Passenger Railway Services (Public Ownership) Bill
(Limited Text - Ministerial Extracts only)
Read Full debateTuesday 3rd September 2024
(3 months, 2 weeks ago)
Commons ChamberPassenger Railway Services (Public Ownership) Act 2024 View all Passenger Railway Services (Public Ownership) Act 2024 Debates Read Hansard Text Watch Debate Amendment Paper: Committee of the whole House Amendments as at 3 September 2024 - (3 Sep 2024)
18:34 - The Committee having divided: - Ayes: 111 / Noes: 362 - Question accordingly negatived.
18:53 - The Committee divided: - Ayes: 113 / Noes: 372 - Question accordingly negatived.
19:10 - divided: - Ayes: 82 / Noes: 360 - Question accordingly negatived.
The Secretary of State for Transport (Louise Haigh)
I would be interested to know whether the hon. Lady has spoken to her immediate predecessor to understand exactly the value of the reforms he was pursuing as Secretary of State, and if she was aware that they were worth less than half the cost of every time the railways went on strike under his leadership.
Helen Whately
Unfortunately, the right hon. Lady’s approach is deeply flawed and risks our facing more strikes in future, rather than fewer. [Interruption.] Yes, to directly answer her question, I can assure her that I have spoken to her predecessor in the role, and I know that the reforms proposed to modernise the railways were crucial not only to controlling increasing costs and fares, but to improving the reliability of our train services. Unfortunately, she gave all that up overnight when she gave away a bumper pay deal of almost 15%, with nothing from the other side to improve services.
The independent body I am proposing would look at pay and terms and conditions in the round. It could shed some light on who is getting a fair deal and help put modernisation at the top of the agenda in negotiations. Given that this Government seem to be set on creating a single huge employer across the network, as set out in their manifesto, which surely means harmonising pay and terms and conditions across many thousands of employees, none of whom I suspect will want to give up whatever terms they most value—a four-day working week, 34 days of annual leave and the extra money they negotiated to start using iPads are some examples—can the right hon. Lady imagine what effect this might have on ticket prices and the efficiency of our network? An independent pay review body could at least gather evidence and advise Government on what makes sense to fill jobs and provide value for money for the taxpayer.
Madam Chair, I am grateful to you for giving me some time to outline our amendments, and I am mindful that other Members wish to talk to their amendments or make maiden speeches, so I will wrap up my comments with a couple of final points. As we made clear on Second Reading, His Majesty’s official Opposition do not support this Bill. Our rail system needs reform, and we have set out plans to do that, but this Bill is not the right way to go about it. On the contrary, the Government are being driven by a flawed ideological belief along the lines of “public sector good, private sector bad”. It is not underpinned by evidence of what works, and they are not being straight with people about the possible downsides such as higher fares for passengers, higher costs for taxpayers and less reliable trains.
Why are the Government rushing through this Bill? Is it to please their Back Benchers, who we know are deeply unhappy about scrapping the winter fuel allowance, or is it to please their union paymasters? I know the right hon. Lady has promised everyone that she is going to move fast and fix things, but this looks more like moving fast and breaking things. I say sincerely to her, as I am sure she will want to make this legislation as good as it can be and, like me, wants to do the best possible job for all our constituents and for the country we serve, that she should please consider the amendments we have tabled and think hard about giving them the Government’s support.
The Parliamentary Under-Secretary of State for Transport (Simon Lightwood)
It is an honour to serve under your chairmanship, Madam Chair. I thank hon. Members of all parties for their amendments, and for their considered contributions. I commend those Members who have delivered some fabulous maiden speeches today, with such quality, passion and dedication to serve, and a love for their communities. It makes me really proud to be a Member of this House, and I am certain that the memory of delivering their maiden speeches will live with them forever.
I will begin with amendments 18 and 8 to 12, tabled by the hon. Member for Faversham and Mid Kent (Helen Whately). These relate to monitoring, reporting and scrutinising the impacts of public ownership and the effectiveness of train operators. Amendment 18 would require the publication of two reports. The first would outline the anticipated impact of public ownership. That would simply duplicate the impact assessment published earlier this year, and therefore would be redundant. The second report would assess the actual impact of public ownership, some years after implementation. A wide variety of data is already routinely published about both public and private sector train operators’ performance. That includes reliability, punctuality, service quality, customer complaints and financial performance among other measures. The Bill does not change any of that and there is no need to wait five years to consider whether train operators’ performance is improving.
