The next item of business is a statement by Keith Brown on the future of Scotland’s railways. The minister will take questions at the end of his statement. There should therefore be no interventions or interruptions.
14:39
I am grateful to the Parliament for the opportunity to make a statement on the future of the ScotRail franchise.
This morning, I advised the Parliament that the procurement process for the ScotRail franchise had been completed on time and to plan. The Scottish Government believes that good public transport improves the lives of the people and the economy of Scotland. Following extensive consultation, Scotland’s railway has attracted a world-leading contract to deliver for rail staff and passengers.
The competition has been evaluated rigorously on the basis of the most advantageous balance of quality and price for passengers, staff and taxpayers, and the Scottish Government intends to award the contract to Abellio ScotRail Ltd.
The new franchise contract confirms the Scottish Government’s commitment to transform Scotland’s rail service. The new Abellio Group United Kingdom headquarters will add 50 new jobs to the 150 Abellio ScotRail HQ jobs secured in Glasgow. The franchise will commence on 1 April 2015 and will deliver investment in the service—investment for the benefit of passengers, staff and the taxpayer—for the next 10 years. The improvements that the contract secures will be felt right across the network for the benefit of all of Scotland.
Before I go into detail, I wish to remind members of the context of railway franchising. As members will recall from my statement earlier this year on the award of the Caledonian sleeper franchise, franchising is a requirement under the Railways Act 1993, and it precludes any UK public sector organisation bidding to operate a railway service. As I have stated publicly on many occasions, that is an unfair restriction that ought to be changed so that private and public sector bidders can compete equally. I have written to three Secretaries of State for Transport to request a change in law and each request has been refused.
Over 13 years, the Labour Administration chose not to widen access to rail franchising to UK public sector organisations, despite having ample opportunity to do so—the Transport Act 2000 and the Railways Act 2005 are silent on the issue. In fact, the Labour Administration supported franchising and its restrictions. In 2009, the then Secretary of State for Transport, Lord Adonis, reassured the House of Commons Transport Committee that
“The evidence so far is that the franchising system has continued to prove its worth.”
I am left to deduce from its legislative silence and its vocal support for franchising that the Labour Administration was clearly happy to leave us operating these patently unfair procedures.
This week, we have started laying the tracks of the Borders railway, but the tracks of the franchising process were laid by Tory and Labour Governments at Westminster.
Earlier this week, I was asked to cancel the franchising process. Doing so might have left us liable for bid costs in excess of £30 million from our five bidders. Members should remember that it cost the Department for Transport more than £50 million for the failure of the west coast franchise, about which Ed Miliband said:
“It is a disgrace that it is going to cost £40m and perhaps more of taxpayers’ money because they have bungled this franchise.”
Nobody in the chamber can guarantee what new powers we will get and on what date, but we know that a delay in the process would be for a number of years. It would be costly and a bad deal for the travelling public, and I am not willing to put at risk the expectations of our passengers or the interests of the taxpayer by playing fast and loose with rail franchising.
Despite having to adhere to unfair franchising rules, we have always stated that we would do so competently. Accordingly, we set out a prudent programme for our franchise procurements, with a process managed by an expert team within Transport Scotland. We delivered the Caledonian sleeper franchise on schedule and, today, applying the same competent, prudent approach that has become the hallmark of this Government, we have delivered yet another successful outcome.
Following a pre-qualification process, we attracted five high-quality bids. The bidders, each of which has international interests, demonstrate the global appeal of Scotland. Their participation demonstrates the confidence that they have in Scotland as a place to conduct business. As members know, ministers play no part in the evaluation of bids or in the selection of the winning bidder—those matters are governed by the process that is administered by Transport Scotland officials—but I am advised that each of the bids was of high quality and, after a rigorous evaluation exercise, Abellio came out on top.
