Passenger Railway Services (Public Ownership) Bill

Lord Snape Excerpts

Committee stage
Monday 21st October 2024 Lords Chamber

[Lord Lansley (Con)]

My Lords, I will briefly ask the Minister a question for when he comes to respond.

I am very supportive of what my noble friend says in his Amendment A1—that we be clear about the purpose of this legislation—but the Minister will be aware that the Bill will substantially achieve that by amending the Railways Act 1993. Section 4 of that Act, as amended, sets out the general duties of the Secretary of State and the Office of Rail and Road. While they are listed in relation to the Office of Rail and Road, they are added as duties of the Secretary of State under Section 4(3)(a).

Section 4(1)(zb) says that it shall be the duty of the Office of Rail and Road—and, by extension, the Secretary of State—

“to promote improvements in railway service performance”.

Will the Minister confirm that nothing in this Bill would change the continuing duty of the Secretary of State to promote improvements in railway service performance?

Can the Minister also say that it will not change the duties of the Secretary of State and the Office of Rail and Road otherwise listed in that subsection, including

“to promote competition in the provision of railway services for the benefit of users of railway services”.

I am interested know precisely how the Minister and the Government propose to meet that general duty, which is not changed by this Bill.

[Lord Snape (Lab)]

My Lords, I am always fascinated when Members of the party opposite attack proposals from this side of the House on the grounds that they are ideological. What could be more ideological than the privatisation of the railway system back in 1994? In my view, Amendment A1, to which the noble Lord, Lord Gascoigne, spoke earlier, would create another bureaucracy—something the Conservative Party are normally against. No one would say, and I certainly would not, that a nationalised railway will be the answer to all our problems. Having worked in it, I know only too well it will not be. On the other hand, I think if you asked the average rail passenger for his or her view of the current system, they would say that anything would be better than what we have at the present time.

When it comes to ideology, I followed with interest the words of the noble Lord, Lord Grayling, who talked about failings in the increased cost of electrification leading to the delay, and in some cases the cancellation, of various electrification projects. My noble friend the Minister, who will respond, has great experience of Network Rail, and he might comment on some of the costings—many of us would take an interest in those matters. I was surprised, to say the least, at some of the expensive projects that Network Rail has embarked upon and the failure of that organisation to work within the original estimates, as far as costs are concerned. I hope it will not upset the noble Lord, Lord Grayling, too much, but his sojourn as Secretary of State for Transport is not looked upon by the railway community with any great favour. His view that in some cases electrification was unnecessary and that what was needed was bi-mode trains did not particularly please passengers. I recently moved home, from the Birmingham area to Gloucestershire, where I now have the pleasure—doubtful pleasure that it is—of travelling on Great Western’s bi-mode trains. They are often subject to cancellation and, again, the usual view from my fellow passengers is that the sooner the railway is renationalised, the better.

My noble friend Lord Berkeley is regarded as an expert on railway costings—he shakes his head, but he should not be so modest; he certainly played a major role with his views on HS2 and its finances. He mentioned the Office of Rail and Road. In the context of this amendment, can my noble friend the Minister tell me what role is envisaged for the ORR in future? I hope he will not be too offended if I say it is a misnomer: it is certainly an office for railways, given that it intervenes on various grounds—in my view, improperly, because there are proper roles for those responsible for railway safety in the industry—but appears to play no role at all as far as the road network is concerned. The fact that something approaching 2,000 people are killed on our roads on an annual basis is not something that detains the ORR. I hope my noble friend can tell me what role he envisages for the ORR in the newly nationalised railway system.

Finally, just to hark back to 1994 and the privatisation Act, fundamentally it adversely affected the railway industry. In 1994—again, I apologise for the history lesson—the railway system in Britain was regarded as the most efficient and effective in western Europe; certainly the subsidies paid to the rail industry in those days were less than those paid in countries such as France and Germany. The sectionalisation of the railway industry in the 1990s, largely at the behest of a Conservative Government—I do not make any complaints about that, as Governments have opinions—led to a much more readily identifiable system of costings for the industry overall. For the first time, we saw exactly which parts of the railway were profitable, which were not and which needed perhaps more money spent on them in the future than had previously been envisaged.

