The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)

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First, I thank the noble Lord, Lord Gascoigne, for his welcome; it is nice to see him again in different and more august circumstances—different, at least, from those that applied in the old City Hall. I thank him, and the noble Lord, Lord Moylan, for their explanations of this group of amendments, most of which require some form of reporting or assessment of the impacts of public ownership or the performance of publicly owned operators.

Like my noble friend Lord Snape, I am fascinated by the plethora of reports proposed at this stage of railway reform. Given that LNER has been in the public sector for six years, and Northern for four, it is strange that the measures now proposed for public sector train operators were never contemplated or enacted by the previous Government, who clearly never thought that they needed them. In simple terms, this Government do not either.

I welcome the support of the noble Lord, Lord Gascoigne, for railway reform. His Amendment A1 does not call for any reports but requires the Secretary of State to have regard to a specific purpose —to improve the performance of passenger services—when exercising functions under the Bill. I entirely support that purpose, and it is at the heart of what we are doing, but there are also many other purposes: stripping out inefficiency and waste on behalf of the taxpayers who fund the railway, simplifying fares and increasing patronage, connecting communities, driving economic growth and promoting opportunity for all. It is not right that the Bill should suggest that it has only that one purpose, important though it is.

Amendment 2, tabled by the noble Lord, Lord Moylan, would require the publication of two reports: the first outlining the anticipated impact of public ownership, and the second assessing its actual impact some years after the event. Regarding the first of these reports, the Government have already fulfilled the proposed obligation through the impact assessment published earlier in the year. Among other expected impacts, the taxpayer will no longer have to fund many tens of millions of pounds in fees currently payable to private sector operators each year, even when their performance is sub-standard. Furthermore, public sector operators will prioritise the interests of passengers and taxpayers, not the demands of their shareholders.

A similar report is envisaged in Amendment 48A, tabled by the noble Lord, Lord Gascoigne, but focused specifically on the impact on performance. I can assure the noble Lord that the Government certainly expect public ownership, and our broader reform proposals, to unlock the significant improvement in the performance and efficiency of the railway which he is looking for; we do not need to publish a report to say that.

Turning to the second proposed report envisaged in Amendment 2, there is no need to wait for three years before we start to consider whether train operators’ performance is improving. A wide variety of data is already routinely published about the performance of both public and private sector train operators. This includes reliability and punctuality, service quality, customer complaints, financial performance and efficiency, among other measures. This Bill does not change any of that, but as part of our wider reform plans, we will further improve access to data. This will be specific to individual routes and/or service groups, not just aggregated at the level of whole franchises, so that passengers can see at each station how services are performing on their local routes and, importantly, what is going to be done to improve them.

The Government can and will monitor performance closely on a continuing basis. We will hold operators’ feet to the fire when their performance is inadequate, irrespective of whether they are privately or publicly owned. The Secretary of State and I have already demonstrated that we will not accept the poor standards that have been tolerated in the past. We have demonstrated that from our first days in office by holding meetings with the managing directors of several train operators alongside their Network Rail counterparts to address poor performance and demand immediate action to raise standards.

In that respect, in answer to the noble Lord, Lord Grayling, we are not discriminating between the public and private sectors and will not do so, as indeed he did not in his time. He rightly gave me a hard time in 2018 in respect of electrification in the north-west of England; even if it was not Network Rail’s responsibility, it related to the failings of GTR as an operator.

Amendment 26, tabled by the noble Lord, Lord Moylan, would require the publication of a further report—or perhaps 10 reports, one after each transfer—setting out the expected impact of the transfers on various aspects of train operators’ performance. Again, once transfers have taken place, it would be more instructive to consider the actual performance of train operators.

Amendments 21 and 22, also tabled by the noble Lord, Lord Moylan, would require the reporting and independent assessment of the performance of publicly owned train operators. That is unnecessary because, as I have set out, the Government will themselves be monitoring their performance closely and will work to ensure that as much performance data as possible is published for the benefit of the travelling public, in a form that is useful to them and that allows for effective scrutiny.

My department is currently reviewing the standard terms of the service agreements that are entered into between the Secretary of State and public sector operators, in readiness for future transitions to public ownership. Public operators will be set targets in key areas such as punctuality and reliability and other aspects of the service. Work is under way to identify the right targets and measures for the period ahead in order to focus operators on delivering the best possible outcomes for passengers and taxpayers. As part of the service agreement review, we will consider the arrangements for publishing those targets and operators’ actual performance in comparison to them.

Amendment 22 refers to performance improvement plans. I reassure the noble Lord that improvement plans are already a feature of the Government’s service agreements with each public sector operator. I confirm for noble Lords that similar mechanisms will continue to exist in future, both through contractual terms and through the controls that DOHL exerts over its operators on behalf of the Secretary of State. As I have said, where performance is falling short, we will not hesitate to demand that things are put right, regardless of whether the operator is privately or publicly owned.

Amendment 45, tabled by the noble Lord, Lord Moylan, requires the publication of an independent assessment of the performance and efficiency of the rail network five years after the enactment of this Bill. By that time, the Government will have established Great British Railways, which will have taken over responsibility for both track and train. New arrangements will need to be put in place to oversee and scrutinise the effectiveness and efficiency of GBR, so in due course we will set out our plans for holding it to account as part of our plans for the wider railways Bill. We should not pre-empt those future arrangements by seeking to legislate for them now.

I hope we will deal with all the noble Lord’s other points during the rest of Committee, as we shall with the detailed comments of the noble Baroness, Lady Randerson, on staff morale and the British Transport Police. In answer to the noble Lord, Lord Lansley, I confirm that there are no changes to Section 4 of the 1993 Act.

In answer to my noble friend Lord Snape, in the present Bill there will be no change to the role of Office of Rail and Road; he needs to await the substantive railway Bill for that, at least with regard to the railway element of the ORR. There will be public consultation on the wider Bill before it comes, so there is no need to wait until the publication of the Bill itself.

I also say to the noble Lord, Lord Moylan, that there is currently no meaningful private investment by train operating companies, so we are not losing anything in the Bill that is on the table today. Contrary to his assertion about the Williams report, its author, Keith Williams, envisaged public ownership as a necessary condition to rationalise a number of things on the railways, in particular fares, ticketing and information.

Lord Hendy of Richmond Hill (Lab)

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I should respond to the noble Lord on three or four points. First, whatever the Williams report said—and it was adequate in what it said at the time—I took the trouble, only a few days ago, to confirm with its author that he acknowledged we could not change the fares, ticketing and information systems without taking the train operating companies or their activities into public ownership.

Secondly, the noble Lord knows perfectly well how a large public body can behave in monitoring activities, whether it carries them out itself or has contractors or concessionaires to do it, because he will be as familiar as I am with the experience of Transport for London. It monitored its own activities, published them and allowed others to scrutinise them. That principle is the one which should be adopted by Great British Railways.

Lord Hendy of Richmond Hill (Lab)

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Well, the noble Lord should not be, because it is quite clear to me that the Government intend to take a large amount of activity out of the Department for Transport and put it in a body that is responsible for the performance of the railways. That being the case, it would be extremely logical that monitoring performance is done by GBR but properly scrutinised by others.

Lastly, I simply say to the noble Lord opposite that there has been a change of government. The policies that this Bill and the railways Bill will seek to enact are the policies that the Government were elected to carry out.

Lord Hendy of Richmond Hill (Lab)

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My Lords, I thank noble Lords for explaining their amendments in this group, which consider some of the practical aspects of the Government’s plans to transfer services to public ownership. Amendments 1 and 48 focus on the contractual arrangements that allow the Secretary of State to terminate a franchise early, following a breach of contract or other sustained poor performance. I make it absolutely clear that this Government will not hesitate to act decisively where an operator’s unacceptable performance means that the contractual conditions for early termination are met. The Secretary of State has made this plain on a number of occasions and I am happy to reiterate it to your Lordships today.

However, I am very much afraid that the terms of the contracts we have inherited from the previous Government do not make this easy. It is far easier for an operator to return the contract to the Government than it is for the Government to take back a contract for poor performance. It is deeply regrettable that in the past couple of years, some of the poorest performing operators have been awarded the longest contracts.

Noble Lords will not be surprised to know that we have looked very hard at the form of the contract. We are closely monitoring train operators’ compliance with their contract, but at present we are not in a position—with any operator—where the Secretary of State has a contractual right to terminate for poor performance. Noble Lords might be amazed to know that Avanti has not yet triggered the need for a remedial plan, although it may well do so. While CrossCountry has triggered the need for a remedial plan, we need to let that work through, together with the timetable reduction that the Secretary of State was deeply reluctant to agree to, before we discover whether its performance then merits some further contractual remedy.

Unless and until that contractual right arises, the only sensible approach is to transfer services to public ownership when the existing contracts expire. Any other approach would require taxpayers to foot the bill for compensation to operators in return for ending their contracts early, which the Government made clear in our manifesto that we would avoid, if only because of the state of the public finances we inherited.

I have also heard representations on behalf of operators—or, rather, their owners—that, rather than transferring services as contracts expire, we should leave their services in private hands for as long as possible. All the owning groups knew of these dates and would have planned financially for them in any event. The concern seems to be that service quality will suddenly collapse, or that current plans for service improvements, or for the rollout of new train fleets, will suddenly grind to a halt.

There is no basis for these claims. DOHL is experienced in transferring services into the public sector smoothly and without disruption, as it has proved in the difficult aftermath of past franchise failures. As services transfer, the same trains will be operated by the same staff as before, and no doubt often by the same management, as happened with LNER six years ago. The improvements that are already in train will continue. I have no reason to think that performance will deteriorate. Extending specific operators’ tenure will simply delay the process of bringing services back to public ownership, where they belong, and the financial savings that will result.

In answer to the noble Lord, Lord Grayling, while there have been transfer costs from franchise to franchise, he will of course recognise that the incoming franchisee would not pay that cost gratuitously; they would simply add it to the subsidy bill for the franchise they were inheriting. In the end, the public sector pays, as it has always done. In fact, since Covid, the operators have not funded anything at all, so the quantum in the future is likely to be extremely limited.

Lord Hendy of Richmond Hill (Lab)

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The answer to the noble Lord is: not yet. He will recognise that those costs materialise only when the franchise transfers, so the department will never have had that total number in the past, and I do not expect it to have it now. As the franchises transfer, the number will become obvious.

Lord Hendy of Richmond Hill (Lab)

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In answer to my noble friend, and in recognition of some of what I have done in the past, it is sometimes a surprise when you read the performance requirements for contracts that you inherit. This is clearly one of those cases. I cannot defend the statistics that my noble friend cited, and I cannot defend a contract that allows that to happen without remedy.

In answer to the noble Baroness, Lady Randerson, we will come to devolution later in Committee.

Lord Hendy of Richmond Hill (Lab)

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The answer is that it is the Government’s policy to take train operations into public ownership. The words the noble Lord mentions in Clause 2 just emphasise that intention.

Lord Hendy of Richmond Hill (Lab)

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On my noble friend Lord Liddle’s comment, I am sure the Secretary of State would like to make her own decision, but I am pretty confident that the work done in the department to assess whether Avanti is meeting its performance standards has taken into account what latitude there is. I suspect there is very little because of the contract terms.

I will write to my noble friend Lord Berkeley, and make the letter available, about the causes of delay on the west coast main line and to Avanti’s services. It is, of course, as he knows, undoubtedly true that every set of delays on the railway is due to a combination of the train operator and the infrastructure, and the way in which those parties manage their interaction with each other. When the Secretary of State and I have seen train companies about their performance, we have insisted that they are always accompanied by the relevant route directors of Network Rail. One of the issues is the root cause of the delays; another is how well those parties interact to resolve them. One of the issues on the west coast main line is that Network Rail’s control point, not unreasonably, is at Rugby where the signalling system is, Avanti’s control is in Birmingham and its train crews are managed from Preston. I would not run a railway like that myself.

Lord Hendy of Richmond Hill (Lab)

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It varies in accordance with the particular train company. Some of them are coming to a natural conclusion, others have break clauses that enable termination and, in a limited number of cases, there are some choices that could be made. To that extent, we will have to make them.

Lord Hendy of Richmond Hill (Lab)

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The next time I see our mutual friend Keith Williams I shall tell him that the noble Lord, Lord Moylan, said he was ghostly.

I thank noble Lords for explaining their amendments in this group, which consider, as we have heard, various alternatives to public ownership. Amendments 3 and 5, tabled by the noble Lord, Lord Lansley, would allow contracts to be awarded to private operators following a competitive process. Amendments 28 and 29, from the noble Lords, Lord Young of Cookham and Lord Moylan, would allow franchises to be continued where the current operator is providing a satisfactory service. I do not support these amendments.

The Government were elected on a manifesto commitment to return passenger services into public ownership—having published, for the avoidance of doubt, the detailed plan entitled Getting Britain Moving—and we have a clear democratic mandate to do so. Despite what has been heard this afternoon, public ownership is a change with clear public support. Last month, YouGov published a survey showing that 66% of people nationally agree that railway companies should be run in the public sector; only 12% favoured private operation.

We are determined to return to a passenger railway which is run for the public, by the public, with passengers, not private shareholders, at the heart of the system. We will not leave the back door open to franchising, a model which has failed passengers and taxpayers. We are committed to public ownership because continuing with franchising would mean continuing to pay fees to private operators, ultimately for the benefit of their shareholders, when that money could be retained for the public good. Franchising would not allow us to integrate track and train in the way we propose to do under Great British Railways, which is the only way to put a stop to the fragmentation and waste of the franchising system, otherwise we will not be able to sweep away the outdated, complex and costly mechanisms that make the fares system impossible to understand for passengers, and even now prevent rational change because of “commercial confidentiality”, even though all the revenue risk is now taken by government. There is no benefit to continuing franchised operations on our railways.

