Railways Bill (Eleventh sitting)
(1 day, 6 hours ago)
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The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Chair
We are now sitting in public and the proceedings are being broadcast. I remind Members to switch any electronic devices off or to silent. Tea and coffee are not allowed during the sittings. The selection and grouping document shows the way in which the amendments and new clauses have been arranged for debate. Any Divisions on amendments or new clauses take place in the order in which they appear in the amendment paper.
Clause 59
Access and use policy
Rebecca Smith (South West Devon) (Con)
I beg to move amendment 79, in clause 59, page 33, line 19, at end insert
“in addition to a subsequent right to appeal to the ORR”.
This amendment would enable a subsequent right of appeal to the ORR after going through the dispute resolution process.
The Chair
With this it will be convenient to discuss the following:
Amendment 217, in clause 59, page 33, line 30, at end insert—
“(3A) Great British Railways’ policy about, and procedures for, access to and the use of GBR infrastructure for the operation of trains, must be best calculated—
(a) to promote improvements in railway service performance;
(b) otherwise to protect the interests of users of railway services;
(c) to promote the use of the railway network in Great Britain for the carriage of passengers and goods, and the development of that railway network, to the greatest extent that it considers economically practicable;
(d) to contribute to the development of an integrated system of transport of passengers and goods;
(e) to contribute to the achievement of sustainable development;
(f) to promote efficiency and economy on the part of persons providing railway services;
(g) to promote competition in the provision of railway services for the benefit of users of railway services;
(h) to promote measures designed to facilitate the making by passengers of journeys which involve use of the services of more than one passenger service operator;
(i) to impose on the operators of railway services the minimum restrictions which are consistent with the performance of its functions under this Part; or the Railways Act 2005 that are not safety functions;
(j) to enable persons providing railway services to plan the future of their businesses with a reasonable degree of assurance.
(3B) Without prejudice to the generality of subsection (3A) above, Great British Railways shall have a duty, in particular, to exercise the functions assigned or transferred to it under or by virtue of this Part, or the Railways Act 2005 that are not safety functions in the manner which it considers is best calculated to protect—
(a) the interests of users and potential users of services for the carriage of passengers by railway provided by a private sector operator otherwise than under a franchise agreement, in respect of—
(i) the prices charged for travel by means of those services, and
(ii) the quality of the service provided; and
(b) the interests of persons providing services for the carriage of passengers or goods by railway in their use of any railway facilities which are for the time being vested in a private sector operator, in respect of—
(i) the prices charged for such use; and
(ii) the quality of the service provided.
(3C) Great British Railways shall be under a duty in exercising the functions assigned or transferred to it under or by virtue of this Part or the Railways Act 2005 that are not safety functions—
(a) to take into account the need to protect all persons from dangers arising from the operation of railways, and
(b) to have regard to the effect on the environment of activities connected with the provision of railway services.”
This amendment places requirements on Great British Railways to use the access and use policy to promote high quality service and competition.
Amendment 77, in clause 59, page 33, line 37, at end insert—
“(7) Neither the Secretary of State, nor Great British Railways, may take any action to implement any part of the access and use policy until a copy of the policy has been laid before Parliament for a period of three months.”
This amendment would provide that neither the Secretary of State nor Great British Railways, could take any step to implement any part of the access and use policy until it has been laid before Parliament for three months.
Clause stand part.
Amendment 87, in clause 66, page 37, line 32, after “ORR,” insert “open access operators,”.
This amendment would require GBR to consult open access operators on its access and use policy.
Clause 66 stand part.
Rebecca Smith
It is a privilege to work under your chairmanship, Mr Western. I start by conveying the apologies of my hon. Friend the Member for Broadland and Fakenham, who is not able to be present today. Instead, I am standing in on his behalf.
The clause sets out that Great British Railways must issue documents explaining the policies and procedures for access to and use of GBR infrastructure. Policy must cover procedures for applying for access, the criteria that GBR will apply to its decision making, and a procedure for resolving disputes. Subsection (3) permits GBR to set out the terms—that is, the rights and obligations —that a train operator can expect to receive where it has been granted access to GBR infrastructure. Subsection (6) allows a person aggrieved by a provision in the document to appeal to the Office of Rail and Road.
That is crucial information for all open access operators, and yet the Bill has no detail at all. It just makes reference to a future “document or documents”. In our view, that is a totally unacceptable approach, and it leaves the industry in the dark on mission-critical issues. Furthermore, no draft has been published, no direction of travel set out and no assurance given to the sector. We feel that to be a slightly arrogant approach from the Government and not a good sign of the approach that GBR itself will take to the independent sector.
Under the Bill as drafted, GBR can make the application process as one-sided as it likes, favouring its own services over those of other competing operators—in the interests not of passengers, but of GBR. The key issue is that the Government’s approach to the legislation is an assumption that the interests of GBR are synonymous with those of passengers, but we do not believe that that is always the case. Every organisation seeks to remove competition, which is uncomfortable—it exposes failures and weaknesses, and ultimately will show GBR up—but competition is crucial to improve service to customers, because organisations are forced to respond. That is why we believe that it needs to exist.
The Bill gives GBR the power to design out competition to itself, with no checks or balances save what we consider to be a pathetic appeals process, where the Government’s position is that the appellate body should not second-guess the decision of GBR, only errors of law. That is a core problem with the Bill and something that we feel is akin only to what a judicial review can do in other areas.
The clause gives GBR sweeping control over access rules, with very few safeguards. GBR sets both the access criteria and the timetable dispute procedure, so the body compiling the timetable also controls challenges to its own decisions. Subsection (3) makes the publication of access terms optional, allowing for opaque or preferential conditions. Subsection (4) lets GBR change the rules at any time, with no duty to consult. Overall, the clause lacks the transparency and checks promised in the consultation and risks embedding clear conflicts of interest to the disadvantage of non-GBR operators.
Lumo and Hull Trains, in their written evidence to the Select Committee on Transport, stated:
“Maintaining a fair, evidence-based, and independent process for access to the network is fundamental to ensuring continued growth and innovation.”
Under clause 59, however, the access and use policy will be developed and revised by GBR, setting the framework by which new services are assessed and defining the terms under which the ORR will judge appeals. Giving GBR exclusive control over that framework risks creating real or perceived conflicts of interest.
For more than two decades, the independence of access decisions has underpinned rail market growth. The continued involvement of the ORR in assessing applications objectively, balancing passenger, freight and performance needs, is essential to preserving that success. To ensure a transparent and fair access framework that the ORR can meaningfully enforce, it is important that private operators are involved in the development of the access and use policy and that appropriate statutory protections for open access are in place.
Without consultation or clear safeguards, the access and use policy risks becoming a document shaped solely by GBR’s priorities, which would potentially exclude private operators and leave them with no effective mechanism to challenge decisions that affect their ability to operate. A robust and independent access framework will also help to unlock further private sector investment in new services and rolling stock. By maintaining confidence in fair treatment and predictable regulation, the Government can encourage additional capital into the network, supporting the expansion of rail connectivity and the delivery of GBR’s passenger growth targets.
Freight operators currently benefit from statutory protections that recognise their environmental and national importance. Open access services deliver comparable benefits by driving modal shift, reducing emissions and supporting regional economies, and should therefore receive equivalent recommendation. They recommend that the Bill provide statutory protection for open access services, equivalent to that afforded to freight, and ensure that the ORR retains full authority to make access determinations independent of GBR. That would support the Government’s ambition for a network that is accountable, transparent and responsive to passenger demand.
I think that they are right. A core criticism of GBR is that it is a player and, now, the referee at the same time. Everyone must surely see that glaring conflict of interest. If His Majesty’s Government insist on changing the access and use policy to create a non-level playing field through the very tight capacity duty in clause 63, it should, at the very least, have an independent body responsible for applying the access and use policy. That is basic fairness in organisational structure.
We tabled amendment 76, which was not selected. We are not sure why, because it would ensure that the access and use policy would remain with the ORR by removing clause 59. That would mean sticking with the status quo and the existing access and use policy, avoiding the profound conflict of interest that clause 59 creates. If the Government decide to keep clause 59, which I assume they will, amendment 79 would enable a subsequent right of appeal to the ORR after going through the dispute resolution process. That would give open access operators a mechanism by which they could go to an independent regulator where necessary, giving them more assurance that they could survive in a new GBR world. That is a different point to the right of appeal under clause 59(6), which refers to the right to appeal the contents of a document. Amendment 79 requires a right of appeal to be included in the document itself.
