Railways Bill

(Limited Text - Ministerial Extracts only)

Committee stage
Thursday 10th September 2026 Grand Committee

[Lord Moylan (Con)]

My Lords, before I turn to the substance of this group, I would like to say that I received this morning from the Minister, as I imagine other noble Lords have, a letter setting out certain corrections to statements that he made on Tuesday. I have not had the opportunity to study that, but I hope that there will be an opportunity at a later stage in Committee, if necessary, to come back and question the noble Lord on the points made in that letter.

However, I also yesterday received an email from a group calling itself the Association of British Commuters. It referred to the debate that we had on Tuesday concerning what constituted in this context a wholly owned subsidiary of GBR and whether that was consistent with some sort of public/private partnership for the purpose, for example, of developing land. This was not a strange email; it was very coherent, sensible and well written. The thrust of it was that not only did noble Lords on these Benches get it all wrong—if I may say so to my noble friend Lord Lansley; if he has not received the email, I will send it to him—but so did the Minister.

I have two questions before I start on this section. First, has the Minister received this email? If not, I am very happy to send it to him. Secondly, does he expect to return to the Committee at the earliest opportunity to make corrective statements? Clearly, if he has not seen the email, he will not be able to answer the second question, because his officials will not have had the chance to advise him, but he is under an obligation to return at the earliest opportunity if he has something to correct, as he has today—I am giving him that opportunity. When I sit down, I will send him the email. If he tells me at the end that he has not received it, I will very happily send it to him, as I will to my noble friend Lord Lansley.

I turn to the group of amendments that we have been debating. I shall speak to—I shall not read out the numbers—all the amendments that I have tabled in this group, which are quite a lot. I shall also speak briefly on Amendment 27 on behalf of my noble friend Lord Grayling.

These amendments go to the heart of the devolution agenda. None of us is satisfied with what the Bill contains on devolution to local authorities, strategic authorities, regional authorities—whatever they are called. I have been thinking about why none of us is satisfied and what the fundamental flaw of the Bill is in this regard. The answer is that there is no devolution in it. What the Bill does is give those authorities the right to request things from Great British Railways—as I said on Tuesday, I find the phrase “right to request” quite objectionable in a free country, because we all have a right to request things of Ministers as part of our democracy. In other words, they have the right to ask to become customers. If those things are granted to them, they will have those services provided by Great British Railways and they will make payments towards them, if necessary, to justify the carriage of passengers on that particular route. All they have, therefore, is the right to request to become customers. There are no devolved powers in any of this. There is no devolved running of railways, because that would be inconsistent, I suspect, in the Minister’s mind with the single directing brain that is going to be controlling the railways. So there is very little.

The amendments that I have tabled fall into two groups. Two of them relate to devolution in general, and the second group relates to TfL in particular. To start with TfL, I need to start by saying that although it is not a current interest, as many noble Lords in the Room will know, I used to be deputy chairman of TfL and indeed worked closely with the Minister during that time. The Mayor of London has made it clear that he wants further devolution of rail services to TfL. In fact, this is a process that started when I was deputy chairman of TfL and the Minister was commissioner, and very successful it has been. Lines that were, in effect, abandoned became busy commuter routes, with very little investment—just through good management, making the stations attractive and having some new trains. It has been a huge success. The London Overground is one of the huge rail successes that this country has achieved in the past few years—all of it run on a concession model, incidentally, involving the private sector or external train companies of one sort or another.

The Mayor of London wants more of that—that is understandable. I think Londoners want more of that. The Mayor of London now has a high-powered friend in Downing Street. The Prime Minister has said that power has been hoarded in SW1 for too long. He wants power carried to every postcode in the land—et cetera—and the Government will be redistributing power. This Bill does not redistribute power to anybody in local government. So I would hope that the Minister would have changed his mind in recent weeks and would be extremely sympathetic to these amendments.

Amendments 28 to 30 seek to ensure that the Secretary of State remains properly involved in arrangements between GBR and TfL, rather than allowing those relations to be determined solely within GBR. This is the bear in the room again. GBR is going to be so huge. It will make all the decisions. Everybody else is just a taker of decisions by GBR, they are not participating in them.

Amendment 159 seeks to protect existing TfL and London Underground arrangements and would ensure that they could not simply be displaced without proper process and consultation.

Amendment 301 makes the principle even simpler: where GBR is making a decision affecting TfL, it should inform TfL and allow TfL itself to determine whether the decision is sufficiently significant to require consultation. That seems entirely consistent with the Prime Minister’s philosophy. The same principle lies behind Amendments 23 to 25, 156 and 297 in relation to mayors and local government more widely, to which I now turn.

Amendments 23 and 24 would give greater flexibility for railway functions to be exercised locally and for the necessary financial arrangements to flow in either direction. At the moment the Bill allows GBR to collect money from local authorities. Why should it not be the other way round? What if GBR makes a profit on a line? Why should it not pay money to the local authority? Why is everything so one-sided in the Bill?

Amendment 25 would provide an independent route to the ORR where agreement cannot be reached. There is no way in the Bill of resolving disagreements. So let us provide one. Let us have an appeal to an independent ORR. It is not that I think the ORR is tremendous, but it is currently the only available appeal body. If the Minister says he is happy to have an appeal but would like a different structure, we would be open to discussing that, but let us have an appeal route so that disagreements can be resolved independently.

Amendment 156 would allow mayoral and combined authorities to procure local passenger services through concession agreements, including using private operators where that offers the best solution. Currently they are limited to using GBR to provide the services. What if GBR is no good? I know that GBR is going to be managed beautifully and nothing will ever go wrong in the utopian vision we are looking forward to, but what if it is not actually very good? What if people are constantly on strike? What if the management is sloppy? Why should you not be able to turn to a private train operator to manage your local service? This is not a question of track access or timetables, because they have been agreed, but why would you have to use GBR to provide these services if you are genuinely enjoying devolution?

Amendment 297 would require GBR to notify a mayoral combined authority before taking a relevant decision. I accept the point made by my noble friend Lord Lansley that that terminology might be improved, but I am not entering into that issue at the moment. That would allow the authority itself to judge whether the decision is sufficiently significant to require consultation. Why should GBR be the body to decide whether something should be consulted on, when it is the local authority that has the knowledge of how sensitive it might be with the local communities that could benefit from consultation?

These amendments test how far the Government intend to follow through on the Prime Minister’s policies. Do they genuinely trust mayors and local authorities to shape local services? Do they support further rail devolution to London where TfL can demonstrate that it would improve services? Will they ensure that GBR becomes a partner in genuine devolution—not simply acquiring local authority customers—rather than just a national body through which decisions are centralised? Given the new Prime Minister’s stated agenda, I hope we will see a different approach from the Minister for the first time.

The amendments tabled by the noble Lords, Lord Blunkett and Lord Berkeley, and my noble friends Lord Lansley and Lord Grayling are at the heart of many of the issues that I have raised in this group. They also sit squarely with what the Prime Minister himself advocated when he was Mayor of Greater Manchester—a song that he has continued to sing, on the whole, since he became Prime Minister, about the importance of devolving power, giving local leaders greater control over transport and allowing places to shape growth around their own priorities. It is time for the Minister to step up, get real and get with the swing of where, we are told, Burnham’s Britain is going.

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

My Lords, before we move on, I return briefly to a point raised in Committee on Tuesday on Amendment 146, regarding the long-term rail strategy and its relationship with devolved railway responsibilities. I was less than clear on this issue when we discussed it previously and thought it would be helpful to make a point of order to provide clarity and correct the record.

For clarity, the Government consider that Clause 15 is correctly drafted and accurately reflects the devolution settlement. The Secretary of State’s long-term rail strategy will cover Great Britain. It will cover all of England and Wales and will address the railway in Scotland with regard to reserved matters only. Reserved matters include issues such as cross-border services, technical standards and railway safety and security. Scottish Ministers have devolved responsibility for matters such as Scottish passenger services and Scottish funded infrastructure. Accordingly, Clause 15(3) prevents the long-term rail strategy making provisions about functions of the Scottish Ministers, who will cover those matters in their own strategy.

I hope that explanation is helpful. The key point is that there is no inconsistency between describing the strategy as Great Britain-wide and providing an appropriate carve-out for devolved Scottish functions. I also reassure noble Lords—

[Lord Lansley (Con)]

I have a quick question. Why, then, is there not a similar provision saying that the rail strategy may not make provision about the functions of Welsh Ministers?

[Lord Hendy of Richmond Hill (Lab)]

The answer is that the infrastructure arrangements in Wales are significantly different and Wales does not have its own settlement in that respect. I reassure noble Lords that engagement between the Government and Scottish and Welsh Ministers on both strategies is productive and will continue until their publication. I am grateful to noble Lords who raised this issue, providing an opportunity to place my clarification on the record.