The relationship between Sir Bob Reid mark 1, the then chairman of the railways board, and Mr Nicholas Ridely, the Secretary of State at the time, was an extremely fruitful one. I am not here to announce any great fondness for Lord Ridley but I think that he appreciated what the railway industry was doing, largely at his behest at that time. I understand—although I do not wish to attribute words to him long after his death—that he was more than a little concerned about the mode of privatisation envisaged by the Government at the time, largely because of the success that he felt he had had in improving and defining the railway industry’s relationship with the Government of the day.

I hope that, when my noble friend the Minister responds to this amendment, he will appreciate at least that, whether the railways are privatised or public, all too often railway passengers—or customers, as they are somewhat laughably known these days—do not feel that their views on the provision of the service are listened to or that there is a proper voice for them. It is some years since the transport users’ consultative committees were abolished. Can my noble friend say what plans he has for better passenger consultation in the future?

In conclusion, I hope that my noble friend will not get too bogged down in the bureaucratic desires of the party opposite. Future amendments that we will come to, from the Conservative Party or its Front Bench, appear to believe that railway management has nothing better to do than put together various plans, which no doubt will be torn apart by those who feel that the railways are not delivering the service that they should. I await with interest my noble friend’s response to the amendment. I know that he will bear in mind that we ought to be concerned about the passengers of the future—the passengers of the past having been sadly neglected.

[Lord Sterling of Plaistow (Con)]

My Lords, trade moves by trains. Why do I bring that up? Some of your Lordships may remember that when Freightliner was put up for sale, P&O—the Peninsular and Oriental Steam Navigation Company, to give its full name—bid for it, and we were told by the competition authorities that, at that time, we already controlled 25% of transport movements for the whole of the UK and therefore we could not take it over.

I went to see the Secretary of State for Transport and everybody involved with this—our own people—to say that it was ridiculous. In practice, what we really wanted was to have a fast line for container trains, at night as well as in the day, from Glasgow right the way through to Istanbul, non-stop, for 2,500 miles, moving trade backwards and forwards in a major way. We had only about 3% of the trade in Europe, and I thought that, at that stage, it would have made a huge amount of sense. With those double trains going right the way through and the movement of trade, we would now be in a much finer position for doing trade in a much more major way, 2,500 miles away and further. I thank your Lordships for listening to me.

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[Lord Moylan (Con)]

My Lords, I start by apologising to the noble Baroness, Lady Randerson, if I caused any confusion; I will try to do better. I welcome the noble Lord, Lord Hendy, back to his place from his excursion, no doubt by rail, in foreign parts. We missed him at Second Reading, but we had an excellent substitute in the shape of the noble Baroness, Lady Blake of Leeds.

I will make a preliminary remark at this stage, which I intend to save me making it on future groups of amendments. It is that we are, essentially, at least as far as the amendments tabled by Members from the Conservative Party are concerned, seeking information from the Government in relation to this Bill. If the Government are candid with us and give us the information that we are looking for, we will have achieved our objective on behalf of the public, and that will be the end of the matter.

I turn to the debate that has taken place so far. The part that has sparked me most, which I felt I had to answer, were the remarks of the noble Lord, Lord Snape. First, I agree with him about what a degradation it is that passengers have become customers when, of course, they really ought to be passengers. But there is also the question of ideology, which I hope to take out of the debate that we will have in Committee today and on Wednesday.

Of course there is always an element of ideology when one talks about privatisation and nationalisation. The railways, which, I think, are 200 years old next year, have been nationalised for only about a quarter of their entire existence. We must not think that nationalisation is the natural condition of railways in this country. They flourished and grew and were developed in private hands; we should always remember that. The truth is that in 1945-46, the railways were nationalised largely because, after six years of war, they were bankrupt. There had been no investment in them during the whole of that period, and they had deteriorated. Nor was there any prospect of their making sufficient profit that private capital could have been recruited to make up that deficiency.

