In summary, the Government have a pretty good track record of starting to address these problems. I pay tribute to the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East

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Dunbartonshire (Jo Swinson), who is pushing the Groceries Code Adjudicator Bill through the House. A system similar to the groceries code to protect landlords will be welcomed. I welcome the consultation and look forward to greater protection for our pubs in future.

3.50 pm

Fiona O'Donnell (East Lothian) (Lab): May I take the opportunity to wish you a very happy new year, Mr Deputy Speaker?

It is a pleasure to follow the hon. Member for Sherwood (Mr Spencer). I am sure that such a benign and jovial fellow is not usually given to conspiracy theories, and he was right to highlight some of the darker practices, such as tenants being deliberately forced out of a lease in order for the pubco to benefit. He was also right to highlight the positive role that good landlords can play in helping people to develop a healthy relationship with alcohol.

I pay tribute to Members on both sides of the House who have stuck doggedly with this agenda, even before many of us arrived in 2010, to get us to this point. In particular, I praise the role of the Business, Innovation and Skills Committee. I regret that the Scottish National party Member only popped into this debate for a short time, because there is a lesson for the Scottish Government in how effective genuinely empowered and independent Select Committees can be in promoting good governance. I hope that some SNP Members are watching the screens in their offices and will take that message to heart.

So far, I have been in quite a jovial mood, considering that I am just 60 hours into nicotine withdrawal. The Secretary of State today showed that he has the sensitive underbelly of the Government. He did not seem happy that there was criticism of the time that it has taken to get to this point—like many Members, I stood here almost a year ago asking for effective regulation of this sector—but it really is his own fault. When he was a real Lib Dem—rather like the Campaign for Real Ale—he prided himself on calling for the quick introduction of stronger regulation of the banks. Whereas he would probably give himself a 10 for his foxtrot when it came to the banks, we might score him slightly lower on his gentle waltz towards the effective regulation of this sector. I hope that he has not left the Chamber because he was so sensitive that he was struggling to cope with the criticism.

I pay tribute to my hon. Friend the Member for Wrexham (Ian Lucas) for talking about the contribution that pubs make to so many of our communities. The Winton Arms is the only pub in the village where I live in East Lothian and it is very important. It is developing in the way that my hon. Friend spoke about. It now has space for a hairdresser, where beauty therapy is also available, and it hosts a coffee shop with home baking. Members can guess which of those two I tend to spend more time on. At new year, when little public transport was available, I was able to go there to see in the new year safely and walk home.

It has been a wasted year. In that time, many of us, including the hon. Member for South East Cornwall (Sheryll Murray), have seen landlords finally give up on a relationship that just was not working. That has happened at the Tyneside Tavern in Haddington in my

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constituency. The landlord, Neil Forbes, an ex-policeman who ran a superb operation, has finally given up. I have attended meetings with Neil and his wife, and have been copied in to an endless stream of e-mails. The experience reminds me of the cartoon “Tom and Jerry”, in which Tom gets a bump on his head, he pushes it in and one pops out on the other side. Neil would make some progress getting fairer terms in one area, but then Scottish & Newcastle would suddenly introduce a charge in another area and set the situation back. Although I deeply regret that he is walking away from the business, I understand the effect that it was having on him and his family.

The Government were a little late in finally agreeing to make the Groceries Code Adjudicator Bill a real Bill with the power to deliver change. I hope that they will not be so reticent this time, but will realise that if we are to have fairness in this sector, we need comprehensive regulation with real teeth.

3.54 pm

Justin Tomlinson (North Swindon) (Con): It is an honour to be the last Government Back-Bencher to speak—it is a bit like queuing for last orders. As a member of the all-party save the pub and beer groups, I welcome the debate. I have shown my hand at trying to run a pub, not particularly successfully, and like many Members who are present I have been known to frequent a pub.

It is a real credit to the Government that we now have a Minister responsible for pubs, and if he ever wishes to visit our local brewery, Arkell’s, I will certainly make him welcome. I am a little concerned, however, because we have a passionate shadow Minister who supports pubs but has announced that he is teetotal for the month of January, and the shadow Minister in the February 2011 Westminster Hall debate, the hon. Member for Derby North (Chris Williamson), declared not only that he was teetotal but that he did not visit pubs. We need the other team to play their part. However, there is clearly cross-party concern about pubs, which are at the heart of our communities.

Although the number of pub closures has slowed, it is still somewhere in the region of 18 a week, which has to act as a wake-up call for all of us. The Government’s decision is a credit to organisations such as CAMRA and the Federation of Small Businesses, and to the countless local residents who have e-mailed all MPs to raise the issue.

Mark Menzies (Fylde) (Con): My hon. Friend is a champion of pubs in Swindon, but may I urge him also to give some focus to rural pubs, which are under greater pressures than those in towns? I see that every day in Fylde.

Justin Tomlinson: I thank my hon. Friend for raising that important issue. That situation arises particularly because of the value of rural pubs if their owners transfer them to other categories of use. It is welcome that the Government are looking to tighten up the relevant planning rules, which will help protect a number of rural pubs. A few in my constituency need that protection.

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I welcome yesterday’s announcement in principle. The new code will ensure fair practices on a number of issues, including rents and the price that publicans pay for beer. Crucially, the adjudicator will manage the matter of fairness, because it is often the big guy against the little guy, and just because someone is good at running a pub, that does not mean that they are a legal expert.

We must not forget the absolute need for transparency on costs, particularly when a publican signs up to their deal. It is a bit like having a franchise. Legally the deal says, “You will buy the product at this price,” and as my hon. Friend the Member for High Peak (Andrew Bingham) said, it includes matters such as PAT testing of vending machines and insurance. It is not just about the beer.

I urge caution, and my hon. Friend the Member for Burton (Andrew Griffiths) made a good and sensible speech that brought some realism to the debate. We have to be careful not to throw the baby out with the bathwater. We must be careful about mandating a free-of-tie option with open market rent review, because the pubco tie is a good business model that allows people to become entrepreneurial small business owners without having to have huge savings to buy an expensive building. Just because some have abused the system, that does not mean that we should completely remove it. We just need to ensure that those who abuse it are dealt with and that others are given adequate protections.

We all have good examples of family breweries working with landlords, such as Arkell’s in my constituency, which has just over 100 pubs. It is in breweries’ interests to do so, because if their landlords succeed, they will continue to sell beer, which is what makes their business thrive. We have to look at the wider picture and be careful not to chase a cheap headline. I support the principle of what is proposed, but we must act on the consultation. Those with expertise, knowledge and first-hand experience should feed into it. The hon. Member for Wrexham (Ian Lucas) made that point, and I echo it.

We must also celebrate some of the examples of good news. Wetherspoon’s continues to buck the market trend and expand. When I am having breakfast in a Wetherspoon’s pub, I often admire how much money they probably take before the majority of other pubs open their doors at lunchtime.

The Government are considering the community right to bid, giving communities a fairer chance to bid to take over pubs. Again, that would be particularly useful in rural communities. They are launching a £19 million support programme to help community organisations; ensuring that planning policies provide for the use of pubs and guard against their unnecessary loss; and providing help with business rates. They have scrapped the previous Government’s plan for a 10% rise in cider duties, but they now need to do the same in the case of the beer duty escalator. As we chase increased exports, let us take a moment to rejoice that 1.25 billion pints of beer were exported last year. That is something to which we can all raise a glass.

We are making it easier for pubs to play live music. I have carried out a number of surveys with local pub users, asking what makes a good pub. We know that society has changed and that more often than not, pure straightforward drinking pubs will struggle these days. Pubs need a combination of good food, good entertainment, live music and pub quizzes—going that extra mile to

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make it a destination for local communities. Moves to exempt pubs from unnecessary health and safety inspections would also be welcome. I urge people to get behind this issue, which has clear cross-party support, and engage with the consultation. Let us hope for a better year for the pub industry in 2013.

4 pm

Simon Danczuk (Rochdale) (Lab): I thank my hon. Friend the Member for Chesterfield (Toby Perkins) for championing this cause and pressing for and securing this debate. Hon. Members may not be aware that I have spent a considerable amount of time researching this subject over many years—perhaps too intensely on some occasions—and I wish to draw on some of that research by telling a story about Mary Spence, a publican in Rochdale who runs the Hunters Rest just off Syke common. One reason I am telling Mary’s story is because it addresses a point raised by Simon Townsend, the chief operating officer at Enterprise Inns. On 12 December he said in the Morning Advertiser that all he had ever asked was to be provided with

“clear evidence, which we can pursue to see whether we have done something wrong,”.

Well, I believe the way Mary Spence is being treated is wrong and that Mary’s story provides clear evidence that Enterprise Inns has little, if any, regard for customers at the Hunters Rest and indeed the wider community. I believe that Enterprise Inns is doing something wrong; it may not be illegal, but it is certainly wrong. I have been in the Hunters Rest on a few occasions and I can tell it is a well run pub. Mary and Tom work exceptionally hard; they start at six or seven in the morning and finish after midnight. They keep a smart, clean pub that provides bed and breakfast and pub food. Indeed, Hilary Devey, one of the entrepreneurial dragons on the BBC’s “Dragons’ Den”, worked at the Hunters Rest while filming “The Secret Millionaire” for Channel 4, but even such an accomplished entrepreneur as she could not work wonders under the arrangements of Enterprise Inns and I will explain why.

Mary Spence is 16 years through a 25-year lease with Enterprise Inns and she has had enough. Enterprise Inns controls most of the business—it sets prices, determines what work should be done on the property, sets the rent and decides what beer should be sold. For example, Mary could buy a 22-gallon barrel of Foster’s for £195 but she has no choice but to pay Enterprise Inns £291. She could buy Carling wholesale for £201 but has no choice but to buy it from Enterprise Inns for £303. That affects not only Mary Spence but her customers. Therefore, when Mr Townsend asks, “What’s wrong?”, it is that Mary Spence is paying around £500 a week extra for her beer.

Lilian Greenwood (Nottingham South) (Lab): Will my hon. Friend give way?

Simon Danczuk: I will not take interventions because I am conscious of the time. The other big problem with Enterprise Inns is that Mary has to maintain the property both inside and out. She had to pay for a fire escape to be fitted and for fire alarms throughout the building. She has invested her life savings in that pub over the past 16 years, but although the place is immaculate, what does she have to show for it? Enterprise Inns is

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doing all it can to ensure that she leaves the pub with as little financial return as possible. Mary pays an inflated rent but gets nothing done to the property. She pays inflated prices for beer but gets nothing in return. Last Friday, the regional manager of Enterprise Inns said that he could not even guarantee her a packet of beer mats! Mr Townsend asks what is wrong with his business model; those are the things that are wrong with it.

I am pleased the Government have moved on the statutory code, but I have concerns about the tied option, which should be kept open, and about open market rent reviews, which the Minister should consider.

4.4 pm

Hugh Bayley (York Central) (Lab): My wonderful city of York has been an important tourist destination for centuries. People are drawn to the city by its history and its wonderful buildings, including York Minster and the city walls, but also by the city’s pubs, some of which date back to the 1400s.

When I meet York members of the Licensed Victuallers Association and York CAMRA, they always raise the problems of pub companies. Like other Members, I carry out a survey from time to time of pubs and clubs in my constituency. When I did so in 2009, I found that 41% of landlords blamed pub companies’ unfair terms of trade for their falling profits, but last year when I carried out a similar survey, I found that the number of pubs complaining about pub companies had risen to 62%. The problem of the pub companies misusing their power is getting worse.

After conducting last year’s survey, I wrote to the Treasury. I told the then Treasury Minister, the hon. Member for Norwich North (Miss Smith), that pub companies had not abided by guidelines and that the Government should consider introducing a statutory code to regulate pubcos’ relationship with their tenants. In July, she replied:

“Regarding your comments on the relationship between pub companies and licensees…The Government does not…consider it appropriate to make a statutory intervention in setting the terms of commercial, contractual relationships.”