Contrary to views expressed by noble Lords previously, there is no meaningful private sector investment being funded by franchised operators at present, so we are losing nothing by moving to a public ownership model. The Government are already reimbursing the legitimate operating costs of private sector operators and receiving all their revenue. Even before Covid, the main private investment in our railways was in rolling stock, which was generally funded by the rolling stock market and not by train operators or their owning groups.

I turn to Amendments 4, 14 and 15, tabled by the noble Lord, Lord Moylan. These amendments require competitive awards to be made to private sector companies on the basis of a concession model, along the lines of Transport for London’s approach, rather than bringing them into public ownership. These amendments would remove the opportunity to deliver the benefits of public ownership, which, as I have said, a clear majority of the public support and which was a specific commitment in the manifesto on which this Government were elected.

The Government’s first objection is that a concession model would mean the private sector continuing to earn substantial profits. Public ownership will put a stop to the flow of money that already sees in excess of £100 million paid out in fees to the private sector each year, even when operators are bearing no significant financial risk.

A TfL-style concession model would expose operators to more financial risk than the current national rail contracts, which means that operators would want to earn significantly more in profits at the taxpayers’ expense and would price their bids accordingly. Not only would concessions be more expensive than this Government’s plans for public ownership but they would be even more costly to taxpayers than the current contracts.

In addition, the TfL concession model involves a very closely defined and largely unchangeable service specification developed in detail by the public authority, with therefore little room for the operator to negotiate changes post tender award in circumstances where they would always have the upper hand on pricing. Our national railway system is much larger, flows alter over time, and one of the great benefits of GBR is that it will be able far more easily to adapt to changing and growing markets and to save costs without endless contract renegotiation with contractors which, except at the point of contract award, always have the upper hand.

The noble Lord, Lord Moylan, referred to the TfL experience of contracting the London bus market. In two previous jobs I was responsible for that market for virtually 15 years. It is a different market because there are a large number of small contracts changing hands, so if a contractor is sufficiently unwise to suggest expensive changes when contracts need to be altered then there is the opportunity to at least counter that by the next award of contracts for other bus routes. That has not been the case in the railway market. It is never likely to be the case. It is a different circumstance.

As a practical point, this amendment would abolish the option for the Secretary of State to appoint a public sector company to run services once a franchise agreement comes to an end. What does the noble Lord envisage would happen under this amendment if an operator went bust at short notice, or lost its licence to operate or its safety certificate? What if a competition failed to deliver a satisfactory outcome? Passengers could not wait a couple of years while the Government run a competition for a new concession. I would also ask whether it is the noble Lord’s intention to tie the hands of the Scottish and Welsh Governments, as this amendment would do, and whether they support these amendments. I think he knows that they certainly would not.

Amendment 10, as the noble Lord, Lord Moylan, said, was to facilitate Amendments 4, 14 and 15, so I will pass over it.

Amendment 35, tabled by my noble friend Lord Liddle, would allow the Secretary of State, and Scottish and Welsh Ministers to award contracts to either a public/private partnership or a co-operative venture involving staff and passengers. The Government’s approach to this is driven by pragmatism, not ideology, and we are certainly not seeking to close the door on private investment, as I will explain later in Committee when we come to discuss rolling stock.

However, I point out that examples of private investment in our railway infrastructure have been fairly thin on the ground in the privatisation era. Nearly all the enhancements to the network have been publicly funded. The noble Lord, Lord Young, referred to electrification, but, as far as I can tell, there has been no electrification ever funded by any party except the Government.

The Government are certainly open to hearing proposals for how private investment might be brought to bear to improve the railway in the future. If noble Lords and others have good ideas, I encourage them to bring them forward as we develop and engage on our plans and consult in due course for Great British Railways and the wider railway reforms.

However, I do not think that involving private finance means that our plans for public ownership of train operations should change. It is fundamental to the Government’s plans for the railway that services should be run by the public, for the public. There are other ways of engaging private capital, short of ownership, and for the most part, even 100% private sector ownership of train operating companies under franchising has not resulted in large investments being funded by those companies.

As for co-operative ventures, I am all in favour of giving passengers and communities a stronger say in the decisions that affect them, but the likelihood of any co-operative venture raising any significant amount of capital—let alone the current circumstances of the owning groups of the present train operators—is, frankly, very small. Our plans are designed to give passengers and communities a stronger say in the decisions that affect them, not least by establishing a new passenger standards authority and by providing a new statutory role for devolved and mayoral combined authorities. We will get to the question of devolution in due course. The Government have shown, through our approach to resolving long-running disputes left to us to resolve by the previous Government, that we are committed to working with the workforce to address the challenges facing our railways.

The noble Lord, Lord Lansley, raised a question about future flexibility. The last legislation for the railways has lasted 31 years, and I note that it had a specific prohibition of public operation of the railways system. That might have been reasonable then but it is certainly reasonable now in the present circumstances, given our policies and manifesto commitment, to replicate our belief that public ownership is the right way of going forward with passenger railway operation.

In conclusion, the Government’s plans for the railways are founded on consolidating responsibility for track and train operations within a single entity, Great British Railways, particularly at a route and operating company level. Already, in my short period in this post, as I have said previously, we have had performance meetings with an operator and a Network Rail route. In one meeting, I enjoyed considerably one manager telling me how great collaboration was between the two parties, which were not owned by the same organisation, while the other simultaneously sat there shaking her head vigorously, demonstrating an absence of the very co-operation that I was being told would happen.

My whole professional history tells me that the railway will run better with somebody in charge of both track and train together at a route and operating company level. That is the way that we will deliver better revenue, decreased costs and, particularly, better reliability. This is not consistent with seeking to preserve private sector operation, whether through franchises or concessions, or with awarding contracts to public/private partnerships or arm’s-length co-operative ventures. I am amused to see that Rail Partners has reversed its previous opposition to the concession model post the election, having spent several years previously explaining why it would not work on the national railway network. I rather agree with its previous analysis. I therefore urge noble Lords to withdraw and not press their amendments.

Lord Hendy of Richmond Hill (Lab)

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I will first say that I am delighted to see the noble Baroness, Lady Pidgeon, in her place. I hope that her questions will be easier than the ones she has asked me for the last 16 years.

I thank noble Lords for explaining their amendments in this group, which consider the impacts of public ownership on the freight sector and the British Transport Police. I shall speak first to Amendment 6, in the names of my noble friend Lord Berkeley and the noble Lord, Lord Moylan, and Amendment 41 in the names of the noble Baroness, Lady Randerson, and the noble Lords, Lord Bradshaw and Lord Moylan.

These amendments highlight the importance of the rail freight sector, which has a crucial role to play in supporting a productive economy and in helping to decarbonise transport on the way to net zero. The Bill in front of the House sets out with two very specific purposes: to enable franchised passenger services to be brought into public ownership as existing contracts expire, and then to enable the Government to keep them there in accordance with their manifesto commitment. As such, the Bill has no direct impact on freight operators or on the availability of network capacity to accommodate freight services. Indirectly, though, freight operators should benefit from public ownership of passenger services, for reasons I am happy to explain.

In the old franchising model before the pandemic, a franchise operator’s commercial motivation was to maximise its own profit—evidently, the difference between its revenues and its costs. If that meant running additional services, it would seek to do so through the usual industry processes of bidding for access rights and then for a timetable that included the extra services. It would not matter, and has not mattered, to the franchise operators that this might deprive freight operators of the opportunity to serve new markets in the future. There are various examples of franchise bidders seeking to win contracts on the back of proposed service enhancements that risked crowding out, or actually have crowded out, potential future freight growth.

Under public ownership, that unfortunate incentive will no longer exist. Publicly owned operators will instead be remitted to act in the interests of all users of the railway, including freight customers. We have made it clear that the forthcoming railways Bill will require Great British Railways to enable the growth of rail freight and that the Secretary of State will set an overall freight growth target to ensure that it remains a key priority. I am sure that we will debate these points further once the railways Bill is before your Lordships’ House.

The noble Lords, Lord Bradshaw and Lord Young, my noble friend Lord Berkeley and others asked how capacity will be allocated. I can certainly tell them how it is done now, because we have had an immense struggle to obtain a timetable on the east coast main line which seeks to justify the £4 billion-worth of public investment to speed up services and provide more passenger capacity. One reason we have had that struggle is that, although there is an appeal mechanism to the Office of Rail and Road, there is in fact no current decision-making process to allow a timetable to be completed, except by agreement. I believe and hope that it is currently in its last stages, but I am not certain.

One of the things that the Government have in mind is that Great British Railways ought to be the body that decides. The noble Lord, Lord Bradshaw, will recall what was the case on the old railway: somebody had to decide which services were of greatest priority and which ones had to be fitted round them. Under the current Bill, however, there is no change to the existing role of the ORR in access decisions for passenger and freight services. Under the future railways Bill—and we will consult on this—there will be appropriate safeguards for both freight and open access operators. We will set out details on that in due course, before any changes to the current approach are made. There is no need to require the publication of a report on this matter. Commissioning a report after this Bill, when in fact there will be no change at this point, will not add benefit to the debate.

I turn next to Amendment 40, in the names of the noble Baronesses, Lady Pidgeon and Lady Randerson, and the noble Lord, Lord Moylan.

Lord Hendy of Richmond Hill (Lab)

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I thank my noble friend Lord Liddle for that intervention. All I can say at this point is that I would hope the rail network enhancement programme is published more frequently, and with more success in what it contains, than it has been for some years. We will have to wait and see what the fiscal situation allows.

Lord Hendy of Richmond Hill (Lab)

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I think in due course we will have to come back in the substantive Bill with a proposition on how those decisions are made, who makes them, and for what period of time the plan is valid.

Lord Hendy of Richmond Hill (Lab)

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I apologise to the Committee; it is my novice inexperience. I thank the noble Lord for that intervention.

I turn to Amendment 40 in the names of the noble Baronesses, Lady Pidgeon and Lady Randerson, and the noble Lord, Lord Moylan. Amendment 40 would require the Secretary of State to report to Parliament on the impact of the Bill on the British Transport Police 12 months after its enactment. The BTP is governed by the Railways and Transport Safety Act 2003, which is not affected by this Bill. Under the 2003 Act, the British Transport Police Authority is responsible for the efficient and effective policing of the railways and for maintaining the British Transport Police force. The authority sets annual budgets for the BTP and recovers the costs of the BTP from the rail industry—of course, now, notably, this is all paid for by government—by entering into police service agreements. The authority sets the funding contributions for each railway service provider via a cost allocation model to ensure that contributions reflect the services provided by BTP and cover its costs.

Under the 2003 Act, the Secretary of State has made an order which requires railway service operators, as well as Network Rail, to enter into police services agreements. This obligation applies equally to public sector operators and private sector franchisees, and I can confirm that all four existing operators under DOHL have a police services agreement in place.

In conclusion, there is no reason to believe that public ownership under this Bill would have any adverse impacts on the freight industry or the BTP, so I hope my noble friend will be persuaded to withdraw his amendment.

Lord Hendy of Richmond Hill (Lab)

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I will respond to my noble friend by either talking to him outside or writing to him.

The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)

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My Lords, I thank the noble Lord, Lord Moylan, for his amendments.

Amendment 7 considers the capability of public sector companies to take over services and operate them to an appropriate standard. It is clearly a key priority for the Government that services should transfer to public ownership smoothly, without detriment to the quality of service during the transition. For this reason, the transfer of services will take place using established arrangements and processes which have previously fulfilled the Secretary of State’s operator of last resort duties. I remind the noble Lord, Lord Moylan, that this has taken place under the previous Government and their predecessors four times with no obvious risk to the delivery of service.

DOHL is the publicly owned company that already oversees four existing publicly owned operators. It has had significant experience of managing the transition of services from private to public operation in recent years. These transfers have been completed successfully and smoothly despite challenging timescales and circumstances, which have included franchise financial failure and poor operator performance. DOHL is therefore well-placed to manage future transitions and is building its capacity to do so as we speak.

The Government have made it clear that we will transfer services on a phased basis as existing contracts expire. This measured, responsible approach will further de-risk the transfer process. As an additional safety net, the Bill includes provision at Clause 2 to allow for temporary continuation of an existing franchise where the Secretary of State is satisfied that it is not reasonably practicable to complete a transfer in the timescales originally planned. We do not plan to use this power other than in genuinely exceptional circumstances, but it is prudent that it should be available if necessary as a last resort, given that everybody would agree that disruption to passengers should be avoided.

Amendment 7 also seeks to provide a new role for the independent regulator, the Office of Rail and Road. The ORR is the regulatory authority responsible for granting operator licences and for assessing, approving and issuing operators’ safety certificates. This Bill does not change this. In its existing role, the ORR will assess carefully the suitability and readiness of any operator—public or private, passenger or freight—to take over services and to operate them safely, and is experienced in doing so. Considering DOHL’s previous experience and track record, the further safeguards I have described and the existing regulatory role of the ORR, the Government do not see any need to commission further analysis from the ORR as this amendment proposes.

Amendment 9 would require the Secretary of State, Scottish Ministers or Welsh Ministers to undertake a public consultation before specifying or allowing any reduction in service levels at all within a contract with a public sector operator.