Whether the then Government believed in nationalisation as an ideological matter or not, if the railways were to continue running at all it was going to have to be in government hands. Parts of the system were privatised in the mid-1990s for equally practical reasons—we discussed some of them at Second Reading. One reason was to attempt to improve customer service through competition; one was to recruit private capital into the railways on a consistent basis, which the Government had never been able to provide during the whole of the time they owned the railways—not enough capital and never enough consistency because no budget went beyond 12 months—and another was to try, frankly, to break the grip of the rail unions on pay, so that the astonishing disparities that exist between, let us say, a train driver and bus driver, which are entirely due to the monopoly supply of labour by ASLEF, might be evened out.

What we discussed at Second Reading, I am perfectly happy to admit, is that on some of these fronts privatisation has been successful, and on others less so. If the Government, who have won a majority on the basis of promising to nationalise the train operating companies, wish to give the other side of it a kick and see if they can make it work on that basis, I do not personally object—at least not on ideological grounds. But the House is perfectly entitled to have its practical questions about how this will work addressed. That is what the amendments in this group and many that will come before the Committee later intend to address.

The Government claim that this is a very small Bill. On the other hand, when they talk to the public it is a huge Bill, “because we are nationalising the railways”. They are not really nationalising the railways, because to nationalise something you normally have to pay for it and this Bill is not something where they are paying out to shareholders. All they are doing is letting the franchises that exist expire and then tying their hands and preventing themselves from renewing them except in emergency circumstances. It is, as I would have said at Second Reading if I had had more time, less nationalisation and more like dismissing your chauffeur at the end of his contract and deciding to drive the car yourself. At least you knew the chauffeur had a driving licence and some experience and qualification in driving the car, but now we will have the Secretary of State—we were told at Second Reading that she prefers to be known as the passenger-in-chief—as, in effect, driver-in-chief as well. We will see how that works out.

It is a big thing when the Government talk to the public—it is nationalisation of the railways—but when they talk to noble Lords it is a very little thing. All the big things, we are told, will happen in the next Bill— the train further down the line, expected in roughly a year or 18 months. That is the Bill in which many of our questions should be addressed, we are told—we should not ask those questions now. I think we should ask many of those questions now, for two very good reasons. The first is that the Bill presents us with a measure regarded by the Government as preliminary to that very large Bill, so it has long-term consequences. The second—a point made by the noble Baroness, Lady Randerson—is that the Bill sets up a shadow structure that could persist in operation for four or five years or even longer because, first, it will take us a year or 18 months before we see the Bill that will make these great reforms; and, secondly, as anyone who has been involved in the railways or any other large organisation will know, implementing significant change as a result of that legislation is likely to take several further years. We will have to live with the shadow structures set up as a result of the Bill for many years, and their practical consequences deserve the most careful scrutiny.

[Lord Snape (Lab)]

Can I ask the Minister, sorry the shadow Minister—

[Lord Moylan (Con)]

I am not quite yet the Minister, but the way the Labour Party is going, who knows?

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[Lord Snape (Lab)]

I asked for that one, I have to say. It is mistakes being made at both ends of the Corridor recently.

Arising from what the noble Lord has just said, can I ask him to clarify two points? First, on the delay in moving on to the more detailed Bill, bearing in mind that it was 2016 when the Government he favours brought forward the proposals for Great British Railways, what were the Government doing in the eight years since then? Secondly, I have a simple question about the ideology of privatisation: if nationalisation is so bad, why was almost the first act of Governments in two world wars to nationalise the railway industry? What makes it so essential in wartime and yet it can be handed out piecemeal in peacetime?

[Lord Moylan (Con)]

If the noble Lord will forgive me, I am asking the questions in this scenario, and I do not feel I necessarily have an answer to his question about wartime. I might pass it on to the Minister, who once arranged for me to go and see deep in the bowels of Mayfair, under the former Down Street Underground station—I am sure that if the noble Lord, Lord Snape, has not been, it can be arranged for him to see it too—the wartime headquarters of the railway operations executive, including what is claimed to be, although I think with no historical foundation, a tin bath in which Churchill once took a bath. I will say no more about the war than that.

