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The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 3 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 4 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 10 / Noes: 3 - Question accordingly agreed to.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 3 - Question accordingly agreed to.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 5 - Question accordingly agreed to.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 8 / Noes: 3 - Question accordingly agreed to.
The Chair
I remind the Committee that with this we are discussing 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 (South West Devon) (Con)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse. There is not much to say, except that the hon. Member for Didcot and Wantage raised a question about our amendments and what he called phantom paths. I think he may have been referring to ghost trains, as opposed to phantom trains—if you google “phantom trains”, all sorts of weird films come up, and they are far too scary for me to watch. He is not here to disagree with me, but I think he was alluding to the issue of trains running entirely empty through stations where people would have quite liked to get on them.
The point I think we are making with our amendments is more about where issues that it is within Great British Railways’ responsibility to fix mean that services cannot run, and about not believing that the operators, which have no responsibility for the infrastructure, should still be expected to pay a fee if they are not able to run their services. I think we would have been alluding to that, rather than where they are running empty trains. There may well be empty trains as well, but I think we were talking specifically about where GBR had the responsibility—
The Parliamentary Under-Secretary of State for Transport (Keir Mather)
I thank the hon. Lady for giving me an opportunity to piggyback on her response to the Lib Dem spokesperson, the hon. Member for Didcot and Wantage. I want merely to say that, from the Government’s perspective, having one centralised body accountable for access to and use of the railway and for determining best use is a good way to avoid the phantom train scenarios she describes, such as the 7 o’clock service from Manchester Piccadilly to London. I am grateful that she has given me the opportunity to row in behind her on this point.
Rebecca Smith
I thank the Minister for that. Yes, absolutely; I believe our amendments are much more about the infrastructure that GBR has responsibility for and about operators not having to pay if they are un able to operate their services. A natural disaster is probably a bit too extreme, but if, for example, a train is running through to Dawlish and the line gets closed, I think it is fair to suggest that the operator should not have to pay the fees for that train. We will press some of these amendments to a vote for that reason, but I just wanted to clarify that point. Without further ado, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 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.”—(Rebecca Smith.)
This amendment would ensure that services are not caught within the charging scheme if they cannot operate due to GBR failures or actions.
Question put, That the amendment be made.
Edward Morello (West Dorset) (LD)
I beg to move amendment 254, in clause 64, page 36, line 14, at end insert
“and the higher amount does not hinder progress against the Rail freight target set out in section 17.”
The Chair
With this it will be convenient to discuss amendment 255, in clause 64, page 36, line 34, at end insert—
“(8A) Following an appeal made under subsection (8), the ORR may, if it decides that GBR has not dealt fairly with the appellant, direct GBR to revise a scheme.”
This amendment requires that any charge levied by GBR under its charging scheme does not have a detrimental impact on the freight growth target.
Edward Morello
It is a pleasure to serve under your chairship, Mrs Hobhouse. It will escape no one that, in the absence of my hon. Friend the Member for Didcot and Wantage, I have been left with my hand on the wheel. I do not think trains have a wheel, but I am not entirely sure how they work—[Interruption.] They have a stick, yes. However, given that both amendments are in his name and relate to the freight target, I can only assume that they are eminently sensible and that the Government should accept them. If not, we would apparently like to press them to a Division.
Keir Mather
It is, once again, a pleasure to serve under your chairship, Mrs Hobhouse. Amendment 254 would require GBR, when charging above the cost directly incurred—in other words, when charging mark-ups—to consider its target to increase the use of freight. I can reassure the hon. Member for West Dorset immediately that GBR will not be able to raise charges in a way that is not compatible with its statutory duties or targets.
In practice, that means that when developing its own test of affordability, GBR is expected to establish bespoke criteria for divergent market segments operating on the railway, including freight, as Network Rail set out in its discussion document on charging. That allows GBR to design a test that can support its duties, including those under clause 18, and the targets to increase freight under clause 17.
We intend that the provision will operate in a way similar to the “market can bear” test today. GBR will develop its own test of affordability in consultation with the sector, including the Office of Rail and Road, before publishing it. However, as we move away from European law, in which the “market can bear” test is established, and to the Bill, which carries over the same principles, we must ensure that the language in the drafting is fit for purpose for UK statute. That is why the Bill stipulates that GBR will be able to levy mark-ups only if it is affordable to efficient operators. The Bill preserves that fundamental safeguard for operators, but in a form that can be applied more clearly in the UK context.
The test will be published with clear routes of appeal, as a further layer of protection for any operators, including freight, that are subject to charges when using GBR infrastructure. When hearing appeals, the ORR will consider the extent to which GBR has appropriately considered all factors before levying a mark-up. I hope I have reassured the hon. Member for West Dorset that amendment 254 is unnecessary, as the Bill already achieves its intended effect.
Amendment 255 would give the ORR an explicit power, following an appeal against the content of a charging scheme, to direct Great British Railways to revise the scheme in cases where it considers GBR has not dealt fairly with the appellant. However, the amendment is not necessary to achieve that aim. The Bill already provides clear and robust rights of appeal to the ORR in relation to the content of a charging scheme. Those rights are supported by strong and effective remedies where an appeal against GBR is successful, as set out in clause 68.
In the system set out in the Bill, where the ORR upholds an appeal on the content of a charging scheme, it has the power to remit all or part of the provision appealed against to GBR for reconsideration. That means that the ORR can require GBR to make changes to the charging scheme if it was identified during the appeal process that GBR had acted in a discriminatory manner, inconsistently with its statutory duties or in a way deemed procedurally unfair.
The ORR can also give legally binding directions to GBR, which could include setting out what it failed to take account of in the original decision and what it must do to ensure that those matters are properly assessed when reconsidering it. The amendment would therefore introduce powers that are already provided for in clause 68. For those reasons, I urge the hon. Member not to press amendments 254 and 255 to a vote.
Rebecca Smith
Amendment 254 is good in so far as it goes in relation to rail freight, but other rail operators also provide public benefit and should receive a similar level of protection. The Opposition are happy to support the amendment, but we do not think it goes nearly far enough.
Amendment 255 would give the ORR the power to order GBR to revise a charging scheme if it found, on appeal, that GBR had not dealt fairly with the appellant. With the current constraint on appeals, the amendment would make no practical difference. The Government need to go much further by providing a genuine appeals process to assess appeals on their merits, with an independent body, not a direct competitor, taking the key charging decisions.
Keir Mather
I believe that hon. Members on both sides of the Committee have expressed all the points on these amendments, and I have nothing further to add at this stage.
Edward Morello
I heard what the Minister and the Opposition spokesperson said but, because of my long-standing and passionate support for freight targets in the context of charging regimes, I will divide the Committee on the amendment.
Question put, That the amendment be made.
Rebecca Smith
I beg to move amendment 85, in clause 65, page 37, line 15, leave out subsection (3)(b).
This amendment would enable GBR to have to pay penalties or compensation.
The Chair
With this it will be convenient to discuss the following:
Amendment 223, in clause 65, page 37, line 15, after “Railways” insert
“or any operator of a train on Great British Railways infra-structure”.
This amendment clarifies that freight operators should not face penalties for service disruption caused by factors outside their control, such as infrastructure failures or planned engineering works by Great British Railways.
Clause stand part.
Amendment 86, in clause 92, page 53, line 40, at end insert—
“(1A) Section 65 does not come into force until Great British Railways has published the performance scheme and laid it before Parliament.”
This amendment would prevent section 65 from coming into force until GBR has published the performance scheme and laid it before Parliament.
Rebecca Smith
Clause 65 requires GBR to provide and publish a performance scheme that is designed to incentivise GBR, its subsidiaries or other train operators to minimise disruption or delay to other train services or the network. Train operators may be required to pay penalties if they cause disruption, may receive compensation where disruption is caused by a different operator’s operations and may receive bonuses to reward better than planned performance. So far, so good, you might say. However, it does not permit payments by GBR that relate to disruption outside its control.
Laurence Turner (Birmingham Northfield) (Lab)
It is a pleasure to serve under your chairship, Mrs Hobhouse. As in previous sessions, I draw the Committee’s attention to my membership of Unite the union. I will speak briefly on the amendments. I welcome the opportunity to talk about an area of narrowly gauged interest of long-standing, although I hesitate to call it tunnel vision: schedule 4 and schedule 8 compensation for planned and unplanned disruption on the network.
The delay attribution scheme has remained essentially unchanged since privatisation, and the clause is a welcome opportunity to look again at how it works in practice. Attention has been drawn to the fact that, under the present system, approximately 400 people are employed across the rail industry to attribute delays to either operators or Network Rail. That sometimes happens in ways that defy any common-sense interpretation of good value for money, and there have been eye-catching examples of expensive lawyers gathering in a room to argue about whether a dead pheasant or a dead peacock was a small bird or a large one, for the purpose of the scheme. Depending upon that determination, the costs may be picked up by the taxpayer or by private operators, and I think we can all agree that that is nonsense.
I am glad that the Bill, as drafted, retains some degree of compensation scheme. My attention was drawn to the need for such measures recently in my constituency, where there has been a long-standing problem with road surface conditions, including what has become known, infamously, as “Northfield’s big pothole” under the railway bridge that connects Quarry Lane and Coleys Lane. Network Rail pointed out to me that a single bridge strike from a heavy goods vehicle would incur greater compensation costs for just one hour of disruption than the entire cost of resurfacing that stretch of road. Clearly, we need some degree of accountability in the system.
However, the amounts paid out through schedule 8 compensation, which is for unplanned disruption in particular, have been enormous. In theory, these schemes should be self-financing, but for all the attention that is paid to dividend payments and profits in the current railway system, the money that leaves the public part of the railway through these compensation schemes has in some years been in excess of those payments. There is a very good case for these changes.
I am not sure that amendment 85 is entirely necessary or desirable, on the basis that there may well be circumstances in which a private operator, whether freight or open access, is responsible for delays, for example if rolling stock had not been kept in the required condition. It is sensible for there to be some attribution in the system. As subsection (7) sets out, there is a right of appeal to the ORR. This is a sensible clause, and I am not sure that the amendments are necessary.
Rebecca Smith
Does the hon. Member not think our amendments could actually improve the system for GBR? We have talked, in this Committee and in the Select Committee sessions on the Bill, about the real gap in terms of the incentives for GBR to improve its services and improve itself. There is no reason why adding GBR as a body that would have to pay penalties and compensation would not introduce an incentive, in the same way we expect for operators, to ensure that the service provided on the taxpayers’ behalf and using taxpayers’ money is improved. At the end of the day, GBR is paying itself, but our amendments would at least give it an incentive to make sure that it does not need to pay compensation in the first place.
Laurence Turner
If I have understood the hon. Member’s point correctly, the key is openness and transparency. We need some degree of understanding that, if GBR itself is responsible for delays, that information should be recorded so that improvements can be made. I am not convinced that GBR paying money to itself in a legal or quasi-legal process is the best use of public resources.