Amendment 217 would place requirements on Great British Railways to use the access and use policy to promote high quality service or competition. At the very least, legislation needs to point GBR in the right direction so that other users can hold their decisions to account. The amendment gives such guidance. Without it, all that is left is clause 18, the general duties for GBR, and a bold reference to the public interest. It is inevitable that GBR will consider the public interest and the interests of GBR to be the same thing. The Government must think again on this, because the long-term damage to the wider rail sector will be profound.
Amendment 77 ensures that neither the Secretary of State nor Great British Railways could take any step to implement any part of the access and use policy until it has been laid before Parliament for three months. That ensures that we are not blindly creating law when we have not even seen important documents relating to how that law will work in practice.
Clause 66 lists the bodies that GBR will be required to consult before issuing its access and use documents: the ORR and Scottish and Welsh Ministers. That is it; they are the only ones that have that opportunity by right. There is no requirement to consult freight or other operators that might be affected. We think that that is an extraordinary approach. Amendment 87 addresses the shocking lack of consultation envisaged when GBR creates its crucial access and use policy documents by adding open access operators to the mandatory list.
The Parliamentary Under-Secretary of State for Transport (Keir Mather)
Good morning, Mr Western. It is once again a pleasure to serve under your chairship. I thank the hon. Member for South West Devon for these amendments, which all seek to make changes to GBR’s access and use policy.
First, I will provide a brief explanation of what the access and use policy sets out to do. It will set out a clear and consistent process for any operator seeking to run services on GBR’s network. It will therefore provide transparency and certainty for non-GBR operators—such as freight and open access—on the new policy and procedures they will need to engage with when seeking access to GBR’s infrastructure. It will be very similar in concept to the way the ORR publishes access processes and policies today. It will therefore follow a well-known path by which industry can engage with the access process, and like today, this engagement will be underpinned by legislation.
I can reassure hon. Members that the access and use policy is being developed in collaboration with industry. A discussion paper on the initial contents of the policy has already been published. It can be reviewed by hon. Members of this Committee and anyone else who wishes to contribute to its development.
I will turn to amendment 79, which seeks to add an appeals route to the working timetable after the dispute resolution process. I am delighted to start in a place of agreement with the hon. Member for South West Devon because the addition to clause 59 is, in fact, already in the Bill. The Bill provides, first, a mechanism for resolving disputes relating to the working timetable and, secondly, an appeals route to the ORR.
GBR will be required to set a dispute resolution procedure within its access and use policy for applications to be included in the timetable. That will allow parties to resolve disagreements collaboratively before escalation to the ORR, as detailed in clause 61(5). To be clear, the Bill already provides a subsequent route of appeal to the ORR for operators who have disputes over the working timetable. The amendment is therefore duplicative of that existing appeals route, and risks creating additional bureaucracy and confusion within the process. It would not improve the dispute resolution framework and, in our view, is redundant, but I am pleased that we have found at least one thing in these clauses on which the official Opposition and the Government can agree.
Amendment 217 would add requirements that GBR should use the access and use policy to promote high-quality service and competition. I cannot agree with this amendment. GBR’s duties under clause 18 cover the range of points that the hon. Member for South West Devon has suggested GBR must consider for its access and use policy. For example, I agree that GBR must promote a high-quality service, and this is already reflected in GBR’s duty to ‘‘promote high standards” of performance. We must remember that the clause 18 duties are the key decision-making criteria that GBR must apply at every stage—including when making its access and use policy—and so the requirement to drive towards a quality service is already embedded.
On competition, however, I must clarify that the Government support competition on the railways where it can add real value to passengers and farepayers. As the directing mind, GBR will be required to determine the best use of the network for all operators under a new and simpler legislative framework that ensures passengers and taxpayers are at the heart of decisions that are taken on the railways.
Where competition can support GBR in fulfilling its statutory duties—for example, to grow the economy and to provide improved choice and benefits to passengers —without undermining the vast investment made by taxpayers, we are supportive of the benefits of competition, and GBR must take those benefits into account. However, what the Government will not support is competition for competition’s sake. It is ideological and does not help us achieve the goal of making the railway work better.
The hon. Member for South West Devon seems to be equating promoting competition with fairness, but they are not one and the same. GBR must be fair to all third-party operators at all times. To ensure fairness for all parties, GBR will be bound by the Competition Act 1998, under which rules it cannot discriminate or abuse its dominant market position, and the ORR will continue to enforce this as the competition regulator. GBR does not need to actively promote competition to achieve that aim.
Amendment 77 would require GBR’s access and use policy to be laid before Parliament for three months before it can be implemented. GBR would be unable to implement any part of the access and use policy for a period of three months after it had been laid in Parliament. This would only result in delays for operators seeking to access the GBR network—a concept that is unlikely to be considered favourably by either open access or the freight industry.
The hon. Member for South West Devon should note that the access and use policy is a technical railway document. The purpose of this document is to provide a fair and transparent process for operators to apply for access. It sets out, for instance, the timings for applications, so that operators can prepare for the application window in advance. It also sets out what information applicants will need to supply and how applications will be assessed by GBR in accordance with its statutory duties. It is therefore right for GBR to develop it in consultation with industry and other railway bodies such as the ORR. This document should rightly be industry and expert-led. To reassure hon. Members about the content of the access and use policy, Network Rail has published a discussion document that sets out emerging thinking on a future access and use policy, with input from industry stakeholders. If Members of Parliament are keen to scrutinise the document, they are welcome to do so now, and I encourage them to engage with Network Rail’s external engagement process, or the usual processes in Parliament.
The industry has responded positively to the transparent and collaborative approach that has been taken in the development of the access and use policy. The freight sector has commented on how the discussion document acknowledges the key role of private investment. Network Rail’s engagement with industry will continue as the policy is developed, and there will be a further full consultation on the access and use policy with the ORR as a statutory consultee, which Members of Parliament are again welcome to contribute to.
Rebecca Smith
Something that the Minister said reflects back to what my hon. Friend the Member for Broadland and Fakenham said on Tuesday. Not putting private operators, open access and freight on this mandatory list is making us nervous that it is not the Government’s intention to keep involving them in the future. I appreciate what the Minister is saying about them being consulted at the moment, but this amendment is important because it would keep them as a fixture of the future of GBR, rather than as an optional extra, where they can be useful, but if they are not considered to add any value to the railway, they will not be there any more.
As we have already alluded to, industry certainty and assuredness needs to be there for private investment to come forward, some of which I know the Government will welcome. It is a bit of a chicken-and-egg situation: if we do not have them in the framework at the beginning, they are not being encouraged to stay involved and have that confidence. Does the Minister agree?
Keir Mather
The hon. Member is of course right to be wary about the involvement of open access in the railway, because although such provision forms a comparatively small proportion of railway journeys, we have discussed at length how certain access operator services provide great inter-city connections. There is of course a role for open access in the system being created by the Bill.
With GBR having regard to its duties when creating its access and use policy, it will have to factor in how users of the railway, both current and future, are able to make best use of services, whether they are provided by GBR or anybody else. Being bound by competition law, and the transparency and fairness inherent in it, will ensure that those that already provide services on the railway, and those that seek to provide services in the future, will have the opportunity to do so. I understand the hon. Member’s point about making sure that something is prescriptively listed in the Bill so that it is given due regard, but I would say that, whether through existing open access entitlements or the two rail freight targets that exist, there are sufficient assurances that there is scope for the inclusion of those services in the future of the railway, and that the access and use policy has to reflect that. I will turn to that in more detail soon.
All of the work on the access and use policy so far has happened without the need for a long and ever-expanding list of operators in the legislation, which would be the likely result of the amendment. If we name open access operators, we should presumably also list others, such as freight operators and devolved operators. Clause 66 currently requires that GBR must consult
“such other persons as it considers appropriate”,
and that formulation is deliberate; it ensures that consultation can be targeted, relevant and proportionate. Network Rail’s actions so far clearly demonstrate that open access operators are considered to be other appropriate persons in the reading of the clause, so both the reality and the future can be accounted for.
I reassure the hon. Member that there is no world in which GBR will create an access and use policy without consulting the relevant industry bodies that are affected. The amendment would add complexity, without delivering additional practical benefit. Although I thank the hon. Member for the amendments, for those reasons, I urge that she does not press them to a vote.