I congratulate the Government warmly on changing their policy and agreeing to a statutory code of practice.

Pub companies came into existence after a previous attempt by the Government of the day to deal with the problem of tied pubs—I believe it happened following the Beer Orders of 1989. Breweries were instructed to sell off their tied pubs, which were bought by pub companies, but that did not solve the problem, because the pub companies imposed a tie of their own. The tie is the problem. In the new regime that the Secretary of State announced yesterday, the tie must go.

If a property company with a shop sought to lease it as a boutique, for example, with a term in the lease that it could sell clothes from a particular manufacturer or of a particular brand only—or sell clothes supplied only by the landlord—the Office of Fair Trading would rule it out of order pretty quickly, and yet that is exactly the relationship between a tied pub and a pub company. I congratulate the Business, Innovation and Skills Committee on its work. It has argued forcefully for a statutory code for pub companies to include a free-of-tie option, which the Labour party motion supports.

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Parliament needs to avoid making the mistake it made in 1989 when the brewers were required to sell their tied pubs. I am pleased to see the Secretary of State in his seat listening to the debate. The statutory code he proposes should start from the presumption that there is no tie. I hope that option is covered in the consultation. If we say to a relatively weak and powerless small businessman or woman that, under the code of practice, there should be an option of no tie, many will still be bludgeoned by big, tough multi-million pound pub companies into taking a tie. Therefore, the default should be that there is no tie unless it is opted for by the landlord. I hope we consult on that basis.

4.9 pm

Andy Sawford (Corby) (Lab/Co-op): We are pressed for time and other hon. Members want to speak, so I will truncate my remarks on what is an important debate.

I want to mention the role of local breweries in my constituency. Dick Simpson runs the Nene Valley brewery in Oundle, which started brewing in 2011. He told me that pubcos make it very hard for pub owners to show initiative. If pubs start to make a handsome profit, the pubcos whack the rent up so the landlord sees little of the extra cash. Local breweries, such as the Nene Valley brewery, the Great Oakley brewery, Rockingham Ales and many others in my constituency, would benefit from being able to sell to all the pubs in my area. Indeed, everybody would benefit: the pubs, the consumers, the local brewers, the local economy, the environment—because it would reduce beer miles—and tourism.

In autumn last year, I was delighted to welcome my hon. Friend the Member for Chesterfield (Toby Perkins) to my constituency for some active research in my local pubs. He came to some of the rural pubs, such as a beautiful pub in Stanwick, and to the thriving pubs in Corby town. He also saw, however, that many of my local pubs are struggling. Some have closed down already; some may face closure in the near future. One reason for that, as has been said, is the profoundly unequal relationship between tenants and lessee landlords. In the past, if a pub owner was tied, he paid more for the beer but had the benefit of discounted rent. As we know, pubcos have increasingly put up both the rent and beer prices.

I will make my remarks even briefer than I intended. There are two critical issues on which I want to press the Front Bench. I recently sat on the Groceries Code Adjudicator Public Bill Committee, and we know that the role of the Bill’s proposed ombudsman will only be as strong as the code itself. One of my questions relates to the power to fine, on which the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson) gave a big concession on that Bill. The power to fine in yesterday’s announcement is only where there are severe breaches. I would like to know how broadly the Government might define “severe breaches”. If the definition is too limited, this code will not have sufficient teeth.

My concluding point is that I, of course, agree with the tests that my hon. Friend has set out, in particular the principle that a tied licensee should be no worse off than a free-tie licensee. That does not go far enough: I want a tie-free option.

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4.12 pm

Mr Andy Slaughter (Hammersmith) (Lab): I am grateful to my hon. Friend the Member for Corby (Andy Sawford) for being collegiate. I wish other hon. Members had been. I will be as brief as I can.

My constituents, Joe and Betty Hynes, are observing the debate. They are also active in the all-party group, the Guild of Master Victuallers and the Fair Pint campaign. They are also known to the hon. Member for Leeds North West (Greg Mulholland), as well as hon. Friends on the Front Bench, because for 23 years they have lived and worked at the Old Parr’s Head in Blythe road in my constituency, which is a very Fine Public house. In 1997, it was bought by Punch Taverns. A few years’ ago, Joe and Betty Hynes acquired a second pub, the Chancery in Fulham. They did that because they wanted to be successful in business and to provide employment. Unfortunately, when they had to surrender the licence of that pub this year, Punch Taverns was taking 124% of their profits. Six years’ ago, Punch Taverns was taking 48% of their profits on their existing pub. This year, save for any agreements that Punch Taverns will keep to, which it is not showing much sign of doing, it will take 91% of those profits. That will mean that Joe and Betty will effectively be living on less than the minimum wage. They have lost their life savings in one venture, because they have been forced out. They are now living on minimum income, yet have provided those two fantastic establishments for my constituents over a long period of time.

The Secretary of State indicated that there have been many pressures on pubs, such as the beer duty escalator, the smoking ban and unfair competition. Trying to deal with those problems is bad enough. If, in addition, pubcos decide that they will take none of the risk or any cut in their profit and put all of that burden on to publicans, we end up in the situation we are in now, where people are being driven out of business and pubs are going bankrupt every week in my constituency. I will, of course, try to intervene as the MP, but it is sometimes difficult to do so in a contractual dispute.

I end on this point, and I wish I had more time to do justice to Joe and Betty’s case. I hope, having seen delay and more pubs going to the wall than is necessary, that there will be the quick implementation of an effective statutory code so that this David and Goliath battle can be evened up and people like Joe and Betty can get the proper reward for a lifetime of work and service to their community.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. I apologise to Members who have not got in, despite having sat here throughout the debate, but we have to move on to the winding-up speeches.

4.14 pm

Ian Murray (Edinburgh South) (Lab): I also apologise to the Members who have not got in, because they have an important contribution to make to the debate, particularly my hon. Friend the Member for Easington (Grahame M. Morris). To Members who have not had a night out with him, I can highly recommend it, and I was looking forward to his contribution. Perhaps we

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will find time later on. I also refer the House to my entry in the register of Members’ interests, as a former licensee of a pubco and other companies. I will run through some of my own experiences shortly.

This afternoon’s debate has emphasised the importance of the great British pub and the contribution that landlords and landladies make to our communities in every country of the United Kingdom. I would like to pay particular tribute to the hon. Member for Leeds North West (Greg Mulholland), who, since I have been in the House, has been a dogged campaigner on this issue, filling our inboxes on the subject. He deserves great credit for everything he has done, and today is a great triumph for him, as well as for everyone else in the House.

I also pay tribute to my hon. Friend the Member for West Bromwich West (Mr Bailey), the Chair of the Select Committee, who has continued to pursue the matter through the Select Committee, showing the power that those Committees can have in the House. I hope that other Chairs will take note. If anyone has time to read the contribution from the hon. Member for Northampton South (Mr Binley), who is not in his place, and his robust performance against the pubcos in the Committee, it is certainly worth looking at. And, of course, I pay tribute to my right hon. Friend the Member for Wentworth and Dearne (John Healey), who did a lot in this field as the former pubs Minister, and to the hon. Member for Mid Worcestershire (Peter Luff), the former Chair of the Select Committee.

I also add a special tribute to my Front-Bench colleague, my hon. Friend the Member for Chesterfield (Toby Perkins). By bringing this Opposition day debate to the Chamber, he rang the last orders bell on the Government to act. Without that determination to get this issue back on the agenda, I suspect we would not be here today with the progress that has been made. Despite his dry January, he does a lot personally to support the industry—although he could do a lot more by standing his round a little more often! Given that it is a dry January for him, however, I shall certainly be buying the drinks after this debate.

Just 12 months ago, we had a robust Back-Bench debate on this issue and the House agreed unanimously that the self-regulation approach should be reviewed and a statutory code considered. It is clear, however, that consecutive BIS Ministers have ignored the wishes of the House and have refused to listen to the broad coalition of groups calling for action. To give credit to the Secretary of State and his Ministers, however, on the eve of this debate, he said that the current system had failed and that he would introduce a new statutory code.

It is worth reflecting again on the scale of the issue: 46% of tied publicans earn less than £15,000 a year. Crucially, that includes more than 50% of lessees with a turnover of more than £500,000 per annum—a return of only 3%. The total number of tied pubs has fallen by more than 3,000 since 2008, which compares with an increase in the number of free-tie pubs. Furthermore, as many hon. Members have mentioned, including my hon. Friend the Member for Bradford South (Mr Sutcliffe), the Wetherspoons model demonstrates that profits and sales can continue to rise in what is a difficult market. It would seem that the abuse of the tied contract is the problem, as many publicans will already be paying rent at the market value or higher.

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I shall give some examples of my own experience. I was in discussions about a premises in Edinburgh, but was concerned that the same company had a managed house just around the corner that had been closed for some time. I was told that it was to have a full refit and reopen shortly, but would be a niche product and would not be in direct competition with my premises. When it eventually opened, it was an almost identical offering and was selling beer to the consumer at less than the value at which I could buy it from the same company.

In another premises, albeit with a different landlord, we asked if we could buy out of our bottled beer tie, because a supermarket had opened up next door and was selling the same products at a third of the price that we were contracted to buy them for. We were told that we could buy out of the tie, but at a cost of £1,600 per annum on the rent. Many hon. Members, including the hon. Member for Pendle (Andrew Stephenson), have raised the issues with off-trade and on-trade. That might be a subject for a useful future debate.

My last and probably most shocking example from that time—this issue has also been illustrated by my hon. Friend the Member for Corby (Andy Sawford) and the hon. Members for Sherwood (Mr Spencer) and for Leeds North West—concerns the major pubco that I rented a hotel from. We received a good deal for the hotel because the premises were up for demolition, but the pubco told us—and I quote—that any increase in our profitability or trade would be reflected in a regular, upward-only rent review. Crucially, the business development manager at the time used to brag about the list of tenants he was fining or about to fine for “buying out”—the term for purchasing products outwith the contract. He got a bonus for fining people. That was the reality of the situation at the time and shows just how much pressure tenants were under.

Let me quickly give the House another example. I did a bit of analysis today. I phoned up a supplier and, with no credit history, asked how much I could buy a 36-gallon barrel of standard lager for. I was quoted £356.73. The list price on Enterprise’s current price list is £510.22, so it is quite clear where the problem lies.

I warmly welcome the new Minister to her place. She has changed her mind on a number of issues, including fining and the groceries code adjudicator. I am delighted that she has come with some proposals today that might make the situation better. We were on the verge of having a groceries code adjudicator without teeth. I hope that she has learnt that lesson and that we do not end up with a G and T with all tonic and no gin. I also want to challenge her on what “no worse off than a free-of-tie licence” means. Does it mean no worse off in terms of profitability, turnover, overall cash or, indeed, the whole package of measures?

I do not have time to run through the other issues, but I want to highlight some of the statements made by other Members. My hon. Friend the Member for East Lothian (Fiona O’Donnell) spoke of how her local pub had diversified into other things, such as a beauty salon, and challenged us to suggest whether she spent more time there or in the bar. Given her natural beauty, I would suggest she spent more time in the bar. My hon. Friend the Member for Hammersmith (Mr Slaughter) gave an interesting analysis of Punch Taverns, which is now taking 124% of profit, rather than the 41% from

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some time ago. The story of Mary Spence, which my hon. Friend the Member for Rochdale (Simon Danczuk) told us about, emphasises how bad the industry can get.

On the eve of this debate the Secretary of State panicked, but he has announced stuff that Labour Members will be accepting, although we will monitor the progress of the code’s development closely to ensure that, as the Prime Minister would put it, it does exactly what it says on the tin. I am sure that many hon. and right hon. Members who have spoken today may be getting a free pint in their local pub, given the amount of free publicity they have given them. I am off to do a pub crawl around all those pubs after this debate and you are very welcome to join me, Mr Deputy Speaker.

