Passenger Railway Services (Public Ownership) Bill

Lord Liddle Excerpts

Committee stage
Monday 21st October 2024 Lords Chamber

My noble friend Lord Gascoigne seeks in his amendment to make good the deficiency pointed out by the Department for Transport: that the Bill has no purpose other than the delivery of a government manifesto commitment and that no alternatives have been looked at to achieve that purpose. He has tried to clarify, and state on the face of the Bill, why we are doing this, and he has put this forward in words that the Government themselves have been using. When the Minister comes to reply, there really should be no problem at all on the part of the Government in stating, “Yes, this is our purpose and this should be on the face of the Bill, so that everyone who looks at this Bill”—I do not mean passengers but those involved in implementing it, from the Secretary of State down—“knows exactly what it is should be guiding them as a principle when they come to make their decisions about how to put it into effect”.

[Lord Liddle (Lab)]

Can I try to help the noble Lord? My understanding is that the Government are committed to a comprehensive package of rail reform, and that the Bill for the comprehensive package will be introduced next spring. The purpose of this Bill is a relatively minor reform, in my view, in the context of the much bigger reform, which is to make sure that the franchises can transition to public ownership at minimum cost to the Exchequer. If we are going to do it at minimum cost to the Exchequer, we have to do it quickly; that is why this is one of the earliest Bills that the Government have put forward.

[Lord Moylan (Con)]

The noble Lord puts the Government’s case very well. How much the House has lost in not seeing him on the Front Bench as the Minister, given that he was the shadow Minister up until the general election.

We are told by the noble Lord that the Government have a package of reforms. We all have a package of reforms. We know what the package of reforms looks like; it is in the Shapps-Williams review. Yet what we are seeing from the Government is a package of reforms that differs significantly from the Williams review; that is why it needs such careful scrutiny.

Given the passage of time, I will be brief on the remaining amendments. All the amendments in my name seek to test the effects of this measure on the performance of the industry in the light of the nationalisation that the Government are proposing.

Taken separately, the amendments deal with different types of performance. Some deal with the performance of the railways in so far as they engage with passengers; that is, on timeliness, efficiency, service quality and so forth. Some relate to the performance of the railways in relation to finances; we will come to finances in more detail later. The Government claim that this Bill has no financial consequences—there are those of us on this side of the House, including the noble Baroness, Lady Randerson, who treat that approach with great scepticism. Other amendments seek to examine the measure’s effect in relation to the performance of the network as a whole.

I hope that all these amendments will be accepted by the Government. If they are to make these changes, there needs to be transparency and the public need to be able to see metrics published, possibly by an independent body or possibly by the Department for Transport—we are open to persuasion on that—which show how the railway is performing.

Having come to power committed to transparency, I know the Government would not want to resile from that. So, if they are not able to support the detailed amendments as tabled, I expect that the Minister will have no difficulty in saying that the Government will put forward amendments on Report showing how this Bill will be monitored in its implementation.

--- Later in debate ---

[Baroness Scott of Needham Market (LD)]

My Lords, I am sure that all of us want the same thing that the passengers want: a railway which is reliable, punctual and affordable. In too many parts of the country, they have been let down and this has not been delivered. Personally, I can understand why the Government have chosen this way of doing things and improving matters. But I do also think it is beholden on this House, particularly as we are now in Committee, to really focus on the way in which the Government intend to do this. It is in that spirit I move Amendment 1.

I am arguing what I argued in my Second Reading speech—that, in order to make the transition to public ownership a success, the Government should first take on those operators which are demonstrably failing passengers. They should turn those services around to deliver tangible improvements for the travelling public. It follows that the management of currently high-performing operators—as I shall show noble Lords, they do exist—should be retained for as long as possible to ensure that passengers continue to receive good service while minimising costs to taxpayers.

This amendment would require the Secretary of State to first nationalise the worst-performing operators to deliver immediate benefits to passengers and taxpayers, while enabling services that are currently working well to continue for the time being. Specifically, it places the Secretary of State under a duty to prioritise the termination of franchise agreements where the incumbent operator is in default of their agreements and gives them a duty not to terminate non-defaulting franchise agreements early unless there are no franchise agreements to be terminated due to default or because of their expiry. It would also require that terminating such an operator early would improve existing service provision.

I will say a word or two about the railway I use. I have travelled between Suffolk and London several times a week for more than 25 years now, and I can tell noble Lords that my service has never been better. Greater Anglia has spent £1.4 billion upgrading its rolling stock. It returned £65 million to the Treasury in the year ending in March and is predicted to return £100 million next year. It has a 94.8% public performance measure; I think Avanti is currently at 62.2%. Greater Anglia’s cancellations are at 1.4% and Avanti’s at 10.2%, but Greater Anglia’s full term expires in September 2026 and will therefore be one of the first to go.

It is genuinely difficult to see how that performance could be bettered. Indeed, with new management operating and a whole new set of structures it could conceivably get worse, initially at least. On the other hand, the poorly performing franchises have the potential for significant improvement—indeed, that is why the Government are doing this—so by using a strictly chronological approach they risk losing the confidence of the public right at the start of this process.

Current national rail contracts give the Secretary of State powers to act against failing train operators, both in general and where remedial measures are in place, and she has broad rights to information provision about possible contraventions, so could the Minister outline how the Secretary of State has used these rights in relation to CrossCountry and Avanti contracts? The grounds for default under the national rail conditions are passenger service performance, non-compliance with remedial agreements and contravention of other obligations, so has the Minister sought advice on CrossCountry’s and Avanti’s performance in relation to those provisions? Is either TOC in breach of any other provision? With Greater Anglia, West Midlands Trains and East Midlands Railway all performing well, can the Minister say whether they will be allowed to run their full course?

Regardless of where your Lordships stand on the question of renationalisation, in the end, as members of the travelling public, we all want it to work. By taking a strictly chronological approach, which leaves poor performers in place, the Government risk seriously undermining their own flagship policy. I beg to move.

[Lord Liddle (Lab)]

My Lords, I have an amendment in this group that is closely aligned with the noble Baroness’s, on which she has spoken very eloquently. It would reaffirm the Secretary of State’s powers to, if necessary, withdraw franchises from operators.

I tabled my amendment because I am a strong supporter of the Government’s policies and it would be tragic if we could not complete the transfer of companies to public ownership with remarkably quick speed. Yet, when we had the Second Reading debate, the noble Baroness, Lady Blake, pointed out to us that, unless there was a basis for withdrawing the Avanti franchise, it would run for another couple of years. It would be tragic if the worst-performing franchise, along with CrossCountry, was allowed to continue for this extended period and thereby to delay the Government’s ability to introduce the kind of rail reform that a unified railway under a guiding mind would make possible. To tell you the truth, on the basis of what I have heard, I think our Ministers are being a bit feeble. They could stand up to Avanti with much greater determination than they have.

--- Later in debate ---

[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.