I start by saying that the Government want to grow rail passenger demand and revenues; we are not starting out with an objective to cut services. When services transfer to public ownership, as now, we will expect operators to clearly communicate all changes to services. I agree that, if there were to be a plan for material reductions in service levels, this should be the subject of public consultation. However, I cannot support a statutory obligation to hold a public consultation in relation to every change to the timetable or to any other aspect of the service specification that somebody might consider to be to their disadvantage.

If a service is so poorly used that it is clearly unnecessary to carry on running it, and there is an alternative train available at a similar time of day, is it really sensible to expend time and public money on a consultation process? If there is a high-frequency service and a slight reduction at a quieter time of day would enable train and/or infrastructure maintenance to be carried out more efficiently and effectively, does this really merit a public consultation? If, God forbid, there were another global pandemic, or other immediate and extraordinary event that caused a serious reduction in passenger demand, I submit that it would be absurd to suppose that a public consultation would be necessary before reducing service levels.

There should of course be consultation on material reductions in services, but to require it regardless of the scale or impact of a proposed change would impose a disproportionate burden. I therefore urge the noble Lord not to press this amendment and to withdraw the amendment I spoke to first.

Lord Hendy of Richmond Hill (Lab)

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In response to the noble Lord, I do not see those circumstances arising. However, I will take the point away and consider it during the progress of the Bill.

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Lord, Lord Moylan, for his Amendment 8, which would require public sector operators to publish plans for investment and innovation. I would dispute the proposition that a move to public ownership will produce a decrease in investment. As I have previously said, currently no meaningful private sector investment is being funded by franchising.

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Lord for his intervention. I did not say that he had made the assertion; I was disputing the proposition that a move in that way would produce a decrease in investment.

As I said, no meaningful private sector investment is being funded by franchised operators at present, so we are losing nothing by moving to a public ownership model. The Government are already reimbursing the legitimate operating costs of private sector operators and receiving the revenue. Even before the Covid pandemic, the main private investment in our railways was in rolling stock, generally funded by the rolling stock market, not by train operators or their owning groups. Given that the rolling stock market is not impacted by the Bill, there is no reason to see that change.

The Government, of course, wish to see innovation and investment in areas such as those described in the amendment. In fact, the public sector is already demonstrating its commitment to innovation. We have committed to reviewing the overcomplicated fares system, with a view to simplifying it and introducing digital innovations. Change is already being delivered: for example, by the slightly delayed, extended pay-as-you-go in the south-east and fares reform on LNER. Public ownership is essential to progress these fares and ticketing innovations and other reforms. Unlike under franchising, with public ownership we will be able to get these sorts of reforms done without needing a commercial negotiation with up to 14 different operators, each seeking to boost their profit at the taxpayer’s expense in return for agreeing to implement those reforms.

However, the Government do not consider it appropriate to spell out detailed requirements such as these in the legislation. To do so would constrain future flexibility to adapt operators’ obligations to suit changing circumstances. It is not necessarily the case that constant investment and innovation across all these different aspects of the customer offer is the right approach. The focus of innovation should be on those areas where improvement is most needed at any point in time, and not those that are already working well. Moreover, it will not be coherent for passengers, nor efficient for the taxpayer, if up to 14 separate publicly owned operators in England, plus those in Scotland and Wales, are each pursuing their own separate innovation and investment strategies across all these different aspects of the passenger offer.

A key purpose of our wider reforms, starting with the establishment of shadow GBR, will be to drive a much more coherent, cross-industry approach in areas such as those described in the amendment. GBR will be the right body to consider investment across the railways, and I ask noble Lords to wait to consider the Government’s proposals on GBR in the coming months, though I feel very confident that a coherent guiding mind for the railways will produce a longer-term and more consistently argued approach for investment than has been true in the past.

In summary, I support the underlying sentiment that investment and innovation are needed to drive improvements in many aspects of the passenger offer, but the proposed amendment is not the right way to deliver it. I offer my reassurance that investment and innovation are critical to our plans to reform the railways, but I urge the noble Lord to withdraw his amendment.

Lord Hendy of Richmond Hill (Lab)

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A coherent guiding mind is far more likely to produce a long-term business plan for the railway that justifies future investment than the previous fragmented system. Very few of the owning groups or train operating companies have ever made any significant investment. The principal investment that has been made in passenger services is with the rolling stock companies, whose position is unaltered in the proposition of this Bill.

Lord Hendy of Richmond Hill (Lab)

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I thank my noble friend Lord Berkeley for his Amendment 11, regarding rest-day working. Rest-day working provides resilience in response to spikes in leave, sickness and training, and it rewards the workforce when extra hours and days are worked. It can offer benefits to rail employees, as well as to passengers. It is likely that it will always be necessary, to some extent, to effectively deliver the timetable. However, rest-day working should be used where there is an operational benefit and employees are willing to volunteer, rather than trying to mandate in legislation how and where it is used. Our focus is instead on ensuring, as soon as possible, that the railway industry has enough staff to operate services reliably for the benefit of passengers and employees, without excessive rest-day working.

My noble friend Lord Berkeley referenced the new trains on South Western Railway. I say to him that they are now entering service and, further, that Network Rail in fact substantially changed terms and conditions two years ago for greater flexibility and in agreement with the workforce, and that is now reflected in greater efficiency. That deal demonstrates what can be achieved in the public sector.

The noble Baroness, Lady Pidgeon, referred to uncertainty. There can be no greater uncertainty than has existed for the last 30 years on the railway, in which anybody of long service has changed their employer at least once, sometimes several times, while doing the same job. The people whom I meet going around the railway talk about it as “the railway”, many of them because their employer has changed so often that they cannot even remember the name of the company that they used to work for. Some stability in respect of the employers of staff on the railway, many of whom are deeply committed and have had long service, is overdue, and this Bill will move towards it.

Will there be a workforce plan? Yes. Is there one at the moment? No. As the train operating companies come into public ownership, they will have to have a workforce plan. Personally, I am absolutely committed to the maximum recruitment of drivers as early as possible, to the benefit of the drivers themselves and the service that the railway operates.

I also very much thank the noble Lord, Lord Young of Cookham, for Amendment 18, which suggests that an independent body should be established to advise the Government on the pay and terms and conditions for railway staff under public ownership. We are committed to delivering the biggest overhaul of our railways in a generation. It is right that, as part of that process, these matters are considered. Employment conditions are an important issue and one that we are determined to get right.

My officials are at the early stages of exploring a number of options, including a pay review body, so that we can consider the most appropriate approach to meet the needs of a transformed industry. A number of different approaches exist across the public sector, including pay review bodies and wider guidance, and, as my noble friend Lord Snape said, the use of the Advisory, Conciliation and Arbitration Service. We need more time to reach an informed conclusion on the best approach for the rail sector. It would be inappropriate to commit to the introduction of an independent body before that work is completed. In particular, we do not need to do this now in relation to this Bill.

Amendment 49 is in the name of the noble Lord, Lord Moylan. It seeks to require the Secretary of State to produce a report on how public ownership will impact the implementation of the Strikes (Minimum Service Levels) Act 2023. The noble Lord must surely be aware, however, that the Government have already committed to repealing the Strikes (Minimum Service Levels) Act 2023. That is because this Government are committed to strengthening the rights of working people by empowering workers to organise collectively through trade unions.

No relevant employer, under the Strikes (Minimum Service Levels: Passenger Railway Services) Regulations, has chosen to implement minimum service levels under this legislation and, in fact, they will not work. Instead, we will work in partnership with trade unions, as we have done in recent weeks to bring an end to two years of disputes that have meant needless disruption and misery for passengers. So I must say to the noble Lord that the Strikes (Minimum Service Levels) Act will not be implemented for publicly owned services, or indeed at all under this Government—as, in fact, it was not under the last one. The suggested report, therefore, would be redundant.

Finally, I will respond to the points made by the noble Lord, Lord Young, on the classification of the costs of rolling stock for publicly owned train operating companies when I respond to Amendment 19 in group 10 in the resumed Committee stage on Wednesday. I note for now that, whatever the position is, it must already apply to the four publicly owned train companies. I urge the noble Lord to withdraw his amendment.

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Baroness, Lady Randerson, for her intervention. In fact, I did not say that there was no need to sort out the terms and conditions now; I said there was no need to sort out the particular matter of how the overall pay and conditions might be dealt with, including with the pay review body. As a matter of fact, the employees would transfer under the transfer of undertakings regulations. At that stage, no change is possible on the transfer. That will need to be resolved and I am sure that changes are in fact needed, if only because, at least in my view, some of the existing train operating companies have failed to develop the terms and conditions in the way that they should have, both to operate a better service and to reward the staff more effectively.

The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)

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My Lords, I remind noble Lords that the Bill is, in my view at least, narrowly focused on allowing the further public operation of existing franchised railway operations currently in the private sector. Many in this House will know that I was the commissioner of Transport for London when the original Overground was proposed and established. Some of the details of its success are extremely familiar to me and give me a glow of pride and satisfaction whenever anybody mentions them. I was also there when the Overground was expanded—in fact, some Members of this House could have allowed it to expand further but chose to oppose it on the grounds that, for a mayor of a different political colour, that might not suit the then-Government’s aims. I say all that because devolution is really important. I have no intention of closing it off, and neither does the Bill—but it has to be subject to the effective operation of the railway network as a whole. I will come back to that in a moment.

I will speak first to Amendments 31 to 33 and 37 of the noble Baroness, Lady Jones of Moulsecoomb, Amendment 34 of the noble Lords, Lord Young of Cookham and Lord Moylan, and Amendment 36 of the noble Lord, Lord Lansley. These amendments would empower the Secretary of State and the Scottish and Welsh Ministers to award contracts to companies owned by various local authorities. Amendment 16 of the noble Baronesses, Lady Pidgeon and Lady Randerson, and the noble Lord, Lord Moylan, aims to provide opportunities for local authorities to take responsibility for services in their areas before contracts are awarded to public sector operators.

Amendment 46 of the noble Lord, Lord Moylan, would require another report, this time on whether public ownership makes it more or less likely that further services will be devolved by means of exemptions granted under Section 24 of the Railways Act 1993.

Amendment 50, also of the noble Lord, Lord Moylan, is another attempt to delay transfers to public ownership, as it makes the establishment of new regional partnership boards the trigger for the provisions of the Bill to come into force. The noble Lord, Lord Moylan, mentioned shadow Great British Railways. This is not a statutory entity but a preparation for Great British Railways; it is not a mechanism to do its job in advance of the creation of the body itself.

In line with the spirit of all these amendments, the Government are absolutely committed to strengthening the role for local communities in shaping the design and delivery of passenger rail services in their areas. Our plans for reform will make this a great deal easier for them, because they will need to engage with only one organisation—Great British Railways—instead of having to deal separately with Network Rail and multiple train operating companies.

The noble Lord, Lord Moylan, reminded us of the manifesto. We have already made it clear that our railways Bill will include a statutory role for the devolved Governments and mayoral combined authorities in governing, managing, planning and developing the rail network, and there is absolutely no intention to enact rail reform without that statutory role. We are committed to a full and open discussion on that role, and how it will work, as we refine our plans for the railways Bill in the coming weeks, and that will be included in the published consultation.

Lord Hendy of Richmond Hill (Lab)

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I thank my noble friend for his intervention. I do not disagree with him at all: those railway services are rather good. I did say that I was rather proud of the Overground, and from a distance I still am; it is a rather good service. However, there is a difference. Those services operate very largely within the Mayor of London’s geographical area, and the fares at the extremes do not differ. In Liverpool, I believe, they are wholly within the Liverpool City Region, but if not, the same applies. Consideration has to be given to consistency when the services stretch beyond those boundaries. That has been, and is capable of being, managed well.

The points my noble friend makes about who pays for enhancements—both the revenue costs of enhancements, and of extra trains if they are needed—and who gets the revenue from that are all subjects on which we are in harmonious discussion with the Mayor of Greater Manchester and Transport for Greater Manchester. It is possible to enhance railway passenger services in conurbations and elsewhere without having ownership of them, in circumstances where the proliferation of ownership may well create other costs. In the previous debate in Committee, I referred to the number of train crew depots in Newcastle. My recollection is that there are currently four, all of which have managers, supervisors and clerical staff. That is not the sort of proliferation of basic on-costs that we want to see in the rest of the system.

We are having a very practical discussion in Manchester about the eight lines that the mayor wants to specify. I suspect that, at the end of the day, when we reach an agreement, as I believe we will, the services the mayor wants will be presented as part of the Bee Network. I expect them to look consistent across Manchester, in the different modes that Transport for Greater Manchester controls. That is exactly the same effect as we had with London Overground and Merseyrail. We will have to bridge those gaps without creating further cost and confusing passengers.

Amendment 43, in the name of my noble friends Lords Snape, Liddle and Berkeley, requires the Secretary of State to produce an assessment of whether passenger services could be run by devolved authorities before any contract is awarded to a public sector company or any private sector franchise is extended temporarily by the Secretary of State. As I have said already, it is not our intention to devolve the operation of further services to local government as part of this process. Our intention is to end the failing franchise system and move to a public ownership model, which will then allow us more easily to reduce fragmentation and create a culture focused on delivering for passengers and taxpayers, not private shareholders.

It is deeply important that local leaders have greater influence over what services are run in their areas. That is why we are engaging with them to develop a statutory role for mayoral combined authorities in the rail network, which will become part of the wider Bill. As I have said, further devolution of services risks including fragmentation, but as I have also said, it is not ruled out by the Bill.