Clause 59 requires Great British Railways to publish an access and use policy. That key document will provide transparency and certainty for non-GBR operators, such as freight and open access, on the new policy and procedures they will need to engage with. For example, the policy will set out how operators should apply to access and use GBR tracks and infrastructure. It must set out the criteria Great British Railways intends to apply, in accordance with its statutory duties, when making access decisions, as well as its procedures for resolving competing demands and disputes. That will include, for instance, details on the economic and performance assessments GBR will undertake to determine best use. The policy must also include an explanation of how GBR will carry out maintenance and improvements to GBR infrastructure, and other necessary provisions, to ensure that the network works effectively. That exists in today’s system, within the industry network code, and we would expect GBR to draw on that when developing its policy on these key points.
The access and use policy is being developed in collaboration with industry. A discussion paper on initial content has already been published, and can be reviewed by the Committee or anyone else who wishes to input into its development. We hope that the extensive engagement being undertaken will ensure that a robust and effective document is produced that industry will be content with. However, as a backstop, any person aggrieved by a provision in this policy may appeal to the ORR.
Clause 66 will make it a legislative requirement that GBR must consult the ORR, the Scottish Ministers, the Welsh Ministers and such other persons as it considers appropriate before issuing, revising or replacing its access and use policy, which is dealt with in clause 59. That is in addition to GBR being a public body bound by public law principles. GBR must behave in a fair and transparent way, and therefore must consult interested parties, including rail freight and open access. The clause also ensures that GBR consults such persons as it considers appropriate before issuing, revising or replacing its infrastructure capacity plan, before issuing a working timetable and before making, revising or replacing a charging or performance scheme. Those issues are dealt with in clauses 60, 61 and 62.
Clause 66 is essential to provide reassurance to industry and our Scottish and Welsh counterparts that key parts of the new framework—GBR’s policies and processes—will not be designed in isolation, but will be underpinned by a transparent and consultative process. The clause provides the essential framework for collaborative and strategic planning by GBR across the rail network. I therefore commend clauses 59 and 66 to the Committee.
Rebecca Smith
I think I have said everything I want to say, but we would like to press amendment 79 and then amendment 217 to a vote.
Question put, That the amendment be made.
Rebecca Smith
I beg to move amendment 78, in clause 60, page 34, line 14, at end insert—
“(4A) When preparing, revising or replacing the document or documents Great British Railways must consult and have regard to the views of other railway passenger services and services for the carriage of goods by railway.”
This amendment would ensure that GBR had to consult and have regard to the views of open access and freight providers when preparing, revising or replacing the capacity plan.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Amendment 81, in clause 63, page 35, line 34, leave out from “to” to the end of line 37 and insert
“be satisfied that it retains sufficient capacity across GBR infrastructure to allow for—
(a) the operation of GBR passenger services, passenger services not operated by GBR and services for the carriage of goods by railway, and”.
This amendment aims to reduce the ability of GBR to prioritise its own operations where there are network capacity constraints and create a level playing field.
Amendment 80, in clause 63, page 35, line 34, leave out from “ensure” to the end of line 39 and insert
“be satisfied that it will meet its key performance indicators set out in section [Great British Railways: key performance indicators].”
This amendment would ensure that GBR made decisions about allocating capacity having regard to the need to meet its key performance indicators.
Amendment 253, in clause 63, page 35, line 37, at end insert—
“(aa) the achievement of the Rail freight target set out in Section 17, and”.
This amendment requires GBR to retain sufficient capacity over GBR infrastructure to allow for the achievement of the rail freight target.
Amendment 211, in clause 63, page 35, line 39, at end insert—
“(3) Where Great British Railways decides not to grant access to persons to a specific part of the network to reserve capacity, Great British Railways must—
(a) publish a statement (a ‘capacity reservation statement’) setting out the evidence relating to the decision;
(b) consult—
(i) the Office for Rail and Road, and
(ii) any other persons who have sought access to that part of the network.
(4) A capacity reservation statement must explain how the decision taken by Great British Railways under subsection (3) reflects the best use of GBR infrastructure for the operation of trains as set out in the infrastructure capacity plan.
(5) The ORR must review a capacity reservation statement.
(6) The ORR may direct Great British Railways to reconsider its assessment if it considers that the exclusion of other operators is not necessary for Great British Railways to retain sufficient capacity over GBR infrastructure.”
This amendment requires Great British Railways to publish a statement explaining any decision not to grant access to a specific part of the network on the basis of network capacity.
Amendment 229, in clause 63, page 35, line 39, at end insert—
“(3) In exercising its capacity duty, Great British Railways must take account of the Infrastructure Capacity Plan and give due regard to achieving the Rail Freight Target set out in section 17.
(4) Great British Railways must identify and publish a list of strategic freight corridors on the railway network.
(5) In exercising its capacity allocation functions, Great British Railways must ensure that the availability of network capacity on a strategic freight corridor is not materially reduced unless—
(a) the Office of Rail and Road has approved the reduction, and
(b) suitable alternative provision has been made to enable the carriage of goods by rail to continue to be facilitated.
(6) Before revising the list of strategic freight corridors, Great British Railways must consult—
(a) freight operating companies;
(b) owners and operators of rail-connected terminals;
(c) such other persons as it considers appropriate.”
This amendment ensures that capacity allocation decisions reflect both planning priorities and freight-increase ambitions. This amendment requires GBR to publish and maintain a list of strategic freight corridors and ensures that any material reduction in capacity must be approved by the ORR.
Clause 63 stand part.
New clause 56—Centralised train planning and auctioning—
“(1) Great British Railways must publish a report on the potential benefits to passenger railways services of the centralised train planning and auctioning scheme (‘the scheme’) set out under subsection (2).
(2) The scheme must require Great British Railways to—
(a) create a centrally designed passenger rail services timetable, and
(b) auction to alternative operators of passenger rail services train paths that—
(i) are long-distance intercity routes;
(ii) have a high revenue yield.
(3) The report under subsection (1) must consider the potential impact of the scheme on customer service and choice.
(4) The report must be laid before each House of Parliament within six months of this Act being passed.”
This new clause requires GBR to explore and consider the potential benefits of centralised train planning and auctioning.
Rebecca Smith
The Government Whip referred to this as the “meaty” group, so we may be here for a while. That is fine; we have plenty of time.
Clause 60 requires GBR to set out how, in its view, best use can be made of its infrastructure over a specified period. Subsection (3) allows GBR to replace or amend the document or documents that set that out at any time, and subsection (5) requires any plan or revisions to be published. Subsection (4) requires GBR to have
“regard to the need to accommodate”
its own passenger services, other passenger services—including open access services—freight services, and the maintenance and improvement of its infrastructure when preparing the document or documents.
Subsection (6) gives a right to appeal to the ORR, but only on limited judicial review grounds, in line with clause 68; there is no right of appeal on the decision of GBR. The Bill contains a duty to consult the ORR and Scottish and Welsh Ministers, but no express duty to consult other rail operators, despite their activities being two of the four considerations for GBR under subsection (4). The Opposition believe that that is an extraordinary omission; only the ability for GBR to consult
“such other persons as it considers appropriate”
is included, in clause 66(1).
Clause 60 gives GBR broad freedom to set and change the capacity plan at will, with no explicit duty to consult operators or freight interests when doing so. Subsection (3) allows revisions “at any time”, and the “have regard” duty in subsection (4) is weak and does not stop GBR prioritising its own services. In fact, the capacity duty in clause 63 actively requires GBR to prioritise its own services, irrespective of passengers’ interest. Clause 60 lacks the transparency and safeguards signalled in the consultation. Our amendment 78 would ensure that GBR must consult and have regard to the views of other railway passenger services and freight when preparing, revising or replacing the capacity plan. That is the very least GBR should be required to do.
Clause 63 provides for GBR to retain sufficient network capacity for the passenger services it is required to operate, and for engineering access. When granting access under the clause—that is, when issuing any capacity commitment or access contract—and when preparing, issuing and revising the timetable under clause 62, GBR must ensure that it retains sufficient capacity on its infrastructure to operate its own passenger services and to carry out works to maintain and improve its structures. It is required to retain sufficient capacity for services it already operates and for those it expects to operate in the future—for example, as set out in a business plan or public service obligations in transport specification not yet awarded. GBR will continue to follow general and wider legislative duties when taking access decisions, and the explanatory notes to the Bill assure us that
“it must take decisions fairly on the genuine best use of the network.”