4.22 pm

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson): I thank all Members who have contributed to this afternoon’s debate. We have heard speeches from 18 Members and interventions from many more.

I particularly thank the Chair of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey), and his predecessor, the hon. Member for Mid Worcestershire (Peter Luff), for the work they have done on this issue over many years, which is a good example of the effectiveness of Select Committees working in a persistent, constructive and responsible way. Many other Members have campaigned on this issue for many years, including the hon. Members for Northampton South (Mr Binley) and for Easington (Grahame M. Morris), my hon. Friend the Member for Leeds North West (Greg Mulholland), who made a typically powerful contribution to today’s debate and has done so much with the all-party save the pub group, and my hon. Friend the Member for Cheltenham (Martin Horwood), who introduced a private Member’s Bill a couple of years ago. I also thank the many thousands of constituents up and down the country who have taken an interest in this issue, whether as landlords or, as the hon. Member for Bradford South (Mr Sutcliffe) put it, “practitioners” of pubs.

In what was a generally consensual debate, the hon. Member for Chesterfield (Toby Perkins) proposed potential court action. I can reassure him that it is not necessary, because the Morning Advertiser corrected the article that had incorrectly attributed quotations to me. I can confirm to the House that I did not say that the self-regulatory approach was working.

Today we have heard stories from Members in all sorts of constituencies of publicans who have faced real injustice and unfairness—horror stories about rent hikes out of kilter with the market, about extra charges and add-ons that they did not know about when they signed up and about people who have been driven out of business. For me, one of the most shocking figures is the comparison between the incomes of tied lessees and of those publicans who are in non-tied leases. Almost half of tied lessees earn less than £15,000 a year. That is an astonishing figure, when we consider the long hours that people put into running their pubs, and the fact that that income is often shared by a couple. The figure for non-tied lessees earning less than £15,000 a year is

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22%, or one in five. The Government will be acting on this, and I welcome the broad cross-party support for what we are doing.

We have heard some horror stories this afternoon, but there have also been some lighter notes in the debate. We have heard about pubs being the scene of a range of events. The hon. Member for Rochdale (Simon Danczuk) mentioned the “dragon”, Hilary Devey, working undercover in a pub. My hon. Friend the Member for South East Cornwall (Sheryll Murray) talked about being the first Cornish MP to pull a pint in her local pub. My hon. Friend the Member for Pendle (Andrew Stephenson) talked about the three shifts that he had done as a barman in his local pubs, and told the House about the Pendle beer festival. I understand that you also have a pub as a neighbour, Mr Deputy Speaker. We heard from the hon. Member for Clwyd South (Susan Elan Jones) about the triumph of the Bridge End winning CAMRA pub of the year, and the hon. Member for Chesterfield told us about his drinking mineral water in his local pubs. Perhaps the most touching story was that of the romance and engagement of the hon. Member for Ashfield (Gloria De Piero).

The Chair of the Select Committee rightly said that what we are doing will not be a panacea, but it will help. Members raised a range of other issues, including the beer duty escalator, on which we had a debate in the House recently. That is a matter for the Chancellor, and I am sure that Treasury colleagues will be following this debate closely through Hansard.

Andrew Griffiths rose

Jo Swinson: I am sorry. Owing to the lack of time, I must press ahead with my summation.

A differential beer duty was suggested, but it would not be possible to introduce such a scheme on the basis of where alcohol was being sold. However, the Government have already acted on a differential duty in relation to the strength of beer. In October 2011, the duty on high-strength beer rose and the duty on low-strength beer fell. My hon. Friend the Member for Pendle made an important point about minimum pricing, which could help pubs to regain an advantage when competing against low-priced supermarket booze.

My hon. Friend the Member for Burton (Andrew Griffiths) said that regulation might not be needed. That might not be a popular argument today, but I understand what he is saying. It is right that the Government should regulate only as a last resort, and that we should seek alternative solutions first. We have sought solutions, however. The industry was put on notice last year and, sadly, it has not delivered. My hon. Friend also mentioned his concern about a two-tier system. It is right that we should focus regulation on those with the greatest market power. That is proportionate because the evidence shows that the greatest problems are in that part of the industry.

As my right hon. Friend the Secretary of State mentioned, the consultation sets out that that regulation would relate to the six largest pub companies, with a threshold of 500 tied or tenanted properties. Those companies would be Punch, Enterprise, Marston’s, Greene King, Admiral and Star. Our consultation will listen to views on what the right definition and the threshold should be. I hear the point made by my hon. Friend the Member for Sherwood (Mr Spencer) that the threshold

9 Jan 2013 : Column 387

should be lower than 500. I encourage hon. Members who have a view on those issues to contribute to the consultation.

There has been much debate on the free-of-tie option this afternoon, and there are arguments on both sides. The hon. Member for York Central (Hugh Bayley) said that the tie must go, but I believe that the beer tie can be important, especially for small family breweries such as those mentioned by my hon. Friend the Member for South Derbyshire (Heather Wheeler). Indeed, in January 2011, CAMRA stated:

“Without the right to tie pubs, the Family Brewers wouldn’t bring their beers to the bar. Closures amongst the smaller brewers would be inevitable. The tie is a viable way for them to run their pubs.”

The problem is not the tie, as such, but the abuse of the tie.

Toby Perkins: Will the Minister give way?

Jo Swinson: I will give way briefly; I am conscious that I must respond to the debate.

Toby Perkins: There has been a great deal of cross-party agreement in the debate, and many people will be watching it on television. Will the Minister confirm that she will support our motion, so that we can all work together and ensure that we get to where we want to be?

Jo Swinson: I can confirm to the hon. Gentleman that we will support the amendment, which does something that his motion does not do—namely, it proposes the introduction of an adjudicator, on which the Government are going to consult. I believe that that is essential, but it is missing from the hon. Gentleman’s motion. However, I welcome the fact that he has brought this topic forward for debate today.

“A new independent statutory code of practice should be imposed to uphold the prime principle—that the tied tenant should be no worse off than if free of tie”.

Those are not my words, but those of the Independent Pub Confederation. That is the key principle on which the new statutory code should be based. This will be looked at across the board—taking into account the profits, the prices, the insurance, other benefits and the rents—and the adjudicator will be able to look at the whole picture. Having higher beer prices mitigated by lower rents and business support is a valid business model, but having higher beer prices and higher rents is just a rip-off. As the right hon. Member for Torfaen (Paul Murphy) said, the combination of the two is what causes the problems.

Let me deal briefly with the process and timetable. The Government propose a consultation of six weeks, and we will publish it as soon as possible in the spring. The adjudicator would have to be established by primary legislation, and we are keen to press ahead with the timetable. The House’s support will be helpful in that regard. We will consult on the details in the consultation, and I encourage those interested to ensure that they set out their views. To respond to an earlier query, the consultation will include the future role of self-regulation and of the Pubs Independent Conciliation and Arbitration Service. The power to fine, which the hon. Member for

9 Jan 2013 : Column 388

Corby (Andy Sawford) mentioned, is certainly envisaged for severe cases, which will of course be decided by the adjudicator.

In conclusion, we want to build a stronger economy and a fairer society, and the Government’s action on pubs will help to achieve both objectives. It will create a stronger economy because pubs are an important part of it, and this will help them to thrive. As for a fair society, pubs are also an important part of our communities and this action will help to put a stop to lessees being treated unfairly by large companies and to abuse of the beer tie. This is good for publicans, good for pubs and good for the public.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.

The House divided:

Ayes 246, Noes 311.

Division No. 131]


4.31 pm


Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Ashworth, Jonathan

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Banks, Gordon

Barron, rh Mr Kevin

Bayley, Hugh

Beckett, rh Dame Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blears, rh Hazel

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Buck, Ms Karen

Burden, Richard

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, Mr Alan

Campbell, Mr Ronnie

Caton, Martin

Champion, Sarah

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Corbyn, Jeremy

Crausby, Mr David

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Sir Tony

Curran, Margaret

Dakin, Nic

Danczuk, Simon

David, Wayne

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Donohoe, Mr Brian H.

Doughty, Stephen

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Engel, Natascha

Esterson, Bill

Evans, Chris

Farrelly, Paul

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Fovargue, Yvonne

Francis, Dr Hywel

Gapes, Mike

Gardiner, Barry

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goggins, rh Paul

Goodman, Helen

Greatrex, Tom

Green, Kate

Greenwood, Lilian

Griffith, Nia

Gwynne, Andrew

Hain, rh Mr Peter

Hamilton, Mr David

Hamilton, Fabian

Hanson, rh Mr David

Harman, rh Ms Harriet

Harris, Mr Tom

Havard, Mr Dai

Healey, rh John

Hendrick, Mark

Hepburn, Mr Stephen

Hermon, Lady

Hillier, Meg

Hodgson, Mrs Sharon

Hoey, Kate

Hood, Mr Jim

Hopkins, Kelvin

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

Jamieson, Cathy

Jarvis, Dan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jones, Susan Elan

Jowell, rh Dame Tessa

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lewis, Mr Ivan

Long, Naomi

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

Mactaggart, Fiona

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCabe, Steve

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McDonagh, Siobhain

McDonald, Andy

McDonnell, Dr Alasdair

McDonnell, John

McFadden, rh Mr Pat

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Meale, Sir Alan

Mearns, Ian

Miliband, rh David

Miliband, rh Edward

Miller, Andrew

Mitchell, Austin

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Munn, Meg

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Osborne, Sandra

Owen, Albert

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Powell, Lucy

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reed, Steve

Reeves, Rachel

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Ritchie, Ms Margaret

Robertson, John

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Sawford, Andy

Seabeck, Alison

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Sheridan, Jim

Shuker, Gavin

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Nick

Smith, Owen

Spellar, rh Mr John

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, rh Keith

Vaz, Valerie

Walley, Joan

Watson, Mr Tom

Watts, Mr Dave

Weir, Mr Mike

Whitehead, Dr Alan

Williams, Hywel

Williamson, Chris

Wilson, Phil

Wilson, Sammy

Winnick, Mr David

Winterton, rh Ms Rosie

Wood, Mike

Woodcock, John

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Tom Blenkinsop


Julie Hilling


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Amess, Mr David

Arbuthnot, rh Mr James

Bacon, Mr Richard

Baker, Norman

Baldry, Sir Tony

Baldwin, Harriett

Barclay, Stephen

Barker, rh Gregory

Baron, Mr John

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Bellingham, Mr Henry

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bone, Mr Peter

Bottomley, Sir Peter

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Browne, Mr Jeremy

Bruce, Fiona

Bruce, rh Sir Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, rh Paul

Byles, Dan

Cable, rh Vince

Cairns, Alun

Campbell, rh Sir Menzies

Carmichael, rh Mr Alistair

Carswell, Mr Douglas

Cash, Mr William

Chishti, Rehman

Chope, Mr Christopher

Clappison, Mr James

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, David T. C.


Davies, Glyn

Davies, Philip

Dinenage, Caroline

Djanogly, Mr Jonathan

Donaldson, rh Mr Jeffrey M.

