I am grateful to the Parliament for the opportunity to make a statement on the future of the ScotRail franchise.
This morning, I advised the Parliament that the procurement process for the ScotRail franchise had been completed on time and to plan. The Scottish Government believes that good public transport improves the lives of the people and the economy of Scotland. Following extensive consultation, Scotland’s railway has attracted a world-leading contract to deliver for rail staff and passengers.
The competition has been evaluated rigorously on the basis of the most advantageous balance of quality and price for passengers, staff and taxpayers, and the Scottish Government intends to award the contract to Abellio ScotRail Ltd.
The new franchise contract confirms the Scottish Government’s commitment to transform Scotland’s rail service. The new Abellio Group United Kingdom headquarters will add 50 new jobs to the 150 Abellio ScotRail HQ jobs secured in Glasgow. The franchise will commence on 1 April 2015 and will deliver investment in the service—investment for the benefit of passengers, staff and the taxpayer—for the next 10 years. The improvements that the contract secures will be felt right across the network for the benefit of all of Scotland.
Before I go into detail, I wish to remind members of the context of railway franchising. As members will recall from my statement earlier this year on the award of the Caledonian sleeper franchise, franchising is a requirement under the Railways Act 1993, and it precludes any UK public sector organisation bidding to operate a railway service. As I have stated publicly on many occasions, that is an unfair restriction that ought to be changed so that private and public sector bidders can compete equally. I have written to three Secretaries of State for Transport to request a change in law and each request has been refused.
Over 13 years, the Labour Administration chose not to widen access to rail franchising to UK public sector organisations, despite having ample opportunity to do so—the Transport Act 2000 and the Railways Act 2005 are silent on the issue. In fact, the Labour Administration supported franchising and its restrictions. In 2009, the then Secretary of State for Transport, Lord Adonis, reassured the House of Commons Transport Committee that
“The evidence so far is that the franchising system has continued to prove its worth.”
I am left to deduce from its legislative silence and its vocal support for franchising that the Labour Administration was clearly happy to leave us operating these patently unfair procedures.
This week, we have started laying the tracks of the Borders railway, but the tracks of the franchising process were laid by Tory and Labour Governments at Westminster.
Earlier this week, I was asked to cancel the franchising process. Doing so might have left us liable for bid costs in excess of £30 million from our five bidders. Members should remember that it cost the Department for Transport more than £50 million for the failure of the west coast franchise, about which Ed Miliband said:
“It is a disgrace that it is going to cost £40m and perhaps more of taxpayers’ money because they have bungled this franchise.”
Nobody in the chamber can guarantee what new powers we will get and on what date, but we know that a delay in the process would be for a number of years. It would be costly and a bad deal for the travelling public, and I am not willing to put at risk the expectations of our passengers or the interests of the taxpayer by playing fast and loose with rail franchising.
Despite having to adhere to unfair franchising rules, we have always stated that we would do so competently. Accordingly, we set out a prudent programme for our franchise procurements, with a process managed by an expert team within Transport Scotland. We delivered the Caledonian sleeper franchise on schedule and, today, applying the same competent, prudent approach that has become the hallmark of this Government, we have delivered yet another successful outcome.
Following a pre-qualification process, we attracted five high-quality bids. The bidders, each of which has international interests, demonstrate the global appeal of Scotland. Their participation demonstrates the confidence that they have in Scotland as a place to conduct business. As members know, ministers play no part in the evaluation of bids or in the selection of the winning bidder—those matters are governed by the process that is administered by Transport Scotland officials—but I am advised that each of the bids was of high quality and, after a rigorous evaluation exercise, Abellio came out on top.
At this point, I would like to thank Arriva, FirstGroup, MTR and National Express for their participation and confidence in the Scottish Government’s vision for ScotRail. I also thank those many stakeholders who informed each of the bids. Particular thanks go to FirstGroup and its hard-working staff for their management of the service since 2004. Since that time, patronage has grown by a third, more than 200 additional daily train services have been provided, performance has improved from 87 per cent to nearly 92 per cent, and passenger satisfaction has risen to 90 per cent. Taken together, those are commendable achievements.