In respect of the second point made by the noble Lord, Lord Moylan, about an email from—

[Lord Harper (Con)]

Before the Minister concludes, may I respond, since I was one of the Members who raised this issue? I thank him for what he has just said and for the very helpful letter that he sent, to which the noble Lord, Lord Moylan, referred. I took the time to study it this morning, since I was the one who raised the issue, and I am grateful to him for making it clear that “strategy” means something slightly different north of the border, in Scotland, because of the role of Scottish Ministers. Again, it is an asymmetrical position with Wales, as my noble friend Lord Lansley, has just highlighted, because in Wales Welsh Ministers do not have the responsibility. That is very helpful, and I am grateful for the Minister’s clarification that the Government do not have to come back with amendments to fix the Bill.

[Lord Hendy of Richmond Hill (Lab)]

I am grateful to the noble Lord. We thought that we had been saved by the bell, but we were not, so I thought that it was right to put it right.

I should say to the noble Lord, Lord Moylan, that to my knowledge I do not have an email from the Association of British Commuters, although I do get several emails a day. If he sends it to me, I shall talk to officials about what it suggests. I think that is the most I can say.

[Lord Moylan (Con)]

It is on its way in a matter of seconds.

[Lord Hendy of Richmond Hill (Lab)]

On group 1, of course this matter is of significance to this Government, with a new Prime Minister, and I firmly believe that the Bill already empowers mayors in local areas. I am clear that Great British Railways will not work unless it works for and with mayors and local communities.

In answer to the noble Baroness, Lady Pidgeon, who quoted me, I stand by what is said. This is absolutely not a tick-box exercise.

I turn to Amendment 22A in the name of my noble friend Lord Blunkett, to which the noble Baroness, Lady Pidgeon, has kindly spoken today. I absolutely agree with him and with the noble Baroness that the partnership approach that the Bill sets out must be effective. GBR must engage with partnership offers seriously, and the bar for GBR to reject a partnership must be exceptionally high. As we are aligned on the intent behind the amendment, which she described as the principal amendment in this group as it covers all circumstances, I commit to taking it away and I shall see what can be done after this debate.

I turn to Amendments 147 and 156. The Government absolutely support further rail devolution where it is in the interests of passengers and the wider rail network. That is why the Bill already provides a route for passenger rail services to be devolved through exemption from designation by the Secretary of State in Clause 28. Where services are devolved, mayors already have flexibility to choose their approach to securing passenger services and may secure them via a concession contract, including to the private sector, if they so wish. The Bill does not change that. TFL, as the noble Lord, Lord Moylan, describes, operates on precisely this basis. There is therefore no need to duplicate the existing devolution provision in the Bill, which already achieves that intent in full.

On Amendments 23 and 24, Clause 5 is already intended to support local commissioning arrangements: it enables mayors to contribute funding where they wish to secure services or improvements that reflect local priorities and go beyond the national railway offer. This gives local leaders a mechanism to invest in additional rail outcomes for their area where they choose to do so, providing the local input that we know is so important for enhancing our communities. The details of these arrangements, including revenue-sharing options, will be agreed separately from legislation via collaborative partnerships between GBR and mayors. Work on developing this model has already begun, using Greater Manchester as a pathfinder—I am going to meet the new mayor of Greater Manchester tomorrow.

The Government absolutely support greater local influence over rail services, but allowing mayors to run rail services is a financially significant decision, with safety and public interest impacts; that is why it is right that the current process in the Bill for devolving services to local leaders remains the route that is used for this. That route is well understood, familiar to industry and proven effective. Allowing mayors to run GBR services outside of the usual process is not necessary and does not better serve local communities.

I turn to Amendments 26, 64, 304 and 333. The Bill is focused on mayoral strategic authorities to reflect their growth across England and the role that mayors can play to convene local partners and tackle regional challenges. Mayors have the most far-reaching and flexible powers; therefore, this level of authority is of the appropriate scale and capability to integrate rail with wider public transport, enabling them to engage effectively with Great British Railways.

Furthermore, as outlined in the Cabinet statement Rewiring the State, published in July, the Government consider that mayors who are directly accountable to the residents who elect them can provide the best governance for their communities. As a result, the suite of powers available to areas with mayors will be commensurately greater, recognising the role that they play as leaders in their regions. However, this is not to say that other levels of local government will be excluded from engagement with Great British Railways, and I take the point that it is important that no local authority is left out, as indeed the Prime Minister said a few days ago. The plan is for all tiers of local government to benefit from local GBR business units, and some existing authorities have collaborated well with the existing structure, including Devon, with several new stations, and, recently, Cornwall, with the Mid Cornwall Metro.

Our approach does not intend to exclude anyone from working with the railway, but we think it is sensible to use mayors as a focal point for powers, responsibilities and representation in their local areas. That said, I am happy to see if there is anything we can do outside the Bill to reassure foundation authorities that their views will be properly considered, and I will reflect on that further.

[Lord Lansley (Con)]

I thank the Minister for his response to my amendments. To avoid us further returning to this issue, I should say that there are other amendments to exactly the same purpose that I did not notice had not been grouped together, in Clauses 16 and 83 and elsewhere in the Bill, so I hope we will treat this as the one debate about that issue.

The route ahead, if I may say so to the Minister, is a very straightforward one: relevant local government bodies—for the purpose of information sharing, taking advice and co-ordinating with transport strategies—should be England wide, and therefore it should be all strategic authorities. If the Minister and the Government, understandably, want to go further and have a category of strategic authorities with mayors which have the ability to go further in terms of working with GBR and taking responsibilities, the route would be to put in something for that purpose in relation to established mayoral strategic authorities, which clearly have the financial basis on which to do that. Distinguishing between those two would make this work much more effectively.

[Lord Hendy of Richmond Hill (Lab)]

I am grateful to the noble Lord. I am particularly grateful for his suggestion that we debate this only once. I have listened carefully to what he has just said and I will reflect on it, as I said I would do on the rest of the subject. I am grateful to him for that, and indeed the Hansard record is useful in being able to cross-reference it further to this Committee session.

I turn to the proposals on Transport for London. Amendment 27 seeks to provide all mayoral authorities with the same powers as TfL. Of course, the Government support rail devolution where it can deliver better outcomes for passengers and local communities, but those arrangements should reflect the circumstances, capabilities and aspirations of individual areas rather than applying a single model everywhere. The TfL model has a distinct legislative and governance framework developed over many years, and it would not be appropriate to automatically confer all existing or future TfL powers on every mayoral combined authority. The other point worth noting is that the geography of London includes several complete railway services, unlike much of the geography of the rest of the combined authorities in England.

The Government have already published guidance on applications for rail devolution and, as I have already said, the Bill includes a route to devolved rail services for those seeking that in Clause 28. Therefore, should mayoral authorities want to pursue full devolution of certain services, as TfL has, they are welcome to use those established routes to seek it. Devolution arrangements should be considered on their merits, taking account of local circumstances and the outcome sought for passengers. A one-size-fits-all approach will not serve all local communities.

On Amendments 28 to 30, Clause 6 of the Bill requires GBR and TfL to co-operate on railway matters, including co-ordinating passenger services and sharing relevant information to help to integrate rail with the wider London network. As the directing mind for the railway, GBR will be responsible for those operational matters and how they will be discharged when collaborating with TfL. I do not believe that expanding the Secretary of State’s role further would reflect that clear division of responsibilities, but I can reassure the noble Lord that, via amendments that the Government brought in on Report in the Commons, the Secretary of State is still enabled to enter into arrangements with TfL to support the future devolution of rail services where that is needed. The Government believe that this approach is sufficient to support TfL to integrate and co-operate with the wider rail network.

On Amendment 159, I reassure the noble Lord that the Government are supportive of the success TfL has made of rail devolution, and existing devolved arrangements will continue. To that end, existing exemption orders in relation to TfL concession services do not have an expiry date. The Bill also contains safeguards governing access decisions, including duties on GBR, a requirement to have regard to the Mayor of London’s transport strategy, a requirement for GBR and TfL to co-operate in relation to all services, and an independent route of appeal to the ORR.

Likewise, Amendment 25 seeks to enable mayors to appeal access decisions if they affect services in their area. Clauses 83 to 86 already allow GBR to request advice from mayoral authorities about services in their area, require it to consult them if a decision will significantly affect their area and, if a decision will affect the local area, GBR will work with local partners weighing up trade-offs between local and national network priorities. This enables issues to be resolved through collaboration rather than requiring relevant local government bodies to challenge GBR through the access appeals regime. Despite this, all local authorities are able to appeal an access decision they are aggrieved by, under provisions already in the Bill.

On Amendments 297 to 301, Clause 83 already requires GBR to consult mayoral authorities where a relevant decision would significantly affect their local area, including the interests of the local economy or of people living in, working in or visiting the area. The amendments would therefore add little practical benefit beyond further bureaucracy, slowing down decision-making, while mayors would have to review hundreds of decisions, often irrelevant to them, before any progress can be made.