Amendment 9 would require the Secretary of State to procure independent reports about the costs of the contracts awarded to public sector operators. The Department already publishes information on payments made to operators, whether private or public. There is therefore no need for the taxpayer to fund a separate body to report the same data. Nevertheless, the hon. Lady is entirely right to take an interest in the cost of these contracts. In that spirit, I would gently remind her that ending the taxpayer funding of private profits will result in an immediate and enduring reduction in these costs.
Amendment 9 also raises the specific question of whether public ownership will expose the Government to liabilities that have previously sat with private operators. Under the current national rail contracts, the Government fund the costs legitimately incurred by train operating companies. That includes, for example, the net operational cost of running services and the cost of meeting pension liabilities. Prior to the pandemic, franchised operators bore some cost risk, but were protected by the taxpayer against, among other things, inflation and, in more recent contracts, risk on movements in pension deficit recovery payments. The franchising system meant that bidders simply priced any change in liabilities into their bids, meaning that the taxpayer was exposed to liabilities in the long term. Public ownership therefore does not materially change the Government’s exposure to liabilities in the long run.
Amendment 10 would require the annual reporting to Parliament on various aspects of the performance of public sector operators, and amendment 12 would require an independent report on the impact of public ownership on the performance and efficiency of the UK rail network. Again, data is already published on a wide variety of aspects of train operator performance, including by the Office of Rail and Road in its role as a regulator. The Bill does not change that. The Office of Rail and Road also provides independent scrutiny of the performance and effectiveness of Network Rail, enforcing compliance with its licences and conducting five-yearly reviews that set its funding and what must be delivered with that funding.
Amendments 8 and 11 look to require independent monitoring of the financial and operational performance of public sector train operators. The Department holds train operating companies to account for their financial management through regular reviews of their management accounts and business plans. That applies to both public and privately owned operators. In addition, in England publicly owned operators are overseen by DFT OLR Holdings Ltd, known as DOHL. As a holding company owned by the Secretary of State, DOHL is experienced in reviewing and monitoring the financial arrangements of the companies it manages, and contrary to what the hon. Lady said, it is building its capacity in readiness to take over more services. At the same time, public ownership will reduce the other contract management costs, because there will no longer be the same commercial tension of the taxpayer interacting with private profit. Amendment 8 refers specifically to the auditing of publicly owned train operating companies’ accounts. It is already the case that DOHL and the operators it oversees must publish their audited accounts annually.
Turning to amendment 11, train operators are already monitored under their existing contracts against targets for punctuality, reliability and service quality. They are also held to account for managing within pre-set cost budget limits each financial year. Driving up operators’ performance in those areas is vital, and the Government will continue to review train operator performance regularly in those and other areas. This has been an early priority for my right hon. Friend the Secretary of State. For example, in her first weeks in office, Ministers held meetings with the managing directors of Avanti West Coast, TransPennine Express and their Network Rail counterparts to set clear expectations for immediate improvement. In parallel with these arrangements, the Government are developing detailed proposals for holding the future Great British Railways to account for performance. This will form part of the broader package of reform that we will set out in the forthcoming railways Bill. We expect these arrangements will be in place long before the five-year reviews proposed in a number of amendments tabled.
Amendment 11 also refers to performance improvement plans. Mechanisms to require improvement plans are already a feature of the Government’s contracts with both public and private sector operators. The Secretary of State has recently put in place formal remedial plans with CrossCountry in view of its unacceptable levels of cancellations and service reductions. Finally, amendment 11 raises the question of senior management remuneration when performance is poor. This matter can be considered when remedial plans are being put in place, taking account of the circumstances in each case.
Amendment 19, also tabled by the hon. Lady, and amendment 20, from the hon. Member for Bath (Wera Hobhouse), both propose additional procedural steps to be followed before a contract is awarded to a public sector operator. Amendment 19 would require the Office of Rail and Road to publish an opinion on the practicability of transferring services to each public sector operator. Clearly it is vital that services are transferred to public ownership smoothly, without detriment to the quality of service during the transition. For that reason, the transfer of services will take place using a well-established arrangement and process. DOHL has significant experience of managing the transition of services from private to public operation in recent years.