Dorries, Nadine

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Ellis, Michael

Ellison, Jane

Ellwood, Mr Tobias

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Fallon, rh Michael

Farron, Tim

Field, Mark

Foster, rh Mr Don

Freeman, George

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Graham, Richard

Grant, Mrs Helen

Grayling, rh Chris

Green, rh Damian

Greening, rh Justine

Grieve, rh Mr Dominic

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, Stephen

Hands, Greg

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Hart, Simon

Harvey, Sir Nick

Haselhurst, rh Sir Alan

Hayes, Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendry, Charles

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Horwood, Martin

Howarth, Sir Gerald

Howell, John

Hughes, rh Simon

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, rh Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kennedy, rh Mr Charles

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Latham, Pauline

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leigh, Mr Edward

Leslie, Charlotte

Lewis, Brandon

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lidington, rh Mr David

Lilley, rh Mr Peter

Lloyd, Stephen

Llwyd, rh Mr Elfyn

Lopresti, Jack

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

MacNeil, Mr Angus Brendan

Main, Mrs Anne

Maude, rh Mr Francis

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McLoughlin, rh Mr Patrick

McPartland, Stephen

McVey, Esther

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Miller, rh Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Newmark, Mr Brooks

Norman, Jesse

Nuttall, Mr David

O'Brien, Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Paice, rh Sir James

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penrose, John

Perry, Claire

Phillips, Stephen

Pickles, rh Mr Eric

Pincher, Christopher

Prisk, Mr Mark

Pritchard, Mark

Pugh, John

Randall, rh Mr John

Reckless, Mark

Redwood, rh Mr John

Reid, Mr Alan

Rifkind, rh Sir Malcolm

Robertson, Angus

Robertson, rh Hugh

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Sharma, Alok

Shelbrooke, Alec

Shepherd, Sir Richard

Simmonds, Mark

Simpson, Mr Keith

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stanley, rh Sir John

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Streeter, Mr Gary

Stride, Mel

Stuart, Mr Graham

Stunell, rh Andrew

Sturdy, Julian

Swayne, rh Mr Desmond

Swinson, Jo

Swire, rh Mr Hugo

Syms, Mr Robert

Tapsell, rh Sir Peter

Teather, Sarah

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vaizey, Mr Edward

Vara, Mr Shailesh

Vickers, Martin

Walker, Mr Charles

Walker, Mr Robin

Wallace, Mr Ben

Walter, Mr Robert

Watkinson, Dame Angela

Weatherley, Mike

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whiteford, Dr Eilidh

Whittingdale, Mr John

Wiggin, Bill

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Williamson, Gavin

Wilson, Mr Rob

Wishart, Pete

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Karen Bradley


Mark Hunter

Question accordingly negatived.

9 Jan 2013 : Column 389

9 Jan 2013 : Column 390

9 Jan 2013 : Column 391

9 Jan 2013 : Column 392

Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.

Question agreed to.

The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).


That this House recalls its Resolution of 12 January 2012 on pub companies; recognises that a wide body of experts share the view that only a statutory code of practice and an independent adjudicator will resolve the contractual problems between the pub companies and their lessees; calls for a statutory code, which would enshrine in law both an overarching fair dealing principle and the fundamental principle that a tied licensee should be no worse off than a free-of-tie licensee; and believes that the consultation will establish how best to do this, as well as producing proposals for a strong adjudicator with the power to arbitrate disputes, investigate breaches of the code and impose sanctions, including financial penalties for the most severe breaches, as soon as is practicably possible.

9 Jan 2013 : Column 393

Rising Cost of Transport

4.45 pm

Maria Eagle (Garston and Halewood) (Lab): I beg to move,

That this House believes the rising cost of transport is adding to the financial pressures facing many households; notes that the Government failed to honour its pledge to cap this month’s rail fare rises at 1 per cent above inflation, resulting in some fares rising by as much as 9.2 per cent; recognises that this was a direct consequence of the Government’s decision to give back to the private train operators the right to increase fares by up to an additional 5 per cent beyond the increase set by Ministers; further notes that bus fares increased on average by more than twice the rate of inflation in 2012; calls on the Government to ban train operators from increasing fares beyond strict limits and to rule out the proposed introduction of a new category of super peak ticket which would increase the burden on hard-pressed commuters; and further calls on Ministers to support transport authorities pursuing Quality Contracts to bring accountability to bus fares, instead of using Better Bus Area funding to penalise authorities seeking to get better value for money for these taxpayer-funded services.

I begin by thanking and paying tribute to my hon. Friend the Member for Barrow and Furness (John Woodcock), who has decided, because of a head injury, to step down from his duties on the Front Bench. He has been an excellent, hard-working colleague, full of ideas, and I thank him very much for all the work he has done in my team. I know that he will be back.

The cost of transport is rising; it is rising by more than the rate of inflation—by much more in many cases. That increase is being fuelled by an out-of-touch Government and Transport Ministers who just do not seem to understand the pain they are imposing on hard-working people. Returning to work after the new year, those who commute by rail found that the price of their tickets had increased by an average of 4.2%, and by as much as 9.2% on some routes. Over the past year, bus fares have increased by more than twice the rate of inflation and motorists have found that VAT at 20% wipes out any relief they have had from the deferral of increases in fuel duty. Yet most people are not seeing their wages go up by anything like as much as those increases, and for many their wages or salaries are stagnant or falling.

Mr Marcus Jones (Nuneaton) (Con): Does the hon. Lady not acknowledge that if her party were still in government and fuel duty had been 13p a litre more than it is today under this Government, bus fares would have increased even more?

Maria Eagle: The hon. Gentleman knows that his Government have cut the bus service operators grant by 20%. As for any policies that a re-elected Labour Government may have carried out on fuel duty, it is just speculation to say that they would or would not have been cut or kept; it is completely speculative to suggest that there may not have been any changes in the intervening two years—

Mr Jones: Will the hon. Lady give way?

Maria Eagle: No, I think once is enough.

Together with the rising costs of housing, fuel and food, the rising cost of transport is adding to the cost-of-living crisis now making life much tougher for households across Britain. Yet Transport Ministers and

9 Jan 2013 : Column 394

the Government are so out of touch with the pressures that families are under that they are making it easier for private train companies and bus companies to hike fares and increase their profits—

Henry Smith (Crawley) (Con): Will the hon. Lady give way?

Maria Eagle: I will in a moment. These companies are doing that off the back of struggling commuters and passengers. The pain is not yet over. This year, we are set to see even greater pressure from the rising cost of transport as the Government unveil their rail fares and ticketing review, with proposals for even higher fares at the times when most people need to travel.

Andrew Gwynne (Denton and Reddish) (Lab): Is not the really sneaky thing the Government’s allowing train companies to regain the power of so-called flexibility, which enables them to increase rail fares by up to 5% on top of the regulated fare increase? The Labour Government removed that power from them in 2009.

Maria Eagle: My hon. Friend is entirely correct. Even now, this Government could put that right by simply removing that power from the train companies, as we did in office. I invite the Secretary of State, who is relatively new to his job, to consider that.

We have Transport Ministers and a Government who are so out of touch with the pressures that families are under that they are making it easier for the private train and bus companies to hike fares and increase their profits off the back of struggling commuters and passengers.

Henry Smith: Will the hon. Lady give way?

Maria Eagle: I will give way to the persistent hon. Gentleman.

Henry Smith: I am grateful that my persistence has paid off. Will the hon. Lady acknowledge the considerable investment in rail? For example, my constituency has a £26 million upgrade of Three Bridges station, a £53 million upgrade of Gatwick station and extra rolling stock from Thameslink and Southern. The travelling public are seeing real improvements.

Maria Eagle: I acknowledge that over a number of years, under the current Government and the previous Government, there has been big investment in rail travel. That is a good thing and I do not deny that.

Steve McCabe (Birmingham, Selly Oak) (Lab): I want to point out that the situation is not uniform. In my constituency, London Midland has sacked the people who work in the ticket office and installed machines and CCTV cameras that do not work. Despite a promise made by the Secretary of State to the House in a recent statement, there is no evidence that security has been improved at all.

Maria Eagle: My hon. Friend is correct. Significant problems are occurring with London Midland’s handling of its franchise. I know that Ministers are considering that and I hope that they will be tough and ensure that the passengers—

9 Jan 2013 : Column 395

The Parliamentary Under-Secretary of State for Transport (Norman Baker): We are.

Maria Eagle: We will wait and see what action the Government take before we conclude that they are being tough—I am just encouraging them to be tough.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): Will the hon. Lady give way?

Maria Eagle: I want to make a little progress, but I might allow the hon. Gentleman to intervene a little later.

The pain is not over yet. This year is set to see even greater pressures from the rising cost of transport as the Government unveil their rail fares and ticketing review, with proposals for even higher fares at the times when most people need to travel. Ministers are to reform bus funding in a way that, deliberately it would seem, will penalise transport authorities that seek to regulate bus fares in the way they are regulated in London.

In contrast, as we set out in our motion, Labour would be taking steps now to ease the pressure on those who rely on our public transport system, standing up to the train and bus companies on behalf of commuters. We would be on the side of passengers, not vested interests.

Last September this House debated rail fares, and to the frustration of commuters—and many on the Government Benches, judging from what they told their local papers—the Prime Minister marched his MPs through the Lobby to oppose Labour’s motion to cap fare rises at 1% above inflation. Of course, Liberal Democrat MPs were marching alongside them. Yet within a month of Tory and Liberal Democrat MPs voting down Labour’s attempt to help commuters, we had a U-turn. On the eve of his party conference, the Prime Minister finally said that he agreed with Labour, and pledged to cap the annual fare rise at 1% above inflation. As commuters found when they returned to work this month, however, that was yet another broken promise from this Prime Minister and this Government, because fares were capped not at 1% above inflation, but at 9.2%. The reason the Prime Minister could not honour his pledge to commuters is clear: he was simply unable or unwilling to stand up to the vested interests in the private train companies. They had lobbied hard before the last election to get an agreement that the Conservative party would give back to them a power that had been taken away by the Labour Government when times got tough—the right to turn the annual cap on fare rises into an average, turning a cap of 1% above inflation into fare rises of as much as 9.2%.

The Secretary of State for Transport (Mr Patrick McLoughlin): I am surprised by what the hon. Lady says. She said that the previous Labour Government took that power away from the train operators when times got tough. Will she confirm that times got tough in 2010, which coincided with a general election?

Maria Eagle: No. There was a rule change that would have applied each and every year after the decision was made. Lord Adonis, who was in post at the time as Transport Secretary, took that decision and had been absolutely clear about it. If anybody in the House

9 Jan 2013 : Column 396

doubts that, they can read the Select Committee on Transport report on rail fares and franchises, published in July 2009. Lord Adonis told the Committee:

“The Government's intention is, therefore, that in future the cap should apply to individual regulated fares, not just to the average of each fares basket.”

He did not say “for one year” but “in future.” As Lord Adonis reaffirmed last year, when the issue came up:

“It was my firm intention to continue the policy for subsequent years, and I was mystified when…my successor”—

that is, the right hon. Member for Runnymede and Weybridge (Mr Hammond)—

“reinstated the fares flexibility. The only people who supported this change were the train companies.”

I do not therefore accept that the cap was a one-off or that it would not have continued into the future under a Labour Government.

How have the Government reacted? The Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), told passengers to stop complaining because fares are

“not nearly as expensive as is being presented”,

and then told peak-time commuters that they were paying for a premium service. I assure the Under-Secretary that many passengers do not feel that that describes their experience in getting to work in the morning on an overcrowded train. They do not agree with him that fares are not expensive.

Meanwhile, it was revealed that the hon. Gentleman’s colleague, the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns), was avoiding taking the train altogether, and had a chauffeur bill to and from his constituency—a commute that would take just half an hour by train on a season ticket that would cost taxpayers not £80,000 a year but £4,500 a year. Transport Ministers—

Daniel Kawczynski rose—

Maria Eagle: No, I will make some progress. We have out-of-touch Transport Ministers and a Prime Minister not willing to enforce his own commitment on fares.

The Minister of State, Department for Transport (Mr Simon Burns) rose—

Maria Eagle: I will give way to the Minister.

Mr Burns: Will the hon. Lady withdraw the accusation that she has just made—that the service to Chelmsford cost £80,000? If she had done her homework or was being fair, she would know that pool cars cost the Department a flat rate of £80,000 for the year, regardless of how many journeys they make or how far they travel. Even if the car stopped coming to Chelmsford, the flat fee would still be paid at the same level.

Maria Eagle: I note the right hon. Gentleman’s attempt to argue that he is actually saving money for the taxpayer, and I will leave that for those who wish to report on these things to decide.