On Amendments 298 to 301, I reassure my noble friend that the Bill is already clear, through Clause 83, that GBR will have to consult mayoral authorities on its access and charging decisions where these relate to a GBR railway passenger service in the area and would significantly affect the local region.

Alongside these legislative commitments, it is the Government’s clear intention for GBR to work in partnership with mayoral authorities. I am determined that GBR will absolutely be a proactive partner of those authorities, maximising the benefits that the Bill can bring to local areas. As a result, I hope noble Lords are reassured that the Government share their ambitions on local devolution and I ask the noble Baroness to withdraw her amendment.

[Lord Berkeley (Lab)]

My Lords, before the Minister sits down, I am very grateful for his response to my amendments, but on the relationships between local authorities and central government, we already have an example in the south-west—and, I think, in south Wales—where the train operators and the local authorities have come together and developed a new wifi system so that you can get wifi on the trains, which is quite important these days. They installed it in one train and it worked beautifully, and many of us have tried it. They asked the Department for Transport whether they, as the regional authority, could take over the procurement of improved wifi on all the trains on the GWR network and have it done more quickly. This was refused by the Department for Transport, which said that only it is capable of doing a procurement exercise on something as important as wifi on trains. Now, I hope that is just a one-off—my noble friend is aware of it—and that in the new GBR set-up, there will be more flexibility as to who does what.

[Lord Hendy of Richmond Hill (Lab)]

In quick answer to my noble friend, the only reason it should be procured centrally is because improved wifi is needed on every railway service in Britain. Therefore, the department is determined to deliver it on all those services, and fragmenting the procurement would lead only to increased cost and probably significant delay elsewhere. I have absolutely no intention of getting in the way of wifi for the south-west, I would just like it to be delivered in other parts of Britain at the same time.

[Lord Moylan (Con)]

My Lords, I think that illustrates a point. The Minister talks of devolution, but everything is flowing one way, so I will come back to this point. It arose in relation to Scotland—and, I think, also Wales—on Tuesday. GBR will be obliged to consult with local authorities on matters of significance. Significant is the word. But GBR will decide what is significant. Amendments I tabled that would allow the local area, or, in the case of Scotland, Scottish Ministers, to decide what is significant for them were brushed aside on the grounds that it would be far too difficult, they would have to review hundreds of decisions and could not possibly do that.

Of course, GBR has to review hundreds of decisions to decide whether they are significant. In local authority terms, one picks out very quickly what the significant decisions are because one has the local knowledge of what will cause a terrible fuss, which GBR does not have. Does the Minister see that the Bill cannot survive claiming a devolution mandate on the basis of this mentality, which keeps coming back? The Minister wants to be a proactive partner but, given GBR, I find that a rather terrifying thing, because it suggests that the other partner will be managed the whole time by GBR; then, at the end of the process, it will think it had a successful partnership. It is the wrong mentality, and it has to change.

[Lord Hendy of Richmond Hill (Lab)]

I think the noble Lord is in a different place in his imagination of this. These proposals will generally originate with GBR. Its structure, which I described on the first day in Committee, will be organised locally and regionally and so it will know how those proposals are going to affect local communities.

There will be timetable changes, station improvements and infrastructure improvements. It is much easier for GBR to identify those in relation to the local and combined authorities that it deals with than it would be for them to sift through what, sadly in many cases, is railwayese in describing what is going on. I do not agree with the noble Lord. I believe this will work and that it will be a genuine partnership with those authorities.

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[Lord Moylan (Con)]

My Lords, I shall speak to Amendment 37 in my name, which is a probing amendment. It would limit the power of the Scottish Ministers to issue directions to GBR to circumstances where a KPI has been missed or performance has not been up to snuff.

I do not advance that because I think it is an appropriate thing to put in the Bill; it is a question of probing when the Government think the powers should be used, because it is not clear. We are meant to have a single directing mind—GBR is meant to be the single directing mind—but, as I said on Tuesday, we have several other directing minds here, too. One of them is the Secretary of State, who can issue directions—after all, directions are exactly what a directing mind would be expected to produce—but, now, we also have the Scottish Ministers issuing directions, and it is not absolutely clear that they cannot overturn the directions of the Secretary of State. I want to know what the powers can be used for, how clashes and contradictions can be avoided, and how all this is coherent with the Minister’s claim that he is creating a single directing mind in the shape of Great British Railways.

I wish to comment briefly on the other amendments in this group. My noble friend Lord Grayling has tabled Amendments 34 to 36, to which I have added my name. It is an important constitutional principle that directions issued by the Secretary of State are not only published but laid before Parliament. The Minister will say, “You can’t possibly expect MPs to read these things. They haven’t got time. They might be full of railwayese. What is the possible advantage of putting them in front of MPs?”, but I think that MPs and Peers would value having these important directions put before them so that the Secretary of State can be held accountable for his or her actions in the management of the railways.

My noble friend Lord Lansley’s Amendments 32 and 33 are also entirely reasonable. Where relevant functions have been delegated and the Secretary of State proposes to give GBR directions affecting infrastructure, capacity, timetables, charging or performance in Scotland or Wales, surely it is right that the Scottish or Welsh Ministers are consulted.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I am grateful to noble Lords for their contributions to this group.

On Amendments 32 and 33, tabled by the noble Lord, Lord Lansley, access to railway infrastructure is a reserved matter. It is important that access and timetabling decisions make sense across the entire rail network; therefore, there must be one central decision-maker, to avoid fragmented and disparate decision-making, which increases delays, cancellations and disruption. However, GBR must consult Scottish and Welsh Ministers before issuing, revising or replacing its access and use policy. It must consult them on other decisions if those decisions may affect their interests, and must take into account their transport plans when making access decisions. There are therefore already adequate safeguards for devolved Governments in relation to the access regime.

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[Lord Moylan (Con)]

On my Amendment 37, if the Minister insists on responding solely in the literal sense to explicitly probing amendments—seeking in this case to work out how a conflict in directions between Scottish Ministers and the Secretary of State, for example, might be addressed—all he does is encourage further amendments to be tabled to the Bill to bring the subject back so that it can be debated. One has to keep finding wording that will make that happen. I genuinely would like to know how he sees these multiple direct laws, producing directions, operating together. Do they collaborate, what happens in the case of contradictions, and so forth? These are questions to which Parliament is entitled to an answer.

[Lord Hendy of Richmond Hill (Lab)]

I believe I did answer the noble Lord: the memoranda of understanding between Scottish Ministers and this Government, and between Welsh Ministers and this Government, set out the processes by which these things will be co-ordinated. Were there to be any real difficulty in the circumstances he is describing, we would not have been able to get as far as we did in drafting the MoUs, which we have done, and in the agreement of Scottish and Welsh Ministers to the provisions of it.

[Lord Lansley (Con)]

We are grateful to the Minister for his explanations—for my part, on Amendments 32 and 33. The Minister explained why the Bill says that, for reason of reserve powers, the consent of Scottish or Welsh Ministers is not required. This is an opportunity to make it clear that, if we were in the exceptional situation of the Secretary of State issuing directions that impacted in Scotland or Wales, it might be reasonable that the Secretary of State would consult Scottish or Welsh Ministers. I did not hear the Minister say that such a consultation would not take place so, on that basis, I am happy to withdraw Amendment 32.

--- Later in debate ---

[Lord Reay (Con)]

My Lords, I thank my noble friends Lord Evans of Guisborough, Lord Lansley and Lord Grayling for their amendments in this group. I will address Amendments 41, 42 and 44 first.

The Government have repeatedly emphasised the importance of independent regulation under the new system. They tell us that the ORR will remain an independent and expert regulator, while describing the new Passengers’ Council as a powerful new voice for passengers. These amendments ask how much power these bodies will actually have. Under the Bill, the Secretary of State may modify GBR’s licence after consulting the ORR and, where the changes concern its functions, the Passengers’ Council.

However, consultation is not agreement. The licence is fundamental to how GBR operates and to the conditions against which the ORR will ultimately regulate and enforce its performance. If the ORR is to be the robust and independent regulator that the Government say it will be, why can the Secretary of State alter that licence without its agreement?

The same question applies to the Passengers’ Council. The Government describe it as a powerful new voice, but the Bill requires only consultation. There is no express requirement in this provision for the Secretary of State to have regard to the council’s consultation response. The Secretary of State must subsequently consider representations or objections made during the formal notice period, but that is not the same as giving the passenger watchdog a meaningful role in agreeing changes that may directly affect passenger interests.

I turn to Amendment 46, tabled by my noble friend Lord Grayling. Under the Bill, the ORR may grant a licence to a non-GBR operator only if the Secretary of State consents or if the licence falls within a general authority previously given by the Secretary of State. As my noble friend Lord Harper asks, why is that ministerial veto necessary? If the ORR—the independent regulator that the Government repeatedly tell us will remain robust and expert—has considered an application and concluded that a non-GBR operator satisfies the relevant requirements, why should the Secretary of State have the final trump card?