That transparency is lacking under the current system. The Delay Attribution Board does not publish any records of its proceedings. Some months ago, I made a freedom of information request for the minutes of the board, and the response was that they were too commercially confidential to disclose. Given the vast amounts of public money that are spent through this process at the moment, I think that is a severe limitation of the current system. This is a real opportunity to do things better.
Edward Argar (Melton and Syston) (Con)
I will not get into whether a peacock or a pheasant is a large or small bird—it takes me back to my days as a Health Minister, when we had a debate about whether a scotch egg is a substantial meal in the context of the regulations. However, my hon. Friend the Member for South West Devon made a very valid point: even if the money is going back to GBR, there needs to be some degree of transparency so that it can be seen where the attribution is, whether it is GBR that has caused the problem, and whether it is improving or going backwards. Does the hon. Member agree that, even if actual cash is not transferred in and out, a notional payment or a schedule of payments that would have been paid should be published to give the travelling public transparency as to where the challenges lie and give GBR an incentive to improve its game?
Laurence Turner
I think I agree with at least most of what the right hon. Gentleman says. The issue is whether actual payments are made, but we questioned the noble Lord Hendy in the Transport Committee on this matter, and he agreed that there needs to be some data accountability where there are delays.
I am sorry to detain the Committee on this matter. As is sometimes said, man is born free and everywhere he is in trains—I just wanted to get that one on the record. I thank Committee members for their time.
Keir Mather
How can I top that? I am not going to try.
This group of amendments concerns performance schemes, which, as hon. Members are aware, are designed to improve the performance of the railway network by incentivising operators and infrastructure managers to enhance punctuality, reliability and overall service quality, underpinned by compensation, bonuses and penalties. For example, performance schemes can require operators to pay penalties if their services cause unplanned disruption, or can offer bonuses for better-than-planned performance.
The performance scheme provided for by clause 65 will apply to GBR itself, both in its capacity as a service operator and as the body responsible for maintaining the infrastructure. The clause supports one of the overall goals of the Bill: to dramatically improve service performance for passengers and freight operators, and to make a railway that really works.
I thank hon. Members for their amendments, which I will speak to in turn. Amendment 85 seeks to remove the provision that protects GBR for liability for performance scheme payments or penalties where the disruption is not its fault. To be clear, that provision is not designed to prevent GBR from ever paying penalties or compensation. Clause 65(2) clearly provides for GBR to pay penalties, compensation and bonuses. Where it is at fault for disruption, there is no question but that it must compensate other operators.
GBR will have the flexibility to design a bespoke performance scheme for its network. The Bill is intentionally broad, including at clause 65(3)(b), which does not define what constitutes disruption outside GBR’s control. Instead, GBR will consult the industry on its policy on the extent to which disruption after an unplanned event has occurred, and whether it is or is not outside GBR’s control. It will consider any legal requirements before publishing all agreed terms for transparency.
Edward Argar
The Minister says that GBR will be able to design a bespoke performance regime, but does that not go to the heart of what my hon. Friend the Member for South West Devon highlighted, which is essentially that it will be designing a performance regime against which its own performance will be managed? It gets to set the rules, determine what the parameters are, and then decide whether it meets those criteria. Subsection (7) says:
“A person aggrieved by provision contained in a scheme…may appeal to the ORR.”
Will the ORR have binding powers to make an adjudication, and will GBR be compelled to follow it?
Keir Mather
The right hon. Gentleman pre-empts my later comments about the role of the ORR in this process.
On the principle of whether GBR should be able to design a performance scheme for its own network, that is completely in keeping with the aspiration of the Bill to create a single uniting mind for the railway. We are cognisant of the fact that GBR has a threefold obligation in this process. First, it must create a scheme that it can use to deliver the efficiencies and operational realities of the railway in a way that suits the interests of the travelling public. Secondly, operators that use the service need to be able to ensure that they can have fair service under it. That is why consulting with the industry is so important.
Thirdly, and arguably most importantly, GBR must protect taxpayers’ interests where it is reasonable to do so. A scheme is being created that directs GBR to run the railway in a purposeful way but with robust consultation and enforcement mechanisms, which I will come to in a moment, embedded within it. I believe that strikes the right balance. We are giving GBR control over the system but not allowing it to mark its own homework in every way, as the Opposition might see it. I will go into that in more detail in a moment.
Rebecca Smith
To build on the point that my right hon. Friend the Member for Melton and Syston made, clause 65(3)(b) says that compensation may not be paid by Great British Railways
“in relation to any disruption that is outside its control.”
It strikes me that that relates to what the hon. Member for Birmingham Northfield said happens already: people have to decide what constitutes significant disruption, and what is inside its control. If I were an outside operator looking at this, I would be thinking, “Hang on a minute. Where’s the definition of what is inside GBR’s control?” There is a whole long list of options that I will not even begin to bore the Committee with for what could be said to be outside its control, but where is that conversation? It strikes me that it might be like trying to claim for a bag that was stolen on holiday on insurance—you have to literally prove that you were mugged to get reimbursed. I would be interested in a bit more information on how “outside its control” will be defined.
Keir Mather
That is why the point about designing the scheme in close consultation with industry partners is so important. The hon. Member has read my mind, as I am about to turn to specific instances or potential demarcations with respect to what does or does not constitute being within or outwith GBR’s control.
It is probably important to briefly explain what happens if an unforeseen situation arises and operators believe it is GBR’s fault but GBR disagrees, and the role of the ORR in that process. That brings us back to the intervention from the right hon. Member for Melton and Syston. The Bill will include in the future scheme a clear route to appeal, to protect all parties in instances that are disputed, but the risks will be mitigated by requirements for GBR to clearly publish the details of the performance scheme, including criteria for when GBR would be liable to pay compensation. That goes back to the public law point about transparency and fairness. The ORR, as the independent appeals body, will have a legal obligation to review the situation impartially and advise on appropriate action where necessary. In addition to the ORR, to further mitigate the risk, operators will be able to seek other means of resolution though the Access Disputes Committee where matters relate to a contractual dispute.
We believe that the clause is important, as there is a need to balance rightly protecting operators whose services have been disrupted with protecting taxpayer interest where it is reasonable to do so. For example, in instances of trespassing, we would not expect the exclusion in clause 65(3)(b) to apply, as the disruption that it causes should be within GBR’s gift to mitigate through investment in defences, and GBR would have significant opportunity to influence how quickly services are restored. In such an instance, therefore, we expect that compensation would be payable. However, where disruption follows events in extremis that are clearly not within GBR’s ability to mitigate against or control—for example, an act of terror—we envisage that the exclusion in clause 65(3)(b) might apply.
I reiterate that formulating the scheme in consultation with industry will allow us to flesh out in far greater detail the demarcations, and make sure that private sector operators and rail freight have the surety they need that the scheme has been designed in the right way. The ORR will play a key role in the process in ensuring fairness, acting as the independent appeals body if GBR does not act in line with its duties.
Amendment 223 seeks to ensure that third party operators do not face penalties for disruption outside their control. The Bill stipulates that only GBR is protected from paying penalties or compensation for disruption outside its control, because GBR is the only party that bears responsibility for the operation, maintenance and renewal of its network. There is no responsibility for that placed on third party operators, including freight.
On that basis, we do not see how the concerns raised by the hon. Member for South West Devon that a freight operator could face penalties for, say, infrastructure failures or planned engineering works would arise in practice, other than in extremely unusual circumstances —perhaps where an operator’s faulty train had caused damage to the infrastructure. Such events could only be the responsibility of GBR, as today they are not the responsibility of the infrastructure manager or the operator, so it is GBR that would pay the penalties for such issues.
It is right, therefore, that the Bill pursues a policy that protects the rights of third parties to reasonable compensation when disruption occurs as a result of another party’s actions or inactions, while also mitigating the risk of unjustified costs to the taxpayer when disruption is not reasonably in GBR’s gift to avoid or resolve. I hope the hon. Member will be reassured that the amendment is therefore unnecessary, as we believe the Bill already achieves the intended effect.
Amendment 86 would prevent the performance scheme set out in clause 65 from becoming operational until it has been laid before Parliament. Such provisions for parliamentary scrutiny are a well-trodden path at this stage of the Committee’s proceedings, and we again believe that the amendment would add unnecessary layers of bureaucracy to what is effectively a technical industry process. In reality, the expertise about what specific incentives should be set for different operators on different routes is within the rail industry, and those experts are the ones who need to review and help GBR to develop the performance scheme.
That is why the Bill includes requirements for GBR to consult on its performance scheme and requirements for what GBR must include and consider as part of its design, with clear rights to appeal to the ORR in the event of disputes. The amendment would add little practical value. It would delay the new access regime and the benefits it will bring to passengers.
Clause 65 requires GBR to provide for and publish a performance scheme that is designed to incentivise it, its subsidiaries and other train operators to minimise disruption to other train services and to the network itself. The scheme may include provisions for GBR and other operators to be required to pay penalties for causing disruption, receive compensation for disruption caused and receive bonuses that reward better-than-planned performance. The scheme may not provide for penalties or compensation when one train service causes disruption to another but they are both operated by the same person. The clause also prevents GBR from having to pay penalties or compensation in relation to disruption outside its control.
The clause gives GBR the power to require operators to provide information necessary for the scheme to function and offers no right to compensation or bonuses for parties that do not comply with those rules. The clause allows any person aggrieved by a provision in the scheme or any replacement or revision to it to appeal to the ORR. The clause is vital to create an efficient and reliable railway. It equips GBR to design a scheme that safeguards operators, forces accountability across the network and promotes continuous improvement. I therefore commend it to the Committee.
Question put, That the amendment be made.
The Chair
With this it will be convenient to discuss the following:
Amendment 88, in clause 68, page 38, line 11, leave out subsection (1).
This amendment removes the requirement that appeals may only be made under Judicial Review principles.
Amendment 89, in clause 68, page 38, line 11, leave out from “must” to the end of line 15 and insert—
“determine the appeal on the facts and the law.”
This amendment would enable the ORR to determine appeals on the merits.
Amendment 90, in clause 68, page 38, line 20, leave out paragraph (a) and paragraph (b) and insert—
“(a) remit all or part of the provision appealed against to Great British Railways for reconsideration, or
(b) quash all or part of the decision appealed against and substitute its own decision, as, at its discretion, it sees fit.”
This amendment would allow the ORR, when agreeing an appeal, to remit all or part of the decision appealed against to GBR for reconsideration, or quash all or part of the decision appealed against, as at its discretion it sees fit.
Amendment 91, in clause 68, page 38, line 29, leave out from “question” to end of line 32.
This amendment would allow the ORR to substitute its own decision for that of GBR when allowing appeals, without there needing to have been an error of law.
Amendment 92, in clause 68, page 39, line 8, at end insert “(f) open access operators.”
This amendment would require the Secretary of State to consult open access operators before making regulations about steps that must be taken before an appeal can be brought, to make provision about the procedure and to set time limits and fees for the appeals brought under this Chapter.
Amendment 93, in clause 68, page 39, line 18, at end insert “(f) open access operators”
This amendment would require the ORR to consult open access operators before publishing its document on the practice and procedure for appeals under this Chapter.