Simon Lightwood
I will not give way to the hon. Lady, as she has had plenty of time to put her case.
Those transfers of services have been completed successfully and smoothly despite the challenging timescales and circumstances, which have included financial failure and poor operator performance. We have also made it clear that we will transfer services on a phased basis as existing contracts expire over the next few years. This is a measured, responsible approach that will further de-risk the process. The Bill does not alter the ORR’s role in granting operators’ licences and issuing their safety certificates; in that role the ORR already independently assesses the suitability and readiness of any operator, public or private, to take over services and operate them safely. In light of those safeguards the Government do not see the need to commission further analysis from the ORR, as amendment 19 proposes.
On amendment 20, the Department for Transport has already awarded multiple contracts to publicly owned operators and has considerable experience of managing them in practice, taking legal, financial and technical advice as needed. We consider a new independent advisory body to be an unnecessary additional step that would add cost and risk delaying progress. I can assure the hon. Member for Faversham and Mid Kent that the Department for Transport is conducting a full review of the standard terms of service contracts entered into with public sector operators, reflecting the fact that public sector operation is to be the Government’s long-term approach, not just a temporary measure of last resort.
On amendments 13 and 14, the Government do not consider it appropriate to spell out such specific contractual requirements in primary legislation, which would risk constraining future flexibility to adapt operators’ contractual obligations to suit changing circumstances. On amendment 13 specifically, it would not be efficient for the taxpayer to require up to 14 different operators in England, plus those in Scotland and Wales, to each pursue its own separate wide-ranging innovation strategy. Indeed, a key purpose of our wider reform plans is to drive a much more coherent cross-industry approach in such areas. On amendment 14, I question why the four groups identified, while clearly of course very important, should be singled out for a specific mention when there are many other relevant considerations to take into account in service design, including the interests of the taxpayer, freight users, people with disabilities and residents of urban areas to name just a few. The list could be endless, and the important point is that decisions about future service levels should take into account all relevant considerations.
Amendment 1, tabled by my hon. Friend the Member for Blackley and Middleton South (Graham Stringer), would remove the power of the Secretary of State to continue existing franchises. I am happy to reassure my hon. Friend that this provision is included in the Bill as a contingency measure only. It exists in case a short continuation is needed to ensure that services transfer to public ownership smoothly and without disruption to passengers. It is intended to be used only in exceptional circumstances and only for so long as necessary to ensure the smooth transfer. It will be available to the Secretary of State only when
“it will not be reasonably practicable”
for a transfer to proceed. Any continuation would be limited by procurement regulations to a maximum of two years in duration, but in practice we would expect the period to be much shorter. The power is clearly transitional in nature; once services are transferred to the public sector it will no longer be relevant, and clause 2 therefore gives us the power to repeal it in its entirety. This is a sensible, pragmatic precaution that exists simply to smooth the transition to public ownership and protect the travelling public from disruption. I hope that explanation offers my hon. Friend some reassurance.
I move now to amendment 6, tabled by the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter). The Bill does not affect the provision of rolling stock. It would not be responsible or affordable for the Government to take on the cost of renationalising billions of pounds-worth of rolling stock when there are so many other urgent pressures on the public purse. However, public ownership will open the door for a much more coherent approach to planning the longer-term rolling stock needs of the whole industry. Once Great British Railways is established, planning the provision of rolling stock across the network will be one of many areas where a single directing mind for the railway will add real value.
We will develop a long-term industrial strategy for rolling stock that supports manufacturing, innovation and interoperability and aligns with the wider objectives of the industry. It will look to end the boom and bust cycle of rolling stock procurement, ensure sustainable pipelines for future work and consider the best financing structures for future orders in partnership with private capital. I can assure my hon. Friend the Member for Easington (Grahame Morris) that we will consider the points he has raised as we undertake work on this matter. My officials are engaging with Eurofima to consider the potential of UK membership and the role that could play in the UK market. We will set out more plans on that in due course. A report mandating that in primary legislation is therefore not necessary in the Government’s view.