If the Government genuinely want an independent regulator and less day-to-day political interference in the operation of the railway, surely licensing decisions of this kind should rest with the regulator. I would therefore be grateful if the Minister could explain in what circumstances the Government envisage the Secretary of State refusing consent to a licence that the ORR considers should be granted and why that power remains necessary.

Amendment 45, tabled by my noble friend Lord Lansley, seems entirely reasonable. Where a GBR licence concerns railway assets located in Scotland or Wales, I see no good reason why the relevant Scottish or Welsh Ministers should not be consulted.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I am grateful to hear from noble Lords on this group, and it is a special pleasure to hear from the noble Lord, Lord Reay.

Amendments 38 and 39 would undermine one of the fundamental principles that the Bill seeks to establish. The Secretary of State will set the overall strategic direction for GBR, and the Bill provides her with the sole ability to issue GBR’s licence. This reflects that it is the Secretary of State, not the ORR or the passenger watchdog, who is ultimately accountable for GBR both to Parliament and to the wider public. This aligns with the wider programme of regulatory reform that this Government are undertaking, where Ministers set the strategic direction and regulators are empowered to enforce against that. Regulators should not be making key strategic or political decisions for fundamentally important sectors.

However, regardless of who issues the licence, the ORR will enforce GBR’s compliance with it exactly as it does today. It has strong enforcement powers to ensure that GBR does not contravene the terms of its licence, including mandatory, legally binding directions requiring GBR to change its behaviour. It would not be appropriate to provide the ORR or the passenger watchdog with the power to veto the licence. The Secretary of State will, however, consult both those bodies and consider their views before issuing the licence.

On Amendment 38 specifically, I reassure noble Lords that safety remains fundamental to the operation of our railways and that the Bill does not weaken or alter the existing railway safety regime, nor the ORR’s role within it. No licence will be issued that is not fully compliant with safety regulations and safety law. Furthermore, we expect that GBR will have a licence condition to support the continuity of the current industry safety and standards framework to preserve our world-leading culture of rail safety. The Secretary of State will consult the ORR on the licence precisely to ensure that these kinds of conditions are fit for purpose.

I turn to Amendments 41 to 46. Currently, the Secretary of State is the ultimate licensing authority for the railways under the Railways Act 1993, and the current Bill does not change that. As it does now, the ORR will continue to issue all non-GBR licences under the general authority given to it by the Secretary of State. Not only would removing the Secretary of State from the process or requiring the ORR to consent undermine continuity and stability for the industry but it would be superfluous in practice, as the ORR already issues these licences on behalf of the Secretary of State.

Let me also clarify that railway licensing is, and will remain, a reserved matter. Scottish and Welsh Ministers are not licensing authorities under the current system, and the Bill will not change this. However, that does not mean that Scottish and Welsh Ministers are prevented from making their views known. The ORR is required under the Bill to provide notice prior to any licence being issued and to consider any representations, including any by Scottish and Welsh Ministers. We therefore do not consider it necessary to create an additional consultation requirement specifically for Scottish and Welsh Ministers.

I also note that the Government have spent long and productive hours discussing the provisions of the Bill with Scottish and Welsh Ministers and, in both cases, they are content with the licensing provisions as drafted. In fact, Scotland has already published its legislative consent Motion. I therefore ask noble Lords not to press their amendments.

[Lord Lansley (Con)]

Can I ask the Minister why, if it is not necessary to create a statutory consultation requirement, it is necessary to have a consultation requirement in relation to the Passengers’ Council? Can it not respond to the consultation on a licence in the same way as Scottish or Welsh Ministers could?

[Lord Hendy of Richmond Hill (Lab)]

I am sure it could, but it is desirable to mention the Passengers’ Council, since we are setting it up and it is an important body. The distinction I am seeking to draw is leaving the Passengers’ Council as a consultee, rather than requiring its permission.

[Lord Harper (Con)]

Can I press the Minister on the question I asked? As he said, the Secretary of State is the holder of the licensing power, but the Office of Rail and Road is given a general authority to issue licences for non-GBR operators, but I still do not understand what the purpose is, in new Section 8(6)(a) inserted by Schedule 1, of the requirement for the Secretary of State to consent to the grant. In what circumstances would the Office of Rail and Road be operating outside its general authority? It would be helpful if the Minister could give an example of where that Secretary of State veto would kick in, because I do not quite understand the point of it.

[Lord Hendy of Richmond Hill (Lab)]

I think we are leaving things as they are, but if the noble Lord would like a specific example, I will have to write to him because I do not have such an example immediately in my mind.

[Lord Harper (Con)]

That would be very helpful.

[Lord Hendy of Richmond Hill (Lab)]

The broad principle is that we are leaving licensing in the position it is in at the moment.

[Lord Evans of Guisborough (Con)]

My Lords, I thank noble Lords for their contributions to this debate, which have been very helpful and largely supportive across parties. I am grateful to the Minister for his response. He has dealt with questions from some of my noble friends to their satisfaction. I am not sure he has dealt with the issue which I originally raised to my satisfaction, but for now I am happy to withdraw Amendment 38.

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[Lord Moylan (Con)]

My Lords, when I was deputy chairman of Transport for London, I found London TravelWatch a rather annoying body. I suspect that when the Minister was the transport commissioner he found it even more annoying than I did, because of course it was there to complain as well as to make suggestions for improvements, so I can understand that there may well be a level of resistance to the suggestion from the noble Baroness, Lady Pidgeon. However, I have added my name to her amendments because, objectively speaking, she is absolutely right: this is a very important statutory body. It should be treated on a level footing with other transport users’ committees. I can see no possible grounds for objection that the Minister may have. I suspect this will be one of the concessions he makes on Report and, if he does not, it will be inserted in the Bill whether he likes it or not. I look forward to hearing him say that the noble Baroness is spot on about this and that he willing be able to accept, if not her amendments as drafted today, at least amendments in lieu to the same effect that he might produce in the near future.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Baroness, Lady Pidgeon, for these amendments. I should directly contradict the noble Lord, Lord Moylan: as the commissioner of transport for Transport for London, I found London TravelWatch a very constructive body. I enjoyed dealing with it; there were other people we dealt with who were far more difficult.

[Baroness Pidgeon (LD)]

Don’t look at me.

[Lord Hendy of Richmond Hill (Lab)]

I shall not list them.

[Lord Moylan (Con)]

I think they include the noble Baroness, Lady Pidgeon.

[Lord Hendy of Richmond Hill (Lab)]

Some of the board.

As the noble Baroness says, London TravelWatch plays a vital role as the statutory watchdog for London, championing the interests of people who travel across all modes of the city’s integrated transport network. That is precisely why the Bill will strengthen its rail powers to ensure there is consistent passenger advocacy across Great Britain.

However, the passenger watchdog will have a new role in the reformed railways which will be different to the role of London TravelWatch. It will go beyond being solely a watchdog and passenger champion. It will have a central role in holding rail operators, including GBR, to account by setting consumer standards for the industry and monitoring operator compliance with them. It would not be appropriate to have two different bodies setting standards, which is why the watchdog will work closely with London TravelWatch to ensure that standards applied across all operators reflect its expertise. That is why London TravelWatch is treated differently in the Bill and why GBR, the Secretary of State and the Office of Rail and Road must consult only the watchdog on certain matters such as the licence, the long-term rail strategy and GBR’s business plan. London TravelWatch is not expected, for example, to have any role on the licence.

That said, I can reassure the noble Baroness that I absolutely agree that London TravelWatch must continue to have a voice on matters that impact the London transport network, and indeed the wider scope of London TravelWatch that she referred to. I understand that Transport Focus, the future passenger watchdog and London TravelWatch will update their existing collaboration agreement to reflect changes in roles. I expect this will include additional expectations around consultation and engagement where matters will affect London and the other services which London TravelWatch oversees. For these reasons, I urge her now to withdraw her amendment, though I am happy to discuss this with her further after Committee.

[Baroness Pidgeon (LD)]

I thank the Committee for this debate; I would say “short debate”, but I spoke quite extensively and maybe comprehensively on this matter. I understand what the Minister is saying, but it would be helpful, even if he has to define it differently, to put London TravelWatch, where appropriate, on the same footing as the Passengers’ Council for certain areas of consultation. A collaboration agreement between two organisations would be between them, but I would like to see something on the statute that makes it clear in which areas we would expect London TravelWatch to have a role. I would be happy to meet the Minister outside to see whether the Government can come up with some wording that would deliver that and ensure London’s voice is not lost in this. On that basis, I am happy at this moment to withdraw my amendment.