Clause 68 stand part.
Keir Mather
Clause 67 provides a route of appeal to the ORR for a person aggrieved by a GBR decision about access, capacity allocation and charging, including decisions made under those schemes. Clause 68 then sets out the principles for how appeals to the ORR will operate and empowers the ORR to issue a document setting out the detailed practice and procedure to be followed. Together the clauses establish the ORR’s reformed and independent appeals role, providing a clear, credible and accessible route of redress against GBR’s access and charging decisions.
Opposition Members have consistently raised the view that basing the appeals role on judicial review principles is not strong enough. However, the rationale for the ORR deciding appeals based on judicial review principles is simple: we do not want the ORR to opine on best use. That is GBR’s job and if the ORR could simply disagree with GBR because it had a different opinion, we would be leaving the system as it is today, with parallel decision makers and unclear accountability. We would not gain the benefits of a body that is truly in charge of rail. That is precisely how we ended up with mistakes like the recent 7 am Manchester service that was set to travel with no passengers on it. The ORR admitted it did not have the adequate information or resource needed to make an informed decision on the operation of that service. That is exactly why we need a consolidated directing mind for the industry that can take decisions confidently and with passengers and freight users at its heart.
Basing the appeals system on judicial review principles ensures that appeals are considered independently and on a recognised basis of fairness, legality and rationality, and without the fragmentation of decision making that plagues the current system. The appeals process will provide a robust accountability framework to ensure the railway delivers for passengers and freight customers. It is not judicial review principles that are weak; perhaps the hon. Member for South West Devon would suggest it is the powers available to the ORR to act on any wrongdoing that are flawed. I will turn to that next.
Edward Argar
Does the Minister not see the challenge that if GBR is the single directing mind, we need to ask how it is held to account for individual decisions that it makes? Where is its accountability to the public, be it through this place or others? Secondly, the Minister talks about judicial review principles. As constituency Members of Parliament, we all know just how high that judicial review bar is when people wish to challenge a planning decision, or something else. It cannot consider the individual merits of the decision, merely how it has been reached and whether due process has been followed. It is also incredibly costly. Is the Minister not concerned that in setting these principles, he is setting that bar at an unattainably high level, rather than striking the appropriate balance between being able to appeal and challenge something, but not unduly burdening the day-to-day decision making of the railways?
Keir Mather
I thank the right hon. Member for that contribution, because he gets to the nub of the principles. GBR will be held accountable through compliance with its duties as set out in legislation, which ensures that it has to have regard to passengers, including passengers with disabilities, and regard to the need to promote rail freight. It also has public law accountability built into it, through its legal obligation to act in a manner that is transparent and fair. The right hon. Member asks a broader question about whether the JR principles threshold is too high. We would argue it is not too high, precisely because of what it unlocks if we get to the stage where an appeal is upheld.
The ORR will have strong powers to dismiss the appeal or remit the decision to GBR for reconsideration, with legally binding directions that GBR cannot ignore. It is right and it is the stated principle both of the policy and of the overall notion of nationalisation that GBR can be a directing mind for the railway and have the power to do so, but there is a strong buttress against it if it is found that it has acted incorrectly as a matter of law.
Rebecca Smith
Clause 66 sets out who GBR must consult before issuing, revising or replacing the access and use policy under clause 59. The ORR and the Scottish and Welsh Ministers must be consulted as well as other persons GBR considers appropriate. Subsection (2) requires GBR to consult the persons it considers appropriate before issuing the infrastructure capacity planning document under clause 60, including any revisions and replacements; before issuing a working timetable under clause 61; and before making, altering or replacing a charging scheme under clause 64 or a performance scheme under clause 65.
Subsection (3) provides that a requirement in this clause for consultation may be satisfied by a consultation before or after the commencement of the clause. There is currently no express requirement to consult existing open access operators.
Clause 67, on appeals against access, charging and performance decisions, provides that a person who is aggrieved may appeal to the ORR against a GBR decision as to their train operations’ access to and use of the infrastructure, or a decision under the charging scheme or performance scheme. That sounds okay, until we realise that it is on judicial review terms, so there is no actual right of appeal at all.
Clause 68, on the appeals procedure, sets out that the ORR, when determining appeals under this chapter, must apply the principles that the High Court would apply on an application for a judicial review, or the principles that the Court of Session would apply in exercise of its supervisory jurisdiction for appeals in Scotland.
Subsections (2) and (3) provide for the ORR to allow an appeal or dismiss it, and, if it allows an appeal, to use the following remedies. For appeals made against the GBR policies, plans, and schemes themselves—under clause 59(6), on access and use; clause 60(6), on infra-structure capacity; clause 64(8), on charging; or clause 65(7), on the performance scheme—the ORR can only require GBR to reconsider the decision.
For appeals made against a specific decision under clause 61(5) or clause 62(7), on the working timetable, or under clause 67, on GBR’s policies, plans and schemes, the ORR can quash the decision that is appealed against. Then, however, all it can do is to send it back to GBR to reconsider, or it may substitute the decision with its own if quashing the decision is on the basis of an error of law and without the error there is only one decision that GBR could have reached.
Clause 68(1) means that because appeals must be assessed using judicial review principles, operators can challenge GBR decisions only on procedural grounds and not on the substance or commercial merits. That means that GBR will be judge and jury in its decisions affecting its direct competition, which is obviously wildly unfair.
Clause 68(3)(a) sets out that even where an appeal succeeds, the ORR can only remit the matter back to GBR for reconsideration, which means that GBR can often reach the same outcome again without revising its reasoning. That offers little to no real corrective power.
Clause 68(4)(b) says that the ORR may substitute its own decision only where there is an error of law and where only one lawful outcome was possible. That is a very high bar and as a result this remedy will be rare.
These concerns have been echoed by the industry. During one of the oral evidence sessions for the Transport Committee, Maggie Simpson of the Rail Freight Group said:
“There are a number of problems with that appeal function. First, it will be incredibly hard to ever get to it. We are told that the appeal will have to meet the standards of a judicial review—illegality, irrationality or procedural unfairness—so there will be a very high bar to meet to even get there. On top of that, the law allows the Secretary of State by regulation to set out some steps you would have to take in advance of going to the ORR. We do not know what those are. There is also a fee, and we do not know what that is. Even getting to the ORR will be very much more difficult than it is today.
If we do get up there, in most cases, the ORR will be able to ask GBR to have another look at its decision. It has another look, and it reaches the same view—so what? Only in a minority of cases can it quash a decision and only if there was an error of law…Passengers are going to get a very powerful watchdog when, conversely, we feel that in freight, we are having those rights of access watered down.”
Steve Montgomery from FirstRail said:
“Considering other large public sector organisations—like GBR is going to be—you have to ask, ‘Why would you not have an independent regulator of it?’ Why is rail going to be different from other large public sector organisations where there are regulators looking at them?”
Nick Brooks from ALLRAIL said:
“A strong independent rail regulator has two roles. The ORR, by the way, is part of the European group of independent rail regulators called IRG. Ideally, those roles are to protect passengers and other parts of the sector from monopolistic behaviour, and to ensure the best use of taxpayer money. Their role is also, in other countries, to ensure competition and non-discriminatory behaviour. We are worried that that might be watered down in this country and needs to be improved still.”
That prompts some questions that I hope the Minister can answer. Why is GBR being set up in such contradiction to its European neighbours? Is there anything that we could have learned? Will the Government reconsider any element of GBR as a result?
These concerns were also set out in the Rail Freight Group’s written evidence to the Transport Committee:
“GBR will by nature be a very powerful monopoly of track and GBR trains, and the overarching changes in the Bill reduce significantly the independent oversight of ORR, leaving the Secretary of State holding GBR to account. By comparison, the ORR currently has a duty to promote the use of the rail network and thus has a track record”—
ha, ha—
“of creating growth by approving new access applications previously rejected by Network Rail. Although we welcome the provisions for freight outlined above, there is still a significant risk that GBR could act in a way which favours its own trains, restricting growth for freight. As such, we believe it is essential that non-GBR operators have an independent appeals function that is powerful, easy to use and able to take action effectively.”
It continued:
“In essence, the provisions in the Bill mean that freight operators and customers have a very limited right of independent appeal against GBR. It is also of note that GBR may replace the current Access Disputes Committee (also independent of Network Rail) who hear lower level timetabling disputes with their own internal process, albeit we do not yet have full details of this.”
I would be interested to hear the Minister’s response to that.
FirstGroup wrote in a similar vein, saying that it was concerned
“about the ORR’s responsibility for track access decisions being transferred to GBR…The Bill removes the ORR’s powers to independently adjudicate on whether applications for access best meet the needs of all railway users. Under Clause 68 the ORR is an appeals body but with no ability to uphold appeals if they are discriminatory or anticompetitive. There need to be more checks and balances to maintain confidence in fair access, independent regulatory oversight and to protect the interests of passengers…As a broader point, independent regulation is vital to all large comparable bodies—consider for example the CQC’s role in healthcare or the Civil Aviation Authority in airlines and airports.”
The pushback against this grossly unfair clause is overwhelming, and the Government can surely no longer turn a deaf ear.
Amendment 88 would remove the requirement that appeals may be made only under judicial review principles. We think that it is an obvious improvement. At the Transport Committee on 7 January, the Department for Transport’s official, Lucy Ryan, stated that the requirement is deliberate:
“The reasoning for the JR threshold is to be absolutely clear that GBR needs to remain the directing mind, able to take decisions about optimising the use of the network.”
That is an insufficient safeguard against monopolistic behaviour by GBR. Large monopolies with structural conflicts of interest need effective decision-making oversight. It cannot be done by the Secretary of State, because this is operational, so it has to be the ORR.
Amendment 89 would enable the ORR to determine appeals on the facts and the law. It builds on amendment 88, and we think it is the only way to create a fair and non-discriminatory process. Amendment 90 would allow the ORR, when agreeing an appeal, either to remit to GBR for reconsideration or to quash and/or substitute its own decision for all or part of the decision appealed against. An independent appellate body applying the rules to GBR and its decisions would not challenge the role of GBR, but make sure that it was applying its rules fairly and correctly.
Amendment 91, which I believe the hon. Member for Didcot and Wantage supports, would allow the ORR to substitute its own decision for that of GBR when allowing appeals, without there needing to have been an error of law, resulting in only one possible outcome. It would remove a ridiculously closely drafted requirement, and it is obviously fair. It is a test to see if the Government actually want a fair and level playing field.
Amendment 92 would require the Secretary of State to consult open access operators before making regulations about steps that must be taken before an appeal can be brought, to make provision about the procedure and to set time limits and fees for the appeals brought under this chapter. Operators clearly have skin in the game, and should be consulted by right.
Amendment 93 would require the ORR to consult open access operators before publishing its document on the practice and procedure for appeals under this chapter. The argument for that is very similar to the one behind amendment 92, which I just set out. Will the Minister stand up for the open access and freight sector, and support our amendments to create a fair appeals process?
