Labour to demand answers from Chris Grayling on Virgin/Stagecoach bailout

Labour’s Shadow Transport Secretary Andy McDonald will today (Wednesday 10th January 2018) demand that the Secretary of State, Chris Grayling, detail the cost to the public purse of the recent taxpayer bailout of Virgin/Stagecoach on the East Coast, which could reach £2bn. Labour will also warn that a failure to take services back into public ownership will result in struggling train operating companies demanding similar bailouts in future, potentially costing taxpayers hundreds of millions or billions of pounds. 

Labour’s motion exposes above-inflation fare rises since 2010 and opposes the recent taxpayer bailout of Virgin Trains Group East Coast. This follows drops in season ticket purchases – the core business of rail companies – and an overall decline in ticket sales, suggesting that prohibitive fares are pricing passengers off the railway. Labour has also warned that the bailout of Virgin East Coast that threatens the sustainability of the rail franchising system. 

The debate will coincide with the release of a damning National Audit Office report on The Thameslink, Southern and Great Northern rail franchise, which states that the TSGN franchise has not delivered value for money and that the Department for Transport failed to consider passengers properly.

Andy McDonald MP, Labour’s Shadow Secretary of State for Transport, said:

“Thameslink, Southern and Great Northern (TSGN) passengers understand the failings of privatised rail as well as anyone. The National Audit Office’s (NAO) claim that passenger misery could have been avoided if the DfT had taken more care to consider passengers is true for the entire railway. Government payouts to companies failing to deliver decent services, soaring fares and poor industrial relations are hallmarks of privatised rail.

“The Conservative policy of privatised rail is not sustainable. Fares have risen three times faster than wages since 2010 and passengers are being priced off the railway. A failure to make fares more affordable threatens the sustainability of Britain rail network, which would spell disaster for the economy and the environment.

“Not only is fare-payer and taxpayer cash being extracted as profit or wasted through our fragmented, inefficient railway, bailouts of failing train companies have become the norm. A refusal to consider public ownership, even as a last resort, leaves our Transport Secretary dancing to the tune of private rail companies.

“This Government is not honest with the public about rail. It sets fares but will not defend them and supports franchising while all the evidence points to its failings. Labour will bring our railways back into public ownership so that they are run in the interests of the many, not the few.”

Ends

Notes to editors

• The opposition day debate is due to take place on Wednesday 10^th January 2018.

• Labour’s motion, tabled on Tuesday, states;

That this House believes that rail franchising is failing to provide adequate services for passengers or value for money for taxpayers; notes that regulated rail fares have risen by 32 per cent since 2010 while planned investment has been cancelled; opposes the recent bail-out of Virgin Rail Group East Coast; and calls on the Government to run passengers’ services under public sector operation.

• Office for Rail and Road demonstrate a decline in passenger rail usage

2017-18 Q1 (http://orr.gov.uk/__data/assets/pdf_file/0006/25719/passenger-rail-usage-2017-18-q1.pdf)

Rail passenger journeys in Great Britain fell by 2.7% in 2017-18 Q1 compared to the same quarter the previous year, as passenger journeys fell to 416m, the lowest number of journeys since 2015-16 Q1. This was driven by a 4.5% fall in journeys in the London and South East.

Season ticket journeys fell by 11.0% with growth experienced on all other ticket types.

2017-18 Q2 (http://orr.gov.uk/__data/assets/pdf_file/0006/26277/passenger-rail-usage-2017-18-q2.pdf)  

Rail passenger journeys in Great Britain fell by 0.4% in 2017-18 Q2, driven by a 1.3% fall in journeys in the London and South East.

The number of journeys made using season tickets fell to its lowest since 2010-11 Q2, with 15m fewer journeys made compared with the same quarter of the previous year, a fall of 9.4%.

Passenger journeys on the franchised London and South East sector fall for the fifth consecutive quarter, by 1.3%.

• Regulated rail fares, which include season tickets and most other commuter tickets, will have risen by 32% on average between 2010 and 2018. The Government policy of tying fare rises to the Retail Price Index (RPI), which over-states inflation, means that fares rise in real terms each year. Labour would use savings achieved through public ownership to cap fares at the Consumer Price Index (CPI), ending inflation-busting fare rises. If implemented, this policy would save the average season ticket holder over £500 this parliament.

• Fares have risen three times faster than wages, with median weekly wages growing nominally by only 10.4% between 2010 and 2017.

ONS, Annual Survey of Hours and Earnings 2017, 26 October 2017,https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2017provisionaland2016revisedresults#average-earnings