Mr Speaker, with permission, I wish to make a statement about the independent inspection report on Northamptonshire County Council.

Everyone in this House, regardless of party, appreciates the crucial role that local government plays as the frontline of our democracy.

Delivering vital services on which we all depend and helping to create great places to live.

And, in doing so, making the most of every penny they receive from hard-pressed taxpayers to secure better outcomes.

All of which builds confidence and trust between local authorities and those they serve.

Which is why the situation in Northamptonshire is of such concern.

Prior to my instigation of the report, there were signs that Northamptonshire’s situation was deteriorating.

External auditors at Northamptonshire had lodged adverse value for money opinions in audit reports…

…suggesting that the council was not managing its finances appropriately.

The former leader resigning in May 2016, also signalled the need for change.

As late as last year, the Local Government Association conducted a financial Peer Review…

…which concluded there were issues with delivering the Next Generation reforms and, again, with the mismanagement of its finances.

The then Chief Executive Paul Blantern resigned in October 2017.

These reports, along with the concerns raised by district councils in Northamptonshire…

…and by Hon Members of this House with local constituencies…

…prompted me to act, as I was concerned that there were potentially fundamental issues within the authority.

On 9 January 2018, I informed the House that I had concerns regarding the financial management and governance of the council.

I therefore decided to exercise my powers under section 10 of the Local Government Act 1999 to initiate a Best Value inspection of the council.

And I appointed Max Caller, an experienced former Chief Executive and Commissioner, to conduct this…

…and report on whether the council was complying with its Best Value duty.

Mr Caller submitted his report on 15 March.

And I placed a copy in the library of this House so that everyone could see what he had found and see his recommendations.

And before I go any further, I would like to thank Mr Caller, and his assistant inspector, Julie Parker…

…for their dedication and focus in conducting such a thorough and prompt review.

When I commissioned the Best Value inspection, I asked the Inspector to consider 4 things in particular:

First, whether the council has the right culture, governance and processes to make robust decisions…

…on resource allocation and to manage its finances effectively.

Second, whether the council allowed adequate scrutiny by councillors.

Third, whether there were strong processes and the right information available to managers and councillors…

…to underpin service management and spending decisions.

And fourth, whether the council was organised and structured appropriately to deliver value for money.

Mr Speaker, I have reflected on the contents of the Caller report.

It is balanced, it’s rooted in evidence and compelling.

The Inspector has identified multiple apparent failures by Northamptonshire County Council in complying with its Best Value Duty.

Failures on all counts.

Whilst I recognise that councils across England have faced many challenges in recent years, the Inspector is clear that…

… Northamptonshire’s failures are not down to a lack of funding or because it is being treated unfairly or is uniquely disadvantaged compared to other councils.

In fact, his report says that:

“for a number of years, NCC has failed to manage its budget and has not taken effective steps to introduce and maintain budgetary control”.

Furthermore, the complex structure of financial support meant oversight was difficult and accountability blurred.

This report says that Northamptonshire’s Next Generation approach – which envisaged outsourcing many of the council’s functions – had no:

“hard edged business plan or justification to support these proposals”.

This “…made it difficult to ensure a line of sight over costs and operational activity”…

…and “made it impossible for the council, as a whole to have any clarity or understanding as to what was going on”.

Similarly, the inspector found that Northamptonshire County Council used capital receipts to support revenue spend…

…without documentary evidence demonstrating compliance with the Statutory Guidance and Direction.

Furthermore, until this February, there was no report to full council on the proposed projects and their benefits.

He says that “Savings targets were imposed without understanding of demand, need or deliverability…

…and it is clear that some Chief Officers. did not consider that they were in any way accountable…

…for the delivery of savings that they had promoted.”

On the question of scrutiny, the report says that:

“The council did not respond well, or in many cases even react, to external and internal criticism…

…Individual councillors appear to have been denied answers to questions that were entirely legitimate to ask…

…and scrutiny arrangements were constrained by what was felt the NCC executive would allow.”

Mr Speaker, I want to emphasise that the report also indicates that the hardworking staff of Northamptonshire County Council…

…are not at fault and have worked hard to provide quality services.

With all of this mind, it is clear that I must consider whether further action is necessary to secure compliance with the Best Value duty.

In doing so, I want to reassure the residents of Northamptonshire that essential services will continue to be delivered.

The Inspector is clear that “the problems faced by NCC are now so deep and ingrained that it is not possible to promote a recovery plan…

… that could bring the council back to stability and safety in a reasonable timescale.”