At this point, I would like to thank Arriva, FirstGroup, MTR and National Express for their participation and confidence in the Scottish Government’s vision for ScotRail. I also thank those many stakeholders who informed each of the bids. Particular thanks go to FirstGroup and its hard-working staff for their management of the service since 2004. Since that time, patronage has grown by a third, more than 200 additional daily train services have been provided, performance has improved from 87 per cent to nearly 92 per cent, and passenger satisfaction has risen to 90 per cent. Taken together, those are commendable achievements.
Our franchise specification puts passengers’ interests at the heart of the ScotRail service. It includes ambitious service standards and an emphasis on quality and effective operation. The new franchise will transform the passenger experience through improved provision of information, enhanced websites, a price promise to provide the best-value ticket and a Scotland-wide extension of smart and integrated ticketing, which will make travel simpler and smarter.
In addition to its price promise, the new franchisee will implement our commitment to bear down on fares to make rail a much more attractive travel choice. As of January next year, peak fares will be capped at the retail prices index and off-peak fares will not be able to increase at a rate greater than RPI minus 1 per cent. Jobseekers and the newly employed will also benefit from reduced fare schemes. In short, there will be fairer affordable fares for all.
A mobile ticketing application will enable passengers to buy tickets, search for travel information, book cycle hire and taxis from selected stations and obtain details on less busy services. Enabling choice and making journeys easy are key to getting our country on the move. Across the network, there will be more car parking spaces, more electric-car charging bays, more cycle spaces and at selected stations even a bike-and-go cycle hire scheme to enable end-to-end journeys.
Our station environments will be updated with more platform shelters, more refreshment kiosks and major enhancements at Aberdeen, Perth, Stirling, Motherwell and Inverness. All of that will build on the substantial investment that has already been made in Waverley and Haymarket and the improvements that are planned for Glasgow Queen Street and Dundee.
We all recognise the need for greater transport integration to join up journeys. At selected stations, cross-modal information screens will display arrivals and departures of other modes such as bus, ferry and air, and a key aspect of all that will be forging links with other providers to unlock journey opportunities across Scotland.
The franchise will deliver improvements on our trains to increase the attraction of rail travel. With high-speed trains, better journey times and more comfort, our seven cities will be linked by proper intercity rolling stock more in keeping with the intercity experience that we know passengers prefer. New electric trains will be delivered for the Edinburgh to Glasgow and the Stirling, Alloa and Dunblane services, and overall there will be a 23 per cent increase in carriages across the network to ensure that full advantage is taken of this Government’s substantial investment in infrastructure.
We asked for proposals to capitalise on the tourism potential of our railways, and the new franchisee came forward with the great scenic railway of Scotland proposition, which will cover the west Highland and Kyle lines, the far north line, the lines serving Stranraer and Dumfries and—from September 2015—the Borders. It will enable our railway to market Scotland’s scenery, its heritage and its tourist attractions to a wider audience. Trains on those routes will be refurbished, and there will be dedicated tourism ambassadors who will be trained to VisitScotland standards and will provide information on attractions, history and journey connections. I hope that community rail groups and local businesses will engage with the franchisee to grasp the very real opportunities arising from this marvellous, expansive initiative.
I have been careful to ensure that the interests of ScotRail staff are addressed in the new franchise contract. Accordingly, we have worked with the rail unions to ensure that staffing issues are appropriately covered, and I am grateful for the unions’ assistance in that respect. Of course, the Transfer of Undertakings (Protection of Employment) Regulations 2006 will apply. Moreover, pensions will be protected. We might be obliged by Westminster to franchise, but that does not mean that we should not get the best deal for staff anywhere, which is what I believe we have.
The contract contains commitments on 100 apprenticeships, training and staff development and, for the first time, trade union representation on the board of the company. The contract also sets out the franchisee’s extensive corporate social obligations to the community it serves. That is important, because a railway does more than provide a journey opportunity—it spreads and generates economic vitality and prosperity across communities.