The infrastructure capacity plan at clause 60 will indicate the capacity available to different market sectors—that is, how much capacity is best used for freight, for open access and for GBR passenger services. Clause 63 ensures that where GBR has decided what constitutes best use, and where the Secretary of State or Scottish or Welsh Ministers have funded it to operate passenger services, consistent with their allocated section of the infrastructure capacity plan issued under clause 60, GBR must ensure that sufficient network capacity is available for those services to operate, while ensuring sufficient capacity for engineering works. The explanatory notes assert:
“The duty does not enable GBR to secure more capacity for its own services than it thinks would equate to best use.”
However, clause 63 is not designed to achieve a level playing field; it does not even try to. The clause is not interested in maximising passenger choice or services, or in allowing competition to maximise use of capacity for the benefit of passengers. The express obligation in the clause is that GBR prioritise its own planned growth, because it must ensure capacity for all current and expected GBR services. That obligation sits ahead of any consideration of open access bids, or whether the service provided by open access would be better for passengers and therefore in the public interest.
Joe Robertson (Isle of Wight East) (Con)
This question is possibly better directed at the Minister, but does my hon. Friend think that the clause might be so restrictive because, in truth, the Government do not really want open access, despite what they say?
Rebecca Smith
I agree with my hon. Friend. I alluded to that issue earlier in my comments, and my hon. Friend the Member for Broadland and Fakenham raised it on Tuesday. That is why we are concerned on behalf of not only open access, but first of all passengers, who are not going to get the best possible service because of the inbuilt assertion that open access can ultimately be discarded if the Government do not see it as palatable.
The written evidence from Lumo and Hull Trains also says:
“As the Government and GBR seek to deliver a thriving, growing railway, it is vital that the Railways Bill recognises and protects the contribution that Open Access makes to these shared goals. This will ensure that it will continue to deliver these benefits to the millions of passengers who rely on them, now and into the future…As the Government looks to modernise and centralise rail through GBR, it will be important that competition remains an embedded principle within this framework. Open Access provides a proven model of innovation and efficiency, which can help GBR achieve its statutory objectives. Recognising the role of competition as a driver of value and growth will ensure that passengers, the network, and the public purse all continue to benefit.”
FirstGroup’s written submission to the Transport Committee tells a similar story, saying that open access operators
“receive no government funding, take on full risk, and generate their own revenue— giving them very strong incentives to deliver a service which is endorsed by passengers…The way in which GBR structures its timetable will be critical. It should be obliged to carry out its functions fairly and without discrimination, so that if an open access train service can provide passenger benefit monopoly interests do not prevent that train from running.”
FirstGroup also says:
“Clause 63 must ensure that un-funded services which GBR ‘expects’ are not given train paths in advance of funded open access services, which will provide passenger benefit sooner.”
The Rail Freight Group is also concerned by the clause, telling the Transport Committee:
“We understand that the basis of the new approach will be via Infrastructure Capacity Plans (Clause 61) and, for GBR’s own trains, via the Capacity Duty (Clause 63). It is very difficult from these clauses to have a clear understanding of how the new process will operate, and how rail freight and rail freight growth will be facilitated, including in contractual rights for operators…For example, we understand from our discussions that there could be numerous infrastructure capacity plans across the network which a new freight service will have to navigate. We also understand that when an infrastructure capacity plan is reviewed, existing freight services could be stopped from operating if other services are considered to be higher value, as contractual commitments are expected to expire in line with the capacity plans.”
Nick Brooks from ALLRAIL told the Transport Committee:
“I think we would look for clarification, regarding clause 63, that GBR cannot reserve capacity for hypothetical future GBR long-distance services at the expense of privately funded open-access proposals or existing services that provide immediate benefits—and extra infrastructure income, of course, because open-access operators are paying track access fees too. For that, I think you need to prioritise funded open access over speculative GBR services ‘someday in the future.’”
It is very clear what the sector thinks: clause 63 needs substantial clarification. That is why, along with the Lib Dems, we have tabled a number of amendments, which I will briefly speak to. Amendment 81 would make it clear that capacity allocation should be based on a level playing field, without priority given to any particular operator. That would allow the best outcome for the passenger, and allows the public interest bit in clause 18 to take the lead. Proceeding on any other basis will leave us with a monopoly that is allowed to abuse its position.
Amendment 80 puts forward an alternative approach, based on key performance indicators, but it is clear the Government are not interested, so in the interests of time I will not pursue that further today—that will be one fewer Division, the Government will be pleased to hear.
Amendment 253, in the name of the hon. Member for Didcot and Wantage, requires GBR “to retain sufficient capacity” to ensure that the rail freight target is met. To progress, there would need to be a mechanism to reach a decision if that conflicted with any planned GBR service.
Amendment 211 would require GBR
“to publish a statement explaining any decision not to grant access to a specific part of the network on the basis of network capacity.”
For an appeals process to have any meaning at all, that would need to be a pre-requisite.
Amendment 229 would ensure that
“capacity allocation decisions reflect both planning priorities and freight-increase ambitions”
and would require
“GBR to publish and maintain a list of strategic freight corridors and ensures that any material reduction in capacity must be approved by the ORR.”
The amendment would give a better balance to capacity considerations than the current wholly one-sided drafting. That is incredibly important because, ultimately, the Government are seeking to reduce climate change and achieve net zero. Freight plays a huge part in that, and if we do not have strategic freight corridors to ensure that we can make use of the freight system, we will fall short of what could be achieved.
Finally, new clause 56, in the name of the Libs Dems,
“requires GBR to explore and consider the potential benefits of centralised train planning and auctioning.”
That is an interesting concept and could have significant benefits for passengers and taxpayers by driving competitive pricing for certain routes, while avoiding the abstraction arguments in relation to competing open access applications.
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairship once again on the Committee, Mr Western. I will no doubt be told off for getting her title wrong, but I agree with the Conservative spokesperson, the hon. Member for—
Olly Glover
I knew the hon. Lady’s seat; it is just that I got told off the other day by the shadow Minister, the hon. Member for Broadland and Fakenham, for calling him the spokesperson instead.
Carrying on, I agree with the hon. Lady’s comments on the Opposition’s amendments. I think most of them are sound and reflect the intention to strike a better balance in the Bill between GBR wanting to protect its interests and objectives, and recognising that there are valid and competing objectives elsewhere in the industry, particularly on the freight side, as well as on the open access passenger side.
Let me speak briefly to our new clause 56. The hon. Lady accurately summarised our intention. The new clause does not require GBR to adopt the idea of auctioning train paths, but it does require it to examine the potential of the idea, which is used to good effect on the Italian and Spanish high-speed rail networks. This idea, basically, retains the guiding mind approach to timetable development and construction but would recognise that for routes with a high-revenue yield and limited competition, such as London to Manchester, it may well be best, in the interests of both revenue and getting more people on to trains, to auction off one of the paths—London to Manchester has three an hour—to another operator. That would help GBR to provide some competitive tension to improve its own delivery.
I appreciate that the Government would probably say that Avanti West Coast is terrible and when it becomes GBR everything will be a land of milk, sweetness and honey; however, the real structural problem is that at the moment there is no realistic competition between London and Manchester. That is why—certainly from the figures that I have seen most recently—passenger numbers have recovered far less than they have on the east coast main line, where there is competition and a real spirit of customer choice. I would be interested to hear the Minister’s comments on that.
Keir Mather
It is my pleasure to speak to this long-awaited group of amendment to what are arguably some of the most critical aspects of the legislation. Clause 60 will require GBR to set out its proposal for the best use of its infrastructure, while clause 63 will require GBR to retain sufficient capacity to run its own passenger services and carry out engineering work.
First, I will explain how the Government have reached that conclusion. We are here because the current system for allocating capacity is clearly not working; it is designed so that each part of the railway acts and takes decisions in isolation. There was a four-year delay to the implementation of the new east coast main line timetable that was finally achieved in December 2025. Meanwhile, there is no single body with a clear vision for the best use of the network, and therefore no clear statement of the capacity that can be made available for different users of the railway. As a result, open access operators have expended considerable effort and resources in developing proposals for access to the network, many of which have ultimately been rejected by the ORR.
