Train Operating Company Contracts

Lord Davies of Gower Excerpts

Monday 25th March 2024 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Davies of Gower) (Con)]

My Lords, in 2021, the Government began introducing national rail contracts, which have now replaced all the emergency contracts signed during the pandemic. These are flexible contracts, allowing services to be adjusted as passenger demand recovers. They include incentives on punctuality, reliability, service quality and customer satisfaction. Last autumn, we introduced a new incentive to drive recovery in demand and revenue. We are actively developing further improvements for inclusion in future contracts.

[Baroness Randerson (LD)]

My Lords, I want to shine a light on Great Western Railway, at whose hands the Minister and I suffer on a regular basis. As well as cancellations and lateness, we have shortened trains, with 10 carriages frequently being reduced to five, and yet Great Western Railway’s notifications of disruption do not always cover this. Why are we not always told in advance about shortened trains? Is it because, as some people have assured me, the department has changed the contract with Great Western, specifically requiring it to run shorter trains for a certain proportion of its journeys? Does the Minister accept that it is important to have transparency on this? People need to know when they will be faced with a five-carriage train. He referred to recovering passenger numbers, and we frequently have intense overcrowding on Great Western trains.

[Lord Davies of Gower (Con)]

I have to declare that I am a regular traveller on Great Western Railway services and appreciate much of what the noble Baroness says. Cancellations, especially those made close to the time of travel, can be very inconvenient, preventing passengers travelling with confidence. When trains are regularly cancelled, this can disrupt people’s lives. That is why the department holds operators to account for cancellations. The scrutiny and penalties depend on the reasons for these cancellations, as well as on how close they are to the planned time of travel and therefore how much they inconvenience passengers. However, I am not aware of any arrangement that the department has with GWR in relation to cancellations.

[Lord Birt (CB)]

My Lords, last year, my wife and I spent a delightful three weeks in Japan visiting the ancient cities and gardens, travelling extensively by bullet, regional and local trains. We laughed increasingly loudly as every train, without exception, arrived on time, exactly to the minute. By contrast, almost every wait at a UK train station—including my journey here today—is punctuated by computer-generated announcements of delay and cancellation. In the last 12 months, 33% of UK trains have failed to arrive on time. One in 30 trains has been cancelled. Why can we not run a railway as well as the Japanese?

[Lord Davies of Gower (Con)]

I take the noble Lord’s point. The Secretary of State visited Japan recently and looked closely at its operating systems. Let us hope that we see an improvement to the extent that we can operate our service equally well.

[Lord Liddle (Lab)]

My Lords, it is almost six years now since the chaotic introduction of changed rail timetables demonstrated that the present system of train operating contracts is completely broken. Since then, we have had the Williams Rail Review, the Williams-Shapps Plan for Rail, and a lecture by the Secretary of State last year backing fully the case for reform. But all there is to show for this is a rather sketchy framework rail reform Bill, which the Government have put out for legislative scrutiny, despite the fact that the legislative programme is so light that the House of Commons is rising at 4 pm. What explains this dither and delay? I suggest to the Minister that the Government introduce this rail reform Bill into this House, where it could have lots of detailed scrutiny from informed people and be improved.

[Lord Davies of Gower (Con)]

As the noble Lord knows, the rail reform Bill is being scrutinised by the Transport Committee. That was an agreement by the usual channels. From May 2021, national rail contracts were introduced to bridge the gap between Covid-19 emergency agreements and future competed contracts. The last two national rail contracts began in October 2023. Under the national rail contracts, the Government cover the operators’ reasonable costs, receive revenues and bear the financial risks. The national rail contracts are flexible by design, allowing service levels to be adjusted as passengers return to the railways.

[Lord Swire (Con)]

If my noble friend the Minister is genuinely looking at improving customer experience on the railways, can I return again to the issue of the provision of wifi, which is variable on some railways and non-existent on others? Surely in 2024 the basic provision of wifi, which is technologically achievable, to encourage people to work—after all, we are trying to increase productivity—should be something we accept as the norm and not something we continually have to argue for? Increasingly, you can get wifi on aeroplanes in the middle of nowhere; surely you should be able to get it on the GWR from Exeter to London.

[Lord Davies of Gower (Con)]

My noble friend is absolutely right, and I quite agree with him. It is very annoying; I suffer from it myself when I travel on GWR. I really do not understand, technically, why we should not be able to do it. It is something I will perhaps take a personal look at when I go back to the department.

[Lord Anderson of Swansea (Lab)]

My Lords, how are the Government addressing that, fearing the non-renewal of their contracts, companies seek to find ways and means of reducing investments as they near the end of their contracts?

[Lord Davies of Gower (Con)]

My Lords, train operators are required to work to an annual business plan agreed with the department, allowing more agility for both parties to respond to change as it arises throughout the contract term. Train operators are incentivised to deliver for passengers by earning a fee based on their performance.

[Baroness Grey-Thompson (CB)]

My Lords, in the light of the draft rail reform Bill, will His Majesty’s Government commit to primary legislation to deliver level boarding and accessible step-free station deadlines? By the Government’s own figures, it will take 100 years for stations to be step-free at the current rate of Access for All funding.

[Lord Davies of Gower (Con)]

I accept what the noble Baroness says. We have discussed this outside the Chamber, and it is something that the Government are working hard to improve.

[Lord Pickles (Con)]

My Lords—

--- Later in debate ---

[Lord Goddard of Stockport (LD)]

From this side, we might rename the noble Baroness, Lady Randerson, Baroness Mystic Meg. We are talking about contracts and railways, and, out of the hat, two days ago, Avanti has now decided to pay overtime premiums of £600 a day for drivers. Clearly, this is a last desperate act of the Government and Avanti trains to keep the contract. Last week, Transport for the North—chaired by a Conservative Peer—unanimously agreed with Burnham and Rotheram, the mayors from the north, that that contract should be taken away. This is clearly unacceptable. We talk about the NHS, care workers, firefighters and the police, and, as a last desperate act, Avanti is offering £600 a shift for driving a train at weekends—it is absolutely scandalous.

[Lord Davies of Gower (Con)]

I can only repeat what I have said before in the House to noble Lords. The decision to award a contract to First Trenitalia was contingent on the operator continuing to win back the confidence of passengers. The Minister with responsibility for rail and officials regularly meet with FirstGroup and Avanti senior management to understand the challenges and to hold them to account for issues within their control. However, I hear what the noble Lord says.