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[Lord Berkeley (Lab)]

My Lords, briefly, the amendments from the noble Lord, Lord Moylan, on producing a business plan are absolutely essential because, as he noted, the railways need long-term investment. It is not just trains which need to somehow be ordered 10 or 20 years before they are needed but things such as HS2, which we have no budget for at the moment. We have no real knowledge of how much is going to be spent each year and when it is going to open, so there needs to be much greater discipline on this. I fully support these probing amendments to see what my noble friend is able to tell us.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I thank all noble Lords for this debate on group 5 and will echo the noble Baroness, Lady Pidgeon: it is a delight to see the noble Lord, Lord Bradshaw, in his place this afternoon. I am sure that the rest of the Grand Committee wishes him, as I do, a very happy significant birthday for yesterday. I have also read and heard what he has argued carefully and, as he is a man of huge experience in the railway, I will reflect on what he said.

The Committee will be relieved to know that I am not going to redebate the status of GBR companies and subsidiaries. I thought I would leave it to the noble Lords, Lord Lansley and Lord Moylan, to fight that out. I think I had the same clarity as the noble Lord, Lord Lansley, at the end of that debate.

I think noble Lords’ amendments are, collectively seeking, first, that the Secretary of State considers GBR’s duties, her long-term rail strategy and the wider planning considerations when determining GBR’s funding settlement; secondly, that that funding settlement is transparent; and thirdly, that it is protected. Finally, the noble Lord, Lord Moylan, seeks to ensure that it is in place two years before the next financial period.

I start by providing some explanation of the provisions. The Bill already establishes a comprehensive funding framework. Schedule 2 sets out that the Secretary of State must publish a statement of objectives for the railway. In doing so, she is absolutely bound to consider her duties and her own strategy, and she will, of course, consider wider planning and the impact of the network. Following the statement of objectives, the Secretary of State must then publish a statement of funds available, so that GBR can understand its funding parameters and produce a high-quality business plan.

Schedule 2 then provides that GBR must produce, publish and keep up to date the five-year integrated business plan across both infrastructure and passenger services. The Office of Rail and Road will advise the Secretary of State on the effectiveness of the business plan, including whether it represents good value for money. If it does, the Secretary of State will then approve the plan and issue a five-year settlement.

Under paragraph 7 of Schedule 2, as in the proposal of the noble Lord, Lord Moylan, the Secretary of State is required to publish details of the five-year funding settlement she gives to GBR, including the funds agreed. She will absolutely ensure that that these published details are clear enough to allow stakeholders to understand the settlement, meeting the noble Lord’s request for transparency, while protecting key commercially sensitive information.

GBR’s business plan will also contain all its planned activities, costs and how it plans to meet those costs. This plan will be updated and published annually after the initial settlement. A clear summary of ORR’s advice through the funding process will also be published, as set out in paragraph 4(6), which means that the desires of the noble Lord for an annual report on GBR’s financial performance will be delivered. Other further reporting requirements are duplicative and unnecessary, and all this amendment would do is increase the time GBR spends on bureaucracy instead of getting on with its job of delivering.

On protecting the funding settlement, which the noble Lords, Lord Bradshaw and Lord Moylan, spoke about, I agree that when maintaining and renewing long-term railway assets, certainty of funding is critical. It provides a stable basis of planning, supports efficient delivery and helps build investor confidence throughout the supply chain. I repeat that the intention behind setting a five-year settlement is that it should endure for the full five-year period.

On the amendment of the noble Lord, Lord Moylan, I can assure him that the Secretary of State must publish any updates to the settlement that are likely to have a material impact. If she wishes to make a material change to the settlement, she must also notify the ORR, which will advise on the likely impact on the railway, and that is one of its important and critical roles. This will ensure that there is transparency around any funding changes and that there will be scrutiny if material changes are proposed that will not support an effective railway.

On Amendment 55 from the noble Lord, Lord Moylan, I do not agree that the Secretary of State should be restricted to changing the funding settlement only in emergencies. As the noble Lord, Lord Harper, says, the Government have a lot of priorities to deliver across healthcare, housing, transport and public safety, which all require funding. While, of course, in my mind, the railway is absolutely the most important of those priorities, I recognise that the Government and Ministers need to be able to move money in response to changing circumstances, because choices about funding priorities are ultimately for the Government of the day.

On the details of Amendments 74 to 77 from the noble Lord, Lord Bradshaw, the first key point is the question of which funding changes the ORR should get involved in. The Bill already requires that the ORR is notified when changes to the funding settlement are material enough to affect delivery, but not in every circumstance. This approach is proportionate. There may well be some smaller accounting-type changes to funding needed, which will not affect delivery and do not require a true statutory formal change process. This could, for example, include GBR offering to return small underspends back to the Government where efficiencies have been found but, of course, material changes, as I have said, should be notified to the ORR. This process ensures that they will be.

The Bill currently requires that the Secretary of State notifies ORR before a material funding reduction is made to the five-year infrastructure settlement. This allows ORR to exercise its independent and expert judgement when it receives notice of a potential change. I can reassure noble Lords that the ORR would absolutely act if significant funding were taken out of the railways, including by advising the Secretary of State and publishing that advice. This approach is most practical, rather than requiring ORR to respond to each change in funding in a set way. To summarise this point, certainty is crucial for the railways, the Government and the wider supply chain, but it must be proportionate and balanced against the ability of Ministers to allocate public resources.

The noble Lord, Lord Moylan, raised the question of rolling stock manufacturers and the Government’s answer to this is to construct and publish in due course a rolling stock and infrastructure strategy, the first for more than 30 years, in order to give that part of this market the long-term certainty it craves and which will keep the production facilities and jobs going.

Finally, I agree that, given the amount of investment on the line, it is important that funding is in place in good time to allow GBR and industry to prepare for the next settlement. Although I do not think this should be in primary legislation, because requiring funding levels to be confirmed two years before the start of a funding period would reduce flexibility and risk settlements becoming outdated before they can even take effect, I reassure the noble Lord that details of the timing will be managed by the ORR, as they have been in successive control periods, to ensure that the financial settlement is never at risk.

Schedule 2 sets out that the statement of funds available must be published early in the process and created to timelines determined by the ORR. I can confirm that in practice, as seen under the periodic review process, this information will be published significantly in advance and has to be more than a year ahead of the final settlement to work. I understand that the ORR will ensure that the process concludes fully with time for industry to prepare. I hope this is a reassurance.

I reassure the noble Lord, Lord Bradshaw, that the Bill leaves flexibility to fund more of GBR’s activity through the five-year settlement, once this becomes once this becomes practical and Ministers are more comfortable funding an integrated entity. If Ministers fund passenger services through the five-year settlement using the route in the Bill, all the protections we just discussed would already apply.

Turning to a related issue, on Amendment 65, I reassure the noble Lord, Lord Lansley, that we are in agreement, and the outcome of Amendment 65 is already achieved by the Bill’s provisions. Under paragraph 4(3) of Schedule 2, GBR will be required through its business plan to set out its activities, the costs of those activities, and how it proposes that those costs are met. In practice, this means that the business plan must cover everything that GBR does, through its subsidiaries as well as the parent company, and must cover its revenue sources across all its subsidiaries.

I turn to Amendment 70—and once again I confirm for the Committee that the Bill already requires the full business plan to be published and kept up to date, in paragraph 4(7), and there is a commitment to update it in paragraph 5(3) of Schedule 2. However, the Bill contains slightly more discretion for GBR to redact sections of the business plan than this amendment proposes. This is because it is important that all types of sensitive data, not just commercially sensitive, are able to be protected. Personal data, security-sensitive information about stations and public places, or anything legally privileged are all examples of content which may need redaction from the final plan, and a flexible requirement can be better used to navigate these nuances. That flexibility is important, but I should be clear that GBR cannot withhold information simply to avoid scrutiny. The ORR will assess and advise the Secretary of State on the unredacted version of the business plan, and GBR’s public law duties and wider accountabilities framework will ensure that GBR will not be able to hide important information relevant to public scrutiny.

I understand that the intention of Amendment 73 is to prevent the Secretary of State circumventing the process as set out through the Bill, by restricting access to the broader funding powers in the Railways Act 2005. The purpose of paragraph 6(7) is to make it clear to Parliament that the Secretary of State can use her other funding power in the 2005 Act. This will be necessary when funding activity outside the five-year settlement, such as individual enhancement projects or one-off funding packages, are needed following a natural disaster, for example. I assure the noble Lord that this does not reduce transparency over GBR’s funded activities. GBR’s business plan, covering all GBR’s activity, will be costed, updated and published as GBR’s outputs change. The business plan will include enhancement projects and will show clearly where the funding for them has come from, therefore transparently identifying the use of the 2005 power for Parliament and others to scrutinise. I therefore hope that the noble Lord can see that the inclusion of paragraph 6(7), to allow the Secretary of State to use other funding powers, is purely practical.

Finally, I thank the noble Lord, Lord Moylan, for Amendment 78. For clarity, relevant subsidy control law does not apply to infrastructure funding. However, it applies in full to passenger services funding, as we discussed in the ticket retailing debate on Tuesday. Railway infrastructure being exempted from subsidy control rules is something that happens on the current railway; railway infrastructure funding provided to Network Rail today is not subject to subsidy control law. The Bill does not change this principle but simply enshrines it for clarity and transparency.