Both freight and open access operators would benefit from a single body empowered to provide that clarity about future opportunities for them to grow their presence on the railway. The only possible answer to fixing that is GBR, which can take decisions strategically, making the very best use of the limited capacity that we have. Only GBR can review the network holistically with a view to creating more space, which will benefit open access operators where they can show that their new services constitute best use of the network. That will benefit every hon. Member’s constituents, because there will be more opportunity for connectivity and more co-ordination to avoid disruption and delays.
In our new system, the process of allocating capacity starts with clause 60. The infrastructure capacity plan will set out GBR’s view of the best use of the network, showing how capacity can best be allocated between GBR’s own services, freight services and open access services. In creating that plan, GBR must have regard to the need to accommodate all types of services. The clause is one of the most crucial in the Bill, because it is where GBR—having consulted carefully with existing and prospective operators and other interested parties, and taken account of its statutory duties—will set out its view of the best use of the network. Once established, the plan will provide much-needed certainty for operators contemplating investment in new services.
I will be crystal clear for the benefit of the Committee: the capacity duty mentioned in clause 63 does not apply to the creation of the infrastructure capacity plan. Under clause 60, GBR will make its best-use assessment on the basis of the duties in clause 18 and other general duties in the Bill only. At this stage, it will not have any basis to refer to the duty as described in clause 63. It will take the decision fairly and transparently, in line with its duties, with the need to allocate paths for freight, open access and itself in mind.
There is absolutely no intention for other operators to be unfairly pushed out or disadvantaged by GBR. We want the best service for passengers, freight users and the public on every part of the route, to enable the best possible connectivity, quality of service and overall economic benefit. That is the goal, regardless of who provides those services. Were GBR to mistakenly apply the capacity duty at the capacity plan stage as part of its determination of best use, that would be grounds for appeal to the ORR.
Joe Robertson
I note the Minister’s assertion that there is no intention to squeeze out other operators, but given the way in which the Bill and the clause are drafted, that surely is an inevitability regardless of whether he intends for that to happen. It is the outcome that matters. If it will not enable open access and competition, that is in itself a problem, notwithstanding he might not intend that to be the case.
Keir Mather
I take fully on board the hon. Member’s point that we need to ensure services are not squeezed out. The process I am outlining is specifically to ensure that that does not happen. Where GBR has regard to its duties under clause 60 when deciding best use, it has to have regard to the freight target and the need to grow freight, but also the need to accommodate a range of services on the railway. That best use policy is locked in. It is under clause 63 that the capacity duty comes into effect, and GBR can make practical operational decisions about how to effectively actualise those proportions being allocated on the railway.
GBR will have to have regard to open access and freight under its duties in clause 60 when making the macro decision about what constitutes best use, which at the end of the day is not a binary yes or no question. The capacity duty in clause 63 merely ensures that it can provide the services it has been allocated. I will come to that in a bit more detail and set it out further. The hon. Member is welcome to intervene again if he feels my subsequent detail is insufficient.
On the capacity duty more broadly, the Government have been nothing but consistent. Put simply, the services that offer the genuine best value proposition for passengers, freight customers and the taxpayer, consistent with GBR’s duties, should be allocated capacity. Clause 63, meanwhile, creates a legal duty for Great British Railways to ensure there is enough space in the timetable to run the services funded by the Government and taxpayers. To reiterate, clause 63 is a requirement for space in the timetable. It is not a requirement for space in the capacity plan. It does not apply to the capacity plan and it therefore does not and cannot undermine the best use decisions taken at the capacity planning stage. That is because the Government are paying for certain GBR services and must not waste public funds. The clause 63 duty is about managing taxpayers’ money after best use has been determined. It is not about keeping anyone out.
Amendment 78 would require GBR to consult open access and freight operators in preparing the infrastructure capacity plan. Amendment 80 would require GBR to have regard to its key performance indicators when preparing the plan, and amendment 81 would amend clause 63 to require GBR to retain capacity for open access and freight operators. Amendments 253 and 229 would both give freight operators more weight in the capacity process.
Adding a further consultation requirement to clause 60 is unnecessary as there is already a separate requirement in clause 66 for GBR to consult affected operators when developing or amending the capacity plan. Were GBR to publish or amend a capacity plan at any point without consultation, that would constitute a breach of its duties under the Bill and present strong grounds for appeal to the ORR. Amendment 78 is therefore duplicative of the provisions already in the Bill.
As for amendments 80, 81, 253 and 229, the intended effect of clause 63 is to create a statutory duty for GBR to ensure that there is enough space in the timetable to run its own passenger services, which are funded directly by taxpayers. That is because taxpayers spend many billions of pounds subsidising the railway. Any responsible Government would be obligated to protect that investment and ensure that taxpayers get full value from it. The clause is therefore needed to ensure that where GBR considers its services constitute the best use of the network, and where it then allocates capacity to itself, it will actually run the trains that it is proposing to run and which it will be funded for. I do not believe anyone on this Committee would be delighted to find that, following GBR being paid several billion pounds to run services, it was unable to do so. Clause 63 is therefore an essential legal safeguard to prevent that from happening.
The interests of freight and open access operators are protected by GBR’s general duties under clause 18, and freight operators are further protected by the duty on GBR to have regard to the rail freight target set by the Secretary of State under clause 17. Those duties will apply when GBR establishes best use at the capacity planning stage for all operators, including freight. The existence of not just one but two statutory duties is a clear signal of this Government’s view that freight must be front and centre of GBR’s decision making. This will give freight much greater prominence in capacity planning and allocation decisions than the current system, in which capacity is too often allocated on a first come, first served basis without reference to any coherent view of the best overall use of available capacity. The clause 63 duty exists only to protect the Secretary of State’s investment in the railway; it is not intended to influence GBR’s capacity planning or to keep anyone out of the network. The amendments are therefore not compatible with the intended purpose of the clause.
Amendment 80 draws a link to the concept of key performance indicators. As I have set out in previous debates, the Government do not accept the need to make statutory provision about KPIs and so cannot support the proposed reference. As I have consistently said throughout these debates, KPIs should be in GBR’s business plan and not in legislation.
Amendment 211 would require GBR to publish a statement on any decision not to provide access on the basis of capacity. As a public body, GBR is bound by public law principles to behave in a transparent and non-discriminatory way. That means that GBR must set out its decisions transparently, including when granting access, with robust evidence that shows how it has acted in accordance with its duties, access and use policy and any guidance issued by the Secretary of State. If GBR failed to do that, it would be grounds for appeal to the ORR. The amendment is unnecessary because GBR is already required to transparently account for its access decisions, whatever the reason for them.
Finally, new clause 56 would require GBR to report on the merits of a centralised train planning and auctioning scheme, with high-yielding services being operated by private sector operators rather than GBR. This Government were elected with a clear mandate to return franchised passenger services to public ownership. Public ownership, with responsibility for passenger services and infrastructure brought together in a single organisation, is the only way to make the railway run better. It enables everybody to focus on a single set of objectives centred around the needs of railway users and the interests of the taxpayers who fund it, rather than shareholders and private profit. Public ownership of passenger services will save the taxpayer up to £150 million a year in fees to private operators alone. Therefore, GBR, rather than private operators, must be responsible for operating the services that taxpayers will fund it to deliver. Making GBR responsible for essential services also avoids the costs of maintaining a public sector operator of last resort function ready to step in if a private operator suffers financial failure or chooses to withdraw from operating the services.
While I fully support the provision of services by open access operators on the network where they add value and where there is capacity on the network, the model set out by the new clause is not compatible with the mandate that this Government were elected on: to bring franchised passenger services back into public ownership. It is not compatible with the regime set out in the Bill, which already provides clarity about the role of private sector operators and the opportunities for them to run services.
Given what I have set out, I hope that the hon. Member for South West Devon feels able to withdraw the amendments. I commend clauses 60 and 63 to the Committee.
Rebecca Smith
I have listened to the Minister’s comments. As I said earlier, we will not press amendment 80 to a vote, but I wish to press the others to a vote.
Question put, That the amendment be made.
The Chair
The rest of the amendments that we have just debated will be decided at the appropriate point.
Clause 61
The working timetable
Keir Mather
I beg to move amendment 174, in clause 61, page 34, line 38, at end insert—
“(4A) Agreement under subsection (4) may be general or specific, and the ways in which it may be given include it being given—
(a) in accordance with the terms set out as mentioned in section 59(3);
(b) by means of, or in accordance with, provision contained in an agreement or other document to which Great British Railways and the operator are parties.”