I turn to Amendments 12 and 13 from the noble Lord, Lord Moylan, which require the Government to consult with the Council of the Nations and Regions and the Prime Minister’s newly appointed envoy before transferring cross-border services to the public sector. This amendment is not necessary. The Government regularly engage devolved Governments on cross-border services. Both the Scottish and Welsh Governments are in favour of transferring rail services into the public sector, and we have worked collaboratively with Scottish and Welsh Ministers on the proposals in the Bill. Consultation will continue to take place as further services are transferred into public sector operation.

In addition, the Council of the Nations and Regions has been set up by the Prime Minister to foster positive collaboration with the devolved Governments. Clearly, we do not require a legislative amendment to encourage collaboration when the council exists to do just that, and I am sure that the newly appointed envoy will further facilitate that.

The noble Baroness, Lady Jones, referred to South Western Railway and in particular to the line between Salisbury and Exeter. I am confident that it will get better when South Western Railway comes into public ownership and we can get much closer liaison between infrastructure and operations and their management.

The noble Baroness, Lady Randerson, referred to Welsh ownership of infrastructure. I am not sure that she is right, bearing in mind our experience with the valley lines, in saying that they aspire to own the infra- structure, but the Bill would not prevent that.

Finally, the noble Lord, Lord Moylan, might want to note that Keith Williams, who he mentioned and who I mentioned on Monday, publicly endorsed the rail manifesto published by the Labour Party before the election. I will say no more about that.

With thanks to all noble Lords for this debate, I urge them not to press their amendments to this relatively narrow Bill, but I will reflect further on everything I have heard about devolution today.

Lord Hendy of Richmond Hill (Lab)

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My Lords, I thank the noble Lord, Lord Hamilton of Epsom, for this amendment, which would require the Secretary of State and the Scottish and Welsh Ministers to consider each public sector operator’s progress in preparing for driverless trains before awarding a contract to that operator. The amendment appears to be of limited practical impact, as it would not require the franchising authority to do anything in light of the outcome of the assessment. That said, I understand from the noble Lord’s explanation that it was intended as a probing amendment, and I take it in that spirit.

I thank the noble Lord, Lord Moylan, for his acknowledgement of my small amount of knowledge of railway operation, and that part of it that I appear to have transferred seamlessly to him. I have tried to educate him in that manner and, clearly, he has been a good pupil. I did not try to extend that to his political beliefs because at the time, when I was educating him in the operation of transport, I had no reason to do so. I will have a go at that some other time.

I also know about the operation of the Docklands Light Railway, referred to by the noble Lord, Lord Hamilton of Epsom, because I was responsible for its operation for nearly 10 years. As the noble Lord, Lord Moylan, said, every train has an attendant on it. They do not sit at the front. People who enjoy sitting at the front—including me—do so instead. More seriously, the attendant closes the doors, to ensure that they are safely closed, and can drive the train if they need to.

The Government have no plans for the rollout of driverless trains on the national railway network. Considerable technological development work would need to be undertaken to make this a viable proposition. There is some practical experience of automatic train operation in the United Kingdom—on several Tube lines and some on the national railway network too, such as on the core Thameslink route running through central London, where this system is vital in enabling the high frequency of service. There is also some limited semi-automatic operation on the Elizabeth line. However, in both cases, it is not truly a driverless system as the operation of these trains still requires a driver to be present while the train is in passenger service, to operate doors and initiate dispatch.

As a practical operator, and a passenger, I am very sympathetic to the view of the noble Baroness, Lady Brinton, concerning staff on trains. From my experience at Transport for London, I can say that Tube trains which are automatically driven have a driver because somebody has to close the doors, somebody has to be able to stop the train in an emergency and somebody has to at least attempt to fix it if it goes wrong. On a train with up to 1,000 people on it, it makes sense for that person to have some space to work in and even more sense for them to sit at the front of the train, where they can see where it is going. That is the philosophy which we adopted.

The noble Lord, Lord Moylan, is correct. The real reason for that signalling system is to enable more trains to run more closely. My erstwhile colleagues on the national railway network still look disconcerted at the thought of one Victoria line train leaving a platform and before the last carriage has departed into the tunnel, the cab of the next one arrives, and the slower that they do it, the closer they get together. That is why you want signalling systems of this sort. That is the reason for the application—not the proposed application but the actual application—of the European train control system on the east coast main line that is currently being implemented. It has been funded by government. It involves several contractors and many UK jobs, and it is done precisely for the purpose of increasing the capacity of the line, enabling the trains to run closer together, and is a very effective business model. As locomotives and trains are fitted with that equipment in the UK, it will become progressively cheaper to equip new lines and it will improve train capacity on all of them.

I suggest that, realistically, the deployment of genuinely driverless trains on the national railway network is a long-term proposition for which passenger safety, practical feasibility and a business case are far from proven. However, there is a range of on-train systems short of driverless operation that can be deployed to improve train service performance and the overall efficiency of the system. These include relatively tried and tested systems such as forward-facing CCTV, which can be used to monitor trackside risks such as excessive vegetation growth; systems to monitor the condition of track and overhead wires; driver advisory systems, which help improve fuel efficiency and punctuality; and more cutting-edge technologies such as the automatic train operation that I mentioned.

Sadly, as a result of the fragmented system that we have, even relatively tried and tested systems have not been deployed systematically across the network. Instead, they have been implemented piecemeal according to the whim of individual operators as they have procured and specified their requirements for new or upgraded train fleets. A clear benefit of public ownership and the future consolidation of track and train within Great British Railways will be the chance to take a consistent approach to the deployment of existing technologies and the development and testing of new innovations right across the system. GBR can set a clear long-term direction for future rolling-stock innovation across the system, with consequential beneficial effects on reliability and the costs of the entire railway.

I will not make specific statements in favour of particular innovations or technologies as part of the debate on this Bill. However, I acknowledge the usefulness of technological development that the noble Lord, Lord Hamilton of Epsom, referred to, and agree with the noble Lord, Lord Ranger, that innovation and technological development have a significant part to play in delivering the best possible services for passengers at the least possible cost to taxpayers and farepayers. I emphasise that our future plans for the railway are aimed at creating the conditions in which innovation can flourish, within both GBR and the much wider private sector supply chain upon which GBR will depend. On that basis, I urge the noble Lord to withdraw his amendment.

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Lord, Lord Moylan, for the remarks that he has just made. He talks of delay and nothing happening. One of the reasons why I personally am here is that I have been waiting six years for rail reform and, in the end, when I was asked, I volunteered to see whether I could move it forward, because it has taken a very long time. Not much has happened since the timetable crisis of 2018 and the report that Keith Williams wrote.

I thank the noble Baronesses, Lady Brinton, Lady Grey-Thompson and Lady Randerson, for Amendment 17, which is supported also by the noble Lord, Lord Moylan. I absolutely recognise the need to address the passenger experience, and I know that my noble friend Lady Blake, who took the Second Reading, recognises it too. Improving accessibility on the railways is a key priority for the Government and something that the Secretary of State and I are personally committed to. We know that the assistance that passengers receive too often falls short of what they deserve and what they have every right to expect.

I was going to list a range of areas where things need to change, but I am embarrassed to do so because so many speakers in this debate have listed them themselves. All I can do is acknowledge that I have heard the list quite clearly. We know that we need to do better, and it hurts me that the public service that I care about fails so regularly to look after people in the way that it ought to. I personally—and the Secretary of State is in the same position—will do my best to do differently in future.

Many of these issues are, frankly, best solved under public ownership, as the problems that have arisen are a direct result of the current fragmented system. For example, on the specification of new trains, which the noble Baroness, Lady Brinton, and others referred to, a guiding mind will take an approach to a greater consistency of design and improve the outcomes for disabled passengers.

In addition, it has been explained, more eloquently than I can do, how many apps there are, how weak they are and how they fail to work. The noble Baroness, Lady Grey-Thompson, took me through, and showed me a huge litany of things that are wrong with, a variety of apps, all of which she needs to make quite simple journeys. I am terribly embarrassed by that. Why should we need so many different electronic devices to deliver such a relatively poor service and outcome in such circumstances? That is an obvious case where consistency is desirable. I referred earlier today to not having a proliferation of train operators, and this is one of the reasons not to do so. We do not want everyone inventing their own process; we want one consistent process, designed with the people who use it, not done for them and not delivered to them after it is done. I have heard the experiences of the noble Baroness, Lady Grey-Thompson, and others of getting something that they wanted but then discovering it did not do what they wanted.

I contend that one of the clearest reasons for the Bill, which seeks to take train operations back into public ownership progressively, is to make those sorts of improvements a great deal easier to deliver in future. Public ownership and control give us the best platform possible to do that. I appreciate the engagement that I have had to date, especially with the noble Baronesses, Lady Brinton and Lady Grey-Thompson. I believe I have offered a meeting to both of them— I hope I have, but that is done for me—and we will have that before Report. That is not an explanation; it is more of an apology, but I hope that for now it will allow them to withdraw their amendment.

The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)

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First, I briefly note my intention to write to the noble Lord, Lord Teverson, on his points about public investment that I did not manage to address on Monday. I also intend to address later the question asked by the noble Lord, Lord Young of Cookham, on Monday.

On fares, there is nothing new here. The regulation of fares has always been by government through its contracts with operators, whether public or private, and as far as this Bill is concerned, that will continue.

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Baroness for her intervention. Of course, she is absolutely right. The fare system is far too complex, whether it is regulated fares or unregulated fares. One of the primary purposes of bringing train operations into public ownership is to provide the basis of rationalising that fare system without the associated complications of either compensation to private sector operators or, indeed, their saying that some of the information needed to do that is commercially confidential and hence cannot be used to rationalise the system that nobody understands.

On Amendment 19, the department already holds its public train operating companies to account for their financial management through regular review of their management accounts and business plans, as part of its routine contract management activities. That is equally true in relation to privately owned operators whose costs are funded by taxpayers. This scrutiny supports the monitoring of performance against the Secretary of State’s priority to deliver an affordable and sustainable railway. The amendment refers specifically to the auditing of publicly owned train companies’ accounts. It is already the case that those companies must publish their audited accounts annually, which are available in Companies House, so there is already full transparency of their financial performance and management. The proposed amendment would add little value to the existing scrutiny of their financial performance by DOHL ass shareholder, the Department for Transport’s contracting authority, and their own financial auditors, as well as the public via the public audited accounts. That would be an unnecessary additional cost to be borne by the taxpayer which I cannot support.

Regarding Amendment 20, the department already publishes information on its website about payments made to operators under its rail contracts. The department’s published annual report and accounts also detail the department’s expenditure on each contract, as well as any associated year-end balances in respect of payments made in advance or still due to be paid. The Bill does not change that, so there is no need for the taxpayer to pay for an independent body to report on the same data. As I have said previously, the most significant financial impact of the Bill will be that taxpayers will no longer have to foot the bill for tens of millions of pounds in fees paid to private operators each year for the benefit of their shareholders.

Amendment 23 raises the specific question of whether public ownership will expose the Government to pension liabilities that previously sat with private operators. Under the current national rail contracts, DfT funds the legitimate actual costs of the train operating companies. For example, this includes the net operational costs of running services and the cost of leasing rolling stock and pension contributions.

The noble Lord, Lord Young, asked a specific question on Monday about how the Office for National Statistics might classify publicly owned operators in future. I cannot, of course, answer that question, as future classification decisions are a matter for the independent ONS, not for me or my department. What I can do is to confirm the current classification of the DfT contracted operators, which are all currently classified as public non-financial corporations, including the four DOHL-owned operators. I can also confirm what has happened previously when a service is transferred from private to public ownership. For example, following the transfer of services into DOHL, the ONS recently considered the classification of TransPennine trains, and concluded that they should remain classified as a public non-financial corporation. That fact that these publicly owned operators are classified in this way, along with the privately owned operators, means that their costs already impact the public finances. For example—and this is particularly relevant to Amendment 25—both private and publicly owned operators’ rolling stock lease payments already come out of the department’s resource budget.

Turning to pensions, I cannot agree with those who assert that the franchising model left responsibility for funding pension liabilities entirely with the private sector. Even under the form of franchising that was in place before the pandemic, pension costs were to a substantial extent a long-term liability for the public sector. First, this is because the franchising system meant the bidder simply priced any changes in costs into their bids at reletting, changing the amount of subsidy payable to the operator or the premium receivable by Government. This meant that the burden of any increases in pension costs arising during the term of the contract would, at the point of retendering, be passed to the taxpayer. Secondly, in the more recent franchise competitions the department was required to share the risk of any adverse movements in pension deficit recovery payments, as that had become a risk that the private operators stated they were unable to bear. The Bill therefore does not materially change the Government’s level of exposure to liabilities.

On the noble Lord’s second amendment regarding pension liabilities, in previous transfers to DOHL the transferring staff have remained within their existing section of the Railways Pension Scheme at the point of transfer. Railways Pension Scheme contribution rates will not change when services transfer from private to public sector operation and, as mentioned a moment ago, the cost of employer pension contributions is already borne by the Government under the terms of the existing contracts.

The noble Lord may also find it helpful to know that the department already reports in its annual report and accounts the employer’s share of the net pension scheme surplus or deficit, the employer’s share of pension scheme assets and the employer’s share of pension scheme liabilities.

In response to the noble Baroness, Lady Randerson, transparency will be enhanced by public ownership. In respect of the question about the passenger standards authority, I am afraid it is too early to say what it will and will not do. That is why we are going to consult about its duties in order to make sure that it represents passengers’ interests in the best way possible.