That is why this contract is a good one. It does more than simply provide rail services; it seeks to help get Scotland on the move, economically and socially. We have struck a deal with the franchisee to ensure that there are no compulsory redundancies over the entire life of the contract. Over and above that, we have struck a deal to ensure that every person, whether they be directly employed or employed through a subcontractor, will have at least the living wage as a salary.
We are committed to delivering a safe, well-founded, properly resourced service as well as an audit process that ensures that the franchise process that we have just gone through stands up to scrutiny. It has been our intention to ensure that we get the best possible deal for fare payers and passengers, and I believe that we have done so, despite being obliged to go down the franchise route. This contract offers a better Scotland by providing improved services to rail passengers, whether they be residents or visitors, providing security for our railway staff and enabling economic opportunities for all in our cities, towns and rural communities.
Members who wish to ask the minister questions should press their request-to-speak buttons now.
I thank the minister for notice of his statement, but I regret that announcements continue to be made in advance outside Parliament. I also put on record our appreciation of the work that staff have done on the franchise over the past 10 years.
In awarding the ScotRail franchise to Abellio, the minister has decided that profits from Scotland’s rail services should be used to invest in lower fares and better services in the Netherlands, rather than in Scotland. We now have a minister who claims to support a Scottish public sector railway but who continues with a franchise tender process that excluded that very option. Why does he say one thing in his deputy leadership bid but do something else in his position as minister?
Keith Brown should have welcomed calls by transport unions and Scottish Labour to suspend the franchise process so that further devolution could allow public bids to operate Scotland’s railways. Instead, he carried on regardless.
The Deputy First Minister recently wrote to the UK Government to ask that the roll-out of the universal credit be postponed in order to allow the talks on additional powers to be held in good faith. Why does the Government say one thing when it is making demands and the opposite when it is in a position to act?
The minister has shown that the Scottish Government’s record is one of hollow words and broken promises. In public, the Government talks about more powers, but when it has the opportunity to act, it abdicates responsibility. Why did the minister not show the leadership that the people of Scotland expect and allow the possibility that a Scottish public sector rail operator could bid for the franchise?
The statement that we have just heard shows why the Labour Party, far from being taken seriously as a potential Government, is not even taken seriously as a potential Opposition any more.
I struggle to understand exactly what the Labour Party’s position is. George Foulkes says explicitly that we have the powers to nationalise the railways in Scotland, which is patently false. For 13 years, the Labour Party had the ability to change things, but it refused to do so. We have also heard the endorsement of the franchising process from prominent Labour politicians.
Perhaps the idea is that some things change. It is interesting that, as recently as a few months ago, the Labour Party’s own publication entitled, “Powers for a purpose—Strengthening Accountability and Empowering People” said:
“The Co-op Party report argues for a new approach”,
which Labour supports,
“in the longer term (i.e. after the end of the new franchise starting in 2015)”.
The Labour Party is all over the place on franchising. The reason why we are hearing such thunderous accusations is that it is embarrassed by the fact that we have ended up where we are.
The Labour Party asks why the franchise went to a publicly owned Dutch railway company. That is a natural consequence of legislation that allows public sector bids from other countries, but which refuses them from Scotland or the UK. It is the Labour Party’s legislation; the Labour Party laid the tracks for how we have to do the franchising, although I very much hope that that will change. We will continue to argue for the change.
Mark Griffin said that I have said one thing and done another. I have written to the Secretary of State for Scotland three times arguing for that change. I would have liked to have Labour support in that, but we have not had it.
If Labour had wanted to change the process, it had the chance to do so. I do not dispute where the trade unions are coming from in relation to the matter; they have always held that position. They have never had the ability to change things. The Labour Party has, but it refused to do so. It should take responsibility for the consequences.
We have run a proper process and we have got a good deal for the people of Scotland.
I thank the minister for his statement and for advance sight of it.