This amendment ensures that changes to the working timetable can be agreed in advance and in general terms, and sets out various of the ways in which agreement can be given.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Clause 62 stand part.
New clause 52—Train frequency duty—
(1) The Secretary of State must undertake a public consultation on the frequency of Great British Rail services.
(2) The consultation under subsection (1) must consider the appropriate frequency of train services to ensure services meet local need.
(3) The Secretary of State must publish a report on the outcome of the consultation under subsection (1) within one year beginning on the day on which this Act is passed.
(4) The report under subsection (3) must—
(a) propose a frequency of rail services that will meet local need;
(b) include proposals for continuous engagement with local communities about the frequency of rail services for those communities.
(5) Before the end of the period of six months beginning on the day on which a report under subsection (3) is published, the Secretary of State must by regulations provide for a duty on Great British Railways to provide the frequency of train services as set out in that report (‘the duty’).
(6) Within one year following the making of regulations under subsection (5), and once per year thereafter, the Secretary of State must publish a report on—
(a) the extent to which Great British Rail has met the duty under such regulations;
(b) where the duty is not being met, any proposed changes to Great British Rail services to better allow the duty to be met.
(7) Regulations under this section are subject to the affirmative resolution procedure.”
This new clause would require the Secretary of State to undertake a public consultation and the regular reporting and monitoring of train frequency to ensure timetabling reflects the needs of local communities.
Keir Mather
Amendment 174 will provide greater clarity for all parties that the agreement GBR is obliged to have under clause 61(4) can be made in advance in a contract or other document between GBR and the operator in line with the terms set out in GBR’s access and use policy under clause 59(3). The amendment broadly replicates the current industry practice of making changes to the working timetable through contractual arrangements, so it is familiar to industry and was always the intended approach. I therefore urge the Committee to support the amendment, tabled by the Government in my name.
I thank the hon. Member for Epsom and Ewell (Helen Maguire) for tabling new clause 52, which would require the Secretary of State to publicly consult on and publish a report that recommends an appropriate train frequency that would meet local need and which GBR would then be obliged to deliver. Although this Government support the principle of designing a train service that meets passengers’ needs and local needs, the new clause would embed that responsibility in Government, and not with GBR. That would serve only to continue Government’s micro-management of the railways, under-mining GBR’s intended role as an empowered, directing mind that is enabled to take decisions on the best use of the network.
To take access decisions and plan its passenger services —which GBR will do in accordance with its duties, which are clearly defined in the Bill—GBR, and not the Department, must be able to design its own passenger train services. GBR will also be legally required to consult devolved Governments and mayoral strategic authorities before making certain decisions, such as service frequency decisions that will significant affect their local areas. The Government and GBR will also have to consult the new passenger watchdog when developing their policies, strategies and priorities for the railway, including when GBR is developing its business plan and passenger offer. The Secretary of State will set the long-term strategic objectives of the railway through the long-term rail strategy, which GBR will need to consider when taking decisions about service frequencies. The Secretary of State will also have to approve GBR’s integrated business plan, which will cover both track and train activity.
That framework represents the right balance between an empowered directing mind that can independently weigh up its duties in a considered and rational way when delivering its statutory functions, including developing the timetable, with appropriate consultation requirements and proportionate Government oversight. We do not want to continue the current system, under which stifling Government interference hampers the efficient running of the railways. I therefore urge members of the Committee not to move new clause 52.
Clause 61 requires GBR to issue a timetable that defines
“all planned train movements which will take place on GBR infrastructure during the period for which it is in force”.
Enabling GBR to establish a working timetable is fundamental to running trains safely and reliably at their published times. The current system cannot deliver significant timetable changes, even where there is a strong public interest case for doing so with significant taxpayer investment. That is because the process for revising the timetable is dependent on different organisations taking, at different points, different decisions that affect the timetable’s production. That creates complexity and challenges that can result in significant delays to the implementation of a new timetable being implemented and passengers and taxpayers losing out.
Despite the significant efforts made by Network Rail and the ORR, the new east coast main line timetable was delayed for over four years, which resulted in delayed benefits to passengers. Ultimately, until the current Rail Minister was appointed no one was willing to make a final timetabling decision. That cannot happen again: GBR must be empowered to take decisions or passengers and taxpayers will not see improvements.
Under clause 61, as the directing mind GBR will be responsible for taking decisions on timetabling in a process overseen by the ORR. A person whose application to be included in the timetable is rejected or who disagrees with the terms and conditions of their inclusion may appeal to the ORR. The clause ensures that GBR will deliver an achievable, reliable timetable that the network is able to deliver. Better co-ordination of the timetable and engineering works will reduce delays, improve reliability and reduce cost. GBR’s holistic review of the whole network can also improve connectivity for passengers. Without the clause, the current unacceptable system of timetable delays, disagreements and ministerial intervention will continue, which serves no one.
Clause 62 sets out the steps that GBR must follow before issuing a working timetable, as previously described in clause 61. It is a critical provision as a timetable is the backbone of a safe and efficient railway operation. Without a clear and structured timetable, trains cannot run reliably at their published times. GBR must invite applications for inclusion in the timetable from operators other than GBR’s own passenger services. The invitation must specify the period within which applications must be made and the information that must accompany an application. GBR must prepare and send a draft of the working timetable to those applicants. A person who has had an application rejected by GBR may appeal that decision to the ORR. The clause ensures that the process for developing the timetable is fair and transparent. I commend clauses 61 and 62 to the Committee.
Rebecca Smith
Clause 61(1) sets out that GBR must issue one or more timetables covering all train movements on GBR infrastructure for the period that GBR intends the timetable to cover, to be known as a working timetable. Subsection (3) allows GBR to alter a working timetable, for example to add new train movements, change a planned train movement, allow for maintenance works, deal with disruption, or change the duration of the timetable. Subsection (4) allows GBR to alter a planned train movement of an operator other than GBR only with that operator’s permission. Subsection (5) provides a right of appeal to the ORR for an operator who applied for a train movement to be included in the working timetable by GBR but was refused, or where the inclusion was made subject to conditions. The duty to consult and appeals provisions in clauses 66 to 68 also apply to the working timetable, but not to alterations of the working timetable.
Edward Morello (West Dorset) (LD)
It is a pleasure to speak under your chairship, Mr Western. I wanted to speak briefly in support of new clause 52, which, as the hon. Member for South West Devon indicated, was tabled by my hon. Friend the Member for Epsom and Ewell. It would introduce a duty on train frequency, which is something my constituents—and I am sure those of other Members—write about continuously. The new clause would require the Secretary of State to consult the public on how often GBR services should run, taking account of local need. It would then require the publication of a report, ongoing engagement with communities, and a binding duty on GBR to deliver the agreed frequency, with regular monitoring.
The new clause is designed to ensure that rural and less well-served areas are properly heard, and that timetables reflect how people actually use the railway and not just what is easiest to operate. If I were the shadow Minister, I would probably describe this as a probing new clause designed to draw out some secret piece of information. I heard what Minister said about it. All the other Liberal Democrat amendments have been designed to restrain the power of the Secretary of State and ensure that GBR is not micromanaged, and I think the new clause probably flies in the face of that. We will leave it there.
Keir Mather
I thank the hon. Members for South West Devon and for West Dorset for their contributions. I remain of the view that a unified system under GBR will plan and deliver an achievable, reliable timetable and ensure that the network is actually able to deliver it, so that the services promised to passengers are delivered. Better co-ordination of the timetable and engineering works will reduce delays, improve reliability and reduce costs, and through its role in issuing the timetable, GBR will be able to ensure that all services represent the best use of the network, with a strong appeals role for the ORR to ensure that fairness is embedded in the system. I therefore retain the view that the hon. Members should not move their amendments.
Amendment 174 agreed to.
Clause 61, as amended, ordered to stand part of the Bill.
Clause 62 ordered to stand part of the Bill.
Clause 63
Capacity duty
Amendment proposed: 81, in clause 63, page 35, line 34, leave out from “to” to the end of line 37 and insert—
“be satisfied that it retains sufficient capacity across GBR infrastructure to allow for—
(a) the operation of GBR passenger services, passenger services not operated by GBR and services for the carriage of goods by railway, and”.—(Rebecca Smith.)
This amendment aims to reduce the ability of GBR to prioritise its own operations where there are network capacity constraints and create a level playing field.
Question put, That the amendment be made.
Olly Glover
Apologies, Mr Western; the confusion has arisen because the selection and grouping paper lists it as an Opposition amendment. I do not wish to move it.
