Passenger Railway Services (Public Ownership) Bill

Andy McDonald Excerpts

2nd reading
Monday 29th July 2024 Commons Chamber

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

I congratulate you, Madam Deputy Speaker, on your elevation.

As I start my contribution, I wish to put on record how proud I am of my relationship with our trade union movement. I declare both the political and financial support that I have received, including from affiliated and non-affiliated railway trade unions, as reflected in my entry in the Register of Members’ Financial Interests.

It is an immense honour to speak on Second Reading of this most welcome of Bills. In the recent election, we set out in our manifesto how we will put passengers at the heart of the service by reforming the railways and bringing them into public ownership. With today’s Bill, that is what we are doing. The restoration of our railways to public ownership is something that I have spent much time working to achieve in this place, especially in the four years from 2016 as shadow Transport Secretary.

In that role, I produced a shadow White Paper entitled, “GB Rail: Labour’s plan for a nationally integrated, publicly owned railway”. It was nice to see that the then Transport Secretary tried to pinch the title, but I suppose that I should be flattered by that. In the document, I set out how the privatised UK railway has not delivered for passengers or taxpayers for a long time. I said, when we published our paper, that the railways must be run with the public interest as its primary objective, and I was looking at the sector more broadly, not just as passenger services. I am delighted that this Bill is before us today. I heartily congratulate the Secretary of State, my right hon. Friend the Member for Sheffield Heeley (Louise Haigh), on securing the first substantive debate and moving the first piece of legislation under this Labour Government.

The Bill is necessary because the privatisation model for Britain’s railways, introduced by the Major Government with the Railways Act 1993, has long been failing passengers. Even Margaret Thatcher was reluctant to privatise rail. The privatised rail system has put private profit-taking before the provision of public service. Far too many of Britain’s train franchises have been wholly or partly run by the subsidiaries of other countries’ publicly owned railway companies. Over the years, Deutsche Bahn, Nederlandse Spoorwegen and Trenitalia, to name just a few, have extracted value out of our railways to pump back into their own home railways, yet the only nation state that was precluded from running railways here was our own. Well, all that changes today.

I have previously said that the primary aim of Britain’s railway should be supporting the health of the economy and society, not other nation states and a small group of private franchise shareholders. The outgoing model has resulted in what is, and should function as, a public service, being subsumed to the commercial objectives to deliver for those shareholders and not the economy or the wider public good.

At the height of private franchising, it was estimated that more than £700 million a year in total was going to those companies’ shareholder dividend payments. That was unproductive, wasteful, and the opposite of value for money. This has been funded by the fleecing of farepayers. The Commons Library sets out that the cost of rail fares has increased by 20% in real terms over the past 20 years, while average real wages across the economy struggle to match 2008 levels. The additional revenue is not used to remunerate staff. Rail staff are incredibly hard-working public servants—employed by private companies since 1993—and RMT union members should not have needed 18 months of industrial action to get a pay deal on which they could settle. The position is similar with ASLEF union train drivers. It shames the Conservative party that these drivers, who had not had a pay rise in five years, were forced to wait for a general election and a Labour Transport Secretary to hold direct pay talks.

I pay tribute once again to the rail unions—the RMT, ASLEF and the TSSA—which keep our rail sector running, despite the problems of privatisation, and which deserve a better deal than they have had in recent years. The rising dividends, funded by rising fares, at the expense of employee pay, have been paid out regardless of performance.

In the most recent statistical release by the Office of Rail and Road, 8.5% of Avanti West Coast trains were cancelled in the last quarter and 10% were more than 15 minutes late. Similarly badly, 7% of CrossCountry trains were cancelled and 6% were more than 15 minutes late.

Under the Conservative’s rail network, the private sector took the profit, the public sector picked up the pieces when things went wrong. When the covid pandemic led to falling passenger numbers, the Government stepped in to prop up the railway with funding. During the recent rail pay disputes, the RMT has argued that rail companies were being indemnified against any losses to the tune of £1 billion, on the same day that there was a national strike on the railways.

Well, Madam Deputy Speaker, the public have had enough. They want change, and Labour is now delivering it. The public voted for it. We believed that they would do so, because polling has always shown that they support public ownership and that is right across the political spectrum. In a YouGov poll just after the King’s Speech, 76% said that they backed public ownership of rail, up from 60% at the 2017 election. That also reflects the increase in support for public ownership of energy: something else on which we are making a start.