As a North East Scotland MSP, I am, naturally, sad to hear that the Aberdeen-based FirstGroup has lost out in its bid to retain the ScotRail franchise. It is no coincidence that its tenure has seen a dramatic reverse in the decline of rail passenger numbers in Scotland. Its investment and sound management have delivered significant improvements in comfort and punctuality, as well as a substantial increase in the number of routes and capacity across the Scottish rail network.
The competitive nature of the franchising mechanism has played a key role in reviving rail transport in the United Kingdom. I believe that the minister’s announcement will further strengthen that recovery in Scotland.
The transport minister has done well to resist calls from the sirens of the extreme left, who would see us return to the investment vacuum and catastrophic management failures of state-owned monopolies in the 1970s. Keith Brown must guarantee that he will play his part in making the franchise a success. Will he give a sound undertaking that he will stand by the contract that he has signed and that he will not exploit the five-year break clause in an inappropriate way in order to end the contract before it delivers everything that it has the capacity to deliver?
I agree with Alex Johnstone’s comments about FirstGroup. It has done an excellent job and we have seen real growth in terms of patronage.
I do not share Alex Johnstone’s enthusiasm for franchising, as he well knows. It is an expensive process to go through and it is expensive for the companies involved. It presents an unequal playing field, as it does not allow public sector bids. I have argued that for some time.
Alex Johnstone asked about the situation with the five-year break clause in the contract. The break clause can be activated by either side—the Government or the company—and can be activated for any reason. However, there is no way that I intend to use “inappropriate reasons”, as he called them, to exercise use of the break clause, nor do I intend to “exploit” the break clause. The break clause has been put in because circumstances can change, and we have to be wary of that fact. All the tenderers for the contract knew that.
Alex Johnstone also asked whether I support, and will continue to support, the progress and ambitions of the contract. Of course I will. There are huge benefits to the contract, which is the result of very hard work by Transport Scotland officials, and of the Government laying out exactly what its expectations were, including those regarding cyclists and fare payers, who say that they are suffering because of high fares, especially throughout the rest of the UK. We have taken action on that already and we will take further action. I am sure that Alex Johnstone will be very interested in the £5 fare from Aberdeen to Inverness, Glasgow, Edinburgh or Dundee. The fare must be applied for in advance and there are restrictions to it, but it addresses the fact that some people want the cheapest possible fare.
I hope that despite some of Alex Johnstone’s comments he, like me, will be fully behind the success of the contract, for the benefit of passengers and of the staff who will deliver the services.
Many members wish to ask a question of the minister, so it would help us get through if we could have short questions and fairly short responses.
I welcome the substantial staff improvements and new jobs that will come with the new franchise: the living wage, trade unions on the board, 100 new apprentices and the protection of pensions and travel rights. Is it not the case that we must move ahead urgently to deliver those things for staff now, rather than have staff wait for years—perhaps forever—for new railway powers to come to the Scottish Parliament? It is simply not the time to put Scotland on hold, especially for an indeterminate period.
Stewart Stevenson is exactly right. It strikes me that people like Mark Griffin have to try to get over the fact that they were on the winning side in the referendum. Power over these things rests at Westminster. There is no guarantee of powers—I do not know whether Mark Griffin signed the petition to make sure that we get extra powers. If we were to delay or cancel the contract, that would impact on the new trains that we are ordering, on fares, on the benefits of the new services—reduced fares would not apply—and on the enhanced benefits for staff, including there being no compulsory redundancies in the whole term of the contract and the living wage being paid to every member of staff, whether they are subcontracted or directly employed. Those are real advances for the people who serve the customers. There are also real advances for the customers themselves.
People in Scotland will be interested in the Labour Party’s opposition to this material advance for fare-paying passengers and the staff who provide the services.
In the light of the decision, which takes the prospect of public running of the railways out of contention for 10 years, does the minister still support the pitch that he made when he launched his deputy leadership, in which he supported public railways, and will that be included as part of the Scottish National Party’s proposals to the Smith commission?