In view of these observations, noting in particular that the costs of public sector operations are already in the public domain, I urge the noble Lord not to press these amendments.

Lord Hendy of Richmond Hill (Lab)

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The Bill before the House is specifically about the ownership of services currently operated under contract to the Secretary of State, Scottish Ministers or Welsh Ministers. Transferring and retaining these services in public ownership will not affect open access operators or prevent them running as they do now. It is therefore not necessary, as in Amendment 24, to require the Government to lay a report on the impact of public ownership on open access operators, given that this Bill will not affect the rights of those operators to access the network and run services. I emphasise that as part of the wider railways Bill, any proposed changes to access arrangements and the body that decides them will, of course, be subject to consideration and debate by your Lordships’ House before they are implemented. I beg for some patience in this debate.

Turning to Amendment 27, which requires the ORR to produce an independent report on access, I again reassure the House that under the present public ownership Bill, the ORR will continue its role in relation to access decisions. There is therefore no need for this amendment; an independent function is already in place that will decide on access to ensure there is no disadvantage to non-publicly owned operators. We will set out further detail on GBR roles and responsibilities in the coming months. Given those reassurances and that this Bill does not affect the rights of open access operators to run services, I urge the noble Lord to withdraw the amendment.

Lord Hendy of Richmond Hill (Lab)

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My Lords, I am grateful to all noble Lords who contributed to this discussion. First, I should say that the objective of this limited Bill before the Committee remains to unify track and train, to provide better services to passengers, to reduce the cost of the railway and to increase the railway’s income. The phrase I would use to start with is, “We are where we are”.

The noble Lord, Lord Young of Cookham, referred to Network Rail. I am very familiar with its arrangements post being put back on the Government’s balance sheet. All I can say to the noble Lord is that managing it is and has been a difficult job. However, it has still managed to make significant investment in the railway infrastructure of Great Britain. In some ways, its exposure to being in the public sector did it a great deal of good. I was paid significantly less to chair it than my predecessor was; its chief executive is paid significantly less than any of his predecessors and to my mind, he does a very good job. The organisation is a good deal more frugal than it used to be, yet it still does some very good things in operating the railway infrastructure.

The noble Lord, Lord Young of Cookham, knows that Chiltern was always an outlier. There was no other plausible large-scale investment in railway infrastructure by a train operating company; certainly, there has been no recent interest in it. If you looked at the owners of the train operating companies now, you would see that their balance sheets simply would not support it.

Of course, the noble Lord knows that I cannot predict what the Office for National Statistics will or will not say. Although the suggestion is that, after six years, LNER was still capable of being put back in the private sector, there was absolutely no evidence that it or Northern, which was in public ownership for four years, was being prepared at all. There was also no move in the previous Government’s department to do so. Nevertheless, there was no change in the status of the public accounts of those companies. The noble Lord may speculate that there might be in future, with these arrangements, but I could equally assert that experience suggests that there will not be.

My noble friend Lord Sikka made a further point about the treatment of the assets and liabilities of Network Rail. I will write to both him and the noble Lord, Lord Young of Cookham, about that.

On the other hand, I recognise completely the passion with which my noble friends Lord Sikka and Lord Hanworth spoke about the rolling stock companies. Again, we are where we are. I heard my noble friends’ arguments with interest, but the Government will not buy back the rolling stock companies. Great British Railways will enable a longer-term view of the rolling stock market and it will reduce the margins it needs to make. Everybody is right to say that rolling stock lasts for 30 to 35 years, but a railway that is more accurately able to predict how long that rolling stock should last and where it should be used will reduce the uncertainty of relatively short-term leases. It will also significantly reduce the cost of those leases and will actually enhance competition in the market. We will see how that market evolves over time.

Having said all that, I urge the noble Lord to withdraw his amendment.

The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)

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My Lords, I start by reminding the Committee that this is a short Bill, simply to bring back the national railway operations into public ownership. This is a popular policy with the public, absolutely necessary to making the railway run properly, and a necessary precursor to a more major Bill next year.

I thank the noble Lord, Lord Moylan, for this amendment, which would require not a report this time—although he has sought to require many—but Statements to Parliament about the relationship between services in Greater London provided under contract to TfL and those for which the Secretary of State is responsible.

There is no reason to expect the Bill, which allows train operations to transfer from private operators into public ownership, to have any adverse effect whatever on the existing collaboration between operators and TfL. The Bill makes no change to the existing duties on the Secretary of State for Transport and on Transport for London under Section 175 of the Greater London Authority Act 1999 to co-operate and co-ordinate passenger rail services in London. Like many noble Lords in the Committee, I know from my own experience how that works. I think we can all conclude that it has worked very satisfactorily so far and there is no reason why it should not continue.

The Bill will not have any adverse effect on those services: substantially the same staff will be running those trains under public ownership on the national railway network, as they do now, so there should be no concern about a sudden deterioration of service. In fact, I expect it to improve: publicly owned operators will prioritise the interests of passengers, rather than exploiting contractual conditions in pursuit of short-term profit.

The Bill says nothing about the devolution of further passenger rail service to the Mayor of London. It would not prevent further devolution, and nothing I have said would prevent that. If they were devolved, they could be operated in the same way as the current London Overground services are operated, under a concession from Transport for London.

When I said, as the noble Lord, Lord Moylan, quoted, that there is no current plan for further devolution, that was an accurate statement. Of course, it may not be an accurate statement in the future, but when I wrote the letter to him and other noble Lords and Baronesses, it was true. We will see what happens. It is only a few weeks since what the mayor said in July and, if he does have aspirations to operate further services, I am sure there will be a cordial discussion under the auspices of Section 175 to discuss whether and how that is carried out and the costs of doing it.

The noble Lord is also mistaken on Manchester. Certainly, the evolving situation I described with the Mayor of Manchester and Transport for Greater Manchester is that services would be operated not by Network Rail, because that is currently an infrastructure provider, but by a train company. In fact, it is most likely to be Northern Trains, which is already owned by the public sector and has been for four years.

As I have already said, I give a commitment that the future, wider Bill will give a statutory role for combined authority mayors that is better than any they have now. I have just repeated it for the avoidance of doubt. In that case, it is under Section 24 of the 1993 Act. If they were to want to operate train services, this Bill does not alter Section 24 and that would be a discussion that could be had. I described the situation as I understand it currently unfolding; in fact, they do not wish to do that, but the Secretary of State could devolve more under Section 24 if she chose to.

At the moment, if I have counted correctly, the operation of rail services in London is currently the responsibility of eight different franchised operators, plus two more under contract to Transport for London. That is without the long-distance operators whose services start and finish in London but do not otherwise serve the London market directly and, indeed, Network Rail, which is responsible for the physical railway infra- structure. Public ownership and subsequent integration into Great British Railways will simplify all this by bringing the currently franchised services together in ownership in one place. If TfL wishes to discuss or influence the provision of other rail services across Greater London in the future, it will have an easier job of engaging with Great British Railways. It will be assured that the train operators that are performing will be interested in acting in the interests of passengers.

The noble Lord, Lord Berkeley, asked where I think it is all going. I will come back and answer that on Report.

It was a pleasure to hear the noble Baroness, Lady O’Neill, talking about the particular circumstances of Bexley, and it is nice to see her in her place. I do not envisage any immediate change to the railway geography of south-east London. I cannot answer for much of the rest of what she said in the way that I once could, as the commissioner of Transport for London, but I am sure that she knows where to go to make the points about the Superloop, ULEZ and the other things she referred to for the benefit of her borough of Bexley.

The noble Lord, Lord Gascoigne, referred to Crossrail 2. It should be evident—I hope it is from what I have now said about Section 175—that, were Crossrail 2 to be promoted and come into effect, it would, like Crossrail 1, be complex, but the outcome would be a significant transfer of services to the mayor, because it would, and hopefully will, eventually take over some national railway services. The ease with which Crossrail has taken over former national railway services in London and transformed them into a coherent service for the benefit not only of London but the national economy would be replicated in Crossrail 2. Nothing in the Bill would change that; nor would it change the way that Crossrail was funded had it been proposed now, or the way Crossrail 2 would be funded if it were proposed in the future.

The answer to a lot of what has been said about the Overground is that the Bill primarily seeks to remedy those parts of the railway network that patently do not work well. I would contend—I have always contended in all my roles and in this one too—that the railway service in London works. It works because it is coherent, and there is no reason for the Bill to interfere with it.

I was very interested to hear from the noble Lord, Lord Grayling. I remember well his position on the devolution of Southeastern services, and he is right that many of them go well beyond the London boundary. There is a democratic issue about how well they serve the areas outside the boundary, and his recollection is correct that at the stage at which it was proposed— I recall it well because I proposed it, even if it was politically advocated by the mayor—it cost more to operate those services separately than it did together. That would be quite a good reason to think carefully about whether a proposition could now be made to do it differently. In a sense, he is making my case because one of the things that we need to have some regard to in a post-Covid railway, with less revenue but similar costs, is the cost of the whole thing. One of the reasons for the proposition in the Bill is to start to sort out the costs of the railway, increase its revenue and improve its performance.

I listened carefully to the remarks made by the noble Baroness, Lady Pidgeon, on devolution and I intend to come back to them on Report.

The Government’s plans will improve co-operation, not hinder it, so I see no need for the statement envisaged in the amendment of the noble Lord, Lord Moylan. I am sure that all involved will work together to ensure that publicly owned and TfL services can co-exist effectively side by side. On that basis, I urge the noble Lord to withdraw his amendment.

The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)

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I thank the noble Lords, Lord Gascoigne and Lord Moylan, for Amendment 1. I absolutely support the idea that the Government should be clear about what the railway is for and what we want it to achieve. Far too many conversations in this industry are about tracks, signals and trains and how the railway works—or, in many cases, does not work so well. There needs to be much more focus on what the railway is for, but you can do that only if the organisation fundamentally works.

I am clear that when we establish Great British Railways, we should set out a clear statement of purpose, and we will set out a proposal for this statement of purpose in the consultation we will launch ahead of the substantive railways Bill. I am also very clear about the purpose of the Bill and the Government’s wider plans for the railway. Improving the performance of passenger services is clearly a big part of that purpose, but it is not and cannot be the only purpose. The Secretary of State has set out six key objectives against which she expects the railway to deliver. In summary, the railway should be reliable, affordable for passengers and taxpayers, efficient, of suitable quality, accessible and, of course, safe. She and I are reminding senior railway leaders of these objectives very clearly and very often. I expect that to carry more weight than a statement of purpose in a Bill that, if we are honest, might not be read widely by those on the front line of running the railway. Given the range of objectives that the Government wish to meet, I would not support the idea of singling out one objective, even a vital one, and placing it in this Bill.

Turning to the specific wording of the amendment, which is about performance, the easiest way to improve the performance of passenger railway services would be not to run so many of them, and to try to run fewer freight trains. It would be much easier to make trains run on time if the railway were less congested. Of course, I do not advocate that as a solution, but it illustrates the point that trying to reduce the Government’s objectives for the railway to a single purpose might be counter- productive. I hope that my remarks will have reassured the noble Lord that I am entirely on board with his underlying suggestion that the railway needs a clear statement of purpose, but I am not convinced that it needs to be enshrined in primary legislation right now, nor that it should focus exclusively on the performance of passenger services.

The noble Lord, Lord Grayling, asked me to set aside my ministerial hat and opine about the performance of the London Overground and the type of operator that operates it. I shall not set aside the hat, but I will say that one of the differences with the Overground is that it operates within a consistent and easily understood fares structure, which has enabled a significant increase in patronage over the period it has been operating. We must change the railway fares: there are far too many of them and they are deeply confusing. But one of the reasons for public ownership of the main network is to ensure that we have control of the operation and that there is enough information to be able to do that.

I will not trouble to respond to the point about arrogance and the Government acting, according to the noble Lord, Lord Moylan, as if we won the election, because it is rather self-evident that we did. I will remind him that this measure is very popular with the public, and every recent opinion poll suggests that a very large majority wish to see the railway in public ownership. We will return to the matter of the staff, but he acknowledges that the transfer of undertakings regulations will apply, and they do involve some consultation. But if you went to Waterloo station today and asked the staff there whether they want to change their employer, most of them would tell you that they have changed employer so often that some of them cannot remember who their employer is, and do not much care. The most frequent description of railway employment that I get when I speak to railway men and women—

Lord Hendy of Richmond Hill (Lab)

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I was referring to the people who drive and operate the trains. There are more of them on Waterloo station than there are employees of Network Rail.

To finish what I was saying, most people on the railway refer to their employer and their work as “the railway”, which tells you something about the way in which the franchise system has dealt with loyalty to employment.

I thank the noble Lord, Lord Lansley, for Amendment 14 and the discussion we had in the last few days. He is right that Regulation 17 requires the publication of a specified list of information within one year, following the direct award of a contract, where that information has not already been published. However, we expect the majority of the information included in Regulation 17 to have already been published well before one year has expired. That is because Regulation 23, which covers post-award publication, requires a competent authority to publish a similar set of information within two months of contract award. The information which must be published is set out in Schedule 2. Regulation 23 also allows interested parties to request the reasons for a direct award within one month of the post-award publication. I agree that a year would be a very long time to wait before the information is published. However, I do not believe that the noble Lord’s amendment is needed because similar and, in many respects, more detailed publication requirements are already provided for in Regulation 23. I urge him to withdraw the amendment, and I note that he does not intend to press it.