Over many years, funding provided for the operation and management of the main national railway infrastructure has not been treated as subsidy as this market has been effectively closed for competition, because there are not multiple infrastructure managers operating on the same infrastructure. That position has underpinned the funding arrangements for Network Rail and continues to be appropriate for GBR as its successor. Removing this provision would not change the way that the railway is subsidised; it would just mean continuing to rely on previous legal interpretations, rather than the additional transparency provided by this clause.

Part 3 in Schedule 2 therefore provides clarity and legal certainty, and it makes sense for this stance to continue as there is no competitive market for the railway infrastructure that GBR will be responsible for, so there is no need to waste resources administering this funding as if there is. I therefore urge noble Lords not to press their amendments.

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[Lord Moylan (Con)]

My Lords, it is difficult to follow my noble friend Lord Young of Cookham because his expositions of difficult issues are always so clear and compelling. There is a movement on the left wing of the Labour Party—which is well represented in your Lordships’ House—to nationalise the roscos so that we can have a full sweep of nationalisation. To date, nationalisation of the railways has cost the Government nothing because, of course, they already owned nearly everything. All it has done is allowed certain franchises to expire at no cost to the taxpayer.

But the cost to the taxpayer of nationalising the roscos would be absolutely enormous, which is one of the reasons why the Government have resisted pressure from the more Corbynite wing of their party to proceed on that basis. My noble friend Lord Young of Cookham is suggesting that, at the stroke of some scribal pen in the Office for National Statistics, at least the financial consequences, if not the legal consequences, of nationalising the roscos would land on the Government’s plate as a result of the Bill—in other words, as a result of eliminating the relative multiplicity of buyers of rolling stock that exists at the moment and replacing it with a single buyer: a state-owned entity. As I understand it, that is the gravamen of what my noble friend is saying.

The amendment is almost too gentle for the circumstances because this is something that we would need to know in advance of the passage of the Bill. It is dilatory of the Office for National Statistics to say that it would review this matter only after the Bill has passed because it is of such consequence that legislators should know before they pass the Bill whether it will ensue as a consequence of their doing so. This is a matter of considerable importance. I do not know whether the officials advising the Minister perceived the full complexity of the noble Lord’s amendment in advance. They may not have given him a full response to the points made by my noble friend—although they may have done so, of course—so he may wish to follow up in writing. That may be acceptable to my noble friend—I do not know—but this is an extremely important matter that we really need to know about.

I do not propose to comment on the other amendments in this group so I turn to my own amendments, which were slightly mocked by the noble Baroness, Lady Pidgeon. We have been told—I accept that this is probably the case—that, should the Bill pass into law, it is likely to set a framework that will last for many years. People say that it is often 20 or 30 years before you get round to restructuring the railways; that is roughly the cycle on which it happens. I think, therefore, that it is very disappointing that the Government are seeking to restrict the debate to very narrow issues around the structure of the railway, which is the main basis of the Bill, when noble Lords want to debate other matters.

For example, in our debate on the previous group, the noble Lord, Lord Bradshaw, who is sadly not in his place any more, wanted to discuss the whole structure of funding the railways—not the amounts of funding but the mechanism by which it is done—in order to avoid crashing from one decision to another and to make it possible for both the railway and suppliers to plan what they will do with some knowledge that the funding will continue for at least a period into the future. Essentially, the Government want to escape having that debate and say, “Everything’s fine as it is so we’ll carry on as before”.

Through my amendments here, I want to have what I think is a very important political discussion about the Government’s vision for the level of subsidy that should go to the railway and for the balance between fares and taxpayer funding to support it. We have in this country a particular balance that is different from what exists in many European countries, and we have held on to it, but where do we want to go with it? The noble Baroness says that the railways will always require funding but, for their first 100 years, they did not require any public subsidy at all, and they provided the most comprehensive, intense and innovative transport system you could imagine, reaching to nearly all parts of the country. Further, they did so at a time when there were practically no roads, and there was certainly no air travel. Yet they did this without subsidy. We really only talk of subsidies to the railways when you get to the 1920s and 1930s, when money started leaking out of government and into the railways. That was before we had the full subsidy regime that came in with the Second World War and what followed. So it is possible to think about it.

I am not saying that it is particularly realistic to think about it, because I accept what the noble Baroness says: there is likely to be an element of subsidy all the way through. But what is the Government’s plan and what is the direction of travel on this? Would the Government not like to set out their policy and vision? If they do not want to do so today, then where in this process is it going to appear? Is the noble Lord going to tell us that it will all be in the long-term rail strategy, so that we can have a debate then about what is the appropriate level between taxpayer and fare payer? Remember that only 10% of the population makes regular use of the railways; the rest of the population is expected to subsidise it through their taxes, but only 10% actually use it. Is that a fair and sensible balance in an allocation of subsidies? These are important issues.

Amendment 112 is closely related but not quite the same. It asks for the railways to publish annual savings targets. Why should they not have such targets? There are great inefficiencies in every organisation. I do not say “in every public sector organisation”, although that is true, because there are inefficiencies in private sector organisations as well. When I was deputy chairman of Transport for London, we had a process for trying to reduce, with an annual savings target of 3% per annum. We took out that amount of cost year after year, bringing it down because we could find those efficiencies. I had learned from local government officers that they could do exactly that, because they knew where the inefficiencies were. In fact, they built them in a little, to give themselves some fat, but if they were required to reduce them under pressure, they could do it. Why should Great British Railways not have a similar discipline imposed on it? Where is the sense of financial discipline that we are looking for?

These are times when the Government have very little money; I think we know that. The tax burden is higher than ever, yet public expenditure is under huge pressure. Choices about defence and so forth cannot be made sensibly because of commitments elsewhere. I am not disagreeing with or criticising the noble Baroness. It is all very well to say that railways will always require subsidies, but the fact of the matter is—I believe this firmly, and I am a believer in the railways—that a railway that relies consistently and heavily on subsidy, in the current and foreseeable fiscal circumstances of this country, is a railway that will come under huge pressure and will be cut. It is not sustainable unless it can show that it is contributing from its own efficiencies and through generating higher fare income, which does not necessarily mean through higher fares but can be a combination of fares and passenger numbers. It needs a plan to show that it is doing that. These amendments ask the Government to set out that plan or tell us when they are going to do so, in the interests of Great British Railways itself.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, Amendments 57, 58 and 61 are about the funding of passenger services. In principle, I support the intentions of these amendments and acknowledge the benefits to business planning that aligning the funding cycles could bring. However, the reality of passenger services funding is that it is inextricably tied to passenger revenue, which changes in response to a number of factors that are difficult to predict, particularly over longer time spans.

Certain factors, such as wider economic conditions and the weather, are outside both GBR and government’s control, so it is quite difficult for any Government to commit passenger services funding in fixed five-year periods, given the revenue-forecasting challenges. It will, however, be a goal to work towards, and in particular it cannot be achieved before GBR’s funding settlement processes have bedded in and Ministers have confidence in how the settlements operate.

I recognise how important it is that GBR has the confidence to plan across track and train to make the most of integration. That is why it will be required to produce and publish a business plan covering all its activity, including on passenger services, and this plan will span the duration of the five-year funding period, regardless of changes to passenger funding. In addition, once Ministers have more experience of funding an integrated body and GBR has demonstrated that it is fiscally responsible, the Bill will provide a route to include passenger services in the five-year funding settlement in future, via statutory instrument. That will allow passenger services funding to join the five-year settlement. I hope the noble Baroness sees that we are as aligned as we can be on this amendment and that she can therefore support the Bill as drafted.

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[Lord Moylan (Con)]

Is the noble Lord’s position that one of the consequences of this Bill, if enacted—we will not know for some months until after it is enacted—is that roughly £25 billion-worth of rolling stock could be added to government debt? I do not want to argue about the figure, but I believe that is roughly right. We are going into this in the dark, not knowing whether that will be the case. What soundings has the Minister taken with Treasury colleagues about this interesting possibility?

[Lord Hendy of Richmond Hill (Lab)]

Since it is independent, nobody can predict the consequences of an Office for National Statistics examination until it concludes one. I said that the Secretary of State will work with it, because it will also need to consider the recent past. The Bill is in Parliament because it has cross-government agreement from all the departments of government. We cannot contemplate what the future might hold in respect of the decisions of the ONS.

[Lord Moylan (Con)]

I am sorry to press the noble Lord. I agree that if the ONS is independent he cannot say what its decision will be, but he could secure that decision before the passage of the legislation. That cannot be too difficult. Given the consequence, it must be possible to secure the decision first. Nobody, I think, is suggesting that you would try to manipulate the decision; that is not my objective. Could the Government not take that approach? These are very significant sums, and to hold one’s nose and just jump into the dark seems reckless.