Joe Robertson (Isle of Wight East) (Con)
It is a pleasure to serve under your chairship, Mrs Hobhouse. I have a short point to make. The Minister seems to be saying that it is important to restrict an appeals process to the judicial review principles, which is a more restrictive set of criteria by which a body or company can appeal. Otherwise, that might lead to “incoherent decision making”—I think those were his words.
That sentiment and assertion undermines the entire court system of the United Kingdom—save for judicial review applications—which is based on disputes being had in, for example, the county court or the High Court, or another court making a decision, and the possibility of an appeal going upwards all the way to the Supreme Court, depending on the issue. However, nobody would suggest that that leads to an incoherent society or to incoherent contracts, family law, employment law, decision making or anything else.
For some reason, Great British Railways has this special carve-out, such that it can be challenged only through judicial review, because of some notion of incoherence. It seems to me that the entire purpose of that restriction is to prop up Great British Railways and allow it to act in a way that is not really comparable to anything else in the way we deliver public transport in this country. It gives me considerable concern.
Keir Mather
I will respond first to the hon. Member for Isle of Wight East. The point about confusion does not pertain to confusion created through arbitration in the courts on the principles of access decisions as a matter of law. I think that that is fundamental to making sure that GBR works within the boundaries of the legislative framework we have created, as well as, via public law principles, operating in a way that is both fair and transparent. The point about confusion is having two decision-making bodies on what constitutes best use of the network and access to the network. That is where we want to avoid confusion, because that is the system we have inherited, and it does not work for passengers.
The shadow Minister raised a point about fees, and the right hon. Member for Melton and Syston mentioned costs. Any appeals will be made against JR principles and not processes. It is not that each case will be brought before the courts, with the associated costs that that would bring, so I am confident that the costs of appeal would not be a significant factor under the new system as opposed to the old one.
On the matter of European systems, the shadow Minister tests the boundaries of my knowledge of the operation of rail systems overseas. There are systems in Europe in which a body similar to the ORR has too dominant a role in having charge over access and decision making in relation to it. That is not working in the existing system, and that is what we are trying to change through the Bill.
Amendments 88 and 89 seek to remove the requirement that appeals be made on judicial review principles and replace this with a requirement that appeals are determined
“on the facts and the law.”
As I set out in my opening speech, judicial review principles will ensure that the ORR focuses on the legality and fairness of GBR’s decision making, not on retaking the decision. Replacing this with a requirement to determine appeals on the facts and the law instead would convert this to a merits-based system, which would require the ORR to rerun strategic judgments and exercises on best use of the network. That is not the role we intend for the ORR. The framework is designed to provide strong, independent oversight while preserving GBR as the single directing mind.
We have discussed repeatedly in Committee that what is wrong with the railway today is the fact that there is no one decision maker. There has to be just one, or the railway will continue to stagnate. GBR is the body with the expertise to be that decision maker, and the ORR is the body that should check that it has acted fairly and proportionately. Judicial review principles strike the right balance between accountability and effective decision making.
Amendments 90 and 91 would extend the ORR’s powers to substitute its own decision for one of GBR’s. As I have mentioned, the Bill deliberately distinguishes between types of appeals and the powers available to the ORR in each circumstance. For appeals concerning provisions within GBR’s strategic documents, such as the access and use policy, infrastructure capacity plans or its charging and performance schemes, the ORR may remit the provision appealed against to GBR for reconsideration, and may do so with binding directions, but may not substitute its own decision. That is because these are not yes or no decisions—they are not simple decisions—but rather complex and comprehensive policies that govern the railway. It is not appropriate for the ORR to rewrite strategic policy documents, and that is not what regulators are meant to do. The ORR should be checking that GBR has acted consistently with its procedures and policies, not substituting them with its own.
However, for operational decisions, for example about charges for operators or about whether someone should be included in the timetable, the ORR has stronger powers. The ORR may quash all or part of the decision and may substitute its own decision in cases where there has been an error of law and, without the error, there would have been only one decision that Great British Railways could have reached. The amendments would remove these carefully drawn distinctions, potentially allowing the ORR to step beyond its oversight role and into decision making on best use of the network. We cannot have that. The amendments would allow the ORR to make decisions on best use without decisions going back to GBR to correct, removing GBR’s ability to learn from and correct its mistakes, and adding duplication between two decision-making bodies. The Bill already provides robust remedies where an appeal is upheld, including the power to remit with binding directions, even when substitution is not available, which ensures effective redress while preserving GBR as the single directing mind.
Amendments 92 and 93 would require the Secretary of State and the ORR to consult open access operators before publishing either regulations or practice and procedures for appeals under this chapter. The Bill already sets out a clear and proportionate consultation requirement, and the current formulation is deliberate to provide flexibility for the ORR to engage industry and stakeholders, including open access operators, without creating an inflexible statutory list. It may also be helpful to emphasise that the ORR’s appeals role exists precisely to ensure fairness, transparency and lawful decision making for operators, including open access operators.
The ORR has already begun engagement on its approach to developing its appeals process and has published a discussion document setting out its emerging thinking, which is publicly available and open to comment and views from industry and other stakeholders, including open access operators. The work is intended to inform its final appeals process, and there will be a formal consultation once the Bill receives Royal Assent. Open access operators will therefore be able to provide views as part of the consultation without the need for an explicit mention in the Bill. The process already provides a clear and appropriate route for open access operators to have their views heard.
I also note that the Secretary of State regulations relate to process matters only, such as steps that must be taken before an appeal is brought, time limits, and fees. They do not determine access rights or decision making on capacity allocation or charging. It is therefore appropriate that the statutory consultation requirement focuses on bodies with system-wide responsibilities and oversight roles, rather than individual categories of operator.
As with other consultation provisions in the Bill, singling out one category of operator will create a precedent for others to request to be added to the statutory list, and we will risk making the framework overly prescriptive. The current drafting already achieves the right balance, ensuring engagement and maintaining flexibility. For those reasons, I urge the hon. Member for South West Devon not to press the amendments, and commend clauses 67 and 68 to the Committee.
Question put and agreed to.
Clause 67 accordingly ordered to stand part of the Bill.
Clause 68
Appeal procedure
Amendment proposed: 88, in clause 68, page 38, line 11, leave out subsection (1).—(Rebecca Smith.)
This amendment removes the requirement that appeals may only be made under Judicial Review principles.
Question put, That the amendment be made.
Edward Morello
I beg to move amendment 203, in clause 68, page 38, line 35, leave out subsections (6) and (7).
This amendment, along with Amendments 204 and 205, strengthens the role of the ORR, and reduces the role of the Secretary of State, in considering appeals against GBR access decisions.
The Chair
With this it will be convenient to discuss the following:
Amendment 204, in clause 68, page 39, line 10, leave out from “Chapter” to end of line 11.
See explanatory statement for Amendment 203.
Amendment 205, in clause 68, page 39, line 15, leave out paragraphs (b) to (d).
See explanatory statement for Amendment 203.
Edward Morello
Amendments 203 to 205 were tabled by my hon. Friend the Member for Didcot and Wantage. The clause gives the Secretary of State extensive powers to intervene and, ultimately, overrule access decisions made by GBR. As I said in our previous sitting, we must remember that those powers are not just for the current Government, but for all future Governments. The Bill concentrates too much authority in the hands of the Secretary of State, with too little accountability and independent oversight. The amendments would reduce ministerial micromanagement and strengthen the role of the ORR in determining appeals on access decisions. The ORR should be an independent regulator whose job it is to make fair, evidence-based judgments. Access decisions should be governed by transparent regulation, not by political discretion. The amendments would strengthen the role of the ORR, protect the independence of GBR and prevent excessive control by the Secretary of State, especially without any accompanying accountability—something the Government have continued to refuse when the Opposition parties have tabled amendments. However, I hope we will have a sudden volte-face on amendments 203 to 205.
Rebecca Smith
I shall be brief. The amendments would strengthen the role of the ORR and reduce the role of the Secretary of State in considering appeals against GBR access decisions. Without further ado, I will say that we will support all three, should the Liberal Democrats press them to a vote.
Keir Mather
Amendments 203 to 205 seek to do two things: to remove the Secretary of State’s ability to make regulations relating to the appeals process; and to remove the Secretary of State, Scottish Ministers and Welsh Ministers as statutory consultees on the ORR’s appeals procedure. I support the ambition to ensure that the appeals framework works independently and commands confidence across the industry. However, the amendments are not necessary or appropriate to achieve that aim.
The ORR will establish its own appeals process and engage with industry on its development. In fact, it has already published a discussion document seeking views from interested parties on its policy choices. That was published on 3 December and can be found on the ORR’s website. The Secretary of State’s regulation-making powers are intended to provide a safeguard to ensure that the appeals framework operates effectively, and are not expected to play a routine role. The powers may be used only for matters of process—for example, the setting of legally binding time limits for bringing appeals and, if appropriate, providing for the charging of fees.
The powers cannot be used to interfere with the ORR’s independence in deciding and assessing individual appeals, or used to dictate the outcome of any appeal. Other procedural arrangements will be set by the ORR as it develops its appeals process. The power ensures that the framework can be set and adjusted, if required, to maintain effective operation over time while fully preserving the ORR’s independence in determining appeals. The Secretary of State will, of course, be required to consult the ORR, GBR, Scottish and Welsh Ministers and such other persons the Secretary of State considers appropriate before making any regulations under the power.
In a similar vein, when the ORR issues, revises or replaces its appeals practice and procedure, it is important that it must consult GBR, the Secretary of State, Scottish and Welsh Ministers and such other persons it considers appropriate. That ensures coherence across the railway network, particularly where services cross borders. Removing these provisions would reduce flexibility and resilience in the appeals framework without materially strengthening the independence of the ORR’s appeals role. For those reasons, I urge the hon. Member for West Dorset to withdraw the amendment, and not to move amendments 204 and 205.
Edward Morello
I listened to the Minister’s points. I think that the Liberal Democrats have been adamant throughout scrutiny of the Bill that we want to establish clear lines between the ORR, GBR and the Secretary of State in order to limit meddling under any future Government and to protect what this Government are trying to achieve. The Bill needs clear red lines on where Secretary of State power should be, so I will push the amendments to Divisions.
Question put, That the amendment be made.
Keir Mather
I beg to move amendment 175, in clause 69, page 39, line 25, leave out “17(1)” and insert “17”.
This amendment and amendment 176 restrict the power of the Office of Rail and Road to give directions to Great British Railways so that it will apply only to “facility to facility” access contracts.
The Chair
With this it will be convenient to discuss the following:
Government amendments 176 to 183.
Clause stand part.
Clause 70 stand part.
Amendment 146, in clause 71, page 40, line 30, leave out paragraph (a).
This amendment prevents regulations allowing for the early termination of access agreements.
Clause 71 stand part.
Government amendment 186.
New clause 67—Abolition of open access rights—
“Within twelve months beginning on the day on which this Act is passed, the Secretary of State must by regulations made by statutory instrument make provision to—
(a) prevent the granting or renewal of licences for open access passenger services;
(b) where such services cease to operate as a result of paragraph (a), require Great British Railways to operate equivalent services following their cessation.”