I note that Amendment 16, from my noble friend Lord Berkeley, is somewhat novel constitutionally, as it would constrain parliamentary sovereignty by imposing limitations on when primary legislation relating to the railways could be introduced. I am very happy to confirm to my noble friend, to the noble Baroness, Lady Randerson, and to others who mentioned it that the Government intend to set out their key proposal for the railways Bill in a consultation document that I very much hope will be published before the end of this calendar year. This will give all interested parties, including Members of your Lordships’ House, the chance to review and scrutinise it and to feed in their views before the Bill is introduced later in this parliamentary Session. The Government do not intend to publish a draft of the Bill before it is introduced, as I would expect that to delay progress in implementing the Government’s planned reforms.

It is now more than six years since the previous Government declared that the structure of the railways is

“no longer fit to meet today’s challenges”

and appointed Keith Williams to lead his review. Passengers, freight and everyone on and who uses the railway have waited too far long already to see meaningful change. I have to say that my own experience is that the previous Government went through pre-legislative scrutiny in a desultory manner, and frankly, we all concluded that they did not intend to bring a Bill before either House any time soon.

While the Government are keen to hear the widest possible range of views on their proposals, including the noble Lord’s, I do not on this occasion support the idea of publishing a draft Bill. It also does not seem necessary, given that noble Lords can submit their views during the consultation I have committed to and will be able to debate the Bill once it is before the House. I am of course happy to meet with my noble friend Lord Berkeley and other noble Lords at the time of the consultation launch to seek their views, as we have done during the course of the Bill before us, if that would help persuade him to withdraw his amendment.

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Lord, Lord Moylan, and the noble Baronesses, Lady Randerson and Lady Scott of Needham Market, for their amendments in this group—Amendment 2 and Amendment 10 respectively. The amendments seek to test the Government’s approach of transferring services as existing contracts expire. I also thank my noble friend Lord Liddle for saying that the intention is to get rid of franchises and for explaining why. He is right. I should also say that I and the Government do not believe that we should either pay compensation for termination or keep paying fees to owning groups of train operating companies when we do not need to.

I am happy to begin with a reassurance about the Government’s position. We will not hesitate to take decisive action if Avanti, CrossCountry or any other operator’s poor performance means that the contractual conditions that allow for early termination are met. The contracts we have inherited from the previous Government make it far too hard to get rid of an underperforming operator, but if we have the opportunity to put passengers out of their misery by ending a failing operator’s contract early and bringing their services into public ownership, we will do just that. In those circumstances, we will not wait for those contracts to expire.

The noble Baroness, Lady Randerson, and the noble Lord, Lord Young, asked whether the public sector operator will have the capacity to take in services from a failing operator whose contract has been terminated early, at the same time as other planned transfers. I reassure them that current contracts allow sufficient flexibility to accommodate this. All but two of the current contracts with private operators give the Secretary of State significant discretion to select an expiry date within a range of possible dates specified in each contract. The Secretary of State simply has to give the outgoing operator a minimum of 12 weeks’ notice of expiry. This means that if a contract can be terminated early for poor performance—be it by Avanti, CrossCountry or any other operator—the Secretary of State will be able to adjust the planned expiry dates of other contracts if necessary to ensure that the failing operator’s services can be transferred as quickly as possible without overwhelming the public sector operator. Of course, we also need a programme of return that is reassuringly steady for the good management of the operations as they come back into public ownership. I hope those observations will be sufficient to persuade the noble Baronesses not to press their Amendment 10.

In response to the noble Lord, Lord Moylan, my previous comments address the first part of his Amendment 2. The Government will not hesitate to exercise its contractual rights if an operator’s poor performance means that the conditions for early termination are met. The Secretary of State, my noble friend Lady Blake of Leeds and I have all made the Government’s position on the matter very clear and on the record. There is no need for a statutory obligation to cover this point.

The noble Lord knows very well that I cannot accept the remainder of his amendment because it would substantially delay the programme of transfers to public sector operation. As the noble Baroness, Lady Randerson, said, thanks to decisions taken by the previous Government, the two most poorly performing operators currently have the longest contracts, with terms that make it very difficult to terminate them early for poor performance. I cannot say quite what the cost is, but I will write to my noble friend Lord Snape to tell him the rough quantum. In fact, the amendment from the noble Lord, Lord Moylan, would mean it would be impossible for the Secretary of State to exercise any contractual break clause, as defined in his amendment, until after the worst-performing operator’s contract had ended. That could be as late as October 2027, so it is difficult to see this as anything other than a wrecking amendment. I hope the noble Lord will prove me wrong by withdrawing it.

Lord Hendy of Richmond Hill (Lab)

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Is that the two worst-performing franchises or two others?

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Lord, Lord Young, for his intervention. I think he is right, but he will forgive me if I consider it further and write to him.

Lord Hendy of Richmond Hill (Lab)

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I thank noble Lords for their amendments in this group. In response to Amendment 3, from the noble Lord, Lord Lansley—and I thank him for our discussion a few days ago— I will highlight two important ways in which this Bill promotes competition.

First, there will continue to be huge opportunities for competition between businesses in the supply chain which publicly owned operators and Network Rail will continue to depend on. I was speaking this morning at the Railway Industry Association’s conference and it welcomed clarity about the Government’s intentions with enthusiasm, because it knows as well as we do that the railway, after six years of being promised reform, needs to understand what reform might look like in order for its businesses to prosper. Public ownership and our plans for GBR to provide long-term strategic direction for the whole railway will give greater clarity and certainty to businesses in the supply chain and so will support healthy competition.

Secondly, in relation to competition between train operators, the Bill preserves the existing arrangements for open-access operators. Open-access services are the only source of meaningful competition between operators on today’s railway, and this Bill makes no changes to the way in which open-access applications are treated by either Network Rail or the independent regulator, the Office of Rail and Road.

Having set out how the Government’s approach is consistent with a duty to promote competition, I also note for completeness, referring to the propositions of the noble Lord, Lord Lansley, that the Section 4 duty applies to the Secretary of State only when she is exercising certain functions under the 1993 Act. It does not apply to the exercise of her functions under Sections 23 to 31, which are the franchising functions that are amended by the Bill. As such, there can be no question of this Bill impairing the Secretary of State’s ability to comply with the Section 4 competition duty.

Turning to Amendment 17, tabled by the noble Lord, Lord Moylan, open-access operators are a valuable part of the system and will remain so following this short Bill. Looking ahead to the wider railways Bill, we see a continuing role for open-access services where they add value and capacity to the network. I will say more in a moment about how their interests will be protected. In the meantime, I reiterate that the current short Bill has no impact on open-access operators, the services they provide or the process by which they can secure rights to operate on the rail network. For this reason, the report required by this amendment would serve absolutely no purpose; the Bill plainly has no impact.

Requiring this report—not just once but every single year in perpetuity—would simply place an additional reporting burden on Network Rail and the Office of Rail and Road, and potentially also on open-access operators themselves if they were each required to provide information about their services to inform each report.

Finally in this group, Amendment 13 deals with freight. My noble friend Lord Berkeley is a staunch advocate of the rail freight sector and I hope that I can reassure him and the noble Lord, Lord Moylan, about the Government’s intentions. The Government hugely value the rail freight sector and recognise the importance of its contribution in reducing congestion on our roads and in helping our transport system move towards net zero.

I entirely agree that the Government’s plans for reform under the railways Bill must ensure that Great British Railways promotes growth in the freight sector and must provide suitable protections for freight operators. We will set out our detailed plans in the consultation I have already referred to as soon as we are able to.

In the meantime, I am very happy to reassure noble Lords on three fronts. First, our proposals for the railways Bill will include a statutory duty on Great British Railways. I have reflected carefully on the remarks of the noble Baroness, Lady Randerson, in Committee, and the remarks just made by my noble friend Lord Snape, and as a result I now confirm that this duty will be not merely to enable the growth of rail freight but to promote it. My noble friend Lord Snape referred to variable access charges. I very much agree that we would seek more of that in the future to encourage more freight traffic.

Secondly, the Secretary of State will set a specific freight growth target for Great British Railways. I cannot confirm today the specific detail of what that target will be, but we will set out our plans for that in due course.

Thirdly, I thank my noble friend Lord Berkeley in particular for his comments on the importance of a fair system for the allocation of access. As discussed with my noble friend last week, I have confirmed today that there will be consultation on the Government’s reform proposals, and that the consultation will set out the proposed role for the Office of Rail and Road in the access decision-making process. Any changes will then be set out in the railways Bill itself, so noble Lords will have ample chance to debate these matters before changes are implemented.

I also reassure noble Lords that our proposals for allocating capacity and granting access to the network will include safeguards to ensure that both freight and open-access operators continue to be treated fairly. As I have already said, I would be delighted to meet with my noble friend and other noble Lords with an interest once the consultation has been published, so that we can discuss the details and continue the very helpful conversations we have started here.

Turning to the specifics of the noble Lords’ Amendment 13, the statement required by this amendment would be very short and sweet. There is no need to wait six months after Royal Assent for me to provide this statement; I can give it to the noble Lords now. The Bill is narrow in scope. Its purpose is simply to allow the Government to transfer the operation of franchised passenger services to the public sector. It does not make any changes to the arrangements under which freight services operate. This means that the Bill will not, and cannot, have any adverse impacts on the freight sector or on freight growth.

I have clarified the impacts of the Bill on competition, open access and freight, I have confirmed that we will soon publish a consultation document setting out our proposals for the railways Bill, and I have reaffirmed that these proposals will consider appropriate protections for freight and open-access operators. In light of what I have said, I hope that noble Lords will agree that there is no need to pursue their amendments further today.

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Lords, Lord Lansley and Lord Moylan, for their amendments in this group. I will speak first to Amendment 4. Following enactment of the Bill, there would be just two routes by which the Secretary of State could secure the operation of passenger services. The first option, and this is the option we plan to use, would be to make a direct award to a public sector company under the amended Section 30 of the Railways Act 1993 and in accordance with the Public Service Obligations in Transport Regulations 2023.

The second option, which is a very limited option, would be to use the power to continue an existing private sector franchise temporarily under new Section 30A. This power is deliberately limited only to circumstances where the Secretary of State is satisfied that a transfer to a public sector company is not reasonably practicable. This means the Government would expect to use it only as a last resort, for a short period, to avoid a transfer causing disruption to passengers or staff. Apart from this very limited power in new Section 30A, the Bill leaves no other route by which the Secretary of State could contract with a private sector operator to run either existing services or new ones. This is entirely consistent with the Government’s very clear policy in favour of public ownership of services that form part of the national railway network.

On the point from the noble Lord, Lord Lansley, about DfT OLR Holdings Ltd, I confirm that award to it is securing the provision. All services currently designated under Section 27 will be provided under Section 30 by a public sector operator as existing contracts expire. The noble Lord also asked about the Secretary of State’s power to secure the provision of new services through a public sector company if those services had never been provided under a franchise agreement. Regulation 21 of the Public Service Obligations in Transport Regulations 2023 allows the Secretary of State to vary the terms of a public service contract to include additional services, and so would provide the necessary statutory basis for her to secure the provision of new services from a public sector operator.

The noble Lord asked whether the Bill will leave an option for the Secretary of State to procure East West Rail services from a new private sector operator, and the simple answer is that it will not. The Government have no plans for long-term private sector operation of the new East West Rail services, which will commence operation next year, nor any other services that the Secretary of State is responsible for procuring.

There are—and, after this Bill, there will remain—two ways in which other parties might operate or secure the provision of services on the rail network. One possibility is that a third party might operate them as an open access operator, as is the case with Hull Trains, for example. Another possibility is that a mayoral or combined authority or other local authority might secure the operation of services either by running them itself or by procuring a third party to do so. As I will explain in relation to the next group of amendments, the Secretary of State can facilitate this by granting an exemption under Section 24 of the 1993 Act, which takes the relevant services out of the scope of the surrounding provisions of that Act.

I noted with interest that my noble friend Lord Liddle remarked about involvement of developers, for example. I echo his sentiment that there will be ways of getting private capital in, particularly through development, that have not really been explored so far.

I hope that my explanation reassures the noble Lord, Lord Lansley, that the Government have carefully considered the implications of the Bill and the options it will and will not leave open, and I hope he will feel able to withdraw this amendment.

Amendments 5 and 6 from the noble Lord, Lord Moylan, deal with competed concession contracts. As I set out to the noble Lord in Committee, these amendments would remove the opportunity to deliver the benefits of public ownership, which a clear majority of the public support and which was a specific commitment in the manifesto on which this Government were elected. For the following reasons, I cannot agree to the amendments.

First, a concession model would mean the taxpayer continuing to fund substantial profits for private sector operators. A concession model along the lines of Transport for London’s contracts would expose operators to more financial risk than today’s contracts, where government bears virtually all the financial risk. Under such a model, train operators would price their bids to generate even more profit than the £110 million to £150 million per annum that they can earn under the current contracts. Our plans for public ownership will eliminate those fees and profits entirely—in the Government’s view, continuing to line the pockets of private shareholders is not a good use of taxpayers’ money.

Secondly, TfL concessions are a relatively inflexible form of contract which is not well suited to the needs of the national railway network. For a concession contract, the procuring authority has to define the service levels and standards at the start of the procurement process, and those levels and standards then endure for the life- time of the contract. Changes to the service specification can be achieved only through costly negotiation and agreement with the operator which already holds the contract.