[Lord Hendy of Richmond Hill (Lab)]

I already said that one thing the Secretary of State will do is to help the ONS with its understanding of both the recent past and what will happen as a consequence of the Bill. In the recent past, the Government have specified, to the most extraordinarily detailed degree, all the rolling stock used in all franchises for probably the past 10 or 12 years. They have also determined how long it runs for and how long it lasts. In those circumstances, we are very content to wait for the ONS to do its work when it chooses to do it.

[Lord Lansley (Con)]

I have a question pursuant to the debate about the powers to fund the GBR business plan. I understand from the Minister’s reply, and it is a reasonable proposition, that the Secretary of State should provide financial assistance in relation to activities set out by GBR in its business plan. Indeed, paragraph 3 says that the Secretary of State should do exactly that and say what financial assistance is expected to be provided. But would it not be logical, therefore, that the powers to provide financial assistance that are specified subsequently should extend to those activities within the business plan, rather than having only infrastructure being capable of being funded by the Secretary of State using the powers? We would end up with something much more visible: specific powers to provide financial assistance in relation to the business plan over this funding period.

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[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord. Since I managed in the end to have to correct myself after the last session on Tuesday, I would rather take some advice and write to him about this. I understand his point, but I am not sure I am capable of expressing an answer in language that will be clear enough for him, so I will drop him a line, if I may.

[Baroness Pidgeon (LD)]

My Lords, I thank the Minister for his response and the fact that, in principle, he supports my amendments in this group as a goal to work towards. It is reassuring that he pointed out—if I understood him—that, within this legislation, there is the potential for a statutory instrument to include passenger services in the future within the five-year settlement. I welcome that and, on that basis, I withdraw my amendment.

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[Lord Hendy of Richmond Hill (Lab)]

My Lords, let me turn to Amendments 94, 124, 125 and 291. I am pleased to say that I agree with many of the performance indicators set out in the noble Lord’s amendments, which will be important in GBR delivering the service the public expect. I also agree with the concept of an annual report. I reassure the Committee that, on both counts, such a thing already exists.

The Bill requires GBR to produce an annual business plan and we have already confirmed that this will include meaningful KPIs around performance. For example, the business plan will clearly have to include GBR’s progress towards reaching its statutory freight growth target and I happily confirm today that it will. The 2050 target is a long way out, but progress against it should be measured in the business plan in 2040 and in 2050. By keeping these KPIs in the business plan, we ensure that a reflection of GBR’s activities, the cost of those activities and its performance against those activities and costs are always transparent and available for scrutiny.

GBR will publish annual updates to this plan which can, and should be, scrutinised by Parliament in the usual way. GBR will need to consult with the ORR and the passenger watchdog when creating these updates, ensuring expert and independent advice. As the noble Lord, Lord Moylan, proposes, the ORR will monitor GBR’s performance against the KPIs in its business plan as part of its monitoring function. An important distinction, however, is that the ORR’s role under the Bill as drafted is not confined to looking backwards at whether a target has been met. The ORR can also recommend to the Secretary of State whether GBR’s commitment and performance measures are realistic and measurable—something not factored in to the amendment.

Linking KPIs to the long-term rail strategy, rather than the business plan, would undermine the purpose of the strategy. The rail strategy is designed to provide ministerial direction on the long-term trends that will affect the railways and, at a high level, what they expect GBR to do about them. But GBR must be independent enough to respond to the rail strategy with a self-developed, proactive and detailed activity plan covering the next five—

[Lord Lansley (Con)]

Forgive me for interrupting. I cannot find where it is required that there be an annual business plan. I can see there is a provision for the business plan to be kept up to date, but nothing that says this has to be done at any specific time or on an annual basis.

[Lord Hendy of Richmond Hill (Lab)]

Let me come to that point. I believe that there is a provision, but before I say so, let me check.

The long-term rail strategy is designed to provide ministerial direction on the long-term trends that will affect the railways and, at a high level, what they expect GBR to do about them. The business plan is clearly the right place for short and medium-term targets to be included, which GBR should set for itself and which the ORR should review and comment on.

[Lord Moylan (Con)]

Can I be absolutely clear about that? The Minister is saying that GBR should set its own KPIs. The ORR may look at them and comment but, having heard the comments, GBR will set its own KPIs and amend them, or not, as it sees fit. That is the plan.

[Lord Hendy of Richmond Hill (Lab)]

The long-term rail strategy will set out the Secretary of State’s expectations. The business plan will set out what GBR believes it can achieve to move towards the long-term rail strategy. The business plan has to be agreed with the Secretary of State, who might well disagree with some of its targets. In the end, GBR has to satisfy the Secretary of State about the progress that it proposes to make. I do not think that is much different, as the noble Lord will recall, to the Transport for London business plan, which translated the mayor’s transport strategy into targets related to the budget of the organisation and which were agreed by the mayor.

[Lord Lansley (Con)]

Surely there is, between the long-term rail strategy and the business plan, the statement of objectives. Surely the question, which I think my noble friend through his amendments has explored quite positively, is that the statement of objectives needs to be quite specific. Some of them need to be performance indicators in themselves, because the business plan is GBR explaining how it is proposing, through its activities and funding, to meet, or to contribute to meeting, what is set out in the statement of objectives.

[Lord Hendy of Richmond Hill (Lab)]

I have to say to the noble Lord that I do not see the difference, in the sense that the long-term rail strategy must express the Secretary of State’s desire, for example, for a reliable railway in terms that enable the business plan to set out the measures that would be used to decide whether it is reliable. Indeed, in the recent past, one of the things that has had to be done since this Government took office was to agree, for the first time, what the measurements are and what the target should be for expressing the performance of the railway. I do not see that conflict in the way that the noble Lord does.

[Lord Lansley (Con)]

Forgive me, but I do not see it as a conflict at all. I am expressing, as I think the Minister has done on a previous occasion, that there is a difference between what is long term and what needs to happen this year, next year and indeed, for the purposes of the funding period, in the next five years. The statement of objectives is specifically about the next five years. The long-term rail strategy is on a different timeframe.

[Lord Hendy of Richmond Hill (Lab)]

The noble Lord is right, actually: I am beginning to confuse myself about this. There is a danger of getting into too great a specificity. He is right that the statement of objectives will include specific standards, but that translates into the business plan.

[Lord Berkeley (Lab)]

My Lords, before the noble Lord sits down, referring to the discussion we have had on KPIs, it occurs to me that there needs to be some differentiation between the list—whether it is the list produced by the noble Lord, Lord Moylan, the list in the Bill or another one—of issues which are basically in the total control of Great British Railways and those which are not. The noble Lord, Lord Moylan, mentioned freight. Freight is not in the control of GBR, in respect of how many trains run and how much money GBR makes from them directly. Of course it can fiddle around with the access, the signalling and everything else, but it is dependent upon many other people delivering the KPI, which I think is supposed to be the KPI of Great British Railways. It would be interesting to hear from my noble friend how the two different criteria are set when coming up with the calculation of who does the KPI and what it covers.

[Lord Hendy of Richmond Hill (Lab)]

My noble friend is right that some of these KPIs relate to wider economic circumstances than the railway currently has, but we discussed on the first day in Committee the fact that the need for a long-term freight target is so that GBR focuses on its own part in growing freight. Clearly, it is much subject to what shippers want to send, how they want to send it, where they want to send it and so forth, but I do not see any conflict in GBR having a long-term freight target. It may have to take different action if the economy or the things which are transported by rail change over time. There has been no greater case of that than the case of coal and steel, which were once a significant part of railway freight but which today are virtually nothing. On the other hand, intermodal traffic and construction materials have vastly increased, and there is no doubt in my mind that the railway could contribute more than perhaps it has done in the recent past to growing those particular categories if it were minded to do so, and the freight target is designed to make it think about how it could do it.

I do not see any contradiction in that; it will be like running any other business. The noble Lord, Lord Moylan, referred to his experience at Transport for London and it is, of course, exactly the same. It is a large organisation which is contributing to, but to some extent dependent on, the economy of London; that will be true of the railways as a whole. I agree with noble Lords that there should be KPIs for GBR, and it should be held to account for meeting them. The reason we are discussing these now is because there is no doubt that, in the end, they should be in its business plan, set next to the costs that they incur and the revenue it will derive from them.

I should go back to what the noble Lord, Lord Lansley, said. Paragraph 5(1) of Schedule 2 says that GBR must keep the business plan up to date. We are pretty clear that that means annually; it could be more often if circumstances change. It is not unknown for businesses of this scale to have to change their business plan if the economic circumstances dictate, but I think annual is reasonable. I would not expect the Secretary of State or the board of GBR to tolerate any circumstances where it did not propose an annual business plan.