Daniel Kawczynski: I am rather disappointed that at the start of the hon. Lady’s speech she did not acknowledge that there had been significant increases in rail fares

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under the previous Labour Administration. Her argument would hold more water—we are all concerned about rising prices—if she had acknowledged that that had happened under her Administration as well.

Maria Eagle: I do acknowledge that there were rail fare rises of RPI plus 1 under the previous Labour Government, but when times got tough after the global banking crisis and financial crash, the last Government acted to protect commuters. As households struggled, we immediately changed the rules to force train companies to apply strictly the cap on train fares. That was 1% above inflation, not the up to 9.2% that we have seen this year. That rule change would have applied each and every year from then on—

Gareth Johnson (Dartford) (Con) rose—

Maria Eagle: If the hon. Gentleman allows me to answer the point put to me, I might consider giving way to him a little later.

Putting train companies before commuters is what this Government are doing; when times got tough, we acted to try to support commuters. In future, if we get the chance, we will restore the rule and put it into law so that passengers will always know that the cap on fare rises set by Ministers is the one they see at the ticket office.

As I have said before, I believe that the previous Labour Government should have been bolder in taking on the train companies and they should have done so sooner, but the important fact is that we acted when times got really tough. This Government are just clobbering commuters even more.

Mr Jones: Will the hon. Lady give way?

Maria Eagle: No. I wish to make a little progress.

I think I have answered the point made by the Minister of State. If he is trying to argue that paying for a car is saving money because he is not having to pay for commuter rail fares, that is extraordinary.

Mr Jones rose—

Maria Eagle: No, I will not give way to the hon. Gentleman.

Buried in the innocuous-sounding Government paper “Rail Fares and Ticketing Review” is a plan to introduce a new category of ticket—the super-peak ticket. It proposes

“a ‘high-peak’ fare priced higher than the current Anytime day fare/a season ticket priced higher than the current season ticket.”

So a commuter who is already paying thousands of pounds for their season ticket faces this year being told that their very expensive purchase is not valid on every train, even if they have no choice about when they have to get to work, and most people do not have that choice. With a captive market, train companies will be allowed to hike fares even higher than they are now on services that suffer the most overcrowding and where there is already no guarantee of a seat. Only this Government would think that the answer to overcrowding on our trains is to price all but the richest off those services.

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The Defence Secretary gave away this Government’s view of the railways when he was Transport Secretary—“a rich man’s toy”, he called them.

When these tickets are introduced, an even nastier shock is awaiting commuters because the Government’s paper includes modelling on how much the cost of these new super-peak tickets could rise each year. Here is what the Government chose to include in their paper as apparently the favoured option:

“some fares (in the high peak) rising by an additional 7% annually (an additional 40% over the course of five years)”.

So there it is in black and white: new super-peak tickets introduced, with their cost then rising by 7% a year and 40% in just five years. We agree with the Transport Committee, which last week in its report, “Rail 2020”, urged the Government to

“rule out forms of demand management which would lead to even higher fares for commuters on peak time trains”.

The Secretary of State should take the opportunity of today’s debate to do just that, and I hope he will. If he does not, Labour will oppose any attempt to penalise commuters with new super-peak tickets.

The Government are not only hiking the cost of travelling by train but making it harder to buy the cheapest fare by supporting the campaign for the private train companies to close ticket offices or reduce their opening hours. The Government’s paper, “Rail Fares and Ticketing Review”, says:

“Ticket offices are the most expensive way of selling tickets…Train operators will be expected to reduce their costs and this is one important option they will want to consider…it may not be possible or appropriate for ticket office opening hours to continue at current levels.”

It may well be inconveniently expensive for the train companies to have to employ staff to sell tickets to their passengers, but it is one of the best ways for many customers to ensure that they purchase the cheapest ticket, not least when we have a ticketing system so complex that it can be very confusing. Surely decisions should be made on the basis of what is least expensive for passengers, not what is least expensive for train companies.

We know that Ministers do not plan on listening because we have seen leaked e-mails from the Department for Transport showing that plans to close ticket offices are already well advanced. This is what one official said in an e-mail to the Department’s press office advising it on what it could say on ticket office closures:

“We can’t say that the Government has no plans to close ticket offices because we have an application from London Midland where the minister has already decided to approve some ticket office closures (it’s just not been announced yet…and there will be more of those in the future.”

When I first read that out last year during Transport questions, the Minister, the hon. Member for Lewes, said that the official must have been mistaken as he had not approved any ticket office closures. Yet weeks later it was announced that the Minister had indeed approved London Midland’s plans to close some ticket offices and reduce the opening hours of others, despite the company’s abysmal performance in recent months which has caused such misery for passengers. What is even more revealing in the leaked e-mail is that it shows how

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the Government intend to pass the blame for those closures on to the train companies. This is what the official told the press office:

“your way of slipping in there that the initiative comes from the TOCs”—

the train operating companies—

“not us is very neat.”

So that is the Government’s plan for fares and ticketing: ticket prices rising by as much as 9% every year; more expensive new super-peak tickets which mean that season ticket holders will not even be able to get on every train without paying up to 40% more than other passengers over the next five years; and new freedoms for train companies to close ticket offices, making it harder for passengers to get the best deals. What a contrast with the ideas to make fares and ticketing fairer and simpler that we have heard as a result of listening to passengers during our policy review process.

Those ideas include a clear definition of peak and off-peak, to prevent passengers from facing massive extra charges on the train because it was not clear when peak time ended, and to prevent train operators stretching their peak time to stretch their profits at the expense of passengers. Another is a legal right to the cheapest ticket, so that passengers are offered the cheapest deal available, with rights to refunds if they find that they were mis-sold a more expensive ticket.

Another idea is a more flexible way for passengers to change travel plans so that if, through no fault of their own, they just miss a train and have an advance ticket, they can take the next train without incurring a massive new fare on board. Another is a right to a discount for a rail replacement bus service, because if your train, Mr Deputy Speaker, becomes a bus, which usually results in a longer journey, it should be treated in the same way as a service that is delayed for any other reason. Finally, it is suggested that there should be a cap on annual increases in station car parking charges, because it is increasingly clear that some train companies are squeezing yet more money out of hard-pressed commuters by whacking up parking charges when we should be making it easier for people to leave their car at the station and commute, because by doing so they are helping to cut congestion and helping the environment.

Gareth Johnson: Will the hon. Lady give way?

Henry Smith: Will the hon. Lady give way?

Maria Eagle: No. Those are the changes to fares and ticketing that passengers want, not the Government’s approach, which seems to be more about what is in the best interests of the train companies, not commuters.

If the Government are out of touch with the impact of fare rises on commuters, Ministers are even more woefully out of touch with the consequences for bus fares and services of their funding decisions since the election. When they set out plans to cut 28% of funding from local transport and axe a fifth of the direct support for bus services, Ministers claimed, incredibly, that that could be done without an impact on fares. The Minister, the hon. Member for Lewes, told the House:

“When I spoke to the industry following the spending review announcement, it indicated that the cut was so minimal that it

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hoped that it could absorb it without fares having to rise, which is what we hope will happen.”—[

Official Report

, 2 December 2010; Vol. 519, c. 953.]

What incredible naivety.

For the subsequent two years, those who rely on local bus services have had to listen to the Minister, with his fingers in his ears, denying all knowledge of the consequences of the cuts. At Transport questions last April, he said of bus services that

“there have not been the cuts that the Opposition are so keen to talk up.”—[Official Report, 19 April 2012; Vol. 543, c. 485.]

At Transport questions in November, he again refused to accept the truth when my hon. Friend the Member for Nottingham South (Lilian Greenwood) warned him of the higher fares and reduced services in communities up and down the country.

We now have the truth, because the Government have had to publish the annual bus statistics for 2011-12. They clearly show an average increase in bus fares of 6.5% in England and an even higher average increase of 7.6% in non-metropolitan areas. Those are increases of more than double the rate of inflation on services that are relied on by some of the poorest in our communities.

Angela Smith (Penistone and Stocksbridge) (Lab): Will my hon. Friend consider whether the impact of those increases will be felt by young people in particular, who have to pay high fares to get to college and to work and who are suffering a great burden because of the increases being visited on them by the Government?

Maria Eagle: My hon. Friend is right. The Government’s own statistics also reveal the truth on lost services. Directly contradicting the Minister’s claims, they show that between 2010-11 and 2011-12, mileage on supported services dropped by 10% in non-metropolitan areas in England and by 7% in metropolitan areas.

Bill Esterson (Sefton Central) (Lab): My hon. Friend’s point about lost services is crucial to those who live in villages in my constituency, particularly older people who do not have another option for transport. They face higher transport costs because there is no bus service any more. I am sure that my hon. Friend will agree that that is a consequence of what she is saying.

Maria Eagle: My hon. Friend is correct in explaining the experience that his constituents are living through. These are not just statistics, but the loss of actual services. Research by the Campaign for Better Transport has found that 41% of local authorities have been forced to cut services that are socially necessary and the support that they give them. That is on top of the cuts from the previous year, when one in five local council-supported bus services were cut or cut back. A tenth of councils have had to cut more than £1 million from support for bus services.

The Government’s own watchdog, Passenger Focus, has warned that the reduction in those services will impact disproportionately on

“older people, less affluent households, those with health related issues, or households containing teenagers”.

I hope that Ministers will accept that they cannot remain in denial any longer about the impact of the cuts to bus services—cuts that could have been avoided in their entirety just by using the Department’s underspend

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from last year, which Ministers handed back to the Treasury. Ministers need to explain to parents why they are having to struggle with the extra costs of getting their teenagers to college. They should explain to pensioners why the Prime Minister’s election pledge to protect their bus pass did not extend to protecting their local bus services, leaving many with a bus pass but no bus on which to use it, thereby reducing their access to shops and vital services and increasing their isolation.

Gareth Johnson: I am very grateful to the hon. Lady for giving way. Clearly, bus services, train services and transport systems have always had to be paid for in some way or another. Does she feel that most of the burden should fall on the passenger or on the taxpayer?

Maria Eagle: The hon. Gentleman has missed out the profits of rail and bus companies. Perhaps those ought to be looked at as well. As he knows, all Governments have to strike a balance. This Government have to do so, as did the previous one, and that will no doubt be the case for the next one too.

Because bus services outside London were deregulated, local authorities have for far too long been unable to limit fare rises or properly plan the network of local bus services in the interests of passengers and economic growth in their area. That is why the last Labour Government changed the law to enable transport authorities to use quality contracts to move to a tendered model for bus services, thereby bringing accountability over fares.

Kwasi Kwarteng (Spelthorne) (Con): Will the hon. Lady give way?

Maria Eagle: No.

That model means that decisions on fare rises are made by politicians, just as we have always accepted should happen for rail fares and as has happened for bus services in London. However, the integrated transport authorities that are rightly going down that route are finding that they are up against the vested interests in the private bus companies. Stagecoach is the worst culprit and has threatened to close depots, sack drivers and take buses off the road overnight. Sir Brian Souter claimed that he would rather “take poison” than enter a quality contract. His managing director accused the elected accountable transport authority of

“operating in the same camp as Marx, Lenin and Trotsky.”

Have the Government stood by transport authorities that are trying to secure a better deal in the use of taxpayers’ money? No. On the contrary, the Government are using their reform of bus funding to stack the odds even further against transport authorities. They are caving in to pressure from the bus companies and proposing to exclude from better bus area funding authorities that seek greater control over fares through quality contracts. Yet again, the Government are on the side of the wrong people and are putting the interests of the bus companies before bus passengers. The Government should think again and work with councils, not against them. Ministers should say to the bus companies, “You operate successfully in a regulated system right across Europe and you can do so here.” Instead, Ministers are cutting funding, oblivious to the impact on rising fares

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and reduced services, and standing in the way of local authorities that are seeking reform to deliver more for less and keep down fares.