Amendment 7, tabled by my hon. Friend the Member for Derby North (Catherine Atkinson), seeks details of the Government’s proposed approach to procurement and the impact of public ownership on the procurement process and the supply chain. She is absolutely right to highlight the crucial role of the broad and diverse private sector supply chain in helping to deliver high-quality rail services, and I very much welcome the contribution made by businesses in her constituency and right across the country. I can assure her and those businesses that innovation and technical progress will remain as fundamental as they have ever been in delivering improvements for passengers, cost efficiency for taxpayers and benefits for the environment.
I can confirm that there will be no immediate impact on the approach to procurement when services transfer to public ownership. Existing private sector operators are already required to follow the same procurement rules as public sector operators. Under the governance reforms, Great British Railways will provide much clearer long-term direction across the whole railway system, giving businesses and the supply chain the certainty and confidence they need to plan, invest and innovate for the future.
Amendment 15, tabled by the hon. Member for Faversham and Mid Kent, considers the Bill’s potential effects on open access operators. The Bill is specifically about the ownership of services currently operated under the contract with the Secretary of State and Scottish and Welsh Ministers. Public ownership of those services will not prevent open access services from running as they do now. The report proposed by her amendment is therefore unnecessary. However, I take this opportunity to reassure her about the role of open access in the future in the context of the Government’s wider reforms. How we make use of network capacity and grant access is fundamental to the performance of the railway and what it delivers for all its users. Open access operators such as Hull Trains, Lumo and Grand Central are a valuable part of our railway. We are keen for such services to continue to operate alongside publicly owned services, where they add value and capacity to the network.
The hon. Lady’s amendment 16, along with amendment 22 from the hon. Member for Bath and amendments 2 to 5 from the hon. Member for Brighton Pavilion (Siân Berry), touches on the role of devolved and local authorities in the planning and delivery of rail services. Amendments 16 and 22 each refer to exemptions granted under section 24 of the Railways Act 1993. Those exemptions allow services in London and the Liverpool city region to be procured by the relevant authorities in those areas, outside the franchising system. The Bill makes no change to those existing arrangements and it will remain for those authorities to decide how best to deliver the services for which they are responsible.
Amendments 2 to 5 would allow the Secretary of State and Scottish and Welsh Ministers to award contracts to companies owned by certain elected public bodies. While the Government are committed to strengthening local involvement in the planning and delivery of rail services, it will be important to ensure that does not undermine the plan for Great British Railways to act as a directing mind that provides coherence, consistency and clarity for the whole railway. To support that, the Government intend to award contracts specifically to public sector companies owned by the Secretary of State via DOHL.
Wera Hobhouse
Our amendment 22 is not just about the current arrangement with Merseyrail and Transport for London; it is much more about having the discussion about how local authorities and local areas can enter into franchising agreements in future if they so wish.
Simon Lightwood
I do not think that the Bill stops them doing that now, though we have no plans to extend the scope of that.
Looking ahead to the railways Bill, the Government have already said that there will be a statutory role for devolved leaders in Scotland, Wales and mayoral combined authorities in governing, managing and planning and developing the railway network. That will ensure that decision making is brought as close as possible to local communities.
I turn to amendment 17, tabled by the hon. Member for Faversham and Mid Kent, which proposes an independent body to advise the Government on employment terms and pay for rail staff under public ownership. That is an important issue, and one that the Government 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.
Last but by no means least, I come to amendment 21, tabled by the hon. Member for Bath, which deals with fares, ticketing and passenger compensation. Naturally, we are keen to see rapid progress in those areas. We are committed to reviewing the overly complicated fare system. Change is already being delivered by extending pay-as-you-go in the south-east and through fares reform on LNER. We will explore the options for expanding ticketing innovations such as digital pay-as-you-go and digital season tickets across the network, and we will hold operators—and, in due course, Great British Railways—accountable for progress on these vital reforms. We also intend that a powerful new passenger watchdog—the passenger standards authority—will independently monitor standards and champion improvement in service performance against a range of measures.
I thank hon. Members on both sides of the Committee for their contributions to the debate. I hope that my responses will have provided the explanations and reassurances that colleagues were seeking, and that that will enable them not to press their amendments and to support the Bill on Third Reading.
The Secretary of State for Transport (Louise Haigh)
I beg to move, That the Bill be now read the Third time.