That is very different from the London bus market, for example, which we discussed in Committee, where the concession model is much more suitable because there is a large number of small individual contracts. For the London Overground, much of which is heavily constrained by the geography of the railway network and the other services that run on it, it might be satisfactory, but the whole of the national railway network requires greater flexibility to adapt to changing patterns of demand. Finally, and most importantly, a concession model would not resolve the fragmentation of the current system, nor would it deliver on the Government’s commitment that rail services should be run by and for the public.

The noble Baroness, Lady Randerson, referred to devolved Administrations and local mayoral authorities. We will come to devolution further in the next amendments.

I urge noble Lords not to press their amendments.

Lord Hendy of Richmond Hill (Lab)

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My Lords, I would like to clarify a point for the noble Lord, Lord Moylan, on Amendment 13. If I inadvertently implied that the Government would somehow reduce the present freight target of 75% growth by 2050, I did not mean to. We intend that target to remain.

I will speak first to Amendment 7, proposed by the noble Baronesses, Lady Pidgeon and Lady Randerson, and I recognise the passion with which the noble Baroness, Lady Pidgeon, spoke on this. In responding to this group of amendments, let me start by saying very clearly that this Government are absolutely committed to strengthening the role of local leaders and local communities in shaping the provision of rail services in their areas. We are a pro-devolution Government. A stronger local voice is absolutely essential if the railway is to play its full part in this Government’s missions of kick-starting economic growth, breaking down barriers to opportunity and accelerating towards net zero. Our plans for reform in the substantive railways Bill will provide that stronger local voice. I can reaffirm to your Lordships’ House that the railways Bill will include a statutory role for devolved governments and mayoral combined authorities. They will be involved in governing, managing, planning and developing the railways.

Linked to this, we expect GBR to closely collaborate with areas through partnership agreements, which will build on progress made through existing arrangements the department has with the West Midlands Rail Executive and Transport for the North. We are already working with leaders in areas such as Greater Manchester, the West Midlands, the north-east and Liverpool City Region to discuss how these relationships could work, with governance supporting these discussions established. While final agreement of these partnerships will need to wait until GBR is formally established, the Government are committed to working with mayors to explore opportunities for progress ahead of GBR operation.

We are clear that together the statutory role and partnerships must allow genuine and meaningful opportunity to influence service levels and standards, and to drive forward the integration of local rail services with other modes as part of a genuinely joined-up local transport offer to passengers. It must allow for things like common branding, integrated timetabling, integration of fares and ticketing in the manner that Londoners, and people who live and work in London, completely understand. By getting this right in the wider railways Bill, we can offer local leaders the much greater level of influence that they are seeking. Existing options for local authorities to directly procure or operate their own services will remain in place, subject to the Secretary of State’s approval, as is currently the case. Alongside our proposed statutory role, our plans for the design of Great British Railways will make it easier for local leaders to engage with and influence what happens on the railway. I am so pleased that the noble Baroness, Lady Randerson, raised her dislike of a one-size-fits-all approach, and I agree with her.

First, I expect GBR will adopt a route and regional structure, with—importantly—a single leader responsible for train operations, rolling stock, staff and infrastructure within a given geographical area. This is material to the reason for public ownership and will create revenue growth and efficiencies and improve performance. A regional and route approach will ensure that GBR is close enough to local communities to understand and respond to their needs, while also being clear that they are part of a national system that needs to work coherently as a whole. It will also mean that local leaders will need to engage with just one organisation—GBR—rather than an infrastructure owner and, potentially, several different train operators.

Secondly, where local leaders wish to promote service improvements, having track and train under unified leadership will mean GBR can take a whole-system approach to identify the most cost-effective solutions. In the past, Network Rail has been much too quick—because it is an infrastructure provider—to opt for the most expensive solution, which is infrastructure change. A whole-system approach would begin by asking whether a service enhancement can be delivered with additional staff, while making better use of the existing train fleet on the existing railway infrastructure. If the answer is no, the next question should be whether the improvement can be delivered solely through changes to the rolling stock fleet. If, and only if, the answer to that question is also no, it might then be sensible to look at infrastructure change, which is usually the most expensive option and certainly takes the longest time.

The crucial point is that one organisation, GBR, on a route or regional basis, will be able to take a view across all those options with local leaders. I would encourage local leaders who think they might want to take over responsibility for operating or procuring services in their areas to keep an open mind until they have seen our full proposals for wider reform. I also reassure noble Lords that, where local leaders conclude that they wish to take over that responsibility, the current Bill does not stand in the way.

Existing legislation in Section 24 of the Railways Act 1993 allows local authorities and others to apply to the Secretary of State for specific services to be exempted from the franchising regime. Where the Secretary of State grants such an exemption, the exempted services are no longer caught in the surrounding provisions of the 1993 Act. So long as adequate alternatives are being made available, this means that the Secretary of State is no longer obliged to secure the operation of these services and they are not subject to the restriction that says they can be provided only by means of a public sector company. The relevant local authority can then operate or procure the services to its own specification, using its existing powers under other legislation, which, in the case of Transport for London, are conferred by Section 173 of the Greater London Authority Act 1999.

This is the mechanism by which services have been devolved in London and in the Liverpool City Region. The current Bill does not make any changes to the way this mechanism works. Following enactment of this Bill, the railways legislation will still provide the same opportunity as today for the Secretary of State to devolve services where she considers it appropriate and where it supports a well-functioning national service, and if we receive any such requests for the devolution of services, we will consider them openly, fairly and carefully, taking proper account of local, regional and national interests. I hope this reassures the noble Baronesses.

On Amendment 12, from the noble Lord, Lord Moylan, I thank the noble Lord for this amendment, which would require the Secretary of State to publish a report on the proposed communications framework between Great British Railways and local transport authorities across the UK. I can reassure the noble Lord that communicating effectively with local authorities is of critical importance to the Government. I have already explained that the Government are keen to ensure that local communities can influence the design and delivery of passenger rail services in their areas. We expect that GBR will engage with local transport authorities regularly on this and on key strategic matters, such as housing and economic growth.

I have also already mentioned the proposed statutory role, which will enable partnership agreements between mayoral combined authorities and GBR. The Government are already engaging with mayoral authorities to develop a framework for these partnership agreements and the intention is that the framework will enable varying degrees of influence, depending on the ambitions and institutional capability of partners. This will include close collaboration on the delivery of rail elements of local transport plans and greater opportunities for local partners to directly invest in the railway and to influence service provision.

Due to devolved infrastructure funding arrangements, my department currently has a memorandum of understanding with the Scottish Government which outlines interactions regarding the governance of Network Rail. The devolved operator, ScotRail, also has an alliance agreement with Network Rail which sees both organisations working closely together to better integrate the railway. For devolved services in Wales, there are a number of supporting devolution agreements between the department and the Welsh Government which set out the existing relationship. Under GBR, these devolved accountabilities will remain in place. We will therefore work with the devolved Governments to update existing arrangements and ensure that the benefits of establishing GBR are felt across Great Britain.

In conclusion, the report proposed by Amendment 12 is not necessary, given that the Government will be setting out their plans in a consultation which will be published shortly. This will provide not only detail on our proposals but also the opportunity for local authorities, mayoral combined authorities and noble Lords to input their views on these proposals. I hope my explanations in response to these amendments will be sufficient to persuade noble Lords not to press their amendments.

Lord Hendy of Richmond Hill (Lab)

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My Lords, I will speak first to Amendment 8, which was tabled by the noble Baroness, Lady Brinton, and is supported by the noble Baroness, Lady Grey-Thompson, the noble Lord, Lord Holmes, and my noble friend Lord Blunkett, and to Amendment 15 which is tabled in my name. I thank the noble Baronesses for their amendment and for the productive discussion we had last week. As I said in Committee, I feel personally ashamed of the industry that I am so familiar with as so many deficiencies come out of the way that it treats passengers, particularly those in need of some assistance. Many of those deficiencies are a result of the fragmented structure of the privatised railway.

The noble Baroness, Lady Grey-Thompson, has shown me and described to me the plethora of apps that you need to buy tickets, the differences in how they work, what they do and whether they enable you to book a seat, a wheelchair space or a ticket for the whole of your journey. I am shocked by it, and I cannot bear for her to show me much more, because all she would do is show me more apps that work differently from those that she has already shown me. We cannot and should not tolerate that. The lack of consistency in train design has been highlighted today, as has the lack of reliable, accurate information about whether crucial facilities such as lifts and accessible toilets are working, and there are other issues.

Looking ahead to the wider railways Bill, establishing Great British Railways will provide the opportunity, for the first time in three decades, to begin to take a coherent approach to these matters. Some of them can be done quickly, some of them we can start now and some of them will, by virtue of the longevity of rolling stock and structures, take a long time, but if we do not start, we will never achieve them. However, I also agree that the noble Baronesses and the many disabled passengers on whose behalf they speak should not have to wait for Great British Railways to come along before we start to improve things, so, as I discussed with the noble Baronesses last week, the Government have tabled an amendment and we also have a number of verbal commitments that I shall place on record in the House today.

First, the Government will work with the disabled community to develop and publish an accessibility road map that will explain the actions we intend to take to improve things for disabled people or others requiring assistance in advance of GBR being set up. We are not waiting for it to do that. The road map will suggest how the Government can work with the industry to prevent situations like those we have heard about in this House so far. As discussed, it will cover important matters that the noble Baronesses have raised with me. They include measuring and reporting on lift reliability and maintenance, providing confirmation and clarity about the legal obligation of operators to provide every disabled person with assistance when travelling whether or not a pre-booking has been made, and improving consistency in the service provided to disabled people across the board. We will engage with the disabled community on the development of the road map to ensure that when it is finished, it works for them.

Secondly, I commit before the House that this Government will provide the funding to develop phase 5 of the passenger assist app. As the noble Baroness, Lady Grey-Thompson, knows from our previous discussions, I have made it clear and will continue to make it clear to those involved that the development of this next phase of the programme must be done in consultation with the noble Baronesses and representatives of disabled people to ensure that it delivers the assistance that people deserve and addresses their needs.

Finally, we have tabled Amendment 15, which is before the House today. It amends the Equality Act 2010 to make it clear that publicly owned train companies are subject to the public sector equality duty. Although it is the Government’s view that the public sector equality duty already applies to publicly owned train operating companies, we are concerned that that is currently not as clear as it needs to be. By adding them to the list of public authorities in the Act, we will ensure that there can be no mistake. Network Rail and Transport for London are already named in the Act, but train operating companies previously were not, which is something that, if this amendment is agreed, we will remedy.

Lord Hendy of Richmond Hill (Lab)

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I thank the noble Lord, Lord Young, for tabling Amendment 9 and for our productive meeting the other day. I recognise that there is a question of whether public ownership will lead to certain liabilities moving on to the public sector balance sheet and therefore counting towards the public sector net debt. I cannot speculate about future balance sheet treatments and impacts as those will always depend on classification decisions that are a matter for the independent Office for National Statistics.

What I can say is that four train companies are already owned by DOHL, including LNER for six years and Northern for four, and the position has not changed so far. The Office for National Statistics recently considered the classification of TransPennine and concluded that it should remain classified as a public non-financial corporation. The mixed economy that we already have is relevant to the question asked by the noble Baroness, Lady Randerson, about the categorisation of a mixed economy. We are going to be there over the next several years as the train operations come back one by one.

It has been suggested in debate that, if liabilities move on to the public sector balance sheet, that would affect public sector net debt and unduly constrain future investment. The noble Lord, Lord Young, referred to events at Network Rail after it was reclassified, many of which I witnessed when I went there in 2015. In fact, a large number of the things that happened were really good. The organisation was not on the public balance sheet. It had spent an enormous amount of money: when I turned up in July 2015, it had debt of £54 billion, roughly equivalent to the whole of New Zealand’s national debt. With the last chief executive and the present one, we have put it into great order and reduced its expenditure. It has reduced capital expenditure too, which I think was also wise. The list of enhancements that it was proposing to carry out were beyond its capability then, and beyond the funding of even the unlimited amounts of debt that it could call on.

Nevertheless, the existing publicly owned train operators are the driving force behind the current multibillion-pound pipeline of new rolling stock orders. Network Rail is still investing in the railway infrastructure, and it shows that public ownership need not be a barrier to investment.

Looking more broadly across the public services, noble Lords may have seen that, alongside the Budget, the Chancellor announced changes to the fiscal rules to measure government debt in a way that recognises the need to better support capital investment. This Government recognise the pressing need to rebuild our economy and invest in our public services after years of underinvestment.

It might be helpful to provide the noble Lord, Lord Young, with some specific reassurance, and I can reassure him that we are not seeking to close the door on private investment. Where there are genuine opportunities for private investment—which, for example, might well be, and in the future should be, in relation to property development around stations or car park investment—we would expect Great British Railways to work with relevant local authorities and the private sector to promote these opportunities. I reassure the noble Lord that securing appropriate private investment will be an absolute priority for this Government. I hope that provides him with enough reassurance to withdraw the amendment.

Next, I will address Amendments 18 and 19 in turn. I thank the noble Lord, Lord Moylan, for these amendments. Amendment 18 would require the Secretary of State to lay a Statement before Parliament within three months of the Bill’s enactment. The Statement would need to set out the Government’s intentions concerning the terms, conditions and pay rates of staff of existing train operating companies as they transfer to become employees of public sector companies.

At that stage, it would be a very simple Statement. The Government fully expect that the TUPE regulations will apply, preserving employees’ existing contractual terms and conditions as they transfer from private operators to subsidiaries of directly operated holdings, in the same way as they have done in previous transfers. I can also confirm that the Secretary of State’s contracts with public sector companies would ensure that staff could continue to be members of the railways pension scheme. That being the case, there is no need for a further Statement of the kind mandated by the amendment.

