Bus Funding

Debate between Lord Hendy of Richmond Hill and Lord Liddle

Tuesday 19th November 2024 Lords Chamber

[Lord Hendy of Richmond Hill (Lab)]

I thank the right reverend Prelate for his question. The question of cross-border bus services is not altered, at least by this settlement, compared with previous settlements. But it is a question that the Government intend to address through the wider buses Bill, which will come before this House shortly. To some extent, you rely on local transport authorities to collaborate with each other, because the movement of passengers is quite often across local authority boundaries. We will have something more to say about that in due course.

The congestion caused by children travelling to school is a very common phenomenon in towns and cities throughout Great Britain. It is open to local transport authorities with the revenue element of this funding to devise schemes for cheaper bus fares for children and the Government will, of course, encourage them to do so, providing it is the right thing for their local area.

[Lord Liddle (Lab)]

My Lords, on this side of the House I am sure there is a very warm welcome for these proposals. Under the previous Government, when Boris Johnson was Prime Minister, a White Paper was produced which, if I remember correctly, was called Bus Back Better. At the time, I was a Cumbria county councillor and we had to put forward plans to see whether the Department for Transport would give us the money. We did not get any money, despite the problems of rural bus services in such a widespread geographical area as Cumbria. Frankly, the reason we did not get any money was that Cumbria was run by a Labour and Liberal Democrat joint administration. It was politics that decided it, not any attempt at objectivity. Does the Minister agree that a far better system is one where there is some rough and ready objectivity for some years ahead, which gives transport authorities an opportunity to plan?

[Lord Hendy of Richmond Hill (Lab)]

I very much agree with my noble friend that a serviceable formula for the allocation of this money is a better thing to do, and to allocate some money to every local transport authority in England. The most damaging feature of all to bus services—which is a feature of the previous methodology of funding—is to have some money one year and no money the next. What happens in those circumstances is that supported services are withdrawn, the passengers disappear—either they cannot travel or they find some other method of travel—and it becomes much harder to re-establish those services. I will not bore the House with details, but I can find many examples across England of perfectly good services forced to be withdrawn because of the inadequate distribution of the previous funding. They are far more difficult to re-establish when funding turns up. The best thing you can have with a bus service is certainty of service over a long time.

Passenger Railway Services (Public Ownership) Bill

Debate between Lord Hendy of Richmond Hill and Lord Liddle

Report stage
Wednesday 6th November 2024 Lords Chamber

[Lord Liddle (Lab)]

My Lords, I will speak briefly, as the noble Baroness, Lady Randerson, mentioned what I said in Committee.

It is right to raise these questions here, but they are questions for the future and for the big Bill that we will get next year. Personally, I do not want to see the re-creation of British Rail. My dad used to work for it, and to my mind it did not have great success as a monopoly nationalised industry. Therefore, it is right that, in the debate about the Bill setting up GBR when it comes around, we should explore the models of ownership that might work on these concessions. I would not rule out co-operative models, or heritage railways, running part of the national network.

My main concern is that we do not get stuck on the idea that this has to be a public sector monopoly. After all, the main thrust of Labour policy, the manifesto on which we won the election and the Budget put forward by Rachel Reeves is that we should use public investment to generate private investment, which will multiply the effects on economic growth. I do not see why the railways should somehow be different from that general principle. I discussed this with the Minister, and he explained how one thing being looked at is using the private development of Network Rail-owned land to improve investment in services. That strikes me as a very good idea and something that we should look at. Noble Lords are right to raise this question, but I hope we are going to have an open-minded debate about it in the coming year.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lords, Lord Lansley and Lord Moylan, for their amendments in this group. I will speak first to Amendment 4. Following enactment of the Bill, there would be just two routes by which the Secretary of State could secure the operation of passenger services. The first option, and this is the option we plan to use, would be to make a direct award to a public sector company under the amended Section 30 of the Railways Act 1993 and in accordance with the Public Service Obligations in Transport Regulations 2023.

The second option, which is a very limited option, would be to use the power to continue an existing private sector franchise temporarily under new Section 30A. This power is deliberately limited only to circumstances where the Secretary of State is satisfied that a transfer to a public sector company is not reasonably practicable. This means the Government would expect to use it only as a last resort, for a short period, to avoid a transfer causing disruption to passengers or staff. Apart from this very limited power in new Section 30A, the Bill leaves no other route by which the Secretary of State could contract with a private sector operator to run either existing services or new ones. This is entirely consistent with the Government’s very clear policy in favour of public ownership of services that form part of the national railway network.

On the point from the noble Lord, Lord Lansley, about DfT OLR Holdings Ltd, I confirm that award to it is securing the provision. All services currently designated under Section 27 will be provided under Section 30 by a public sector operator as existing contracts expire. The noble Lord also asked about the Secretary of State’s power to secure the provision of new services through a public sector company if those services had never been provided under a franchise agreement. Regulation 21 of the Public Service Obligations in Transport Regulations 2023 allows the Secretary of State to vary the terms of a public service contract to include additional services, and so would provide the necessary statutory basis for her to secure the provision of new services from a public sector operator.