Rebecca Smith
Amendment is 211 is mine, and we would like to press it to a vote. [Interruption.] Oh, no, that is also a Liberal Democrat amendment—that says “Opp” as well.
Olly Glover
Yes, Mr Western. Thank you.
Amendment proposed: 211, in clause 63, page 35, line 39, at end insert—
“(3) Where Great British Railways decides not to grant access to persons to a specific part of the network to reserve capacity, Great British Railways must—
(a) publish a statement (a ‘capacity reservation statement’) setting out the evidence relating to the decision;
(b) consult—
(i) the Office for Rail and Road, and
(ii) any other persons who have sought access to that part of the network.
(4) A capacity reservation statement must explain how the decision taken by Great British Railways under subsection (3) reflects the best use of GBR infrastructure for the operation of trains as set out in the infrastructure capacity plan.
(5) The ORR must review a capacity reservation statement.
(6) The ORR may direct Great British Railways to reconsider its assessment if it considers that the exclusion of other operators is not necessary for Great British Railways to retain sufficient capacity over GBR infrastructure.”—(Olly Glover.)
This amendment requires Great British Railways to publish a statement explaining any decision not to grant access to a specific part of the network on the basis of network capacity.
Question put, That the amendment be made.
Edward Argar (Melton and Syston) (Con)
On a point of order, Mr Western. We have just dealt with a couple of amendments that the selection list described as tabled by the Opposition but were actually been tabled by the Liberal Democrats, which I suspect is where some of the confusion came from. Will it be possible during the lunch break for the Clerks to check the list and update it if necessary, or confirm that there is no further mislabelling, just for clarity?
The Chair
Absolutely. We will make sure there is absolute clarity for this afternoon’s session.
Clause 63 ordered to stand part of the Bill.
Clause 64
Charging scheme
Rebecca Smith
I beg to move amendment 242, in clause 64, page 36, line 6, leave out subsection (1)(b).
This amendment would remove the requirement for GBR to charge in relation to trains which are planned to use GBR infrastructure but do not operate, or do not operate in full.
The Chair
With this it will be convenient to discuss the following:
Amendment 230, in clause 64, page 36, line 7, at end insert
“, except where the services cannot operate due to a failure of the GBR infrastructure or the need for GBR to take capacity for work on the network.”
This amendment would ensure that services are not caught within the charging scheme if they cannot operate due to GBR failures or actions.
Amendment 83, in clause 64, page 36, line 11, leave out subsection (3).
This amendment would prevent GBR charging any sum it likes, rather than what is reasonable.
Amendment 82, in clause 64, page 36, line 28, leave out “at any time” and insert
“by giving no less than 12 months’ notice”.
This amendment imposes a duty on GBR to give other operators a minimum 12-month advance notice of changes to the charging scheme.
Amendment 84, in clause 64, page 36, line 34, at end insert—
“(9) Neither the Secretary of State, nor Great British Railways, may take any action to implement any part of the charging scheme until a copy of the scheme has been laid before Parliament for a period of three months.”
This amendment would provide that neither the Secretary of State nor Great British Railways, could take any step to implement any part of the charging scheme until it has been laid before Parliament for three months.
Clause stand part.
Rebecca Smith
Clause 64(1) requires GBR to develop a charging scheme setting out the charges to be paid for access to and use of GBR’s infrastructure, and the extent to which charges may by payable in relation to trains that do not operate, or do not operate in full, despite their use being planned in.
The base assumption is that charges will be set at the costs directly incurred—for example, the wear and tear caused by the service—but subsection (3) provides for a higher charge to be demanded in particular circumstances,
“provided that it does not exceed the amount that Great British Railways considers is the amount that an efficient operator would be able to pay in those circumstances.”
Subsection (4) confirms that GBR can also set a lower charge where it considers that appropriate, for various purposes, including but not limited to encouraging the use of spare capacity and promoting new services. The Subsidy Control Act 2022 would apply to any decision to lower charges under that provision.
GBR will not charge itself for use of infrastructure, despite being an operator as well as the infrastructure manager, but must include in its charging scheme sufficient information on the charges for its passenger services’ access to and use of its infrastructure to explain how charges in the scheme have been calculated. GBR will be able to make changes to its charging framework at any time.
The Opposition believe that the clause is simply terrible. It confirms the worst fears of other rail users, and gives no certainty for business planning. Subsection (3) allows for a higher amount than the actual cost to GBR to be charged in particular circumstances, but those are not defined or explained. If GBR thinks that the operator has the money to pay it, then it is expected to pay—no rationale for the increase is given. The clause allows GBR to set charges above direct cost based on what it considers an efficient operator could afford, which remains a subjective judgment made by a body that is itself a major operator.
Even with the ORR able to substitute its own decision on appeal, the initial charging decision sits entirely with GBR. That creates scope for charges that disadvantage open access operators, unless and until challenged, which is not the level of neutrality expected for an industry-wide charging regime.
Subsection (4)(a) is an oxymoron. Charges could not be assessed unless there were sufficient capacity to run a service, which by definition would mean that there is assessed to be spare capacity. Subsection (5) does not provide open access operators sufficient information to properly assess the fairness of the proposed charges. Subsection (6) allows for a change at any time, and without notice.
It is clearly impossible to run a service without confidence of track-access charges. A devolved, concession, freight, open access or heritage and tour operator could, at the stroke of GBR’s pen, suddenly find its cost base increase significantly. That is not conducive to long-term business planning, and must harm private sector investment in rail services.
Laurence Turner (Birmingham Northfield) (Lab)
I am thinking about the hon. Member’s arguments about clause 64(3). Does she not think that there may be circumstances where higher charges actually help to get private investment into the railways? For example, GBR could agree to fund infrastructure improvements in exchange for an operator paying higher access charges over an agreed period and, through that mechanism, recoup at least some of the costs of that welcome upgrade to the network.
Rebecca Smith
I can appreciate where the hon. Member is coming from. It sounds like a good idea; however, it could still be in the legislation directly, and the illustration he gave still leaves a huge number of questions about what happens if there is more than one user of that bit of infrastructure. Why should the private operator be the one that has to pay for the infrastructure? If anything, there is an issue, which I may come to, about the impact on fares, because ultimately, by the sound of it, GBR is going to have far fewer costs than other operators. In principle, I can see why the hon. Member made that point, but I think it is not clear enough at this stage.
Clause 64(8) allows a right of appeal, but only under judicial review-type provisions, which is no right at all. Any of us who has worked with anyone who ever wanted to get a judicial review knows that it is incredibly difficult. It is also incredibly expensive, so it is certainly not a level playing field.
The industry has rightly been outspoken on clause 64. In evidence to the Transport Committee, the Rail Freight Group stated:
“The Bill sets out the future framework for access charges for freight. In headline terms the charges will be calculated in a similar way to today (costs directly incurred by running the train) which we welcome. However, the Bill provides for extra costs to be levied on freight services
a. Through a mandatory reservation charge for capacity which is booked and then not used (for example, if a customer cancels a train due to poor weather) (Clause 64)
b. Through a general clause 64(3) which allows GBR discretion to charge more if ‘an efficient operator can pay it’. This is a very broad test and far wider than the test in current law ‘if the market can bear it’. This raises the prospect of far higher, and potentially uncapped charges being levied.
Increasing the costs of rail freight will simply make using rail too expensive for customers when compared to road freight, and will reverse modal shift and undermine growth. It is essential that the powers to charge more than the standard charge are strictly limited for GBR.”
The key point there is about reversing modal shift. On the one hand, the Government want to promote modal shift. Indeed, there is a scheme coming in— I mentioned it on Tuesday, but now I cannot remember its name—that will look at different types of transport, and one of the plans is to ensure modal shift. Anything that undermines that is potentially contradictory and a backwards step.
The Transport Committee also heard evidence from Nick Brooks of ALLRAIL, who said:
“I was just going to say something about privately owned investors and privately owned operators, specifically privately owned investors that want to invest in our sector rather than in other sectors—aviation, the road sector, or even completely different sectors. There is a certain risk. There is a commercial risk, of course, and ultimately they are looking for lower fixed costs and higher variable costs. The worry with GBR is this: who determines what the market can bear? Is GBR an independent entity, or not? I think the Bill says it should be GBR itself that determines that, if I am not mistaken.