The noble Lord asked what the Government intend should happen to pay, terms and conditions in the period after employees have transferred to a public sector operator. Although this is beyond the scope of the amendment the noble Lord has tabled, I am happy to address the question by saying three things.

First, public ownership under this Bill does not give rise to any imperative to harmonise or otherwise amend staff terms and conditions. Decisions about any such changes are for the future. In contrast to the previous Government’s approach, we would expect to discuss these matters openly and constructively with the workforce and their representatives before settling on any specific proposals. If the noble Lord was serious in his proposal, he would be able to tell me, for example, that the previous Government consulted the staff of LNER when it was transferred into the public sector. I think he will find that they did not. I am not going to speculate about the outcome of any such future discussions.

Secondly, resolving the long-standing disputes with the rail unions, as we have done and are doing, clears the way for vital workforce reform to modernise our railways and do away with outdated working practices. We do not need to wait for Great British Railways to start this essential work—although we have needed to clear up a number of disputes, including one so long-standing that it has been a dispute since 2015—and we will do this by working with the workforce, not against them.

Thirdly, looking further ahead to Great British Railways, the overall structure for GBR and the mechanics of how staff will transfer into it are still to be decided. We will want to make sure that GBR retains and treats fairly the committed and talented staff who are essential to keep the railway running for its customers. We will have more to say about this when we publish our proposals for the railways Bill.

Amendment 19 would require another report, this time on the impact of national insurance employer contributions on the operational costs of public sector companies. I am sure that the noble Lord will recognise that employer national insurance contributions are just one relatively small component of train operators’ overall costs—less than 2.5% of total costs in this financial year. Furthermore, other significant costs, such as diesel and electricity, are volatile. It would therefore take significant resource to routinely report on all these different costs, which are subject to change all the time.

This reporting would add little value, particularly when any national insurance costs incurred by a DfT-contracted operator are simply paid to another part of government. Public ownership will make no difference to the net cost to government of the relevant train operators’ employer national insurance contributions; the Government are already both the funder and the recipient of these.

Having said that, I will be pleased to provide an estimate of any impact as soon as I am able to. At that point, I will happily write to the noble Lord and place a copy of the letter in the House Library. In the light of this, I urge the noble Lord, Lord Moylan, not to press his amendments.

Lord Hendy of Richmond Hill (Lab)

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I said I hoped to.

Lord Hendy of Richmond Hill

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That the Bill do now pass.

The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)

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My Lords, I am hugely grateful for the robust and detailed scrutiny from all sides of this Chamber on what is an important and landmark Bill. The Government were clear in their manifesto commitment to bring passenger services back into public ownership, and we shall not pass up the opportunity to do so. We have taken a significant step towards achieving this over these last weeks. Six and a half years after the timetable crisis of May 2018, I am delighted that we have finally begun the process of reforming our railways.

I shall briefly update the House on the position of the devolved Governments. There has been constant and constructive engagement undertaken to date with both the Scottish and Welsh Governments, in keeping with this Government’s commitment to reset the relationship with the devolved Governments. I am pleased to confirm that the Motion has passed each respective Parliament. This demonstrates the unified belief in the necessity and relevance of this Bill.

I thank all colleagues involved in this process. It has been a privilege to take this Bill, one of the first major pieces of legislation for this Government, through this House. On a personal level, I am grateful to be part of the process to improve the industry, which can deliver so much for growth, jobs, housing and the Government’s missions, and to which so many are vocationally committed.

I owe thanks to my noble friend Lady Blake, who so admirably and impressively stepped in to act on my behalf for the Bill’s Second Reading. Her guidance and support on the Front Bench have been of great help.

We will finally have trains that are run for the public by the public. The Secretary of State for Transport said in the other place that her aim is to move fast and fix things. The Bill is the first step towards unravelling a failing, fragmented system and instead places the interests of passengers and freight front and centre. There is a lot of work ahead, and separate legislation will be introduced later to address the much-needed wider reforms. I extend my gratitude to a number of noble Lords who have dutifully engaged with and examined the Bill.

I congratulate the noble Lord, Lord Moylan, on his substantive appointment as the shadow Minister and on his unique and effective style of questioning. It is by no means the first time the noble Lord and I have worked together; he will recall in particular election night in 2010 when, under his and the previous Mayor of London’s political direction, we joyfully took Tube lines back into public ownership—another example of a failed transfer of public assets, in that case to a public/private consortium. However, I should remind him that we needed no reports or further constraints in making the Tube better as a result. We both knew that public ownership itself would bring greater accountability and improvements in performance, and in order to achieve that the noble Lord himself was appointed chair. I hesitate to mention it, but it was a direct appointment without competition. I have no doubt that the noble Lord will feel a similar sense of triumph today as this Bill passes to the other place.

I pay tribute to his colleagues, the noble Lords, Lord Gascoigne, Lord Lansley and Lord Young of Cookham, and I thank them greatly for their most constructive and courteous engagement. I am grateful to the noble Baroness, Lady Randerson, for her valued contribution, and I thank the noble Baronesses, Lady Pidgeon, Lady Scott of Needham Market, Lady Finlay and Lady Jones of Moulsecoomb, and the noble Lord, Lord Bradshaw, for their input in the Chamber and our separate meetings. The noble Lord, Lord Bradshaw, has of course seen it all and is a great champion and mentor for a joined-up, coherent railway.

I place on record my gratitude to the noble Baronesses, Lady Brinton and Lady Grey-Thompson. Their powerful contributions to the debates were moving, thought provoking and essential. I will not take lightly what they have shared in this Chamber. My hope is for us together to build the passenger experience for many, including the disabled, into a source of shared pride rather than a confidence-sapping lottery.

I say to my noble friends Lord Sikka, Lord Liddle, Lord Berkeley, Lord Snape, Lord Tunnicliffe and Lord Hanworth that their wisdom is hugely beneficial, so I extend my thanks to them for sharing it and for their counsel. Additionally, I thank all the officials who have supported me, especially the Bill team, who have worked so hard. Their names are Emma, Matt, Sophie, Heidi, Dani, Emily, Tom, Gabriel and Marisa, and I thank them all. Finally, I thank the Lord Speaker and the parliamentary staff.

This Bill is the first step in changing the culture of the railway and how it works in order to put passengers and freight back at the heart of the system. Only by these means can we start the great process of the reform of our railways to deliver passengers and freight better across Great Britain. I beg to move.

Lord Hendy of Richmond Hill

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That this House do not insist on its Amendment 1, to which the Commons have disagreed for their Reason 1A.

The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)

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My Lords, in moving Motion A I will speak also to Motion B. I am grateful for the collaboration and engagement up to this point on the Bill, which is a critical step towards our manifesto commitment of reforming our fragmented railway system. This system has cost taxpayers and passengers dearly in huge fees paid to private operators and in the delays, cancellations, overcrowding and poor service that passengers have endured for far too long. There is a strong public desire for public ownership. In September, a YouGov survey found that 66% of people nationally agreed that railway operations should be run by the public sector and only 12% favoured private operation. I hope that the House can agree that we need to pass this Bill and move on to the critical work of the next one.

Motion A is about the purpose clause proposed by the noble Lords, Lord Gascoigne and Lord Moylan. I completely agree that public ownership and wider reform should be guided by a clear purpose, with users of the railway placed at the heart of that purpose. Turning specifically to Motion A1, tabled by the noble Lord, Lord Gascoigne, I was disappointed to see that the noble Lords were insisting on this, despite the overwhelming majority against it in the other place. This is not in keeping with the collaborative approach that I hoped we were taking to the Bill in this House—and quite an unusual approach for this House to take as well.

The Government have already set out the purpose of public ownership and wider reform in our policy document Getting Britain Moving. This identified six objectives. People can see what they are and can hold the Government to account on delivering against them. These objectives are already at the heart of our decision-making. For example, my right honourable friend the Secretary of State and I have met the worst-performing train operating companies and their Network Rail counterparts and have demanded that they do better for passengers, right now. We have brought to an end long-running industrial disputes that inflicted misery on passengers. We have convened Network Rail and train operators to work together to tackle overcrowding at Euston and provide a better service for passengers. We have made new commitments about accessibility, following debates in this House, and we have pledged to increase transparency by publishing train performance data at stations. So there is no need to place a purpose on the face of the Bill—especially one that tells only part of the story.

I also remind noble Lords that during the previous Government’s 14 years in office, they never felt the need to legislate to impose this new statutory purpose on the Secretary of State, either in relation to the privatised railway or to the train operations that they chose to keep in public ownership for years—one now for six years—with no sign of a plan to return them to the private sector. However, I agree with noble Lords on all sides of the House that we must ensure that the future Great British Railways will have a clear purpose. In consulting on our wider reform plans, we will restate our objectives for the railway and its purpose. I assure noble Lords that delivering a reliable, punctual train services will be a prominent part of that purpose, as it already is.

I urge the House to support Motion A for two reasons. First, the purpose clause is unnecessary: we have already set out our objectives for the railway; we are already acting to achieve those objectives; and we are ready to be held to account for whether or not we deliver against them. Secondly, we will ensure that we set out a similarly clear purpose for Great British Railways in the forthcoming consultation.

Regarding Motion B, this House will be aware that Amendment 2 was rejected in the other place on the grounds of financial privilege. The Government understand the calls for the worst-performing services to be brought into public ownership first. But Amendment 2 was not the right approach. Its effect would be to delay the transfer of services into public ownership and so require taxpayers to continue to foot the bill for millions of pounds in fees for longer than necessary. Instead, the Government’s approach is the right one, and I am grateful to the noble Baroness, Lady Randerson, and her noble friends for recognising this in previous debates.

We have made it clear that where the contracts we have inherited from the previous Government allow it, we will bring failing operators’ services into public ownership as soon as we can. There is sufficient flexibility in the existing contract expiry dates to allow us to do that without overwhelming the public sector operator. Beyond that, we will bring services in-house as existing contracts end. This will avoid paying compensation for early termination and will avoid delaying the benefits of public ownership, as Amendment 2 would have done.

I urge the House to support Motion B so that the Government can get on with delivering the benefits of public ownership in accordance with the very clear mandate on which they were elected. I beg to move.

Motion A1 (as an amendment to Motion A)

Lord Hendy of Richmond Hill (Lab)

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I thank all noble Lords who have taken part in this debate. I will address just a few points.

I very much agree with the noble Lord, Lord Moylan, and his description of the previous Government as being dilatory. It is six and half years since the timetable went wrong in the north-west of England and on Thameslink, in May 2018, and nothing really has been done. The railway is suffering and its passengers are suffering, and something needs to be done about it. I have referred to this before but, at some speed, we will be consulting shortly about the content of the wider Bill to reform the railway. I think that differentiates this Government and the speed at which they choose to operate.

On Motion A, I want there to be no doubt that this Government will undertake reform with a clear purpose and direction. As published in Getting Britain Moving, our objectives are set and are more ambitious and wide-ranging than the proposed purpose clause. We want to see reliability, affordability, efficiency, quality, accessibility and safe travel as the DNA of our railways—the foundational values that drive reform and deliver on what passengers expect. Public ownership will be the first step in ensuring better services, by placing the passenger front and centre as we rebuild public confidence, trust and pride in our railway.

I listened carefully to the noble Baroness, Lady Randerson, on the commitment that passengers should be at the core of the future of the railway. In that respect, the wider railways Bill is a different matter. It will establish Great British Railways as a new body at arm’s length from government, which will not be directly accountable to the electorate in the same way as the Government are. In that context, it is essential that the railways Bill should clearly set out two things.

The first of those is the functions of Great British Railways—what it is actually going to do. The second is what Great British Railways is supposed to achieve by exercising those functions—in other words, its purpose. I can absolutely confirm to your Lordships’ House today that the forthcoming railways Bill will set out both of those things, and that delivering improvements for passengers and maintaining high standards of performance will be a crucial part of its purpose. I will be more than happy to engage with the noble Baroness on how we express that in the Bill.

I urge your Lordships’ House to support the Government’s Motion A and to reject the amendment in Motion A1, tabled by the noble Lord, Lord Gascoigne, for two reasons. First, it is unnecessary, because the Government have already set out our objectives for the railway, we are already acting to achieve those objectives, and we are ready to be held to account on whether we deliver against them as we transfer the services to public ownership under this Bill. Secondly, as I have just assured the House, we will ensure that the railways Bill sets out a clear purpose for Great British Railways.

With regard to Motion B, the Government simply cannot accept an amendment that would delay reform, therefore going against the wishes of the electorate, and which would place additional cost on the taxpayer. We will use every tool at our disposal to resolve poor performance, including contractual termination rights, where they are triggered.

On the Bill itself, public ownership is not only the will of the voters but the right step towards bringing an end to years of fragmentation. Tens of millions of pounds in fees will be saved each year due to public ownership and, with the new direction and focus that this Government are now providing, current in-house operations are already seeing a reduction in cancellations. The evidence that public ownership is the way forward is clear.

On top of this, poorly performing train operators are being held to account, as I described earlier, and with Great British Railways coming further down the line, this Government have shown that we are serious about reform. None the less, improvements are needed now, and the Bill starts that process.

Lord Hendy of Richmond Hill

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That this House do not insist on its Amendment 2, to which the Commons have disagreed for their Reason 2A.

Lord Hendy of Richmond Hill (Lab)

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My Lords, I have already spoken to Motion B. I beg to move.