The noble Lord asked whether the Bill will leave an option for the Secretary of State to procure East West Rail services from a new private sector operator, and the simple answer is that it will not. The Government have no plans for long-term private sector operation of the new East West Rail services, which will commence operation next year, nor any other services that the Secretary of State is responsible for procuring.

There are—and, after this Bill, there will remain—two ways in which other parties might operate or secure the provision of services on the rail network. One possibility is that a third party might operate them as an open access operator, as is the case with Hull Trains, for example. Another possibility is that a mayoral or combined authority or other local authority might secure the operation of services either by running them itself or by procuring a third party to do so. As I will explain in relation to the next group of amendments, the Secretary of State can facilitate this by granting an exemption under Section 24 of the 1993 Act, which takes the relevant services out of the scope of the surrounding provisions of that Act.

I noted with interest that my noble friend Lord Liddle remarked about involvement of developers, for example. I echo his sentiment that there will be ways of getting private capital in, particularly through development, that have not really been explored so far.

I hope that my explanation reassures the noble Lord, Lord Lansley, that the Government have carefully considered the implications of the Bill and the options it will and will not leave open, and I hope he will feel able to withdraw this amendment.

Amendments 5 and 6 from the noble Lord, Lord Moylan, deal with competed concession contracts. As I set out to the noble Lord in Committee, these amendments would remove the opportunity to deliver the benefits of public ownership, which a clear majority of the public support and which was a specific commitment in the manifesto on which this Government were elected. For the following reasons, I cannot agree to the amendments.

First, a concession model would mean the taxpayer continuing to fund substantial profits for private sector operators. A concession model along the lines of Transport for London’s contracts would expose operators to more financial risk than today’s contracts, where government bears virtually all the financial risk. Under such a model, train operators would price their bids to generate even more profit than the £110 million to £150 million per annum that they can earn under the current contracts. Our plans for public ownership will eliminate those fees and profits entirely—in the Government’s view, continuing to line the pockets of private shareholders is not a good use of taxpayers’ money.

Secondly, TfL concessions are a relatively inflexible form of contract which is not well suited to the needs of the national railway network. For a concession contract, the procuring authority has to define the service levels and standards at the start of the procurement process, and those levels and standards then endure for the life- time of the contract. Changes to the service specification can be achieved only through costly negotiation and agreement with the operator which already holds the contract.

That is very different from the London bus market, for example, which we discussed in Committee, where the concession model is much more suitable because there is a large number of small individual contracts. For the London Overground, much of which is heavily constrained by the geography of the railway network and the other services that run on it, it might be satisfactory, but the whole of the national railway network requires greater flexibility to adapt to changing patterns of demand. Finally, and most importantly, a concession model would not resolve the fragmentation of the current system, nor would it deliver on the Government’s commitment that rail services should be run by and for the public.

The noble Baroness, Lady Randerson, referred to devolved Administrations and local mayoral authorities. We will come to devolution further in the next amendments.

I urge noble Lords not to press their amendments.

Passenger Railway Services (Public Ownership) Bill

Debate between Lord Hendy of Richmond Hill and Lord Liddle

Committee stage
Monday 21st October 2024 Lords Chamber

[Lord Hendy of Richmond Hill (Lab)]

The answer is that it is the Government’s policy to take train operations into public ownership. The words the noble Lord mentions in Clause 2 just emphasise that intention.

[Lord Liddle (Lab)]

I would like to raise another point about Avanti. As I understand the law, the Secretary of State has a clear right to withdraw contracts on the basis of passenger service performance. Is it the case that the present Secretary of State cannot make her own judgment of that and is bound by whatever was decided before the last election? Would a court really not accept that the present Secretary of State has the right to make that judgment and act on it?

--- Later in debate ---

[Lord Hendy of Richmond Hill (Lab)]

I will first say that I am delighted to see the noble Baroness, Lady Pidgeon, in her place. I hope that her questions will be easier than the ones she has asked me for the last 16 years.

I thank noble Lords for explaining their amendments in this group, which consider the impacts of public ownership on the freight sector and the British Transport Police. I shall speak first to Amendment 6, in the names of my noble friend Lord Berkeley and the noble Lord, Lord Moylan, and Amendment 41 in the names of the noble Baroness, Lady Randerson, and the noble Lords, Lord Bradshaw and Lord Moylan.

These amendments highlight the importance of the rail freight sector, which has a crucial role to play in supporting a productive economy and in helping to decarbonise transport on the way to net zero. The Bill in front of the House sets out with two very specific purposes: to enable franchised passenger services to be brought into public ownership as existing contracts expire, and then to enable the Government to keep them there in accordance with their manifesto commitment. As such, the Bill has no direct impact on freight operators or on the availability of network capacity to accommodate freight services. Indirectly, though, freight operators should benefit from public ownership of passenger services, for reasons I am happy to explain.