On rail and bus services, the cost of transport is rising by well above the rate of inflation. The Government should listen to passengers, and the House should support the motion. Let this be the last year when the train companies are allowed to turn the so-called cap on fare rises into an average. The Government should restore the strict cap on fares that was introduced by Labour and that they scrapped. They should also listen to passengers about ticket offices and look at the ideas that we have set out to make fares and ticketing fairer and simpler. The Government have so far shown themselves to be completely out of touch on the rising cost of transport and the pressure that it is causing for families who are already feeling the squeeze on household budgets. Today is an opportunity for Ministers to start listening, recognise the consequences of the misguided decisions that their predecessors have taken over the past two years on rail and bus services, and act. I invite the Secretary of State for Transport to do so.

Mr Deputy Speaker (Mr Nigel Evans): Before I call the Secretary of State, I should say that there will be a time limit on contributions. It is difficult to say what the limit will be until the Secretary of State sits down, but I should not think that it will be much more than six minutes.

5.14 pm

The Secretary of State for Transport (Mr Patrick McLoughlin): I start on a bipartisan note by joining the hon. Member for Garston and Halewood (Maria Eagle) in wishing her colleague the hon. Member for Barrow and Furness (John Woodcock), whom I see in his place, a speedy recovery and return to the Front Bench. We all wish him well and understand why he has taken the decision that he has in the short term.

I could not help but think that the hon. Member for Garston and Halewood and myself must have lived in different countries. From listening to her speech, it was almost as if there had been utopia until the general election, with everything fine and wonderful and the train companies bowing to the wishes of the Government and always doing what was right by consumers and the Government. Then I read a few Select Committee reports from the last Parliament to put me on the right track. I could not help but be struck by a report of the Transport Committee from 2006, when it had a Labour majority and a Labour Chairman. It stated:

“Both the Department for Transport and the train operating companies quoted growth and the fact that ‘the UK has the fastest-growing rail patronage in Europe’ as reasons not to be overly concerned about price levels. Indeed, the Government demonstrated breathtaking complacency”

about fares and ticketing. The hon. Lady should not imagine that the problem of fare rises is new. She said that there was no recession then, but we were about to go into one of the biggest recessions that this country has ever suffered. I will come to that a little later, but I am conscious of time—although you did not tell me to be brief, Mr Deputy Speaker, I am aware of the fact that you said there will be a time limit on speeches. I will try to be a lot briefer than the shadow Secretary of State was in her 30-minute opening speech.

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I am afraid that a lot of what the hon. Lady said was a mixture of the ill informed and the inaccurate. The motion does nothing to help passengers or investment, and it says all that we need to know about the Labour party. Let us be plain about some of the facts, which might help the Opposition. The motion calls on the Government to cap regulated fares at 1% above inflation. We have. It was the last Government who planned for 70% of costs to be met by fare payers in 2013 and 2014, which would mean fares rising this year not by 1% above inflation but by double that. The fare rises are lower than they would have been under Labour’s plans. That would have been an additional tax on hard-working commuters that we have not been prepared to impose.

I do agree with the shadow Secretary of State on some things. She has said that

“we should reduce the public subsidy to the rail industry”.—[Official Report, 19 May 2011; Vol. 528, c. 522.]

I agree. She has also said that if she were running the Department’s budget now,

“we would have to make difficult and painful decisions in respect of cutting the deficit”.

Indeed, and Labour did make some of those difficult decisions. She talked about ticket office opening hours, and it is a fact that in the last five years of the Labour Government, Ministers approved cuts in opening hours at approximately 300 stations. Now the Opposition seem to think that that is wholly wrong, but they were only too aware of the need for it when they were in government.

I agree with the hon. Lady, too, that it is right that we have a record level of investment in our railways at the moment, and that railway passengers have to contribute to that as well as the taxpayer. We have more trains and better services and we are delivering new lines. We are also delivering for passengers by capping the average increase in regulated fares at RPI plus 1% not just this year but last year and next.

Mrs Cheryl Gillan (Chesham and Amersham) (Con): I note that my right hon. Friend and his fellow Ministers have a long-term aim of reducing the cost of railways to both passengers and taxpayers, and therefore ending the era of the above-inflation rail fare increase. Will he therefore reassure me that he will not look to the taxpayer and the fare-paying passenger to bear the £33 billion cost of his plans for the High Speed 2 railway?

Mr McLoughlin: I am grateful to reaffirm to my right hon. Friend the Government’s commitment to adopt what was Lord Adonis’s plan for HS2, and I pay tribute to the former Secretary of State. My right hon. Friend and I disagree on HS2. I believe that it is vital for future investment and opportunities for the whole country. I will say more about that in the House in a few weeks’ time.

David T. C. Davies (Monmouth) (Con): Will my right hon. Friend also mention the rise in transport costs for users of the Severn bridge and say whether there is any possibility of capping those increases when the bridge returns to public ownership in 2017-18?

Mr McLoughlin: If I am still Secretary of State in 2017, I will have been the longest serving Transport Secretary. If my hon. Friend will forgive me, I have enough

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problems on my plate without making commitments for 2017. I look forward, however, to a Conservative Government making that decision—that is as far as I will go towards meeting that commitment at the moment.

The fact that we have capped fares to RPI plus 1% will benefit more than a quarter of a million annual season ticket holders by around £45 a year, and some commuters will be more than £200 better off over the two years. The motion before the House is confused in another way. It attacks the flexibility that allows operators to increase some regulated fares by more than RPI plus 1% if they cut other fares by an equal amount—for example, on Virgin Trains the Rugby to Euston season ticket has increased by almost 1% less than inflation. Today, the hon. Member for Garston and Halewood tried to claim that it was not the last Government who introduced that flexibility, or that such flexibility existed for more than one year. The changes to the agreement, which I can read to her, make it clear. The deed of amendment states:

“With effect from 00.00 on 1 January 2010 Schedule 5.5 of the Franchise Agreement will be amended as set out in the Appendix to the Deed…From 00.00 on 1 January 2011”.

Therefore, the agreement was amended for just one year.

Maria Eagle: Is the Secretary of State saying that Lord Adonis, whom he just praised, misled the Transport Committee when he said that he intended the agreement to go into the future and that it was a permanent change? Does he realise—he will find it out in 2014—that the year before an election, the limits of how far into the future one can go in the time of one’s successors are set by Whitehall and are different from those for the beginning of a Parliament?

Mr McLoughlin: I am not accusing the noble Lord of misleading anybody; I am informing the House of what he did as Secretary of State. He may have wished his changes to last longer, but they did not and were solely for that one year. Indeed, when the 5% flexibility was introduced in 2004 it led to some increases of 11% under the previous Labour Government in 2009 alone. That flexibility was suspended for one year—an election year.

However, that is not Labour policy now. How do we know? Well, let us look at Wales where this year under the Labour devolved Administration fares went up by RPI plus 1%, with flexibility of 5%.

Henry Smith: My right hon. Friend is right. Labour says it has changed its policy on fare flexibility, but in Wales, where it is in charge of the devolved Administration, it has agreed flexibility of up to 5% on train fares.

Mr McLoughlin: Indeed; I am grateful to my hon. Friend. I hope no Welsh Labour MPs support the motion tabled by the shadow Secretary of State. If they do, not only will they back up my argument that we are having a synthetic debate introduced by an Opposition who have synthetic policies on transport costs, but they will not mean what they say. When Labour is in a position to change the rules, it does not do so. In Wales, it has accepted the flexibility it believes it needs to provide a proper service; the Labour Government in Wales have acted in exactly the same way as the UK Government.

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Richard Burden (Birmingham, Northfield) (Lab): Will the Secretary of State give way?

Mr McLoughlin: I will, but unfortunately Birmingham is a few miles away from Wales.

Richard Burden: Indeed it is. The Secretary of State says that the debate is synthetic, but the anger of my constituents and many others at the performance of London Midland in the past year is not synthetic. He has recently dumped the deal with London Midland. The good news is that that provides some pre-concessions to passengers, but it is also said that he has not actioned a break clause in the contract. That could have happened at the end of this year, but it has been extended to 2015. It is also unclear what milestones and review mechanisms will be in place to hold London Midland to its word. Will he clarify whether his measures give London Midland more of a free rein or whether he will introduce a measure that forces it to do what it says it will do?

Mr McLoughlin: The Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), has made a statement on that, in which he also outlined some of the requirements we expect of London Midland. He and I will be watching the performance of that franchise very carefully. It is important that we give passengers the service they rightly expect and demand. We have put in place a number of measures that will cost London Midland considerable money to put into operation, and I expect it to do so.

I am conscious of the time—time moves on when I am continually trying to help colleagues to understand where their policies have gone wrong in the past. We are looking at ways to improve our railway services. As I have said, the Labour party, which is in control in Wales, has kept exactly the same flexibility on rail fares that the UK Government have retained.

In 10 years, the Labour Government electrified only 10 miles of railways; this Government will electrify 850 miles, including the midland main line, for which my hon. Friend the Member for Loughborough (Nicky Morgan), the Whip, who is sitting on the Front Bench, has campaigned so hard.

Julie Hilling (Bolton West) (Lab): Will the Secretary of State give way?

Mr McLoughlin: I will give way only briefly, because I am conscious of the time.

Julie Hilling: Does the right hon. Gentleman remember the amount of money the Labour Government had to put into the railway to rebuild it after 18 years of no investment under the previous Tory Administration?

Mr McLoughlin: The hon. Lady is a sadly missed member of the Transport Committee, and was there when I first appeared before it. She should be careful, however, because she was probably a member of the Committee during its inquiry on “Rail 2020”, which quite clearly shows that the worst year for subsidising the railways was 2000-01. I cannot remember what party was in government at that time, but it is true that investment went up afterwards—[Interruption.] She is looking for the page number. Page 9 simply and straightforwardly sets out the record.

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Julie Hilling: Will the Secretary of State give way?

Mr McLoughlin: I must press on. I am sorry I cannot give way to the hon. Lady. The facts I have pointed out are in the report. I will try to make progress and give other hon. Members the chance to contribute to the debate.

We are putting record investment into the railways. In the 19th century, our railway was a symbol of Britain’s innovation—including London’s underground, the first anywhere and 150 years old today. Now, the railway is experiencing an extraordinary renaissance. Last year, the number of passenger miles travelled was almost 50% higher than it was in 2000. More people are travelling by rail today than at any time since the 1920s, and rail freight has grown by more than 60% since privatisation. We have soaring demand, but limited space. Regular passengers on busy lines know only too well what that can mean—overcrowded carriages and uncomfortable journeys. That is not good enough and we are going to sort it out.

In July, we announced £16 billion of funding for the network between 2014 and 2019. Inter-city travellers will benefit from the completion of the northern hub in Manchester, a £240 million investment on the east coast main line and a further £300 million for high-value, small-scale schemes in other parts of the country. We approved a £4.5 billion contract to build a new generation of inter-city trains in County Durham, creating some 900 jobs, and we are procuring thousands of new carriages for Crossrail and Thameslink. We are also getting cracking with HS2, the biggest new transport scheme since the building of the motorways. Meeting demand, however, is only part of the problem.

While the previous Government blew the budget, the railway was allowed to grow wasteful—up to 40% more expensive to run than those of our European competitors. We have therefore had to take a hard look at the industry and have a rail reform programme to tackle the £3.5 billion annual efficiency gap identified by the McNulty report in his rail value-for-money study. Already, major savings are being found. Ultimately, this focus on efficiency will help us to deliver our goal and put an end to above-inflation fare increases at the earliest opportunity. A railway that is efficient and modern is a railway that is affordable to use.

Nia Griffith (Llanelli) (Lab): May I ask the Secretary of State whether, in his drive for efficiency and savings, he can give assurances to the steel industry that it will not be penalised by rail freight charges?