He recommends that “a way forward, with a clean sheet, leaving all the history behind, is required”.

I am therefore minded to appoint Commissioners to oversee the Authority…

…using my powers under section 15 of the Local Government Act 1999.

From day 1, I propose that they take direct control over the council’s financial management and overall governance.

Getting these basics right must be the first step in stabilising this authority.

I also propose giving them reserved powers to act as they see fit across the entirety of the authority’s functions…

…if they consider that they must step in.

My officials are writing to the council and district councils today to this effect and they can make representations on my proposal.

I will consider any representations carefully before reaching a final decision.

The Caller report makes a clear recommendation on restructuring, and notes there are a number of options available.

So, in addition, I’m inviting Northamptonshire County Council and the district and borough councils in the area…

…to submit proposals on restructuring local government.

I would like those councils to think about what is right for their community and the people they serve…

…and to come forward with proposals.

This invitation and the letter to Northamptonshire that I mentioned earlier have been published today and copies placed in the Library.

It is clear to me that any proposals from the councils should seek to meet the criteria for local government restructuring…

…that I have previously shared with the House.

Namely, that proposals should:

• improve local government
• be based on a credible geography
• and command a good deal of local support

I will be particularly interested in hearing how the councils have consulted with their communities…

…to ensure that Northamptonshire’s future is truly locally-led.

Mr Speaker, the findings of Mr Caller’s inspection report on Northamptonshire County Council are extremely serious.

Which is why this government is prepared to take decisive action…

…to ensure that local people receive the high quality services they need and deserve.

And to restore faith in local government in Northamptonshire.

I commend this Statement to the House.

Improved accessibility, simpler fares and improved compensation are among the benefits passengers on the West Coast will receive under a new operator over the next decade, Transport Secretary Chris Grayling announced today (27 March 2018).

As companies are today invited to bid to run the new West Coast Partnership, the Transport Secretary unveiled a new vision that could see HS2 become a fully integrated railway, with a single organisation running all aspects of the service – the tickets, trains, maintaining the track and other infrastructure like signalling – ensuring a single joined-up team will deliver the best possible passenger service.

The successful bidder for the West Coast Partnership will drive improvements on the current services on the existing West Coast line but also oversee the introduction of HS2 services from 2026 and work with the department and HS2 to consider the options for the future.

Bidders for the West Coast Partnership have been challenged to innovate to improve the experience for passengers on this highly successful railway. As a minimum, West Coast passengers will benefit from improved accessibility, simpler fares and modern ticketing, as well as improved compensation – with passengers on the route eligible to receive money back for delays of just 15 minutes.

West Coast Partnership video

The successful bidder will operate the West Coast service until 2031 and work closely with the government and HS2 Ltd to shape the future high-speed service, as well as running the first high-speed services from 2026. Given the scale of the interaction between InterCity West Coast services and HS2, this will ensure that these projects are effectively coordinated with the passenger at the heart of all decision making.

Transport Secretary Chris Grayling said:

We are investing in the biggest modernisation programme of our network since Victorian times, delivering what passengers want to see and changing the way our railways are run to ensure they are focused on delivering the best possible service.

The new West Coast Partnership will deliver immediate benefits to passengers and pave the way for the seamless introduction of HS2, with one operator responsible for all aspects of the journey, designed to deliver the best-possible passenger service.

I want HS2 to become a strong British organisation, potentially capable of not just building, but also operating a successful railway – a beacon for other countries to aspire to, both in terms of the engineering project to build it and the service it will offer to passengers, which we will introduce on the West Coast Partnership.

With your permission I would like to make a statement about the future of the West Coast Main Line, about our plans for the integration of track and train on our railways and our plans for the transition to the operation of HS2 as it opens up in 2026.

I have already set out for the House our plans to bring the operation of track and train together on a day to day operational basis around the country, with the creation of new alliances between Network Rail and the train operators on South Eastern and Midland Mainline, and the strengthening of the existing alliance arrangements on South Western and Southern.

I have also set out our plans for a new partnership between the public and private sectors to operate the East Coast mainline.

Today I want to explain how this approach could start to inform the development of the West Coast Mainline and HS2. I am also today publishing the invitation to tender to be the new West Coast Partner which – subject to them delivering on their commitments – will operate the route until 2031 and which will work with HS2 to pave the way for the opening of HS2.