Across the economy, it is clear that voters have had enough of rip-off privatisation and are embracing public ownership. There is much, much more that we will achieve, enabling all of us to travel much more easily and reliably, with simpler fares, connecting with other modes of increasingly decarbonised public transport, to give our economy and the quality of life a massive boost.

With this marvellous Bill, my right hon. Friend has the golden opportunity to make sure that our railways work for our people and our businesses, not for the private profit of train operators. I look forward to speaking with her about the much-discussed expansion of rail connections to our capital city and across the northern region, from my Middlesbrough and Thornaby East constituency. I commend her for the superb job that she has done thus far by bringing forward this Bill today. I wish her and the Bill every success.

Passenger Railway Services (Public Ownership) Bill

Andy McDonald Excerpts

Committee of the whole House
Tuesday 3rd September 2024 Commons Chamber

To that end, our first amendment also proposes a follow-up report in five years’ time, which would articulate the actual impact of these reforms. That is not a lot to ask, so I hope the Government will seriously consider the amendment. Passengers and taxpayers deserve to know what difference this change is likely to make, and then what difference it has made—to services and costs, to what their money will buy and how wisely it has been spent—and to be able to compare the impact of the choices this Government are making with those made by Governments across Europe. As I said, several of those Governments are reforming railways in the other direction by unwinding their public models and introducing more private provision into their networks.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

The shadow Minister asks about the benefits that will accrue if this change is made. We on the Labour Benches have been working on it for years, so the suggestion that it has somehow been rushed is a nonsense. May I gently point out to her that over the years that this change has not been made, millions if not billions of pounds have been shipped out of this industry to subsidise and support other nation states’ railway systems? If ever there was a nonsense, that is it, staring us in the face. She talks about ideology: the ideology of privatisation has been ruinous for the railways, and it is about time that it was corrected.

[Helen Whately]

There are a few problems with what the hon. Member has just said. One is that he talks about those figures, but the Government have not taken the time or trouble to set out what the impact of the Bill on passengers and taxpayers is expected to be. Were the Government confident about that impact, I am sure they would have set it out, but they have not. That is why our amendment proposes that they should set it out. We also know that while on the one hand, there are some savings to be made from management fees—I will come to that later in my speech—the benefits of competition, and the pressure of profit and loss and the bottom line, drive innovation and bring efficiency. That does not necessarily happen to the same extent in the public sector.

--- Later in debate ---

[Wera Hobhouse]

I thank my hon. Friend for that intervention and repeat that it remains to be seen how quickly that can be addressed. That is really our main point—we will scrutinise the Government on how quickly these changes can be delivered, because that is what all our constituents are really asking for.

Our amendment would ensure that an annual report was published on the effects of public sector contracts, particularly on the ticketing system. Fare hikes, delays and cancellations all contribute to a loss of confidence. Despite that, passenger numbers are up; people want to use our railway as a clean, green way to travel. We agree with the Government that competition is not working as intended, but we cannot expect nationalisation to be a silver bullet that solves all the issues with our rail services. It is therefore vital that the Government get a clear picture and are fully transparent about the public experience throughout the change.

The current ticketing system is simply not fit for purpose. Complicated and inconsistent ticketing is a barrier to rail travel. If we are to meet our climate commitments, green travel must be encouraged. I often hear from my constituents that they find it hard to understand when a ticket is best value for money, which highlights the need to simplify the entire system. When people buy a ticket, the best value fare should be clear and should be displayed first. There have been cases where operator-owned ticket machines have had an in-built bias to sell their own company’s tickets even if they are not the best value. Commuters should not have to jump through hoops to find the most effective price.

Amendment 21 would also require a look at the effects of nationalisation on digital season tickets and compensation for delays and cancellations. Delay repay is another big issue on our rail network. In the last reporting year, train operators closed 7.6 million delay compensation claims. That figure was 30% higher than the previous year even though passenger journeys were only 16% higher. However, current operators treat delay repay claims differently: while some passengers can get automatic compensation if their journey is delayed, others have to fill in complicated forms and have to wait. A unified approach to delay repay is clearly needed to improve passenger experiences, and I agree with my hon. Friend the Member for Edinburgh West (Christine Jardine) that it is absolutely vital that passengers see such changes very quickly, rather than having to wait for a whole-system change.