Mr McLoughlin: I will look at the hon. Lady’s point, but I hope she will make representations to the Welsh Assembly following the motion that the hon. Member for Garston and Halewood has tabled. Perhaps the hon. Member for Llanelli (Nia Griffith) will consider not voting for the motion in light of it being in direct competition to what the Welsh Assembly, which I understand is Labour controlled, is doing.

Bridget Phillipson (Houghton and Sunderland South) (Lab): I am conscious that the Secretary of State has not yet referred to bus services. My constituents rely entirely on bus services, as they do not have the luxury of a rail link. Does he agree that it is entirely wrong for

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operators such as Stagecoach to scaremonger about the introduction of quality contracts in Tyne and Wear and to threaten to sack staff and pull out of the region? Should the Government not back up integrated transport authorities, such as mine, which are making decisions that are in the best interests of local people?

Mr McLoughlin: I am coming on to say something about bus companies, but I will not comment on individual contracts that are being negotiated, as it would be wholly wrong of me to do so.

I want passengers to get the best deal from a ticket system that is easy to understand, and that is why we have set up the fare and ticketing review. This is not about higher fares; it is about simpler fares. It is not about catching out passengers who have to travel when trains are busiest, but getting good deals for people when there are seats to spare. Taxpayers, whether they use trains or not, all contribute to the cost of running the railway. I know that when people face big bills and tough times they really feel the pressure of higher fares. That is why we are looking at ideas such as smart ticketing and more flexible season tickets, so that they only have to pay when they actually need to travel. The way we work is changing and it is right that tickets change too.

This Government are on the side of passengers, whether they use trains or buses. That is why we have protected free bus travel for pensioners and are putting in place a level playing field so that operators can compete to bring fares down. The basic truth, however, is that the cost of bus travel has risen, including during the decade to 2010 under the Labour Government, and that is mainly due to higher operator costs, such as fuel.

Sheila Gilmore (Edinburgh East) (Lab): Will the Secretary of State give way?

Mr McLoughlin: I am sorry, but I must make some progress.

From the first day of the coalition Government, our priority has been to tackle the deficit that we inherited, to rebalance our economy, to get people back to work and to boost growth. Transport plays a key part in that process. This Government have capped fare rises. We are getting the investment in, tackling overcrowding, increasing seats and services, and delivering High Speed 2. It is the right deal for passengers and the right deal for Britain’s future.

Mr Speaker: There is a six-minute limit on Back-Bench speeches, and it applies with immediate effect.

5.34 pm

Ian Mearns (Gateshead) (Lab): I welcome the opportunity to speak in today’s debate, which is extremely timely, given the news in today’s newspapers that once again the north-east is to lose out on vital rail infrastructure investment. I want to draw some important links between fares paid, the turnover of rail operating companies, the profits they make and levels of investment.

This morning, The Journal in Newcastle announced that Network Rail’s £37 billion five-year improvement programme looked set to snub a wish list of north-east track upgrades. The Secretary of State just trumpeted

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that 850 miles of line were to be electrified—well, not in the north-east of England, I am afraid. He also mentioned that £240 million was to be invested in the east coast main line. On the basis of current profits and the amount of money going back to the Department for Transport from the east coast main line, that is about one and a quarter years’ operating profit—so not much to be thankful for there. Rail passenger groups have warned that, although some east coast main line work will speed up connections, almost none of Network Rail’s refurbishment money will go to north-east England. Incidentally, the east coast main line is operated by Directly Operated Railways, which is owned, in turn, by the Secretary of State and the Department, so he has significant influence over the company—or certainly should have.

Lines in the region calling out for electrification, new passenger services or full-scale reopening have had their case turned down, as money has gone instead to improving services via Manchester and Leeds, as well as improving links to London. Of the £37.5 billion budget, only a pittance is earmarked for track enhancements in the north-east—mainly for the easing of the so-called pinch points between Northallerton and Ferryhill. From a north-east perspective, projects would help to boost mobility and connectivity in our region and enhance our prospects for economic growth.

This snubbing, yet again, of the north-east is particularly galling given the range of fare deals being offered to north-east customers, compared with our Scottish counterparts, by the east coast main line. We sometimes have to pay £100 more for a journey that is an hour and a half and a 100 miles less. I have no quarrel with my Scottish colleagues and their constituents getting good deals from east coast main line, but on behalf of my constituents, I have a duty to demand the same kind of deals and discounts for the travelling public in the north-east as those from which colleagues north of the border benefit.

The east coast main line is working at a significant profit and contributing those profits to the national pot.

Ian Lavery (Wansbeck) (Lab): I had a look at the fares on the internet just before we came into the Chamber. A return fare from Newcastle to King’s Cross was £301. With the minimum wage at £6.19, that means that people have to pay 48.62 hours of work at the minimum wage for one journey from Newcastle to London return. Is that fair?

Ian Mearns: There is an awful lot about current fare structures that is desperately unfair, particularly for people on low wages and those trying to get jobs, and particularly in a region such as the north-east, where many have to travel to get work.

As the independent report stated in September, a railway company that was temporarily renationalised by the Government three years ago reported increased profits and an improvement in passenger satisfaction. DOR, which took over the running of the east coast line from National Express, said that its operating profit increased by 7% in the year to March to £7.1 million. Turnover for the year amounted to £665.8 million—an increase of £20 million—leaving a profit before tax and service payments to the Department of £195.7 million.

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That was an increase of £13 million. Putting that against the £240 million proposed investment in the east coast main line makes the amount look extremely modest indeed.

I have a great deal of respect for east coast main line as a franchise. I sympathise with its staff, who often work in difficult circumstances, dealing with the failures of creaking infrastructure and worn out rolling stock and equipment, yet an awful lot of what the travelling public have to put up with on the east coast main line could be avoided through some relatively modest investment, which would be entirely affordable given its profits.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): My hon. Friend mentions the east coast main line staff, who do indeed provide a good service to passengers. I am sure that he, like me, frequently comes across people who are confused about whether they have the right ticket for a journey—a train might be late or they might get on the wrong train. The poor staff then have to deal with the problems that that creates. Is that not an example of the kind of complication that drives away passengers and often makes them go for higher fares rather than cheaper ones?

Ian Mearns: Indeed, and one criticism I would make of the last Government is that they did not sort out the complicated franchising system, which has left us with a complicated rail ownership programme across the country.

The Chancellor of the Exchequer proudly announced investment in infrastructure as a means to unlock growth. However, analysis by the Institute for Public Policy Research shows a biased picture. The think-tank examined the data, detailing the projects to be brought forward as part of the national infrastructure pipeline. Of the projects that were identified as benefiting a particular region and where public funding was involved, it found that London and the south-east accounted for 84% of planned spending, compared with 6% in the north. That equates to some £2,700 a head for each Londoner, which is more than the total for all the other regions combined, which includes £201 a head for Yorkshire and Humberside, £134 a head for the north-west and just a fiver for the north-east of England. My constituents do not believe those figures, but they are absolutely right. Why, if we get a meagre £5 of investment per head, should we pay extortionate rises in rail fares, which have risen nearly three times faster than wages since the recession? In fact, between 2008 and 2012, average rail fares increased by 26.6%, with wages rising by just 9.6% over the same period. Recent research by the think-tank Transport for Quality of Life has shown that UK rail fares are the most expensive in Europe and that rail privatisation is costing taxpayers £1.2 billion a year, with train operating companies making large profits on the back of public subsidies.

Speaking of profits, I was appalled to learn recently of a dispute over pay involving east coast main line and a subsidiary company called ISS—International Service System—which centred on its cleaning staff. Cleaners were being paid £6.08 an hour—a figure that is below the national minimum wage and is, I believe, illegal. On top of that, they got no pension scheme, no enhancements for unsocial hours, bank holidays or weekends, no sick

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pay above the statutory minimum and no travel allowances. The east coast franchise, which likes to promote itself as a first-class service, was treating employees of its contract cleaning company in a third-class way. ISS is a huge multinational company, with more than 500,000 employees worldwide, 43,000 of whom work in the United Kingdom. It is disgusting that it was able to do that to its hard-working employees. Indeed, following on from yesterday’s debate, this has a knock-on effect, as the Government have to fork out in-work benefits to many of these people to subsidise the industry.

Pressure must be put on Network Rail by the Government to ensure that north-east services get a fair allocation of resources. Connectivity, particularly by rail, is essential to the economic prospects of regions such as the north-east. Despite their stated commitment to reduce the deficit, the Government still find themselves, month after month, deepening the crisis yet further. When will they recognise the essential link between investment in growth, particularly in regions such as the north-east, and their prime aim of deficit reduction? The two are absolutely connected.

5.43 pm

Andrew Jones (Harrogate and Knaresborough) (Con): The motion before us is very disappointing. It fails to recognise why there are costs in our transport system or what the Government are already doing about them.

I want to focus on the rail network, because it is the transport area undergoing the most significant change, as we are in the biggest period of rail investment since the Victorian era. We all know that there are inefficiencies in our rail system. The McNulty review, which was commissioned by the previous Government, reported inefficiencies of between £2.5 billion and £3.5 billion in the system, and found that our railways were up to 40% less efficient than the best of our European counterparts. Those are inconvenient facts that the motion ignores. It also ignores the success of the industry. As my right hon. Friend the Secretary of State mentioned, there are as many passengers on our rail network now as there were in the 1920s, yet the network is significantly smaller than it was then. That is one of the causes of overcrowding. It also shows, however, that passengers are choosing to use rail.

I am going to talk about an area in which the Government have introduced a radical change of policy that will cut costs for passengers and improve the service they receive. That policy is rail electrification. Let me remind the House of how the UK performs in this area. We have electrified 34% of our network. In 2010, the UK was 20th out of 29 European countries in the league table of electrification. We are ahead of the former Yugoslav Republic of Macedonia, Latvia, Estonia, Greece and Lithuania. Wales and Albania were the only two countries without a single mile of electrified railway.

Why does this matter? It matters because electrified railways are cheaper to run. Electric trains are cheaper to buy. They weigh less, and so put less wear and tear on the network, which in turn costs less to maintain. They require less engine space, and so can accommodate more passengers, which contributes to the capacity issue. They can accelerate and decelerate more quickly than diesel trains. This means that passengers can enjoy faster journey times or that there can be more stops for

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the same journey time, or that there can be a combination of the two. They are also, of course, more environmentally friendly. Rail electrification is part of the long-term solution in taking cost out of running our railways.

I mentioned earlier that this area has seen a radical change of policy direction. Labour managed just 10 miles of rail electrification in 13 years. That is not even a snail’s pace. In contrast, this Government have announced 850 miles, and we are only halfway through this Parliament. That represents a huge change of scale and ambition, tackling cost and capacity for the longer term.

Mrs Gillan: Does my hon. Friend agree that this Government have also led the way by announcing the electrification of the railway line from London all the way down to Swansea and, more importantly, the electrification of the valleys lines in south Wales, which will mean a great deal to a large number of people? I am pleased to say that those measures are supported by Members on both sides of the House, and I look forward to the projects being completed in due course.

Andrew Jones: I completely agree with my right hon. Friend. This is not just an abstract policy; we are seeing real change on the ground, and there is good news right across the country. As she says, the Great Western main line is being electrified between London and Swansea, along with the valleys lines and the vale of Glamorgan line, which will bring electrification to Wales for the first time. The midland main line is being electrified between London and Sheffield, and that will obviously include Loughborough. A matter of great importance to my constituents in Harrogate and Knaresborough will be the electrification of the TransPennine Express services between Leeds and Manchester. That is just part of the massive rail investment that we are seeing in the north. There are many other projects, and I would like to highlight the complete funding of the northern hub, which will vastly increase capacity between our great northern cities.