On the former question, I do not know the answer, but I would like to know. Why was it that the then Government, having published what they called the Williams-Shapps review written by Keith Williams—I think he is correct in saying that it was in 2016—and having promised a transport Bill in the King’s Speech one but last, did not come forward with the measures they thought they could offer in that regard? I do not know the answer to that, but I am willing to have a guess and it is relevant to what the Government are embarking on now and to whether they are going to meet their 12 to 18-month deadline of delivering us with this massive Bill that is going to transform the railways. My guess is that the then Government found that grappling with the intense difficulties of reforming the railway on such a large scale meant that, try as they might, they found considerable difficulty in putting together that Bill. It may be that is exactly what the Minister finds as he comes to address these difficulties. This only adds further to my point that the shadow arrangements we are setting up today could be with us for a very long time.

I come to the first amendment in the name of my noble friend Lord Gascoigne. The Government say they have a purpose—they are not doing this for ideological reasons or at the behest of the trade unions—which is to improve passenger services. At Second Reading, I pointed out that in the final stage impact assessment produced by the Department for Transport, given the opportunity it had to say exactly that, it said something completely different. It said that the Bill had been

“prepared to enable swift delivery of a Government manifesto commitment”—

not to improve matters for passengers—and that was why it had not looked, as it normally would, at the alternative options that might be put forward to achieve a similar purpose. That is another reason why it is incumbent on us in this House to look in great detail at what the Government are putting before us. They are in effect asking us to buy into an article of faith. They are simply saying, “Well, it couldn’t be worse than it is at the moment”—that is simply untrue; there are problems with the railways, but they could be a great deal worse than they are at the moment—“so it is bound to be better if we take it over and run it ourselves as part of a national enterprise”. But they have not provided any evidence for that; they have simply stated, “This must be the case and you’ve got to believe us”. As I say, that is one of the reasons why our job is not to do so.

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[Lord Grayling (Con)]

My Lords, I shall raise a question with the Minister, as we are on the subject of the termination of franchises. I should say to the noble Baroness and the noble Lord that I have been there and wanted to terminate franchises. I have never had a problem with a mixed economy, but I have an issue with a uniform economy, because I cannot understand the logic of terminating a very good private sector provider, any more than the Mayor of London believes in terminating his private provider of the London overground—and I suspect, if we see more devolution in future, other parts of the country may want to see a mixed economy as well. Clearly, the Government are very happy to see that in stations, as we learned at the weekend.

However, it is more difficult than one might wish, and as a Minister you have to take a judgment about how much legal and therefore financial risk you are willing to take, and also about the disruption that the termination brings. Nobody should be under any illusion that making a transition between two operators has to be managed extremely carefully and, done at gunpoint, can actually lead to a deterioration of services.

I come to my question to the Minister. This set of amendments discusses the process of termination of franchises and when and how they happen—the order in which they happen. My memory is that, in a private system, at the end of a franchise, there is a payment to be made by the successor franchise operator to the franchise operator handing over control of that franchise. There are various capital costs and other costs incurred. If the public sector is coming in and saying, “Right, we’re taking over the franchise”, what can the Minister tell us about that equivalent process? Will payments be made to the companies that are being phased out, as there were between private operators? What will those payments be and what will be the total cost incurred by the Government in making those payments? After all, the private operators will have invested in capital aspects, on the stations or elsewhere. Therefore, logically, the Government will also have a legal obligation to go through the kind of process that happened in the past when a franchise simply moved between two private operators. Can the Minister address that specific point in his closing remarks?

[Lord Snape (Lab)]

My Lords, I honestly believe that the amendment so ably moved by the noble Baroness opposite is extremely sensible. Like her, I can see no reason why we have a chronological system for dispatching the current franchisees based on the run-out date of their particular franchise.

Like the noble Lord, Lord Grayling, I am in favour of a mixed economy. There are certain aspects of privatisation, heresy though it might sound to some of my colleagues, that were successful. The fact that some of the railway system—rail freight, for example, which rarely gets a mention in these debates—remains in the private sector is indicative of the success of those who took what was, under British Rail, a very much declining sector of the railway industry. I do not wish to do an “all our yesterdays” speech, but my recollection of the freight sector in those days is ancient wagons clanking around the system, being shunted from one marshalling yard to the next, and with an average journey speed between loading and destination of around 12 miles an hour. Since privatisation, the rail freight side has improved greatly.

