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John Bercow and Theresa Villiers blast Government after Commons is last to hear of nationalisation of East Coast Rail Franchise

John Bercow MP, Speaker: "Before I call the Minister to make his statement, I regret that this House is the last to hear it. That said, if the statement had been made earlier it would have further constrained the time given to the main business of today. I hope that such circumstances are not repeated in the case of other Departments. In answer to points of order made earlier today, I acknowledge that a written ministerial statement was made today at 7 am, before the Secretary of State’s interview was broadcast."

VILLIERS THERESA NW Theresa Villiers MP: "Twelve hours after the stock exchange, 11 and a half hours after “Today” programme listeners, and some four hours after the House of Lords, we finally get to hear the news officially. What we have heard is evidence of the incompetence and failure that has characterised the Government’s handling of the rail franchising system. Two franchises have collapsed in the space of two and a half years on one of the nation’s most important transport corridors, on which millions of people and businesses rely, both in England and Scotland. To borrow a well-known phrase, to lose one east coast franchise might be said to be unfortunate; to lose two looks like carelessness.

The Secretary of State told their lordships that he hoped that the next franchise would be better than the last. Clearly, for Labour, it is third time lucky, or so it hopes. On the “Today” programme, the Secretary of State seemed to be saying that National Express East Coast was already in default of its contracts, yet that allegation was not repeated in the written statement, or the statement from the Minister today. Does the Minister stand by the statement made by his boss this morning?

The Secretary of State has claimed that the “Nat Ex” holding company is not prepared to “stand by” its loss-making subsidiary. Does the Minister regret that his Government signed up to a deal that caps the liability of the holding company, and apparently entitles it just to walk away when the going gets tough? Does he accept that the incredibly detailed—even invasive, some would say—due diligence process that the Department for Transport carries out in relation to the credibility of franchise bids and bidders has wholly failed in this case? How much will re-letting the franchise cost? How much did the original franchise process cost? What assessment has the Minister made of alternative solutions to direct Government control, such as getting another operator to run the line under a management contract? How much will the fiasco cost the taxpayer in total? Will the money come out of the control period 4 funding settlement? If not, which part of the DFT budget will be raided to cover it? National Express East Coast was due to pay £1.4 billion over the lifetime of the franchise to help fund CP4. What will be the shortfall on that income? How will the Minister plug the resulting black hole in the funding for CP4?

Can the Minister tell us whether he expects the Government to be able to exercise the cross-default clauses, either immediately or in the future, and will he guarantee that in that event, the Government will not let services be disrupted? How can the Secretary of State possibly say with credibility today that 15 out of the country’s 16 franchises are completely fine, and that it is just a “Nat Ex” problem, when everyone knows that there is a red-light list of other franchises? Will the Minister come clean and tell us which franchises are on it?

In conclusion, this debacle shows that Labour learned nothing from the collapse of the Great North Eastern Railway franchise. It has continued to press train operators to make wildly over-optimistic bids. It has wholly failed to get a grip on rising costs in the rail industry and in Network Rail. It has tried to plug the gap by squeezing passengers for higher and higher fares. It cut a deal that capped the liability of holding companies and allows them to walk away from their subsidiaries with impunity. They cannot wash their hands of the problem by saying that “Nat Ex” got its numbers wrong. The extensive risk assessment by the Department for Transport of the business case underlying the franchise bid has wholly failed, and as a result we have had a yet another accidental renationalisation by Labour to add to the lengthening list that began with Network Rail. It is yet another blow to the public finances, and yet another bill for Labour failure has landed with the long-suffering taxpayers, who have already received such punishment at the hands of this increasingly incompetent Government."


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