Keir Mather
Amendments 175 to 183 and 186 will ensure that GBR can enter into connection contracts with adjacent infrastructure managers and facility owners. A connection contract is a formal agreement that focuses on the physical interface and upkeep of the connection between two rail networks. Connection contracts are important in enabling the smooth passage of trains from GBR’s network to others, such as the Core Valley Lines in Wales. They also allow GBR’s network to be connected to privately owned depots or ports, which will be of importance to freight operators. These technical amendments retain the existing arrangements, enabling GBR and other parties to enter into connection contracts. I therefore urge the Committee to support them.
Edward Morello
I wish to speak in support of amendment 146 tabled by my hon. Friend the Member for Didcot and Wantage. Clause 71 gives the Secretary of State the power to make regulations allowing for the early termination of access agreements. We believe that this creates unnecessary uncertainty for train operators and passengers. Access agreements are detailed, regulated contracts that set out service patterns, responsibilities and costs. They are overseen by the ORR and published on its public register. Amendment 146 would remove ministerial powers to terminate those agreements early, limiting the ability of the Secretary of State to micro- manage GBR.
While I risk sounding like a broken record, as I have said before, these are powers that apply to both the current Government and future one. While I understand the desire for the Secretary of State to have the power to terminate agreements, those powers sit better with the ORR and GBR. If we want stability, investment and reliable services, we need to signal to the market that there will not be political intervention that undermines long-term planning. I hope that the Government will see the sense of this amendment.
Rebecca Smith
Clause 69 amends the Railways Act 1993 to except GBR or a subsidiary of GBR from the sections outlining the ORR’s powers on access and its corresponding duties. That change would prevent the ORR from making access decisions on infrastructure operated by GBR. The clause removes GBR from the normal ORR supervised access regime, giving it a special exemption that no other operator has. Since GBR is both operator and infrastructure manager, we believe that this creates an uneven playing field and risks unfair treatment of competing operators. If the Government insist on the current drafting, they must come clean and admit that their intention is to treat competitors unfairly in comparison, and that they are not in favour of competition and reject private investment as a driver of innovation and improvement on the railway.
Given the destruction of the current independently managed fair and level playing field, it is no surprise that the industry has major concerns. Eurostar’s written evidence to the Transport Committee explains:
“The Railways Bill consolidates strategic and operational authority in Great British Railways. While centralising network management offers efficiency gains, it is essential that ORR’s independent regulatory function is preserved, especially for open access and international services. In future Government will have the overarching interest in the Infrastructure Concession (let to LSPH), the Maintainer Operator (Network Rail) and the largest operator on the route (SET). There needs to be an independent referee to balance these interests with those of open access operators.
ORR provides impartial oversight of track access, station allocation, depot facilities, charging, and timetabling. Its independence provides transparent decision-making and safeguards competition, while giving investors confidence in the long-term stability of services.
Decisions such as the allocation of depot access at Temple Mills demonstrate the importance of ORR in balancing competing demands for constrained resources. Without statutory protection, GBR could constrain competition and impede international service growth. In addition, it could reduce transparency in access allocation.
Eurostar recommends that the Bill explicitly preserves the ORR’s independent role in regulating access, charges, and depot allocation for international services. This statutory protection is essential to provide fair treatment for operators and give certainty for the future of UK international rail services.
In international rail terms, the ORR’s role is more important than ever before, given the recent ruling enabling a new entrant to the market to access Temple Mills depot. The regulator will need to perform a strong, independent and objective role in ruling on cost sharing, compatibility and rolling stock issues.
The ORR can also play a role in track access charges – costs for accessing the London-to-Calais stretch of rail are nine times higher per kilometre than the cost of accessing equivalent infrastructure in Belgium, France or the Netherlands.”
Written evidence to the Transport Committee from Lumo and Hull Trains outlines their concerns:
“The ORR plays an essential role in maintaining a fair, transparent, and competitive rail network. Its independence supports confidence among passengers, freight operators, and private investors. Lumo and Hull Trains believe the Railways Bill should preserve this role to help GBR succeed.
To maintain balance across the system, the ORR must retain meaningful regulatory powers to ensure decisions made by GBR on access and charging are fair, evidence-based, and consistent with the Government’s growth objectives. The current drafting of the Bill, however, limits the ORR’s capacity to intervene proactively, restricting its powers primarily to appeals after decisions have been made.
Enhancing the ORR’s decision-making and enforcement capability would help ensure that GBR’s commercial and operational decisions remain aligned with the wider interests of passengers and the market. This approach would reinforce the Government’s ambition for a collaborative, competitive, and accountable rail system. A strong regulator also provides stability for investors, ensuring that GBR operates within a framework that fosters long-term confidence and fair treatment for all market participants.
While the Government desires to create a ‘directing mind’ in GBR, coordinating rail with a whole network view, for private operators to have confidence in the system there must be appropriate protections guaranteeing fair access and charging. The ORR is well-positioned to perform that role as an essential backstop, but the correct framework must be built around it to enable it to operate as such.”
Finally, Angel Trains also provided written evidence to the Transport Committee:
“Angel Trains believes that the new access framework must provide equitable access to all parts of the railway, whether operators are GBR-led, Open Access, or freight. As a lessor of rolling stock to both GBR-led and Open Access operators we believe parity among operators is crucial and would welcome greater clarity from the Government on how access and charging decisions will be made and prioritised. As an independent regulator, the Office of Rail and Road (ORR) should be responsible for ensuring a level playing field by intervening if concerns are raised that GBR could have taken a discriminatory decision, for example, around preferential access rights and charging for GBR operators over Open Access competitors.
Beyond access arrangements, we would welcome further detail from the Government about how GBR will be held to account. In its current form, GBR possesses a high concentration of power in its role in setting both strategy and delivery. In order to provide adequate scrutiny and accountability, there must be sufficient checks and balances to ensure that financial, economic, and safety objectives are met.
Angel Trains believes that there should be clear divisions between different parts of the rail system to ensure adequate accountability…As outlined above, it is vital that there is a fully independent regulator to hold GBR to account, for which the ORR could be best-placed. Beyond acting as an arbiter on access and charging decisions, the ORR should be empowered to report on GBR’s performance and issue performance improvements notices to GBR, in addition to other regulatory duties. The ORR must maintain a regulatory function to provide fairness and stability for the rail industry, which encourages investment and ensures financial sustainability by creating a level playing field across the sector and eliminating subjectivity from decision-making.”
We therefore seek to leave out clause 69 and will vote against it. This would keep GBR under the normal access regime supervised by the ORR and ensure a fair system. We have no objections to Government amendments 175 to 183 but, as mentioned, we are less happy with clause 69 as a whole.
Clause 70 amends the 2016 regulations to exempt GBR from the provisions of those regulations that would otherwise apply to its infrastructure. The 2016 regulations will continue to apply to other infrastructure managers. We do not object to the clause.
Keir Mather
I thank the shadow Minister and others for their contributions. It is a small point, but the shadow Minister raised international obligations and treaties, and I want to reassure her that infrastructure managed and operated by parties other than GBR, including High Speed 1, will continue to be governed by the existing access and management regulation. There will therefore be no impact on international obligations and treaties. Hopefully, that will instil confidence throughout the rail supply chain as to how seriously we take those obligations.
I will speak first to clauses 69 and 70, before turning to the amendments. Clause 69 amends the Railways Act 1993 to exempt GBR from the ORR’s powers on access and its corresponding duties. In short, the clause prevents the ORR from making access decisions on infrastructure operated by GBR. Amendment of the existing provisions is vital to allow the Government to fulfil their commitment to establish GBR as the directing mind responsible and accountable for making best use of the railway. Retaining the role of the ORR as the decision maker on access is not the answer.
Under the current ORR system, decisions on the timetable are plagued by delays and disagreements between ORR and Network Rail, and require ministerial intervention for timetables to be finalised. As the regulator, the ORR does not have the ability to review the system holistically, create more routes and optimise the overall use of the network—it can only respond to the specific applications that are submitted to it.
If we keep the current system, we will continue to see disruption and delays caused by timetabling problems, and inefficient use of the network that is no one’s best interests. We will continue to see problems, such as trains running without passengers on them, purely because of the systematic issues that govern access and timetabling decisions. Retaining the ORR as the access decision maker would not lead to better performance, and would not benefit passengers. The only way to achieve the high-performing and high-quality railway that this country needs is to put one body—GBR—in charge of the railway and of granting access to it. It is only GBR—not Ministers or the ORR—that will have the level of expertise and the detailed knowledge of the whole railway system that is needed to make the right decisions for passengers, freight users and taxpayers.
Clause 70 makes technical changes to the body of law that currently governs access, to exempt GBR and make some other consequential changes, so that the existing access and management regulations will no longer apply to GBR in relation to its infrastructure. The technical amendments in the clause are necessary to enable GBR to become the single decision maker and directing mind for its infrastructure. The existing regulations will continue to apply for adjacent infrastructure managers, such as Transport for London and Core Valley Lines in south Wales.
Clause 71 provides the Secretary of State with a time-limited power to ensure that contracts can continue to operate effectively, following the establishment of Great British Railways. The Government have made the commitment that, following its establishment, the existing access rights held by operators, known as schedule 5 rights, will be honoured, as will the charges set by the ORR for the remainder of the current control period. The clause does not change those commitments. However, the power is needed to prevent contracts from becoming inoperable because they are reliant on the previous legislative framework in the Railways Act 1993, which will not be applicable once the Bill is enacted.
In a similar way to how the ORR provides notices for contracts today, the Secretary of State will, if necessary, and only as a last resort, use the power to make technical changes to existing contracts, simply to ensure smooth transition to the new access and charging regime under GBR—for example, to account for the establishment of GBR and address the changed roles of the ORR and GBR, so that contracts still operate as they should.
Without those changes, operators with access rights would potentially not be able to provide the services that they have contracts and rights to run, because the contracts will become inoperable. However, recognising the need for reassurance, and to offer certainty for third parties, the Government have also committed publicly to ensuring that operators with existing contracts in scope of needing that power will be engaged with and consulted, to identify inoperable clauses and agree on replacement wording.
Amendment 146 would take away the ability to amend or terminate contracts. However, it is necessary for the clause to be drafted widely, including with reference to termination, in case the best way to effect the technical changes to the contract is to terminate and immediately replace the contract with one that is aligned to the new legislative framework, rather than making numerous technical amendments throughout that would otherwise render the contract unusable or unwieldy. As stated earlier, that will not affect any operators’ schedule 5 rights, nor will it impede the existing charging determination set by the ORR until its natural expiry in April 2029, which the Government have confirmed both publicly and in writing. Not including that provision would be a risk to the smooth transition to the new regime, which the Government are not prepared to risk.
Given all that I have discussed, I urge hon. Members not to press the amendment to a vote.
Amendment 175 agreed to.