To return to the very valid point made by the noble Baroness, Greater Anglia is not just a success so far as its operations are concerned; it is a financial success as well. Because of this unfortunate coincidence of the run-out date of franchises, Greater Anglia is forecast to repay to His Majesty’s Treasury around £100 million in the current financial year. As my noble friend Lord Liddle said, presumably—unless my noble friend the Minister can reassure us otherwise— we are going to dispatch Greater Anglia to the railway knacker’s yard while pursuing with Avanti Trains, as he and the noble Baroness said, a franchise operator that, quite frankly, should not be there.

The previous Government, in the run-up to the election, were stupid enough—or ideological enough, perhaps—to give Avanti an extra nine-year franchise, on the grounds that it was showing some improvement. Those of us who travelled on Avanti regularly—thankfully, it is an experience that is now behind me since I moved home—could not find any improvement whatever. Indeed, it seemed to me that the service was deteriorating on an annual basis.

Again, it might be heretical for some of my colleagues to hear this, but aspects of the passenger railway that were privatised were successful. At Second Reading, I mentioned Chiltern Railways. Thanks to the financial constraints that British Rail had to operate under as a nationalised industry, Marylebone station was proposed to be a coach station by Sir Alfred Sherman, if I remember rightly, Mrs Thatcher’s transport guru at the time. The existing railway management, again through no fault of their own but because of financial constraints, had to run the service from Marylebone down, single much of the line and reduce the overall train service. Under the able leadership of the late Adrian Shooter, and with a long-term franchise of 20 years, with various break-off points, my noble friend Lord Prescott and the then chief executive of the Strategic Rail Authority came up with this 20-year franchise, but insisted that not only had the service to be improved but some of the infrastructure had to be restored. Under Chiltern Railways, lines that had become single were redoubled, and a pretty poor commuter rail service now has two trains an hour as far as Birmingham—with a price, incidentally, as my noble friend Lord Liddle might be interested to know, which considerably undercuts the fare of Avanti trains.

There are aspects of the future of the railway industry where a mixed economy would make some sense. I hope that, in those circumstances, my noble friend the Minister will look with some degree of favour on the noble Baroness’s amendment.

[Lord Berkeley (Lab)]

My Lords, the noble Baroness makes some very good points. The Greater Anglia service is awfully good: my two noble friends who have spoken about it have confirmed that, and I have been on it recently myself. However, following the intervention of the noble Lord, Lord Grayling, could somebody from the Conservative Party—maybe the noble Lord, or one of his predecessors or successors—explain the basis on which it chose Avanti and CrossCountry, which are two of the worst performing operators, to be given such very long contracts? I remember at the time there was a big debate between Virgin and Avanti as to which should get the contract. Whatever one thinks about Virgin, it has had some good services in the past, but Avanti is absolutely awful—as is CrossCountry, though for different reasons. Why did the then Government do it?

It is fine to say that we have given it to a private sector operator, but if we end up in a situation where the Government are effectively going to make similar awards to people—not companies, but people—we should know on what basis it is done. I hope my noble friend the Minister can explain what the criteria will be to make sure that we get some decent new franchises and how he is going to get rid of the two existing pretty bad ones as soon as possible.

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[Lord Hendy of Richmond Hill (Lab)]

The answer to the noble Lord is: not yet. He will recognise that those costs materialise only when the franchise transfers, so the department will never have had that total number in the past, and I do not expect it to have it now. As the franchises transfer, the number will become obvious.

[Lord Snape (Lab)]

Before my noble friend leaves that point, I will ask him about the question of performance that has been raised on both sides of the House. The public performance measure national average is 88.7%, but the Avanti West Coast performance measure is only 62.2%—some 25% less. What has to be done to remove a franchisee which has performed so badly, as in the case of Avanti, other than knocking down the buffers at Euston and heading a Pendolino down Eversholt Street?

[Lord Hendy of Richmond Hill (Lab)]

In answer to my noble friend, and in recognition of some of what I have done in the past, it is sometimes a surprise when you read the performance requirements for contracts that you inherit. This is clearly one of those cases. I cannot defend the statistics that my noble friend cited, and I cannot defend a contract that allows that to happen without remedy.

In answer to the noble Baroness, Lady Randerson, we will come to devolution later in Committee.