Those projects involve major long-term funding decisions. Sometimes, we have been reluctant to take such decisions, but not under this Government. The ministerial team deserves praise for that. However, I cannot resist taking this opportunity to highlight a marvellous electrification opportunity. This is a bit of a local advert, and I thank the Ministers for listening. I am talking about the Leeds-Harrogate-York line. The line has up to 3 million passengers a year, its usage is growing rapidly and it serves an area of high economic activity. The area also has a significant visitor economy. The Harrogate international conference centre attracts more than 300,000 visitors a year, and 500,000 visitors attend the Great Yorkshire show each year. The area is so inadequately served by its rail facilities, however, that less than 20% of its visitors arrive by rail.

Electrification of the line is part of the solution. There is enormous support for the electrification of our line—from all the councils along the route, from the West Yorkshire passenger transport executive and, of course, from all the local chambers of trade and commerce. May I therefore ask the Minister, perhaps a little cheekily, to look at what can be done for the Leeds-Harrogate-York line and to meet me and colleagues to discuss it?

The questions we should be asking today about transport costs are not those in the motion before us. We should be looking at the underlying reasons why we have cost

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in the system. I think the Opposition know that, which is why they commissioned the McNulty report in the first place. Overall, I completely agree with the desire to cut the cost of travel in the UK, but I will not support the motion because it fails to take so many important issues into account.

I have been talking about rail solutions, but the Government have been taking action in other areas, as well. We should look at the different approach to fuel duty. The last Government increased fuel duty 12 times, and left office with six further rises planned. This Government have stopped them, and as a result motorists are seeing fuel duty 13p a litre lower.

I welcome the Opposition’s interest in delivering value for taxpayers and passengers, but it is a late conversion. As identified in the McNulty report, they left our rail network inefficient. Under the last Government, rail subsidy went up by 337% at a time when passengers saw real-terms fare rises. Bus subsidies went up by 127%, despite real-terms fare increases again. It is only by tackling the underlying drivers of cost that better value will be delivered for taxpayers. This motion does not even consider that, which is why I will not support it.

5.51 pm

Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Transport is a vital issue. It is essential for people to get to work and to get to social amenities. That is why it is so important that we debate not just the provision of transport itself, but the cost—because transport has to be affordable if it is to be put to best use. I shall confine my comments to the rail service, and I shall refer to some of the findings of the Transport Committee’s report on rail, which was recently published. There will be an opportunity tomorrow to debate the Select Committee’s report on bus services, and I hope there will be the same number of Members in Westminster Hall tomorrow afternoon as there are in this Chamber today.

It is important to note that rail is, in fact, increasingly popular. The number of people travelling by rail has doubled in recent years, while the amount of freight carriage has increased by about 40%. There is rising concern, however, about fare levels. I assume that that explains why the Government’s proposal to increase regulated fares by an average of RPI plus 3% was reduced to RPI plus 1%—because of the public outcry and concern about increased fares. It is also true that the Government are implementing a policy—indeed, they inherited it—whereby passengers were expected to pay an increasingly higher percentage of the cost of rail than the taxpayer. Important issues remain about how this policy is applied, about the cost of running the railways, about how efficiencies can be achieved and about how costs and the allocation of subsidies can be assessed.

Kwasi Kwarteng: The hon. Lady made an important point in saying that both the Conservatives and Liberal Democrats in government and Labour decided to shift to some degree the cost of rail transport from the taxpayer to the passenger. The hon. Member for Garston and Halewood (Maria Eagle) did not comment on the issue from the Front Bench, so I was wondering what level of subsidy and what proportion of the cost should be borne by the passenger?

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Mrs Ellman: At the moment, the overall distribution is about 60% for the passenger and 40% for the taxpayer. In the breakdown of how the funds are allocated on different types of services, however, there are very stark differences. It is in respect of the allocation of the cost and the resultant proportions of contributions made by taxpayers and passengers where further major questions need to be asked. That is why the Select Committee report highlighted the need for more transparency about the cost of different types of services and where the subsidy goes.

The Committee’s main conclusion was that the Government should rule out demand management that would lead to even higher fares at peak times. It made the important point that many people have to travel at peak times in order to get to work.

Mr Andrew Turner (Isle of Wight) (Con): We must all acknowledge that at peak times the demand placed on the rail network can far outstrip supply. How does the hon. Lady think demand can be prevented from exceeding supply? Does she not agree that more should be done to encourage investment in local areas, outside the major cities, in order to remove the need for most of us to commute?

Mrs Ellman: People often travel at peak times because those are the times when they have to get to work. They have no choice. However, there are other ways of addressing the question of demand, and I shall say something about them later.

The report also talks of the importance of achieving efficiencies, although we think that the aim of making efficiency savings of £3.5 billion by 2018, as McNulty recommends, is a challenging one. The bringing together of different parts of the rail industry in the Rail Development Group, and through other means, is welcome, but it is important for the industry then to work in the interests of passengers and the taxpayer, not just in its own interests. It is also important for it not to cut corners and put safety at risk in order to achieve efficiencies. We have high safety standards which should not be jeopardised, and strong regulation is particularly important for that reason. The regulator needs to be able to act firmly and decisively.

Members have mentioned other means of achieving efficiencies and reducing fares, or at least reducing the rate of increase in fares. We need to think about smart ticketing and innovation, and about introducing more flexibility in the way in which fares policy is drawn up and implemented, which has been sadly lacking. There should also be more transparency in the use of public funds. It is extremely important for the rail service to receive a public subsidy, because it is a public service, but it is equally important for the £4 billion public subsidy going into the system this year to be dealt with in a way that people understand, so that they can assess whether it is being used effectively. Not all the information that we have at present enables them to do that.

Jim Shannon (Strangford) (DUP): Will the hon. Lady give way?

Mrs Ellman: I am sorry, but my time is very limited.

Some information has been published about the subsidy for the London North Western route, which, we are told, amounted to £1.2 billion in 2010-11. That is a

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significant proportion of the £4 billion that is going into the overall system. The area covers wide expanses, including the west coast main line run by Virgin and Cumbrian rail services run by Northern Rail. We have been given an overall figure—a very major figure—but we do not know how the subsidy is allocated between different services, or indeed between different parts of the country. That is just one example of the need for more transparency so that we can assess whether subsidies are effective.

I welcome Network Rail’s recent announcement that more than £35 billion will be invested in the next control period, 2014-19. However, the Committee will look at the figures in detail and consider what they actually mean, and the rail regulator will look at them as well before anything is finally approved. It should be noted that although the announcement of more much-needed investment in the rail system has been welcomed, passengers have expressed the fear that they will have to pay for it through even higher fares, which renders the need to look again at a policy on regulated fares even more urgent. The Committee has asked Ministers to do that.

In due course there will be an opportunity to discuss the Committee’s complete findings, and we will do more work on rail franchising and rolling stock acquisitions, another important area in respect of savings. I hope my comments this afternoon have helped to inform the debate. Rail is increasingly popular and a good service is currently offered, but there is increasing concern about fare levels, and we must address that.

6 pm

Mr Alan Reid (Argyll and Bute) (LD): After many years of above-inflation rail fare increases, rail fares are now simply too high, so I am pleased that as a result of pressure from the Liberal Democrats and others, the coalition Government’s previous plan of introducing an increase of the retail prices index plus 3%—which would have made a bad situation even worse—has been dropped and that that increase has been reduced to RPI plus 1%, which means fares will be lower than they would have been under the previous Labour Government.

Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Will the hon. Gentleman give way?

Mr Reid: I certainly will. I wonder whether the hon. Gentleman will draw the House’s attention to the fact that his Scottish National party Government have raised fares to his constituency and to Tiree and Coll in my constituency by 10%.

Mr MacNeil: RPI plus 1% was an SNP Government policy, so this is a case of stolen clothes. Unfortunately, ferry fares have risen for haulage, but there was no effort at all to reduce ferry fares under the Edinburgh Liberal-Labour Administration. Will the hon. Gentleman apologise for that?

Mr Reid: I am certainly not going to apologise after the SNP has just increased ferry fares by 10%. The hon. Gentleman is right, however, that the SNP Government in Scotland copied the Government here, so the rail fare increase in Scotland is also RPI plus 1%.

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Liberal Democrats believe it is important to end the era of above-inflation rail price increases as soon as possible. However, that important aim has to be balanced with the need to raise cash for the investment that our railways so badly need. Our railways have suffered from decades of chronic under-investment, leading to a system which was increasingly inefficient, overcrowded and highly expensive to run. I am therefore pleased that the coalition Government have committed to invest about £16 billion in our railways up to 2019. That will support over £9 billion-worth of improvements, which will help to provide more services and greater capacity, particularly for commuters to our nation’s biggest cities.

The coalition Government are currently overseeing the biggest investment in our railway infrastructure since the Victorian era, and at the same time we are working hard to reform our railways and reduce unnecessary costs. The coalition plans for further rail electrification will also ultimately result in over 800 miles of track being electrified. Many speakers have contrasted that with the record of the previous Government. Our future plans include the important High Speed 2 project. It will create a direct high-speed link between London and Birmingham, which will eventually extend to Manchester and Leeds, and, I hope, Edinburgh and Glasgow as well. That will help enhance rail connections throughout the country and reduce journey times, and boost future opportunities for jobs and growth.

I will not support the Opposition motion, as it has fallen into the typical Opposition party trap of calling for fare cuts while saying nothing about where the money will come from for the investment our railway system so badly needs. Liberal Democrats and Conservatives are working together in government to put our railways on a sustainable footing, and we hope it will soon be possible to keep fare increases below inflation.

Although the country needs to reduce the deficit, I am pleased that the Minister, my hon. Friend the Member for Lewes (Norman Baker), has recently been able to announce more than £120 million of funding for buses, including £31 million for low-carbon buses. I also welcome his launch last year of the Government’s policy document, “Green Light for Better Buses”. It sets out a series of reforms that will attract more people on to the buses, ensure better value for the taxpayer and give local authorities more influence over their bus networks. Ultimately, it is for local authorities working in partnership with their communities to identify the right transport solutions for their areas.

Graham Stringer (Blackley and Broughton) (Lab): Is the hon. Gentleman not aware that outside London there has been a continuing decline in the level of bus patronage and that the real answer to that is, as the shadow Secretary of State said, to have quality contracts or to re-regulate the buses? What are his Government going to do about that?

Mr Reid: The important thing is that the Government work together with local authorities and that power is devolved to them to find the correct solution; this Government are providing money and are working with local authorities.

Cycling has another important transport role to play, and I was pleased with the announcement in the autumn statement of a further £42 million investment in the

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sustainable transport fund for cycling infrastructure, including cycling safety. No matter how much effort is put into providing public transport and encouraging people to use it, in rural areas, particularly sparsely populated ones such as mine, the car will always be part of the transport solution. So I am pleased that the Government abandoned Labour’s fuel duty escalator and have reduced fuel duty by 1p a litre on the mainland and by 6p a litre on the islands. I hope that the Government will soon get the EU approval required to extend this scheme to remote parts of the mainland.

Mr MacNeil: Hear, hear.

Mr Reid: I am glad that policy is welcomed by the hon. Gentleman. This is the one Government policy he is very supportive of, and it has certainly done a tremendous amount for his constituency. I am sure that he is suitably grateful.

Mr MacNeil: Does the hon. Gentleman not feel that the 5p reduction is perhaps a bit small and that, given the price of fuel, we should be striving to make that derogation from the European Union somewhat greater?

Mr Reid: I would certainly support any efforts to increase that discount. Such a move would need EU agreement, but I would certainly be happy to work with the hon. Gentleman to try to obtain it. It is important to point out that from April fuel duty in his constituency will be almost 20p a litre less than it would have been had the previous Government’s policies continued.

I hope the Government will introduce road pricing on motorways and major trunk roads, using that income to reduce fuel duty. Such a system would rightly tax people more for using their car on journeys where there is a public transport alternative. This coalition Government are tackling the problems of lack of investment in our public transport system, in contrast to the Labour motion, which offers no solutions whatsoever. I certainly will not be supporting the Labour motion, and I am sure it will be overwhelmingly defeated.