The same is also the case with season tickets. Annual passes for similar-length rail journeys differ immensely across the country depending on the operator. An annual report scrutinising how nationalisation affects those inconsistencies is essential to reducing them. To ensure that passengers get a fair deal from nationalisation, I urge Members to support our amendment 21.

Amendment 20 aims to bring people further confidence as rail companies are brought into public ownership. The amendment would establish an independent body to review contracts made by the Transport Secretary and public companies. That body would put the customer at the heart of services, as well as delivering, putting commuters first and holding operators to account. The amendment would ensure that if the independent body did not agree with a proposed contract, the Secretary of State must explain to Parliament why they were going ahead. To give the public confidence in our railways, the process of contract allocation must be kept under scrutiny and be fully transparent.

Our third amendment is amendment 22, which would require the Government to review how the transition to public ownership affects services such as Merseyrail and Transport for London. Those services are already under public control, but in those cases the control is local, not national. The amendment would allow more services to be operated by local public bodies in the future—we have discussed that in our pre-meeting. The review would not simply look at direct impacts, but engage with the local public bodies themselves on their capacity and their wish to deliver such services.

If the new Government are serious about devolution, the option for combined authorities to deliver services must be on the table. We have already seen how devolved authorities can deliver rail services effectively. Transport for London and Merseyrail are two such examples. If devolved authorities wish to deliver rail services, there must be a way for them to have discussions with central Government. I understand that such a proposal might be for the future, but it is important we put a marker down here. Amendment 22 provides a mechanism for that process.

Nationalisation must be a means to an end. The public at large do not care who is running the trains as long as there are good services and travel is affordable. Our Liberal Democrat amendments would ensure that the legislation has the passenger at the heart of any changes and that the public get value for money.

[Andy McDonald]

rose—

[Wera Hobhouse]

I am coming to the end of my remarks.

The Liberal Democrats want to work with the new Government to improve our railways and deliver a fair deal for passengers. I call on all colleagues to support our amendments.

--- Later in debate ---

Contrary to the views expressed by the Opposition and set out eloquently by the shadow Secretary of State, the Bill will save taxpayers money, as profits will be used to improve rail services, rather than inflate considerable, unwarranted dividend payments to private train operators. As my hon. Friend the Member for Middlesbrough and Thornaby East (Andy McDonald) indicated, the private train operating companies are often owned by foreign Governments, so in fact we are subsidising the rail fares of passengers in other European countries. The previous Government allowed train operating companies to pay out hundreds of millions in dividends while taking public subsidies. That is financial mismanagement. It is bad value for money and exploitative of the taxpayer and commuters.

[Andy McDonald]

The privatisation of the railways was a privatisation too far, even for she whose portrait should be removed. Does my hon. Friend agree that it is utterly ridiculous that the only nation state on the planet not able to run the railway in this country is this one?

[Grahame Morris]

Absolutely. If ever there was a charge of political dogma to be made, it must be about the fact that, under the terms of the privatisation, the British taxpayer and the British Government are not allowed to own a stake in our own railway. For too long, private companies have provided a substandard service while making substantial profits. Over the last seven years, the remaining private train operating companies—I apologise for misleading the Committee, but I misspoke earlier when I said that there were 14 of them; there are 14 franchises in total, four of which are operated by the state through the operator of last resort—have paid out an average of £130 million annually to their shareholders. Those companies are often owned by foreign Governments —in Germany, Italy, France and across Europe and the world. Meanwhile, passengers’ day-to-day experiences have been of overcrowded carriages, delays, service failure and, worst of all, some of the highest fares in Europe.

It is worth thinking about the costs, and the profits that some private train operators have been able to generate for shareholders. Figures released just this week show that Govia Thameslink Railway paid out a staggering £82.4 million in dividends, with £62.3 million of that being for the 2023-24 financial year. That represents a 268% increase from the previous year. In return for those princely profits, Govia consistently failed to meet two thirds of its customer service quality targets, as reported in the Financial Times. The situation was encouraged to persist under the last Conservative Government. I welcome the fact that Labour is making this a priority from day one, as that is fundamental to fixing the foundations and delivering the economic growth promised by the Prime Minister.