Our franchise specification puts passengers’ interests at the heart of the ScotRail service. It includes ambitious service standards and an emphasis on quality and effective operation. The new franchise will transform the passenger experience through improved provision of information, enhanced websites, a price promise to provide the best-value ticket and a Scotland-wide extension of smart and integrated ticketing, which will make travel simpler and smarter.
In addition to its price promise, the new franchisee will implement our commitment to bear down on fares to make rail a much more attractive travel choice. As of January next year, peak fares will be capped at the retail prices index and off-peak fares will not be able to increase at a rate greater than RPI minus 1 per cent. Jobseekers and the newly employed will also benefit from reduced fare schemes. In short, there will be fairer affordable fares for all.
A mobile ticketing application will enable passengers to buy tickets, search for travel information, book cycle hire and taxis from selected stations and obtain details on less busy services. Enabling choice and making journeys easy are key to getting our country on the move. Across the network, there will be more car parking spaces, more electric-car charging bays, more cycle spaces and at selected stations even a bike-and-go cycle hire scheme to enable end-to-end journeys.
Our station environments will be updated with more platform shelters, more refreshment kiosks and major enhancements at Aberdeen, Perth, Stirling, Motherwell and Inverness. All of that will build on the substantial investment that has already been made in Waverley and Haymarket and the improvements that are planned for Glasgow Queen Street and Dundee.
We all recognise the need for greater transport integration to join up journeys. At selected stations, cross-modal information screens will display arrivals and departures of other modes such as bus, ferry and air, and a key aspect of all that will be forging links with other providers to unlock journey opportunities across Scotland.
The franchise will deliver improvements on our trains to increase the attraction of rail travel. With high-speed trains, better journey times and more comfort, our seven cities will be linked by proper intercity rolling stock more in keeping with the intercity experience that we know passengers prefer. New electric trains will be delivered for the Edinburgh to Glasgow and the Stirling, Alloa and Dunblane services, and overall there will be a 23 per cent increase in carriages across the network to ensure that full advantage is taken of this Government’s substantial investment in infrastructure.
We asked for proposals to capitalise on the tourism potential of our railways, and the new franchisee came forward with the great scenic railway of Scotland proposition, which will cover the west Highland and Kyle lines, the far north line, the lines serving Stranraer and Dumfries and—from September 2015—the Borders. It will enable our railway to market Scotland’s scenery, its heritage and its tourist attractions to a wider audience. Trains on those routes will be refurbished, and there will be dedicated tourism ambassadors who will be trained to VisitScotland standards and will provide information on attractions, history and journey connections. I hope that community rail groups and local businesses will engage with the franchisee to grasp the very real opportunities arising from this marvellous, expansive initiative.
I have been careful to ensure that the interests of ScotRail staff are addressed in the new franchise contract. Accordingly, we have worked with the rail unions to ensure that staffing issues are appropriately covered, and I am grateful for the unions’ assistance in that respect. Of course, the Transfer of Undertakings (Protection of Employment) Regulations 2006 will apply. Moreover, pensions will be protected. We might be obliged by Westminster to franchise, but that does not mean that we should not get the best deal for staff anywhere, which is what I believe we have.
The contract contains commitments on 100 apprenticeships, training and staff development and, for the first time, trade union representation on the board of the company. The contract also sets out the franchisee’s extensive corporate social obligations to the community it serves. That is important, because a railway does more than provide a journey opportunity—it spreads and generates economic vitality and prosperity across communities.
That is why this contract is a good one. It does more than simply provide rail services; it seeks to help get Scotland on the move, economically and socially. We have struck a deal with the franchisee to ensure that there are no compulsory redundancies over the entire life of the contract. Over and above that, we have struck a deal to ensure that every person, whether they be directly employed or employed through a subcontractor, will have at least the living wage as a salary.
We are committed to delivering a safe, well-founded, properly resourced service as well as an audit process that ensures that the franchise process that we have just gone through stands up to scrutiny. It has been our intention to ensure that we get the best possible deal for fare payers and passengers, and I believe that we have done so, despite being obliged to go down the franchise route. This contract offers a better Scotland by providing improved services to rail passengers, whether they be residents or visitors, providing security for our railway staff and enabling economic opportunities for all in our cities, towns and rural communities.