Amendments made: 176, in clause 69, page 39, line 26, leave out from “after” to end of line and insert—
“subsection (1) insert—
“(1A) Where the facility owner is Great British Railways, the Office of Rail and Road may give directions under subsection (1) only for the purpose specified in subsection (2)(e).”
See the explanatory statement for amendment 175.
Amendment 177, in clause 69, page 39, line 32, leave out—
“to which this section applies”
and insert—
“of the description specified in subsection (2)(e) unless one of the conditions in paragraphs (a) to (c) of subsection (1) is satisfied; and any such contract is void unless one of those conditions is satisfied.”
This amendment replaces the general restriction on Great British Railways entering into access contracts with one that will apply only to “facility to facility” access contracts.
Amendment 178, in clause 69, page 40, line 1, leave out subsection (4)(c).
This amendment removes the restriction on Great British Railways as a facility owner entering into installation access contracts.
Amendment 179, in clause 69, page 40, line 4, at end insert—
“(4A) In section 21 (model clauses for access contracts), after subsection (5) insert—
‘(6) The powers of the Office of Rail and Road under subsection (5) may not be exercised in relation to an access contract where the facility owner is Great British Railways unless the access contract is of the description specified in section 18(2)(e).’”
This amendment provides for the ORR’s model clauses powers to be exercisable in relation to access contracts entered into by GBR only where the access contract is a “facility to facility” access contract.
Amendment 180, in clause 69, page 40, line 6, leave out “if” and insert “where”.
This amendment and amendment 181 provide for ORR approval to be required for amendment of “facility to facility” access contracts entered into by Great British Railways.
Amendment 181, in clause 69, page 40, line 7, at end insert—
“unless the agreement is an access contract of the description specified in section 18(2)(e)”.
See the explanatory statement for amendment 180.
Amendment 182, in clause 69, page 40, leave out lines 10 to 12 and insert—
“(5A) Directions may not be given under this section in relation to an access agreement where the facility owner or installation owner is Great British Railways unless the agreement is an access contract of the description specified in section 18(2)(e).”
This amendment restricts the ORR’s power to give directions under section 22A of the Railways Act 1993 to the parties to an access agreement in line with the approach taken by the other amendments about access agreements.
Amendment 183, in clause 69, page 40, line 12, at end insert—
“(7) In section 22C (amendment: supplementary), after subsection (1) insert—
‘(1A) Directions may not be given under subsection (1) in relation to an access agreement where the facility owner or installation owner is Great British Railways unless the agreement is an access contract of the description specified in section 18(2)(e).’”—(Keir Mather.)
This amendment restricts the ORR’s power to give directions under section 22C of the Railways Act 1993 to the parties to an access agreement Great British Railways in line with the approach taken by the other amendments about access agreements.
The Chair
I propose that we suspend the meeting for 10 minutes so that everybody can have a comfort break.
Edward Morello
I beg to move amendment 256, in clause 72, page 41, line 38, at end insert—
“(3A) The regulations must not make provision for the Secretary of State to direct operational matters of customer and facility-owner freight sidings and terminals.”
This amendment ensures that the Secretary of State does not exercise powers over operational matters of customer and facility-owner freight sidings and terminals.
The Chair
With this it will be convenient to discuss the following:
Amendment 221, in clause 72, page 42, line 2, leave out from “consult” to end of line and insert
“the Office of Rail and Road and affected facility owners”.
This amendment would require the Secretary of State to consult the ORR and affected facility owners before making regulations under this section.
Amendment 231, in clause 72, page 42, line 4, at end insert—
“(7) Infrastructure, facilities and services not managed by Great British Railways which are used exclusively for the carriage of goods by rail are excluded from the provisions of this section.”
This amendment clarifies that privately funded, freight-only facilities are excluded from regulation under this section.
Clause stand part.
Clause 73 stand part.
Edward Morello
I speak in support of amendment 256, tabled by my hon. Friend the Member for Didcot and Wantage. Clause 72 allows regulations that could give the Secretary of State powers over operational matters in freight sidings and terminals. Amendment 256 makes clear that those operational decisions must not be subject to ministerial direction. The amendment comes directly from the freight industry and reflects clear concerns about unnecessary political interference.
Freight sidings and terminals are operational commercial assets, and their day-to-day management should sit with operators, not with Ministers. As we said in previous sittings, the powers would apply to not just the current but future Governments. At the risk of sounding like a broken record, I should say that the Bill already gives the Secretary of State too much control and too many opportunities for micromanagement with too little accountability over too many areas. Amendment 256 draws a sensible boundary, protects freight operators from meddling, and supports a stable and efficient freight network.
Rebecca Smith
I will speak to clauses 72 and 73, and the grouped amendments. Clause 72 is another controversial clause. It sets out that the Secretary of State may make regulations about the management and operation of non-GBR infrastructure, which means any network, station or track not operated by or on behalf of GBR; about the rights to operate trains that use non-GBR infrastructure; and about competition in the market for the provision and supply of such operations.
Subsection (2)(c) allows the Secretary of State to set access terms and charges for non-GBR infrastructure, overriding commercial negotiation and bypassing the ORR. That cuts directly against the stated principle that the publicly owned operator must not regulate its competitors. It is an extraordinary clause that cuts up contract law and throws it out of the window.
The Rail Freight Group is concerned. It states:
“Clause 72 enables the Secretary of State by regulation to intervene in privately owned rail freight terminals, setting conditions of access and charges amongst other matters. Again, we understand that this is not the intention of the clause (which exists to enable GBR to take over other infrastructure such as HS1, Heathrow Branch or the Core Valley Lines) but nonetheless it is an extant risk to rail freight as presently worded, and we believe freight terminals should be explicitly out of scope for this clause.”
Rebecca Smith
I think he probably would have said it, to be perfectly honest.
Clause 73 marks the end of a very significant chapter in the Bill, with many poorly drafted or simply ill thought through clauses. I am sure the drafting has been done with the greatest attention to detail; it is just the “thought-through-ness” that we are struggling with. But we end on a positive note, with no objections to clause 73.
Keir Mather
I am pleased to speak to this group of provisions, which concludes the scrutiny on the access chapters of the Bill.
Clause 72 provides the Secretary of State with the power to make regulations to amend the Railways (Access, Management and Licensing of Railway Undertakings) Regulations 2016 via the affirmative procedure. The access and management regulations are the existing body of secondary legislation that sets out the rights and obligations of infrastructure managers, train operators and the role of the ORR in relation to access, capacity allocation, access charges and performance. At present, those regulations can be amended only using powers under the Retained EU Law (Revocation and Reform) Act 2023, but those powers will expire on 23 June 2026, which means that, after that date, there will be no means other than an Act of Parliament by which those detailed and technical regulations can be amended.
Great British Railways infrastructure will not be subject to the regulations, as the Bill establishes a new access framework to enable GBR to be the directing mind, which we have discussed over the last few groups. However, alongside Great British Railways there will be a number of rail networks, such as Transport for London, London St Pancras Highspeed and the Core Valley Lines in Wales, that will continue to be subject to the access and management regulations. Those “adjacent infrastructure managers” will therefore not be part of GBR’s access regime. The purpose of the power in clause 72 is to ensure that the legislative framework governing the other infrastructure managers can be updated to address any inconsistencies between networks—to “keep pace” between the two different regulatory regimes. Without this power there may be disruption to the smooth passage of train services across different networks—which the Government have a duty to protect.
For example, the power might be used to secure alignment on the date when a new working timetable must come into effect. The access and management regulations currently stipulate a date in December, but given the risk of weather-related events, staff absences during the Christmas season and the engineering works that usually take place between Christmas and the new year, GBR will likely want to move away from that. If it did, it is not unreasonable to think that other infrastructure managers might want to follow suit to avoid being affected by the same risks and to ensure consistency in the timetable change date. To achieve that, it would be necessary to amend the regulations for the other infrastructure managers who wish to align with the date that GBR chooses in the future. The regulation-making power would enable that simple change to be made without needing an Act of Parliament.
There may also be opportunities for adjacent infrastructure managers to seek further simplifications to the current regulations in a way that meets our ambitions to reduce regulatory burden and support growth, while maintaining a sustainable and predictable framework so that businesses have confidence to plan and invest. The Government consider regulations, rather than primary legislation, as a better way in which to achieve that.
Regulations made under the clause must be subject to the affirmative procedure, ensuring full parliamentary scrutiny. Before exercising the power, the Secretary of State will consult all interested parties, ensuring full transparency, that industry has the chance to comment and that Parliament approves the regulations before any changes can be made. Amendments 256, 221 and 231 all seek to narrow that power in some way.
Amendment 256 would prevent the power from being used to direct operational matters of customer and facility owner freight sidings and terminals; amendment 231 would similarly exclude freight-only facilities. Those amendments are unnecessary, as the purpose of the power is to ensure alignment and remove inconsistencies in the regulatory regimes that will apply to GBR and non-GBR infrastructure and to enable simplifications where they align with the objectives of adjacent infrastructure managers.
Rebecca Smith
The Minister just said that the amendments are completely unnecessary, because the stated concerns are not real, effectively. That does not answer the very real concerns put forward time and again in the Transport Select Committee and in this Committee’s evidence session—the written and oral evidence—by businesses that are experts in the field. They are not reassured by the Bill as it stands. How can the Minister go back and say, “No, we’re right and you’re wrong,” to those experts in the industry?
Keir Mather
I thank the hon. Member for that intervention. I am not arguing that stakeholders are not valid in raising concerns about the issues: they are. I am seeking to ameliorate their concerns by outlining what provisions are in the legislation to offer sufficient scrutiny and ensure that the way in which the process happens offers robust safeguards.
Constraints are built into clause 72 to ensure sufficient oversight, with the Secretary of State consulting persons considered appropriate and making changes in secondary legislation that is subject to the affirmative procedure. That means that legislation will be subject to full public consultation and subsequently debated in both Houses, which reflects the importance of the regulations in providing certainty for business.
I have already said that the Secretary of State will consult all interested parties to ensure that there is full transparency and industry comment. Amendments 256, 221 and 231 would all narrow that power in some way. Amendment 256 would prevent the power from being used to direct operational matters of customer and facility owner freight sidings, and amendment 231 would exclude freight-only facilities. I have already spoken on why some of the principles that lie behind those amendments are unnecessary.
Let us take my example of GBR changing the date when its new working timetable is to take effect. On the basis of the amendments, other infrastructure managers would forever be misaligned with that new timetable change date, even if they wished to align. The Government do not intend to use the power to direct the owners or operators of private freight facilities on operational matters.
I am happy to reassure the Committee that the power cannot be used to bring other infrastructure managers or operators of privately funded facilities into public ownership, as I know how exercised Opposition Committee members have been about that principle. In the consultation, industry broadly supported the ability to make necessary amendments, although it is of course right to raise concerns when they arise. Most sector bodies agree that it will be important to ensure that there are no regulatory barriers to passenger and freight operators crossing between different networks, and that is what the clause seeks to achieve.