Will it be in the Labour Party’s proposals?
Order.
I am aware that James Kelly came late to the chamber. I do not know whether he heard my previous responses. He may have missed the fact that Labour’s position is that we should look for a new approach after the end of the franchise that we are about to sign. That is the same as the position that he just outlined.
The Labour Party is all over the place on the matter and it is not being taken seriously because it has changed its position so often. It was the party that was happy to have franchising: Lord Adonis referred to franchising in glowing terms. The Labour Party did not change the situation when it had the chance; it did not change it through the Calman commission and it did not change it through the Scotland Act 2012. It did not even argue for that change.
A few months ago, Labour was arguing for us to let the contract; suddenly its position has changed. That is because the Labour Party is embarrassed by its past failure to act. We have acted to protect fare-paying passengers.
Abellio says that there will be major investment in concourse and retail development in order to improve links between Aberdeen station and Union Street. I expect that that will be welcomed in my region. What are the anticipated costs and the timescale of the project? Will the minister assure me that there will be thorough community consultation on the project?
I am more than happy to give the assurance that there will be thorough community consultation. The project, because it has infrastructure elements, involves various parties, including local authority partners. I will provide in writing the details on cost and the parties that are involved, and I will also underline the reassurance that I have given on community consultation.
I welcome the commitment for staff that is set out in the new franchise contract. It will see all staff and subcontractors being paid at least the living wage, the creation of 100 new apprenticeships and a guarantee that there will be no compulsory redundancies throughout the contract’s lifetime, as well as the protection of staff pensions, of their travel rights and of their representation on the board. That is fantastic. Does the minister agree that it is essential that, rather than putting Scotland “on pause”, those key staff benefits should be delivered at the earliest possible opportunity?
Maureen Watt is quite right. and those benefits will be delivered at the earliest possible opportunity. The one thing that surprises me is that I have not heard one word of welcome from the Labour Party for those key staff benefits.
In keeping rail fares affordable, what difference will the £5 intercity fare and reduced ticket prices for jobseekers and those newly in work make to the people and the economy? What is the timescale for the delivery of more cycle spaces at stations and on trains and the introduction of a bike-and-go cycle hire scheme?
Jim Eadie will be aware that we have started the hire scheme. I was very pleased to launch the bike hire scheme and bike shop at Stirling station, which is just outside my constituency. There are also further benefits from the work of recyke-a-bike, a tremendous local scheme that prepares and provides bikes at cheap cost to local families. The work has started and it is on-going.
The new services will start on 1 April next year when the new contractor takes over the franchise.
We will get more information out on cycling, but the intention is to ensure that people are able to park their bikes more easily at stations and, where they can, to take them on to trains in greater numbers, for which we have had a real demand. Those advantages mean that we will have a much more integrated transport structure.
I mentioned that some of the concourse improvements and signage will also tell people about ferry and bus arrivals and departures. We obliged all bidders to look at that as part of their bids, to ensure far better connections with bus services, rather than the buses leaving five minutes before the train arrives. We should start to see all those benefits in the months to come, although we are seeing some of them already.
Delivering the living wage through procurement is a good thing, so it is a shame that the SNP did not think that a couple of months ago when it voted against that in the Procurement Reform (Scotland) Bill.
Since 2008, ScotRail has made £100 million of profit, 95 per cent of which has gone to shareholders. What are the projected profits for the new franchise holder? How much money will be taken out of and not reinvested in the Scottish rail network?
I do not know whether Neil Bibby is aware of this, but it was the Labour Government in 2004 that awarded the franchise to ScotRail in the first place. We used that same franchise framework. If the member has a concern about the profits, I say to him that we put in place provision to ensure that any excess profits are returned to the Government and we have applied that provision to the new contract, too.
