the existing franchise? What are his plans for Dundee fares under the forthcoming franchise?
I reiterate that the ability to deal with a number of anomalies in the fare structure will be much greater in the new franchise. At the moment, to address anomalies, we have to buy out the relevant part of the existing franchise, which was signed up to in 2004. That is more expensive and complicated than the approach that we intend to take. We want to remove all the anomalies in the new franchise, but work is under way to see what we can do during the current franchise with the arrangements and obligations that we inherited from previous Administrations.
What were the minister’s reasons for selecting the service improvements that he set out? Can he confirm that any new franchise arrangements will not preclude new services being put in place to stations such as Croy, Greenfaulds and Cumbernauld in my constituency, if they are identified as being a possibility?
The new franchise will not preclude such improvements, as I mentioned in response to Elaine Murray. In the next few months, we will provide greater specification of what we expect to see in the franchise. The Brown review that has been announced at Westminster might propose greater separation of the specification and the evaluation of franchises, or even an organisational split. We must be aware that things could change as a result of that review, but there is no reason why we cannot look at improving services.
As the member knows, we have announced as part of the new franchise a £30 million fund for new or improved stations. The prospect for growing the railway and increasing patronage is substantial.
Does the minister share my view that increasing the speed of rail services is the best way of getting drivers out of cars and on to trains and that the necessary capacity improvements on the Highland main line can best be achieved by providing more strategically located dynamic loops, to allow trains to pass each other at speed rather than wait in short loops? Is he satisfied with the fact that both lines that connect Inverness with the north-east and the south are still largely single track?
As Dave Stewart knows, it is true to say that we have inherited in the rail network—and the road network—decades of underinvestment in transport infrastructure. We are trying to remedy that as best we can by improving journey times and improving the infrastructure. We are doing that at the same time as providing a new railway service to the Borders and many of the improvements that I have mentioned, such as EGIP and—potentially—a high-speed rail line between Edinburgh and Glasgow.
Doing everything at once is not possible, but we are well aware of the pressing need to do more on the Highland line. I have already responded to some of the points that the member has raised. We intend to improve journey times to the Highlands. Of course, more work on major infrastructure will require more funding, which can be committed only when it becomes available.
I welcome the much-improved service between Ayr and Glasgow under the new timetable, but the minister is aware of the reduction in service between Ayr and Paisley under the new timetable, which adversely affects my constituents who work for and study at the University of the West of Scotland, for example. The minister mentioned in his statement improved services between Ayr and Glasgow in 2014. Will the problem in and around Paisley be addressed then, if it cannot be resolved before then?
I do not recognise the service reduction to which John Scott refers. The changes that we are making to Glasgow to Ayr services are providing a huge number of new seats and new services. What has been announced today, as part of the discussions that we have had with ScotRail about the franchise’s timing, is a further increase—two further services. I am happy to write to the member with all the details of the services as they will stand after the agreement takes effect.