Amendment 221 would make the ORR and affected facility owners statutory consultees to the power. That is unnecessary as before exercising the power to make regulations, the Secretary of State is already required to consult all persons they consider appropriate, which would include the ORR and any affected facility owners. If the Secretary of State did not consult such persons, there would be strong grounds to challenge the regulations.
Clause 73 will ensure clarity in how key terms are applied throughout the access chapter of the Bill. It defines “GBR infrastructure”, “GBR passenger service” and “working timetable”—fundamental terms to the operation of GBR. The definition of GBR infrastructure ensures that the new access arrangements developed by GBR apply only where intended. The clause also includes a power to amend the definition, which is necessary to ensure that, as GBR’s network evolves over time, it remains clear to GBR and other infrastructure managers which parts of infrastructure are GBR’s responsibility. The clause is therefore critical to provide clarity and transparency.
Given what I have set out, I hope that hon. Members will not press their amendments. I commend clauses 72 and 73 to the Committee.
Edward Morello
I have nothing further to add, but we would like to press amendment 256 to a Division.
Question put, That the amendment be made.
Rebecca Smith
I beg to move amendment 99, in clause 74, page 42, line 24, after “monitor” insert “and audit”.
This amendment would require the ORR to monitor and audit GBR’s statutory functions.
The Chair
With this it will be convenient to discuss the following:
Amendment 100, in clause 74, page 42, line 29, after “monitoring” insert “and auditing”.
See explanatory statement for Amendment 99.
Amendment 101, in clause 74, page 42, line 30, after “monitoring” insert “and auditing”.
See explanatory statement for Amendment 99.
Amendment 97, in clause 74, page 43, line 5, at end insert—
“including, where reasonably practicable, implementation of recommendations of safety improvements and standards developed through relevant industry bodies”.
This amendment ensures that Great British Railways in furtherance of railway safety actively engages with the industry bodies such as the Rail Safety and Standards Board and implements where reasonably practicable, the cross-sector recommendations of safety improvements and standards emerging from any cross-sector work.
Amendment 222, in clause 74, page 43, line 5, at end insert—
“(d) whether, and the extent to which, Great British Railways is achieving its key performance indicators set out in section [Great British Railways: Key Performance Indicators].”
This amendment requires the Office of Rail and Road to consider Great British Railways’ performance against its KPIs, as set out in NC2. This amendment is consequential on NC2.
Clause stand part.
Rebecca Smith
Clause 74 amends the Railways Act 1993. It gives the ORR a new function to monitor GBR’s delivery of its statutory functions and carry out investigations where appropriate to fulfil that monitoring. In particular, the ORR must consider how and whether GBR is carrying out the activities listed in its approved business plan, how the cost of carrying out those activities compares with the estimates in the business plan, and whether GBR is carrying out railway activities in a way that furthers railway safety. The ORR may advise the Secretary of State in relation to that monitoring function and publish its advice.
Amendments 99 to 101
“would require the ORR to monitor and audit GBR’s statutory functions.”
The amendments address the relationship between GBR and the ORR, making it clear that the ORR remains an independent regulator with powers associated with audit, for example in relation to the release of documents. None of that applies to a woolly duty to monitor. Legally, the term “monitoring” is weak. It does not imply an ability to take action to demand improvement. That is particularly concerning when combined with clause 75, which removes the ORR’s ability to impose a financial penalty in the event of poor performance.
Amendment 97
“ensures that Great British Railways in furtherance of railway safety actively engages with the industry bodies such as the Rail Safety and Standards Board and implements where reasonably practicable, the cross-sector recommendations of safety improvements and standards emerging from any cross-sector work.”
That provides the Office of Rail and Road a clear mechanism to hold Great British Railways to account in safety matters. It also highlights an expectation of relevant industry bodies to recommend improvements to Great British Railways. We will not divide the Committee on amendment 97, but we ask the Government to think about what we are proposing in it. We all want the Bill to make the railways safer, and anything we can do to ensure that that happens will be for the good.
I think we have already debated amendment 98, but I want to put it in context we will vote on it at this point, so I want to mention why it is relevant. It
“would require the ORR to consider whether GBR procuring services from the private sector would be a more efficient use of public funds.”
That echoes previous amendments that we tabled, but we will be dividing on amendment 98 as part of this group, I believe.
Amendment 222
“requires the Office of Rail and Road to consider Great British Railways’ performance against its KPIs, as set out in”
new clause 2. As amendment 222 is consequential on new clause 2, we will not press it to a Division, given that the new clause is likely to be rejected. It is a probing amendment that we wanted on record.
We also have amendment 236, which is not part of the group, but my hon. Friend the Member for Broadland and Fakenham told me not to forget it because we will have a vote on it. Are we debating group 73?
Keir Mather
Me too, Mrs Hobhouse. Thank you for placing such confidence in me; we will see in due course if it is justified.
I thank the shadow Minister for speaking to amendment 222, which would require the ORR to monitor KPIs. My response will be brief, to avoid repeating myself, as the amendment is heavily linked to new clause 2, which we have already debated.
We expect GBR to have KPIs, as I have said before, but the right place for them is in GBR’s integrated business plan, alongside the detail of the activity that GBR will carry out over the five-year funding period. No sensible business would ever set its KPIs in stone, potentially for generations to come.
It is important that the ORR, in its role scrutinising GBR’s proposed business plans and monitoring its delivery of them, is able to assess whether commitments made by GBR are ambitious and realistic. As the independent expert adviser to the Secretary of State, the ORR will have a clear route to influence the formulation of GBR’s KPIs. By keeping them within the business plan, the ORR’s involvement is already ensured by legislation.
Amendment 97 would require the ORR to monitor whether GBR is implementing safety recommendations and standards set by industry bodies. I sympathise with the sentiments behind the amendment. Britain’s railways remain some of the safest in the world, which is why we are maintaining the roles of the statutory bodies in this area—the ORR and the Rail Accident Investigation Branch —and preserving the legal duty on all public bodies, including GBR, to give due regard to the investigation branch safety recommendations addressed to them.
Existing safety legislation already gives the ORR broad powers to monitor GBR’s safety management, including its implementation of investigation branch recommendations, and to take enforcement action if it finds that GBR is not managing safety effectively. The amendment risks confusing or duplicating well-understood roles and responsibilities in relation to the implementation, monitoring and enforcement of safety best practice. I hope I have reassured the hon. Member that this suggestion is already covered.
Amendments 99 to 101 would require the ORR to audit GBR’s statutory functions when undertaking its monitoring role. That is unnecessary, and would distort the clear and distinct roles set out in the Bill for both GBR and the ORR. The Bill retains the ORR’s important role as sector regulator and creates an enhanced monitoring function through which it will monitor GBR’s statutory functions and provide independent advice to the Secretary of State.
The ORR’s role as sector regulator is rightly separate to the role of an approved auditor. The annual accounts of GBR will be audited by the National Audit Office in the usual way. We do not propose to change that effective system, and cannot agree to an amendment that would layer it with unwarranted and inappropriate duplication, given that the ORR will already be monitoring GBR’s delivery of the KPIs within its business plan and GBR’s consideration of its duties when doing this.
Oversight of GBR will be proportionate, risk-based and focused on the outcomes that matter most to users of the railway, taxpayers and the wider public. The ORR will have a crucial part to play in providing this oversight, including by undertaking its enhanced monitoring role in the way it, as the independent regulator, considers appropriate. With that in mind, I urge the hon. Member not to press those amendments.
I commend clause 74 to the Committee. It will provide the ORR with enhanced monitoring powers, in line with its new role in the reformed sector. It will ensure that the ORR can effectively scrutinise GBR and provide independent expert advice for the Secretary of State for Transport and Scottish Ministers on its performance. As set out in the Bill, GBR will be required to produce an integrated business plan that demonstrates how it will deliver its priorities across the breadth of its statutory functions, including passenger services and the management of the GBR network.
Although GBR will report to the Secretary of State on the delivery of the plan, the ORR will be required to monitor the performance of GBR and independently advise the Secretary of State. The clause sets out that the ORR will monitor how GBR exercises its functions, including whether the commitments in GBR’s business plan are being met, how costs and income compare with estimates in that plan, and the extent to which GBR is ensuring safety on the railway. On an ongoing basis, the ORR will be able to escalate concerns to Ministers as it considers necessary, enabling the Secretary of State to make informed decisions in line with her responsibilities as funder of GBR. Given that the Secretary of State is democratically responsible for the billions of pounds of taxpayer subsidy invested in the railway, it is right that she has the final say on how it is used, with proper, comprehensive advice from an expert independent regulator to support her.
To fulfil its new role, the ORR must have the ability to gather information, conduct investigations, and assess whether GBR is fulfilling its statutory functions and business plan commitments. Clause 74 provides that statutory basis. It will allow the ORR, where it deems appropriate, to publish any information or advice it provides to the Secretary of State in connection with this monitoring function. That will ensure that the public can see how GBR is being held to account for its performance and how it is delivering in the interest of its customers, taxpayers and the public.
The policy rationale is clear: the Government are committed to preserving an independent expert adviser within the rail system and are providing the necessary tools for that body to operate and scrutinise GBR effectively. I commend the clause to the Committee.
Rebecca Smith
I have indicated that we want to press amendment 99 to a Division.
Question put, That the amendment be made.
Keir Mather
I beg to move amendment 271, in clause 75, page 43, line 23, at end insert—
“(2A) In section 55 (orders for securing compliance), after subsection (7C) insert—
‘(7D) The Office of Rail and Road may not, by a final or provisional order, require the payment of a sum by Great British Railways.’”
This amendment would ensure that the ORR may not impose a fine on GBR under an order to secure compliance with conditions etc, to align with the amendment to section 57A of the Railways Act 1993 made by clause 75(3) of the Bill.
The Chair
With this it will be convenient to discuss the following:
Amendment 212, in clause 75, page 43, line 24, leave out subsection (3).
This amendment removes the restriction on the ORR to impose fines on GBR for licence breaches.
Clause stand part.
Keir Mather
I will first speak to Government amendment 271 and clause 75 as drafted, which is essential to ensure that the accountability arrangements for GBR reflect its status as a publicly owned body, as well as enshrining the strategic role of Ministers.
The clause will make two changes to functions of the ORR that would otherwise apply to GBR. The first is to prevent the ORR from issuing specific directions to GBR relating to providing, improving or developing railway facilities, such as stations or depots. However, we expect that the GBR licence will include a condition relating to long-term asset management to ensure that the ORR retains oversight of infrastructure in the new system. As Members are aware, GBR’s licence will be subject to formal consultation.
The direction power was originally included to ensure that improvements were made when it is was clearly in the interests of the railway generally, but a railway operator might have no commercial incentive to make them. In the new system, GBR will be incentivised to improve its own infrastructure, and the change in legislation recognises that it is for Ministers, as funders, and GBR itself—not the regulator—to set the strategic direction for GBR.
GBR should then make decisions and improvements as part of its business planning, and the ORR should be able to monitor against the agreed business plan, supported by a licence condition that ensures that it can enforce long-term asset management in case anything goes wrong. If the ORR identifies a failing that constitutes a breach of that condition, and dialogue or early intervention have not proved effective, it will be able to escalate issues to the GBR board, require GBR to create and publish improvement plans and issue an enforcement order, which is a legal instruction that would require GBR to take action to meet its responsibilities.