It has been an extraordinary privilege to take this Bill through the House, as the first major piece of legislation to pass through the Commons under this Labour Government. The work to rebuild Britain and return to a politics of service started the moment we entered office. We pledged to act decisively to get our country moving and our public services working. I set out my motto for the Department for Transport—to move fast and fix things—which is why this Bill wastes no time in fulfilling one of our central manifesto commitments, calling time on the 30-year ideological privatised experiment on our railways that failed passengers, failed to modernise our railways and failed our economy. It is why this Government have begun the work of reform by bringing services back into public ownership, so that our railways will finally be run in the interests of passengers.
There will be immediate benefits. Our railways will serve the British public, be they passengers or the taxpayer, and as we bring services into public ownership, we will drive up performance. We will remove the burden of the millions of pounds squandered every year in private sector management fees. We will bring services into public hands as soon as their contracts expire, but if operators fail to deliver in line with those contracts—if they continue to let passengers down time and time again—I will not hesitate to use every tool at my disposal to drive up standards, including terminating contracts early where appropriate. In my meetings with Avanti and TransPennine and in the rail Minister’s meetings with Northern, London North Eastern Railway, East Midlands Railway and CrossCountry, as well as their Network Rail counterparts, we have been clear that we will not tolerate for any longer the poor performance that the last Government tolerated. My officials will drive improvements using the mechanisms in those contracts.
That work is already bearing fruit. Last week, LNER and ASLEF resolved their long-standing local dispute at no cost to the taxpayer, preventing 22 days of industrial action while ensuring an improved service for passengers. As a result, there were no driver cancellations over the weekend or this morning—the first time that has occurred for many years. Last month, we ended the longest strike in our railways’ history. It was a strike that cost the taxpayer hundreds of millions of pounds in lost revenue and cost the economy more than a billion pounds, and a strike that the Conservative party deliberately prolonged and provoked, at enormous cost to the taxpayer and passengers.
A passenger-centred railway needs workforce reform; I do not shy away from that fact. As we move towards Great British Railways, we will waste no time driving those reforms forward. This is an area where the party opposite totally “failed”. That is a quote from the former Conservative Rail Minister, who is no longer in this place. To his credit, unlike his colleagues, he has at least had the decency to apologise for what he put our country and our railways through.
We are under no illusion: the Bill is not a silver bullet. It is the first stop on our journey to a modern railway for a modern Britain. We will introduce separate legislation later in the Session on the wider reforms that are required. Fixing the industry’s crumbling foundations is the only way to deliver the lasting improvements that passengers expect and deserve. Providing national leadership and a single point of accountability, Great British Railways will bring track and train together. It will plan services on a whole-system basis. It will increase innovation while cutting waste. It will put an end to outdated working and management practices, and end the operational meddling of Whitehall that has characterised the industry, particularly post covid. In short, we will create a simpler, safer and more reliable rail industry, relentlessly focused on passengers and on growing our economy.
That, of course, cannot happen overnight, but as passenger in chief, I am not prepared to wait. That is why today I have made a written ministerial statement formally standing up shadow Great British Railways, in order to bring together the Department’s passenger services, Network Rail and the operator of last resort. For the first time in 30 years, the railways will begin to act as one coherent system, and there will be the political backing for decisions to be made in the public interest. Shadow Great British Railways will review performance and finances. It will begin work to modernise our railways and unblock barriers to ticket reform, and will start to make urgent improvements now for passengers and freight.
Before I finish, I thank the Under-Secretary of State for Transport, my hon. Friend the Member for Wakefield and Rothwell (Simon Lightwood), for his excellent work, support and dedication of time to getting the Bill through the House. I also thank the Clerks, Chairs and parliamentary counsel, and of course my fantastic officials, who have worked at pace and done an excellent job supporting us in our first two very short months in office. Finally, I am hugely grateful to hon. Members from all parts of the House for their scrutiny and collaborative approach. I add my congratulations to the many hon. Members who made their maiden speech during the Bill’s passage.
The Bill represents a line in the sand. It shows that the Government are willing to roll up their sleeves and do the hard work to fix what is broken and reform what does not work. Getting this right matters for people up and down the country, for whom the railways are their route to opportunity. It matters for communities that need a reliable railway to support businesses, retain talent and attract investment, and it matters for this mission-focused Government, because the railways underpin our efforts to rebuild Britain, from building economic growth to providing clean energy, and to deliver hope and opportunity to everyone, wherever they live. I commend the Bill to the House.