In the old franchising model before the pandemic, a franchise operator’s commercial motivation was to maximise its own profit—evidently, the difference between its revenues and its costs. If that meant running additional services, it would seek to do so through the usual industry processes of bidding for access rights and then for a timetable that included the extra services. It would not matter, and has not mattered, to the franchise operators that this might deprive freight operators of the opportunity to serve new markets in the future. There are various examples of franchise bidders seeking to win contracts on the back of proposed service enhancements that risked crowding out, or actually have crowded out, potential future freight growth.

Under public ownership, that unfortunate incentive will no longer exist. Publicly owned operators will instead be remitted to act in the interests of all users of the railway, including freight customers. We have made it clear that the forthcoming railways Bill will require Great British Railways to enable the growth of rail freight and that the Secretary of State will set an overall freight growth target to ensure that it remains a key priority. I am sure that we will debate these points further once the railways Bill is before your Lordships’ House.

The noble Lords, Lord Bradshaw and Lord Young, my noble friend Lord Berkeley and others asked how capacity will be allocated. I can certainly tell them how it is done now, because we have had an immense struggle to obtain a timetable on the east coast main line which seeks to justify the £4 billion-worth of public investment to speed up services and provide more passenger capacity. One reason we have had that struggle is that, although there is an appeal mechanism to the Office of Rail and Road, there is in fact no current decision-making process to allow a timetable to be completed, except by agreement. I believe and hope that it is currently in its last stages, but I am not certain.

One of the things that the Government have in mind is that Great British Railways ought to be the body that decides. The noble Lord, Lord Bradshaw, will recall what was the case on the old railway: somebody had to decide which services were of greatest priority and which ones had to be fitted round them. Under the current Bill, however, there is no change to the existing role of the ORR in access decisions for passenger and freight services. Under the future railways Bill—and we will consult on this—there will be appropriate safeguards for both freight and open access operators. We will set out details on that in due course, before any changes to the current approach are made. There is no need to require the publication of a report on this matter. Commissioning a report after this Bill, when in fact there will be no change at this point, will not add benefit to the debate.

I turn next to Amendment 40, in the names of the noble Baronesses, Lady Pidgeon and Lady Randerson, and the noble Lord, Lord Moylan.

[Lord Liddle (Lab)]

Before we move on to the British Transport Police and while we are still considering freight paths, the noble Lord, Lord Bradshaw, for whom I have enormous respect because of his experience on the railway, made the point that investment decisions are very important to getting more freight on to the railway. Is not the real question about freight the priority it is given in the investment decision-making process? I know the Bill is not about that, but, since there is concern about this in the Committee, can the Minister give us any guidance as to how investment will be prioritised?

[Lord Hendy of Richmond Hill (Lab)]

I thank my noble friend Lord Liddle for that intervention. All I can say at this point is that I would hope the rail network enhancement programme is published more frequently, and with more success in what it contains, than it has been for some years. We will have to wait and see what the fiscal situation allows.

[Lord Liddle (Lab)]

Would that be a decision for the Secretary of State or for Great British Railways?

[Lord Hendy of Richmond Hill (Lab)]

I think in due course we will have to come back in the substantive Bill with a proposition on how those decisions are made, who makes them, and for what period of time the plan is valid.

High-speed Rail Services: West Coast Main Line

Debate between Lord Hendy of Richmond Hill and Lord Liddle

Wednesday 4th September 2024 Lords Chamber

[Lord Liddle]

To ask His Majesty’s Government what plans they have to facilitate improved high-speed rail services between (1) London Euston and Manchester, and (2) on the West Coast Mainline north of Crewe.

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

This Government are currently reviewing the position that they have inherited on rail infrastructure and will consider how we address capacity needs while maintaining financial discipline. We will set out our plans in due course. We need a long-term approach to infrastructure and investment, taking account of local transport priorities, which is what we will provide.

[Lord Liddle (Lab)]

I thank my noble friend for his reply. Of course we need a long-term plan for investment, but does he agree that there is a huge problem of congestion and capacity on the west coast main line, which is a key artery of our transport system? These problems have been made worse by the former Prime Minister’s impulsive and ill-thought-through cancellation of the second stage of HS2; the National Audit Office says that this will reduce capacity on the west coast main line by a further 17%. We need an investment solution to this. Will my noble friend also confirm that the Government have not ruled out use of the existing HS2 route to provide that extra capacity?

[Lord Hendy of Richmond Hill (Lab)]

Following the cancellation of HS2 phase 2, the Government are looking at all options to improve rail journeys to the north-west and Scotland, including managing the long-term issues that my noble friend describes, with capacity that HS2 phase 2 would have alleviated. In the meantime, Network Rail is progressing a programme to renew and modernise the west coast main line between Crewe and Scotland, and work on that will continue through the next three five-year control periods.