It is a little bit like another conflict, or potential problem, with track access fees. Who decides the size of the track access fees? If you are a privately owned operator, is it your competitor—GBR—that decides your track access fees? That is a potential cause of worry.”
Lumo and Hull Trains also had similar concerns, which they raised in their written evidence to the Transport Committee:
“A transparent and proportionate charging regime will be critical to ensuring the financial sustainability and competitiveness of the railway. If GBR were able to set and revise access charges without independent oversight (as suggested by clause 64), it could create uncertainty and deter private investment. Independent regulation of charging is therefore vital to maintain investor confidence and ensure fairness between different operators. Open Access operators already make a substantial contribution to the upkeep of the network while receiving no public subsidy. The charges paid by Open Access are calculated independently by ORR to encourage investment, sweat the railway asset and deliver connectivity and the associated economic benefits. It also acts as an additional income stream to Network Rail. These arrangements demonstrate the sector’s willingness to invest and its commitment to supporting the network’s long-term health.
Ensuring that access charges remain proportionate and independently regulated will help reinforce the Government’s objective of crowding in private capital to support network growth. Confidence in a fair charging regime is essential for the continued profitability of private operators. Reinforcing a transparent and proportionate charging system will also help deliver the Government’s wider fiscal priorities by attracting and retaining private investment. By giving investors certainty that network costs are predictable and fairly allocated, the Bill can ensure that private operators continue to play a central role in funding innovation and expanding passenger capacity across the UK.”
Lumo and Hull Trains recommend:
“The updated charging regime must be developed in consultation with private stakeholders, appropriate for the markets being served and regulated with independent oversight from the ORR. This will sustain confidence in a fair and transparent access regime and ensure that private investment continues to play a central role in delivering a successful railway.”
Amendment 83 would prevent GBR from charging any sum it liked without notice. Instead, it would be required to follow the standard pricing structure set out in clause 64(2), based on actual costs incurred as a result of the activity. Does the Minister agree that any serious business case for private investment in our railways will need to have the certainty of fixed costs? How does the clause achieve anything other than the opposite?
Amendment 82 would remove the right of GBR to charge its competitors costs, basically at any time and without notice, on grounds that they have access to more money that they could pay. Instead, it would impose a duty on GBR to give other operators a minimum of 12 months’ notice of changes to the charging scheme, so at least they can react to the change and seek any appeal before the event rather than after it.
Speaking to amendments 82 and 83, the Rail Forum has said:
“We strongly support these amendment, access and other charges should be reasonable and operators should have sufficient warning of changes to be able to plan accordingly.”
The amendments are not just a nice idea being suggested from the Opposition Benches, but something that the industry would like to see as well.
Amendment 84 would provide that neither the Secretary of State nor Great British Railways can take any step to implement any part of the charging scheme until it has been laid before Parliament for three months. Once again, that would put accountability and transparency back into the system—something the Government seem hellbent on ignoring.
The second impact would be to allow affected organisations time to prepare an appeal. Judicial review requires a very short application process of just 12 weeks. This amended clause would help aggrieved parties to prepare a complex challenge in time for a JR timetable. Amendment 84 is more a probing one, so it will be interesting to hear the Minister’s response. The reflection on the judicial review process is particularly important, because we do not want to crowd people out of the opportunity to appeal. Anything he can offer in response would be appreciated.
Amendment 230 would ensure that services are not caught within the charging scheme if they cannot operate due to GBR failures or actions—a case of natural justice. Does the Minister accept that the existing wording of the clause would allow GBR to profit from a cancellation of services caused by GBR’s failure to provide infra-structure? If so, will he explain how that could be a fair result?
Amendment 242 would remove the requirement for GBR to charge in relation to trains that are planned to use GBR infrastructure, but do not operate or do not operate in full. Again, that is in effect a probing amendment, or a making-a-point amendment, as it were. With that, I shall sit down.
Olly Glover
I have a few brief thoughts on what the Conservative spokesperson has said about this clause. On the Liberal Democrat Benches, we feel that a lot of the amendments ask good questions about transparency and about accountability for how the access charging regime will work. We are definitely interested to hear the Minister’s response.
A couple of the Opposition amendments perhaps go a little too far, or at least questions could be asked about them. Amendment 242, on what I am calling phantom paths, addresses an interesting phenomenon in the railway at the moment. Many freight paths are in the timetable, but seldom used; they are reserved by freight operators for a variety of reasons in case they might be used. People in the industry say that they sometimes present problems for optimum timetable development or use of capacity. It will be interesting to hear from both the Minister and, perhaps, the Conservative spokesperson as to how they feel that those phantom paths can be dealt with, absent an ability by GBR to apply access charges to trains that do not run.
Conservative amendment 83 attempts to remove GBR’s ability to charge higher than the normal rate, the likely revenue to be obtained by running train services does not vary significantly based on the type of railway and the type of service concerned. The most extreme example of that is that the typical fare yield for Manchester to Blackburn will obviously be a lot less than for London to Manchester. The concept of GBR applying differential access charges is not necessarily one that I would be inclined to oppose, but the criteria that it uses in doing so needs to be transparent. The amendments that we tabled earlier allude to that. It will be interesting to hear from the Minister how the Government intend for GBR to make that process transparent, particularly given the high judicial review bar for challenging some of those decisions. That way, hopefully, a new system can be created in which everyone might have faith.
Keir Mather
I will briefly turn back to the debate on the previous clauses; because the Opposition spokesperson asked me to provide an example of the motion of consent in general as it relates to timetabling and I was remiss in my duty in not doing so. To give more context, the network code currently sets out the circumstances where train service timings need to be adjusted by a few minutes without requiring specific consent. GBR will follow a very similar process and that is a normal process that industry would expect us to follow.
I now turn to the amendments at hand, all of which seek to make changes to GBR’s charging scheme. I confirm to the hon. Member for South West Devon that the charging regime broadly replicates the one that is in place today. That is intentional, so that all of the charges and discounts referenced will be familiar to industry to achieve a smooth transition to the new framework.
Furthermore, given that GBR will be bound by public law duties, which require fairness, reasonableness and non-discrimination in actions and decision making, there is no reason to think that GBR will behave unreasonably. Rather, when making or amending its charging scheme, GBR will be required to balance the various duties set out in clause 18, which include promoting the interests of passengers, promoting the use of the network for carrying freight and enabling operators to plan the future of their businesses. GBR will also be required to consult with industry through the development of its charging scheme, and will be held to account via a clear route to appeal to the ORR on the scheme’s design and application.
Given that existing competition law and applicable subsidy rules will automatically apply to GBR, GBR will not be able to treat other operators unfairly or start levying excessive charges that would undermine their ability to operate successful, profit-driven services. That will be further supported by the ORR’s continued role as competition regulator for the railway. I hope that gives hon. Members some assurance to begin with.
I now turn to amendment 242, which proposes to remove the provision at clause 64(1)(b) that enables GBR to charge operators for services that do not run as planned. In today’s system, that mechanism is called a reservation charge, and the Bill replicates that for GBR. Importantly, the Bill does not mandate that a reservation charge must be issued in all instances where services do not run. Instead, GBR will have discretion regarding how and when to use it. That is particularly important for taking into consideration different industry operating models, especially freight, which is market driven and therefore has to live with less certainty over the services that it needs to run to serve its customers.
A routine and technical example of when a reservation charge is used today, and likely to be replicated in the future, is one affecting passenger services, not freight. Where a passenger service is allocated to a path that is expected to stop at eight stations but—for reasons of its own making and not GBR’s—it terminates short of its final destination and stops at only seven, it could still be charged as planned for the full service. In addition, with finite capacity on the network it is important that, when passenger operators are granted access, they provide those services they said they were going to run and are disincentivised to simply hold on to capacity.
To use a different example, if an operator consistently failed to run a service in its entirety, it would disadvantage passengers seeking to use that train and other operators that might wish to operate a passenger or freight service on an unused path. It could therefore be charged in full. As I have outlined, the purpose of the measure is to encourage operators to use the capacity that they have been allocated. Therefore, the ability to levy a reservation charge is an extremely useful tool to drive the right behaviours on the network. It ensures that best use is made of capacity and that operators remain accountable for providing the services in the timetable that they agreed to deliver.
The Chair
Just to confirm, the Clerks have checked the point of order raised by Edward Argar about the selection and grouping, and there are no further errors. They apologise for the error.
Ordered, That the debate be now adjourned.—(Nesil Caliskan.)