The government only realised the need to shelve vital rail projects in mid-June, the transport secretary told MPs as he responded to claims ministers were aware of the depth of the Network Rail crisis before the election.
Patrick McLoughlin told the transport select committee that the information he received on 15 June prompted him to put on hold parts of the operator’s £38.5bn five-year plan 10 days later.
Labour MPs, led by committee chair Louise Ellman, demanded to know on Monday why McLoughlin had not admitted to the problems when asked by the committee at previous hearings.
Ellman said regional authorities were told in June 2014 by Network Rail that the Midland mainline was unlikely to be electrified. “That was reported to this committee and we pursued it, so that doesn’t square with what you told us. How can it be that Network Rail told South Yorkshire transport authority and this was reported, and yet you somehow didn’t know anything about it?”
McLoughlin said: “I don’t acknowledge that there were problems emerging on the Midland mainline … On Great Western some of the complexities were becoming apparent.” He added: “In the very early stages of any scheme there will be a fall-behind … I’ve always tried to be very open about all these problems.”
Philip Rutnam, the permanent secretary to the Department for Transport, said: “We were certainly well aware that costs of these programmes were rising above our estimates.”
But he added: “What happened since was a much more thorough and worrying assessment of the CP5 programme [the five-year plan] in the round … the secretary of state felt on the basis of that advice that he had to take action.”
Labour has stepped up its attacks on the government after last month’s announcement that it had “paused” two major rail upgrades, the electrification of the Midland mainline and the Transpennine route, due to cost overruns and delays at Network Rail. The projects had been widely touted by Conservative ministers on the election trail as well as being pledged in the manifesto.
Minutes of board meetings from March, since published, show directors and the government were already preparing to announce parts of the five-year plan should be scrapped. Michael Dugher, Labour’s shadow transport secretary, said the documents showed ministers must have known before the election that promised electrification would not go ahead.
Mark Carne, chief executive of Network Rail, told the Guardian last month that the company “knew, already, very early on last year that certain aspects of the plan were going to be incredibly difficult to deliver”.
But McLoughlin reiterated to the committee: “The timescale I was told about this was actually after the election, on 15 June. I acknowledged last December and in March that there were some problems about the timescale. The information I got on 15 June made me take the action that I did.”
McLoughlin defended Network Rail when asked if the organisation was “fit for purpose”. He said the operator was “trying to do a vast and huge job … open-heart surgery”. He said it was the “hero of the hour” when reopening the flooded Dawlish route and had rebuilt Reading stations ahead of schedule and under budget.
But he declined to defend the rail regulator ORR when asked if he was satisfied that it did a good job, replying: “I think we’ve got a lot to learn from this process … The projects were signed off by the regulator and by Network Rail … In fairness, Network Rail said it would be an incredibly difficult and challenging set of projects to deliver in that time.”
Three separate reviews into the working of Network Rail have been promised, with new chairman Sir Peter Hendy reviewing which aspects of the original plan could remain on track and what further works needed to be jettisoned. McLoughlin suggested that a new timescale for electrification could come when Hendy reports in the autumn. Colette Bowe will report on what caused the crisis, while HS1 boss Nicola Shaw will review funding arrangements – with unions warning that privatisation of Network Rail is back on the table.