On the member’s late conversion to the idea of the living wage, Labour did nothing about that when it was in power. There was no living wage in 2004 when the Labour Government had a chance to introduce it. This Government has taken action on a living wage not just for directly employed people but for people who are subcontracted. We are taking action; Labour only talked about taking action.
In welcoming the announcement of a great scenic railway of Scotland scheme, bringing more tourists to the south-west, the Borders and the north, could I ask the minister to outline the benefits that will be delivered for my constituents in the south-west?
That is a very good point. I know that the scheme has already been warmly welcomed by tourism organisations across Scotland. As Aileen McLeod knows, not least because the first community rail partnership was established in her region, there is real pride in sections of the railway and we want people to take ownership of those. As I have said, there will be tourism ambassadors who will help people locate and get to the attractions and scenery around Scotland. That should benefit places throughout Scotland, including in the area that Aileen McLeod represents.
I inform the chamber of hospitality that was provided to me by Abellio during the Commonwealth games in my position as the co-convener of the cross-party group on cycling.
There is a huge public appetite for bringing rail back into public hands—Green colleagues in Westminster are leading a bill that would allow the renationalisation of rail services as franchises run out. Can the transport minister confirm that the optional five-year break point in the franchise will allow a Scottish public sector operator to make a bid at that point, provided of course that power is devolved from Westminster to allow that to happen?
The sting in the tail is in the last part of Alison Johnstone’s question—provided that Westminster allows the powers to do that. We will argue for the maximum possible powers over the rail network in Scotland, as we have done for many years. We have argued for the franchising process to be expanded to allow public sector bids. There is no guarantee that a public sector bid will come along, or that it will be successful, but we have argued the case for such bids.
I have mentioned the five-year break clause already. We will exercise that only in a responsible and appropriate way. Who can say what the situation will be in five years’ time? We have to go into the contracts with the intention of seeing them through. If circumstances change, either for the party providing the service or for the Government, of course we will reconsider the contract, but we have to go into the process with the intention of completing the contract. That is what those bidding in the bidding process that we are obliged to hold expect and that is how we will proceed in relation to the five-year break.
There seems to be quite a lot of good news linked to the contract. Will the minister confirm that, as well as taking on the First ScotRail staff in Glasgow, Abellio will bring new staff to Glasgow and site a new function there?
That is a very good point. Abellio intends to bring its UK headquarters to Scotland and site them in Glasgow. There will also be a shared services centre. In total, we are talking about 200 jobs, which is a major benefit. That shows the level of commitment that Abellio has to the process. It will be a jobs boost for people.
As I mentioned earlier, the idea of doing something to make it easier for jobseekers and the newly employed—perhaps before they start receiving a wage—to be able to get around the country more cheaply demonstrates the Government’s commitment to driving up employment and helping out some of the more disadvantaged people in society.
Will the minister tell us his Government’s position—rather than his views on Labour’s position—on using the powers that the Parliament already has to consider a co-operative, a mutual or a not-for-profit franchise, as for example proposed by the rail union ASLEF or the co-operative movement? Further to Alison Johnstone’s question, will the five-year contract break allow a future Administration to go down that route or are we committed to 10 years of privatised railways in Scotland?
I have answered the question on the five-year break twice now; the five-year break can be exercised by either party.
On Ken Macintosh’s other point about a not-for-profit bid, we have said from the start of the process that we would be more than happy to see a not-for-profit bid come forward. Some of the organisations that Ken Macintosh mentioned were very interested in that and were asked whether they wanted to put in a bid, but they said that they were unable to do so. If he looks into the matter, he will see that one of the provisions is that a bidder must have some background and experience in providing rail services. There is at least one public sector organisation in Scotland that is able to demonstrate that. We are not able to favour one bid over another—a fact that Ken Macintosh knows. We have always been ready to welcome any not-for-profit bid, but none came forward.
That ends the statement by the minister. I apologise to the two members that I was unable to call. This afternoon’s motions make business extremely tight.
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