I support the comments made by my hon. Friend the Member for Derby North (Catherine Atkinson) and the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter) about the rolling stock companies—the so-called ROSCOs. Many commentators see a problem with the newly formed Great British Railways having to continue to lease rolling stock from ROSCOs, as that would allow those companies to profit from taxpayers’ money. My view is that ROSCOs are an unnecessary link in the chain. I frequently raised the issue with experts and industry leaders on the Transport Committee, and I believe that we would benefit from meeting our rolling stock needs by placing orders directly with UK-based manufacturers such as Alstom and Hitachi, rather than enriching the ROSCOs.

Despite being in post for a relatively short time, the Secretary of State has made a strong start with the Bill. However, I urge her to consider the points raised by me and Members on both sides of the Committee about how we continue to procure rolling stock as we move forward. On Second Reading, the Under-Secretary of State for Transport, my hon. Friend the Member for Wakefield and Rothwell (Simon Lightwood), said that purchasing existing rolling stock would not be a responsible use of taxpayers money. I understand that, but will the Minister, in responding, clarify whether in the future, under GBR, there will be an option to purchase new rolling stock directly, instead of having to continue to lease through the ROSCOs?

As my hon. Friend the Member for Derby North said, the UK needs to upgrade to 4,000 units of rolling stock over the coming decades, with Network Rail estimating costs in the tens of billions of pounds, so this is an ideal opportunity to explore a new financing model for rolling stock. I am not naive—I understand the financial situation that we have inherited from the last Government—but I ask the Government to explore not-for-profit financiers if rolling stock cannot be nationalised under GBR. May I point out respectfully that Eurofima, a supranational not-for-profit financier, has stated that, for every £1 billion of financing on UK railways, it could save the taxpayer £350 million over 30 years due to its lower financing costs? That is compared to using the existing ROSCOs. Will the Secretary of State update us on the possibility of using not-for-profit financiers for rolling stock in preference to the ROSCOs?

I will take up the point made by the shadow Secretary of State about the pay review bodies. May I point out that they are not universally welcomed? I have been looking at responses to pay review bodies in the health service, and the last Government had a less than wonderful record when it comes to implementing the recommendations of pay review bodies, not least those relating to junior doctors. The Royal College of Nursing has said of pay review bodies that there is “nothing independent about them.” The chairs and members of pay review bodies are hand-picked by the Prime Minister and Government Ministers, and the terms of reference are decided by the Government. There is some scepticism about how independent they truly are, and about whether, when they make recommendations, the Government are obliged to implement them in full.

I ask the Minister if it is possible to provide a timetable for the next steps. When will future Bills be introduced to the House, and when is Great British Railways expected to be fully established? I acknowledge and express my appreciation for the engagement of the Front-Bench team. I stress that I support the Bill because I believe that it represents a critical step in fixing the long-standing issues in our rail system. The current privatised framework is giving a fragmented railway, and has failed to deliver value for money, an efficient service or customer satisfaction. I am pleased that we are moving towards a model that prioritises the needs of passengers over the profits of shareholders. Rethinking our approach to rail management and financing is a crucial first step towards fixing the foundations and putting Great British Railways at the service of the travelling public.

Passenger Railway Services (Public Ownership) Bill

Andy McDonald Excerpts

Consideration of Lords amendments
Tuesday 19th November 2024 Commons Chamber

[Gareth Bacon]

The point of the amendment is to put passengers at the heart of the decision making we are asking for. [Hon. Members: “How much?”] The point of the amendment is to put passengers at the heart of the decision making, and the proposed amendment would ensure that this legislation is in the service of improving passenger experience, not purely in the service of fulfilling an ideological undertaking.

Lords amendment 2 would also ensure that the Government, alongside stakeholders, consider carefully what performance data is most relevant to passenger experience, and would ensure that that data is taken into consideration when undertaking the actions facilitated by the legislation. I fail to understand why the Government would be opposed to such a clearly reasonable protective measure, but I can guess. In justifying this ideological legislation, the Government have made clear their intention to utilise selective performance data. Rather than clarifying the relevant performance information for its own administrative use or for passenger understanding, they are obscuring it, allowing the Government to fulfil an ideological project untethered from the public’s wish to see their experiences on the railways improved.