The second change is to remove the ORR’s power to fine GBR. Imposing financial penalties on a public body would not align with the aims of maximising the benefits of public ownership. It would simply mean recycling public funds between two public bodies, continuing the money-go-round that is pervasive in today’s system. It would also add an administrative burden with only a limited effect on incentivising the right behaviours.
Amendment 271 is a technical amendment to ensure that when the Bill removes the ORR’s power to fine, it refers to all the correct parts of the law, including section 55 of the Railways Act 1993, to achieve that aim. The ORR will retain the ability to issue fines for breaches of licence conditions by non-GBR licence holders where that is an effective tool because those organisations will not be wholly funded by Government money. GBR can still be subject to a financial penalty if it violates health and safety or competition laws, as we are not changing the safety regime that will apply to the railways, and competition law will still apply in full to GBR. I look forward to hearing from hon. Members about amendment 212.
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairship once again, Mrs Hobhouse. Our amendment 212 relates to what the Minister said: it would remove the restriction on the ORR’s ability to impose fines on GBR for licence breaches. I am hoping that we can find some agreement or that the Minister can improve my understanding of the Bill. I entirely agree with him that we do not want wooden dollars—are we still allowed to say that?—sloshing around the system. We do not want fake money, fake economics or fake regulation. That has not been a strength of the rail industry under the current structure.
The Minister said that the ORR would have the powers to tell GBR to do better and to put a legally binding notice on it. Perhaps this is an extreme thought experiment, but what would happen if GBR said, “Thank you very much, ORR, for your legally binding improvement notice, but we’re not interested—we’re not doing it.”? Is the Minister saying that the ORR could then sue GBR? What would happen next? If he covers that in his summing up, I might not move my amendment—I am sure he feels very threatened given how many Divisions we have won so far.
Rebecca Smith
Clause 75 prevents the ORR from issuing directions to GBR relating to providing, improving or developing railway facilities. It also prevents the ORR from imposing a fine on GBR for licence breaches. We think those are both terrible ideas.
The Transport Committee asked Maggie Simpson of the Rail Freight Group:
“What is your view on the ORR’s downgraded power merely to ‘advise’ the Secretary of State on GBR’s performance, rather than having actual powers of enforcement?”
She said:
“I am quite worried about this.”
To the same question, Steve Montgomery from First Rail said:
“Following on from that, the independence element of it—marking your own homework—is a big concern for us. How do we ensure that we do not see a perverse behaviour where GBR looks after its own operations to the detriment of others?”
Nick Brooks from ALLRAIL said:
“I can only echo that. With GBR writing the rules, controlling capacity and being linked to the main operator in the country, there is a structural conflict of interest, unless there is a clear duty of fairness and non-discrimination. I do not know of other European countries that do not have a strong independent rail regulator, across the EU and beyond. To be the judge and the jury at the same time is somewhat worrying.”
Emma Vogelmann, the co-chief executive of Transport for All, told the Transport Committee:
“Our recommendation on the role of the ORR is to retain its independent authority. We are definitely interested to see how that transition of powers, as Ben mentioned, plays out, and how enforceability plays into that.”
For once, the Government need to stop and listen. The sector is speaking with one voice and telling them that this is the wrong approach. The clause needs to be removed in its entirety. It is common for regulators to be able to issue financial penalties to private utility companies that are in breach of their statutory duties. Why should that consumer protection not also be applied to a public body like GBR? Removing clause 75 would restore the ORR as a strong, independent economic regulator.
Government amendment 271
“would ensure that the ORR may not impose a fine on GBR under an order to secure compliance with conditions etc, to align with the amendment to section 57A of the Railways Act 1993 made by clause 75(3) of the Bill.”
The Conservatives are against the whole clause, but, to save time, we will not seek a Division specifically on this amendment—I am sure that everybody will be pleased to hear that. However, as somebody who serves on the Transport Committee and sat through a lot of those evidence sessions, one of the key things that concerned me and some other members of the Committee was the breakdown of the relationship between the ORR and GBR and the weakening of the ORR’s powers. When I heard that evidence, I certainly felt that it was a compelling argument.
Liberal Democrat amendment 212 would remove the restriction on the ORR to impose fines on GBR for licence breaches. That is okay as far as it goes, and we will support the amendment, but we think that it does not quite go far enough. As I am sure Members expect on the basis of what I have just said, we will vote against clause 75 as a whole.
Keir Mather
I thank the hon. Member for Didcot and Wantage for his amendment, which would retain the ORR’s power to fine GBR in the event of a licence breach. He will be pleased to hear that I do not intend to repeat the arguments that I made in my opening remarks. However, as I suspect he knows, I cannot accept his amendment, because in creating the ability for the ORR to fine GBR, it would simply lead to the recycling of public funds, which he so ably outlined as being an issue.
On the subject of licence breaches, the ORR can issue an enforcement order to direct a different outcome from GBR. There is also a point to be made about accountability for GBR’s executives. That kind of relates to the penalties for Network Rail today: the ORR already recognises its public sector status and scales penalties accordingly. The chair and board of GBR will be responsible for ensuring that the CEO has in place robust performance management for senior staff, inherent to which will be not defying the ORR when it has issued legally binding directions. There will be a clear expectation that any significant failures will have a material impact on performance-related pay, and where the failure is sufficient to demand it, an individual should be at risk of dismissal. Put simply, removing the ORR’s power to fine will not cause the executive of GBR to be remiss in their duties.
Although the hon. Member asks me to speculate on potentially extreme cases where GBR could defy the ORR, I believe that, in the round, sufficient safeguards remain in place, with the ORR retaining its existing ability to issue mandatory and legally binding enforcement orders to GBR on matters within the licence; it is only the monetary aspect that is targeted here.
Amendment 271 agreed to.
Question put, That the clause, as amended, stand part of the Bill.
Keir Mather
Clause 76 updates the Office of Rail and Road’s information duties by inserting a new section into the Railways Act 1993 under which the ORR must proactively publish documents and information about key regulatory matters, including licences, access contracts, closures and railway administration orders, in whatever manner and form it considers appropriate. At the same time, the clause removes the ORR’s duty to maintain a formal statutory register under section 72 of the 1993 Act and repurposes that section so that it better reflects modern expectations of transparency, while retaining strong safeguards so that information that would seriously and prejudicially affect individuals, businesses or the wider public interest is not disclosed. The clause is not retrospective: it does not compel the ORR to publish historical material, but it allows it to publish information already held on the existing register where that is appropriate.
The main purpose of clause 77 is to replace the Secretary of State’s duty to keep a statutory register under section 73 of the 1993 Act with a focused duty to publish information, in keeping with the Government’s commitment to ensure appropriate levels of transparency on the railways. Clauses 78 and 79 do the same but for Scottish and Welsh Ministers.
These clauses retain strong protections for individuals, businesses and the wider public interest, making it clear that material that would seriously and prejudicially affect those interests must not be published. They allow Ministers to publish material currently held on the existing register, so that there is no gap in transparency during transition. The clauses deliver a modern, proportionate and more accessible publication regime, in keeping with the Government’s ambitions for a reformed railway.
Rebecca Smith
Clauses 76 to 79 change the current duties on the ORR, the Secretary of State and Scottish and Welsh Ministers to maintain a register, in sections 72 to 73B of the Railways Act 1993, and put them under duties to publish certain information. The ORR must publish documentation relating to licences; access agreements; access contracts, other than those using GBR infrastructure, for which GBR will be responsible; experimental passenger services; closures; and railway administration orders, except where that would affect individual public or commercial interests. The Secretary of State, Scottish Ministers and Welsh Ministers must publish determinations that a closure is a minor modification, and documentation relating to the enforcement of closure restrictions. Each clause contains restrictions about publishing information that would affect individual, public or commercial interests. Each clause also allows for the publication of documentation that was previously contained in the registers.
Clause 77, which is very similar to clause 76 and, indeed, clauses 78 and 79 on the devolved Ministers, amends section 73 of the 1993 Act, on the publication of a register by the Secretary of State, so that they are under duties to publish information—in particular, determinations that a closure is a minor modification and documentation relating to the enforcement of closure restrictions. However, proposed new section 73(5) of the 1993 Act is interesting. It states:
“The Secretary of State may not publish particular information or documents under this section if it appears to the Secretary of State that publication of that information or those documents would be against the public interest or the commercial interests of any person.”
Can the Minister outline under what circumstances not being transparent is not in the public interest? What determines public interest? I would be grateful to hear the methodology in this instance. Further, the only person with commercial interests in the railway will be the guiding hand of the Secretary of State herself, as it is all public money.
I am sure that proposed new subsection (5) is standard practice in statute, but it raises an interesting point about transparency that I ask the Government to spend some time thinking about. Public trust is low—perhaps it is even lower today than it was when my hon. Friend the Member for Broadland and Fakenham wrote this speech—and any part of any Bill that allows the Secretary of State to get away with not publishing information under a perceived public good would look most suspicious indeed. I do think that, in the light of yesterday’s events, my hon. Friend will see the irony in the words that he wrote there.
Clause 77(2) allows publication of anything that was in the register before the Bill’s commencement. What is the timeline for publication, and will the Minister commit to publication? Those queries aside, Members will be pleased to hear that we have tabled no amendments at this time.
Clause 78, which relates to publication of information by Scottish Ministers, mirrors clause 77. As I mentioned, it amends the 1993 Act, and aside from my query about the ability that it provides to not publish information against a perceived public good, we have no objections to the clause—unless it falls outside the devolution settlement, but presumably the Minister can reassure the Committee that it does not.
Clause 79 relates to the powers of Welsh Ministers, which are similar to those enjoyed by Scottish Ministers. The rationale behind allowing Ministers to not publish information over a perceived public good remains interesting to me, but I see no need to revise the clause.
Keir Mather
The intention of these changes is not to reduce transparency, but to modernise what is published and how. The new duty focuses on determinations under the Railways Act 2005 and the exercise of key enforcement and closure powers, which are among the most significant decisions the Secretary of State takes in relation to the railway. Other publication requirements—for example, on designations, directions and guidance, and the long-term rail strategy—are dealt with in other clauses, so the transparency framework should be viewed as a whole, not just through the lens of these changes to the 1993 Act.
The shadow Minister raised an important point about how commercial and public interest protections interact with freedom of information and scrutiny. The clauses preserve a carefully balanced approach that has long existed under the 1993 Act. This is not a wholesale change in how that process works. The Secretary of State must not publish material where it would be against the public interest or commercial interests, or where it would seriously and prejudicially affect individuals or particular bodies. Those protections sit alongside and do not displace the wider legal framework, including freedom of information legislation and parliamentary scrutiny, which of course continues to apply.
Question put and agreed to.
Clause 76 accordingly ordered to stand part of the Bill.
Clauses 77 to 79 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Nesil Caliskan.)