If I may, I will try to find my place regarding Amendment 66. I am glad that the noble Lord agrees that GBR’s business plan is where its KPIs should sit. However, these need to evolve over time while, by contrast, GBR’s duties are unchanging—a core list of ambitions guiding GBR over the next decades. While GBR’s business plan is where it will show both how it will discharge its duties and set out its KPIs, there is an important distinction between them. Duties and KPIs are not the same thing. KPIs need to be driven by the specific, often numerical, outcomes sought by the Government, whereas duties are behavioural expectations. Some of the duties would be impractical to even turn into measurable KPIs. How would GBR measure whether it has provided businesses with certainty or acted in the public interest? I believe it is right that the two should not be statutorily linked.

Amendment 87 proposes action about the chief executive. I hope the noble Lord understands that, primarily, the powers of the Secretary of State rest with the right, in the end, to dismiss the chair if that chair fails to do the job that the Secretary of State expects of the chair and the board. That might well be the case if the Secretary of State believed that the chair failed to challenge the executive and chief executive effectively. The Secretary of State will also have the right, as we discussed this afternoon, to issue legally binding directions to GBR, and those could be where remedial action is required. The Secretary of State could also remove accounting officer status from the CEO, effectively taking financial management of the company into the department.

[Lord Moylan (Con)]

Where does it say the CEO is the accounting officer?

[Lord Hendy of Richmond Hill (Lab)]

What I would say to the noble Lord about all these things is that we are setting this organisation up and, conventionally, it is the chair and the board that support, hire and fire the chief executive. I do not believe that his amendment is the right way of doing this. It should be done through the chair and the board, and the expectations of the Secretary of State should be conveyed to them. Whatever action might be necessary regarding the chief executive should be taken as a consequence of that relationship.

On Amendment 83, the Bill already does what the noble Lord is trying to achieve. Much of the substance of this amendment is already enabled by the process created by Schedule 2. GBR is already required to produce a business plan containing all its activity and how its costs will be met, which will be reviewed annually, as we have discussed, to ensure it is up to date. The plan will be published, which will allow Parliament and the public to hold GBR to account. The ORR will monitor GBR’s delivery of its business plan. I agree with the noble Lord that transparency is important, but we do not need to hardwire in excessive bureaucracy, as this amendment would.

On Amendments 59, 60, 62 and 64A, I can understand the desire to codify the contents of the statement of objectives, but this legislation needs to be drafted to last as long as the last Railways Act has and therefore needs to be open to future Governments to suggest their own objectives for the funding period. The Bill provides a suggested list of what could be included, setting a strong precedent for future government but leaving options open for Secretaries of State. This is a tried and tested method, being the same approach that underpins the periodic review of funding today. The periodic review is widely considered one of the most successful parts of the current regime, which is why the Bill replicates the five-year length of it. Similarly, the statement has to be capable of accommodating different approaches based on wider environmental and socioeconomic circumstances. That is why the current list of potential topics to be covered by the statement serves as a guide for future drafters but does not constrain the Government.

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, the Bill should be amended to say that the business plan is annual, especially as that is the Government’s clear intention. The Minister has just said the business plan is going to be annual and it was precisely to get stakeholder engagement with business away from the annual cycle that the amendment was tabled. Can the Minister take account of that? It is not good enough to turn up once a year and have a word with the industry about what your plans are. That is what we are trying to get away from.

[Lord Hendy of Richmond Hill (Lab)]

I think I understand what the noble Lord is saying. I am expecting an organisation, as GBR will be, to be constantly in discussion with the wider railway industry and the supply industry, and indeed its customers, simply because, as we have discussed, the market will change over time. I do not see that there is any confusion between an annual exercise of producing a business plan and the sort of engagement over a prolonged period that will confirm and vary industry’s advice over time about what should be in it. That is a perfectly natural way of doing business. If I refer, as I probably do too often, to Transport for London, that is precisely the way in which Transport for London did it. The business planning cycle was an annual cycle, but the engagement with those parties who had an interest in both the inputs and results was an activity throughout the year.

[Lord Moylan (Con)]

The Minister has just changed the story. A moment ago, he was saying that engagement with business stakeholders would be through the business plan. Now he is saying that it is not actually through the business plan once a year—because anyway, we do not know it is going to be once a year, but it is likely to be once a year—but it will be a continuous process. Of course, it can in a sense be both, and other things, but that is not giving us the level of assurance and precision that I think noble Lords are looking for. This is one of our big opportunities to speak up in Committee for the interests of the supply chain—there may be other opportunities coming in later groups. This is the chance for the Government to nail down our interests. We are interested in passengers and freight, but we are also interested in the supply chain, and trying to secure for it a degree of visibility about the future is important. What we are getting is not very clear, I am afraid.

[Lord Hendy of Richmond Hill (Lab)]

I agree with the noble Lord that the supply chain is crucial. Actually, for much of the supply chain, what really makes a difference is the five-year periodic settlement. That highlights the need for this engagement to go on, both at the time when the five-year plan is formed and the rest of the time. I do not see any contradiction in those two things happening. The five-year settlement for infrastructure could not possibly be done properly without the involvement of the supply chain, but they do not go away for the next four years until the next one. The dialogue with them is constant—and so it should be. I had better make progress, if I may.

I turn to Amendment 82, tabled by the noble Baroness, Lady Pidgeon. I do not often completely disagree with the noble Baroness, but I do here, I am afraid, because her amendment would fundamentally blur accountability for the railway system and undermine the clear responsibilities in the Bill. I do not think that interposing another board between the Secretary of State and the board of GBR would be right. However, the Bill contains a number of provisions such that both the Office of Rail and Road and the passenger watchdog will have many opportunities to provide the Secretary of State with advice before she takes decisions. The reality is that she will most likely have taken advice from either, or both, of them before any performance matters should escalate to the point of requiring a direction.

On Amendment 84, as we discussed in earlier groups, the Government are dedicated to providing a steady drum beat of publications that will inform the House—and, indeed, this Committee—on progress in establishing GBR. I encourage the noble Lord, Lord Moylan, to look at the Government’s policy publication timetable on GOV.UK; indeed, I have just written to noble Lords about the publication of the draft access and use policy by Network Rail. Given the ambitious timeline that we are working to on this, it would not seem to make much sense to divert resources away from the business of establishing GBR in order to write progress reports that would largely duplicate existing information that the Government are already making available.

Given what I have said, I encourage noble Lords and the noble Baroness not to press their amendments.

[Lord Lansley (Con)]

My Lords, I thank all noble Lords who took part in this interesting debate. To my mind, we established one or two rather important propositions.

The first is that, when the Government are setting out their statement of objectives, in relation to which GBR writes its business plan, it would be helpful if it were as specific as possible about the performance indicators that are to be included in that; my noble friend made a lot of good points where that is concerned. I made, in effect, only one point: I accept that, on Amendment 62, relating it directly to the performance scheme may not be the way to do this, but, as with the question of how many trains arrive within 15 minutes of the timetable, there are standards that need to be included, and it is important that we have those standards in the statement of objectives.

The other thing that we have established is an interesting reflection on the relationship between the business plan and the funding arrangements. I draw noble Lords’ attention to paragraph 1 of Schedule 2 on funding. The ORR is setting a timetable, and we have four components to this. I do not envy the Office of Rail and Road’s process of trying to establish in precisely what relationship these four dates are, because it has to say to the Secretary of State, “You’ve got to tell us what your statement of objectives is”. Then it has to say to the Secretary of State, “You have to tell us what funding is available”, which is an interesting question because the answer might be “not much”. Thirdly, Great British Railways has to go off on a third element and give us the business plan. Lastly, the Secretary of State tells GBR and the ORR how much financial assistance is going to be provided.

I have two points to make. I am not at all sure why the fourth of those components is there in that form. There is nothing in the schedule saying that there is a requirement on the Secretary of State to provide such a notice. There is no notification requirement; it is simply that the power to provide financial assistance is there. So I would have thought that the Secretary of State might give notification of how much financial assistance there is, but looking across the whole funding period and having to notify them of what financial assistance is available seems a curious requirement to me.

[Lord Hendy of Richmond Hill (Lab)]

If I may intervene on the noble Lord, for once, I say to him: welcome to the five-year funding periods. We are now in control period 7, I think. The process that was described is complex, but it works remarkably well, which is why the industry and the Government are wholly aligned in wanting to carry on with it. I could discuss with him in more detail how it works, but it has generally been very effective. It relies on a lot of collaboration between the parties, which is why it has been successful.

[Lord Lansley (Con)]

I take that point, but, of course, that is if the financial assistance under this is restricted to infrastructure, which we debated a short while ago. If there is a requirement to notify of the financial assistance, I do not see it at the moment. The Minister might have a look at whether such a notification is required. That being the case, I have made my points.

Finally, I apologise in advance that I will not be here on Wednesday for the next day in Committee. I will endeavour to leave notes with colleagues about any amendments that are my responsibility; I will have the benefit of reading what is said. We might have the benefit of the presence of my noble friend Lord Grayling to speak to his amendments. With that, I beg leave to withdraw Amendment 59.