Of course, the Government could choose to put politics aside and support the amendment, and we call on them to do so. If they did, that would signal that while they are undertaking this ideological rail project, they are also seriously considering the need for the legislation to make an actual improvement to passenger experience. This amendment will help the Government’s actions, and it is not founded on selective principles. A failure to accept the proposed amendments will also fail to ensure that the ideological measures being undertaken by this Government take into account the needs and experiences of passengers.

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

Will the shadow Minister give way?

[Gareth Bacon]

I am just winding up.

Such a failure will only further the approach—already taken by this Government—of prioritising political convenience over substantive action. We urge the Government to support these amendments and, in doing so, mitigate the negative impacts of their legislation and work to protect and support passengers.

[Andy McDonald]

Madam Deputy Speaker, you will perhaps be relieved to know that I will not detain the House particularly long. I rise to support the Government, but also to say something in favour of the motion in the Secretary of State’s name relating to Lords amendment 2.

I read the Lords debate on their amendments 1 and 2, and I sympathise with the notion that passengers receiving the poorest service from a train operating company may wish its franchise to be terminated early. However, the point of this Bill is not simply to take over the worst franchises, but to recognise that the private operation of the passenger rail service has delivered a poorer service for passengers in general, and that the remedy is to return all passenger franchises to public ownership and closer control.

I say to Conservative Members that the British public spoke on this issue at the last election. If we look at any of the research and analysis on the passenger rail service, it is abundantly clear that not only do the vast majority of the British public want to take our railways back into public ownership and control, but the majority of Conservative supporters want the same thing. Perhaps that tells us a great deal about why the party opposite is the party opposite—why Conservative Members no longer sit on the Government Benches.

The hon. Member for Orpington (Gareth Bacon) made many references to ideology. I do not know how many times he mentioned the word, but I ask him to cast his mind back to the Railways Act 1993: if ever there was an act of ideology, that was it. John Major took a step that even she whose portrait must be removed was not prepared to take—she recognised that it was a ridiculous step to take. I suspect that the mover of the motion in the other place was seeking a device to disrupt the orderly transfer of passenger rail back into public ownership, which is best achieved with the least cost to the taxpayer by doing so as each franchise contract expires.

I am heartened to hear Conservative Members be so evangelical about the issues of performance and punctuality. Where were they for the past 14 years? Why were they not doing anything about those issues?

[Mr Andrew Snowden (Fylde) (Con)]

Will the hon. Member give way?

[Andy McDonald]

I will certainly give way. I look forward to it.

[Mr Snowden]

The hon. Member has mentioned removing franchises based on performance and passenger satisfaction, but c2c—which operates with a 94% passenger approval rating—will be one of the first franchises to be removed. I actually think that Lords amendment 2 is quite sensible, in that it looks at how we prioritise. Some franchise operators operate very well-recommended and well-approved services.

[Andy McDonald]

Perhaps the hon. Gentleman would like to tell us where he thinks the dividends go when they ship out of the system. The Conservative party was quite content to see massive dividends paid out to Abellio, Nederlandse Spoorwegen, Deutsche Bahn, and every other nation state on the planet that could subsidise its own transport system because of the ridiculous system imposed on this country’s railways by the Conservative party. Rather than serving passengers and performance, what we got was money shipping out of our system for decades, subsidising other nation states’ transport systems—if that is not a good example of barmy ideology, I do not know what is. We are correcting that, and rightly so.

The Minister in the Lords, my noble Friend Lord Hendy, said that

“the Government do not believe that we should either pay compensation for termination or keep paying fees to owning groups of train operating companies when we do not need to.”

He also clarified that some contracts may end early if their performance requires it:

“if we have the opportunity to put passengers out of their misery by ending a failing operator’s contract early and bringing their services into public ownership, we will do just that.”—[Official Report, House of Lords, 6 November 2024; Vol. 840, c. 1519.]

The Government are clear that they are moving ahead with restoring passenger rail to public ownership. They have a clear plan to do so, but Lords amendment 2 creates obstacles to doing that. It is not in the interests of passengers, and I hope the House will throw it out when we vote later.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Liberal Democrat spokesperson.