The West Coast mainline is one of the busiest mixed rail routes, if not the busiest in Europe. It carries commuter traffic to 6 of our biggest cities, it carries express trains between them, it provides essential intermediate services to places like Milton Keynes, Coventry, Warrington and Preston. It is an essential link to North Wales, Scotland and Ireland. And it is also one of our busiest freight routes.

It is this complex mix of traffic which is a key part of the case for building HS2 so that we have the capacity to meet these growing needs in the future.

The West Coast franchise has been very successful in recent years, with high passenger satisfaction and substantial revenue growth for the taxpayer. It is my intention that the new contract will build on this up to and including 2026. There is already a close working relationship between Network Rail and the train operator, and I intend that this should be deepened under the new contract with the new operator.

After that, though, Mr Speaker, the way we run this railway will change. After 2026 the express services will start to move off an increasingly congested part of the existing network and onto the new HS2. Brand new and more frequent trains will provide additional capacity on faster services. Space will be freed up on the existing routes for improved services to other destinations.

This will require a carefully managed transition, as initial services begin to Birmingham and then gradually the HS2 network provides more and more of the intercity service.

I want to explain today how this new contract will ensure that this smooth transition takes place and set out what we are working towards. I should emphasise that final decisions on the transition and the operational details are years away, but I do think it’s right that as we publish this new invitation to tender that we start to look towards what that end point could be.

For example, one option could be an integrated railway operation, in charge of both its infrastructure and its services, akin to some Japanese high-speed lines, and in line with the government strategy of bringing together track and train. It could also be structured as a public-private partnership and there will also be other options that we should explore before any final decisions are made.

While the exact shape and end-state of the organisation does not need to be decided now, I am very clear of one thing, I want HS2 to become a strong, British organisation, potentially capable of not just building but also operating a successful railway here. It should also become a strong international champion for the UK – in the way, for example, that the organisation that runs Manchester Airport has.

Manchester Airports Group is a strong and effective public private partnership organisation that has expanded in the UK running first great operations in the UK, and is now doing so internationally. It has proved itself effective at managing major projects and delivering good customer service.

Today’s announcement is not about creating a long term organisational model for HS2, though.

As we get into the 2020s we will need to prepare for the introduction of services. So through this new arrangement my department is paving the way for that introduction.

The winner of this new competition will help design the new HS2 services and develop a new customer offering to take advantage of 21st century technology to revolutionise the way we travel on high speed rail, and provide input to my department and to HS2 Limited.

They will run the existing West Coast Mainline services until HS2 passenger services are introduced.

After that they will continue to run successor services on the West Coast main line until 2031, albeit to a different set of timetables and priorities, with a refocused service aimed at those intermediate locations.

During the period between now and the start of HS2 services they will also help plan the introduction of the express trains to the new line, the move from one line to the other, and put in place all of the customer facing resources needed to deliver an excellent service on day one.

If they perform strongly, they will also operate on behalf of HS2 services for a limited period after 2026.

During this period, my department will be closely involved with operations to ensure that the envisaged connectivity benefits of HS2 are realised.

What the contract also includes a number of safeguards such as restrictions on branding, transfer of intellectual property and collaboration requirements with HS2, which mean that while we will harness the innovative thinking of the private sector no bidder will be able to create something that only they could run in the future.

During this period, the operator will also work with the department and HS2 to consider the options for the end state, including what would be required for fully integrated operations to be undertaken by an eventual combined organisation.

This short term arrangement will be very similar to the modus operandi that which will be operating on Crossrail next year after it formally begins services as the Elizabeth line for Transport for London.

Throughout this period, the new operator will also deliver a high quality experience for passengers and continue to drive growth on the existing West Coast Mainline route.

Passengers will benefit from enhanced compensation for delays of greater than 15 minutes, simpler to understand fares and ticketing. And also a more accessible railway, we are introducing an accessibility panel to advise on all aspects of how this railway is operated.

I want to ensure that passengers are placed firmly at the heart of all planning decisions.

So what I am setting in train today for the West Coast Partnership is our plans to:

• keep industry leading services on the West Coast until HS2 enters operation
• ensure that the first HS2 services are delivered by an experience operator that has been working hard to plan for their introduction
• and use this approach to help inform decisions on what the future shape of the organisation should be

I believe that this is the best way of ensuring a smooth transition to what will be an exciting new future for our railways

I commend this statement to the House.

Published 27 March 2018