Passenger Railway Services (Public Ownership) Bill

Baroness Blake of Leeds Excerpts

2nd reading
Monday 7th October 2024 Lords Chamber

Moved by

[Baroness Blake of Leeds]

That the Bill be now read a second time.

[Baroness Blake of Leeds (Lab)]

My Lords, I am pleased to present the Passenger Railway Services (Public Ownership) Bill for Second Reading today. Public ownership will allow us to end the failed franchising system which has inflicted misery on passengers through delays, overcrowding and poor service—a system in which far too many conversations are about how the railway works or, more often, does not work, and too few are about what the railway is for. At its heart, the railway is there to allow people and goods to move from A to B, which is vital in supporting jobs, housebuilding and quality of life. Railways are central to the Government’s missions to kick-start economic growth and break down barriers to opportunity, as well as helping us move towards net zero.

We need to change the whole culture of the railway to place all passengers back at the heart of the system. This Bill will ensure that trains are run for the benefit of the British public, not for the profits of shareholders around the world. I will be clear: there is a great deal of work ahead to reverse three decades of failure, fragmentation, inefficiency and waste. Bringing the railway infrastructure back into public ownership after the failure of Railtrack in the early 2000s was a helpful step, allowing the infrastructure manager to collaborate better with train operators, but it was just one small step. Two decades later, the system remains far too fragmented, and that is costing the taxpayer dearly.

This Bill will mean that we can finally have trains that are run for the public by the public. It is narrow in scope and serves just two main purposes. First, it will enable us to bring rail passenger services back into public operation as the default option when contracts end, not just as the last resort. Secondly, it will allow us, and our counterparts in the Scottish and Welsh Governments, to keep them in the public sector rather than having to put them back out to tender.

The Bill is just the first step—although a very important one—towards a much wider programme of reform. The need for reform could not be more obvious. In recent times, the franchising system has delivered record high levels of cancellations, frequent overcrowding, a frankly bewildering ticketing system and hugely disruptive periods of industrial action. The list goes on.

Reform of the railways has cross-party support. In fact, it originated in 2018 when the Conservative Government commissioned Keith Williams to carry out a root-and-branch review of the whole railway system. His review confirmed just how fractured and fragmented the railways are. As did the Blake Jones review, which I co-authored at the same time; I am afraid I too have contributed to the plethora of reporting on this matter.

The manifestos of all three political parties acknowledged the need for reforms to address this fragmentation. We all agree that things cannot continue as they are. There is strong public support and a clear democratic mandate for public ownership, so I sincerely hope that noble Lords on all sides of the House can put politics aside to get behind this Bill as a vital first step towards fixing our broken rail network.

That is why we have brought in this public ownership Bill as an urgent priority, and we will introduce a railways Bill later in this Session to bring about a much wider programme of reform. This will include setting up Great British Railways to act as a directing mind and put the whole railway back into the service of the travelling public and freight users.

In this debate, I am sure that some noble Lords will question the case for public ownership. In addressing that head-on, let me highlight one noticeable change for the better that did come about under the previous Government. They appointed no fewer than four public sector train operators to take over from failing private sector companies. They must agree that public ownership is a good thing, as they kept LNER in the public sector for six years and Northern for four. The devolved Governments in Scotland and Wales also support public ownership. They are right behind this Bill because it will avoid the need for them to put their publicly run services back into private hands.

Publicly owned operators exist to serve the interests of passengers and taxpayers, not to maximise profits for shareholders. The Government’s holding company, known as DOHL, has a proven track record of picking up the pieces after private sector failure, transferring services to public operation smoothly and without disruption for passengers or staff, and then starting to turn those failing operations around. LNER was one of the first operators to fully restore services after the lockdowns, with patronage last year exceeding pre-pandemic levels. It has led the way on fares reform, simplifying the confusing array of ticket types and improving the management of train capacity on the east coast main line. TransPennine Express has dramatically improved its reliability since joining the public sector. In its worst periods early last year, more than one in five services—over 500 a week—were wholly or partly cancelled, either in advance due to train crew shortages or on the day for a variety of reasons. This is now down to around 500 a month.

The newly stood up shadow Great British Railways has a strong mix of skills, expertise and experience from the top of the rail industry and will be held to account by its newly appointed chair, Laura Shoaf. DOHL, whose chief executive is part of shadow Great British Railways, has previously managed the successful transfer of services, engineering functions, back-office functions and thousands of staff members. It already has work under way to bring in the additional capacity and expertise that it will need as DOHL takes on more services.

As well as delivering better services, public ownership will save a fortune. Once franchise services are all back in public ownership, where they belong, we expect that the taxpayer will save between £110 million and £150 million a year in fees which currently benefit private companies and their shareholders. Finally, public ownership will pave the way for the wider railways Bill and for Great British Railways, which will bring together track and train in a properly integrated way for the first time in three decades. GBR will have a relentless focus on meeting the needs of the passenger and the freight user, while also driving best value for the taxpayer.

While extolling the virtues of public sector operation, I also want to acknowledge the vital role that private businesses will continue to play in our railways. As now, there will be huge opportunities for the many successful and innovative businesses within the rail supply chain. The operation of rail freight services will remain in the private sector, helping to free up our roads and put us on our way to net zero. There will be a continuing role for open-access passenger services alongside publicly run services, where they bring benefits and add value to the network. In view of the dire state of public finances, it would not be responsible to bring privately owned rolling stock—trains and carriages —back into public ownership, but GBR will take a coherent, long-term approach to our future rolling stock needs, helping to secure better value from the private rolling stock market than was possible under franchising.

There was some debate in the other place about the availability of performance data to enable public scrutiny of individual train operators’ performance. However, we are not lacking in information about operator performance: there is plenty of evidence that it has not been good enough. There have been particular concerns about the poor standards of service provided by Avanti and CrossCountry, which I am happy to address head-on.

As a result of decisions made by the previous Government, the core term of Avanti’s contract expires in October 2026, while CrossCountry’s expires a year later. We cannot bring these contracts to an end before those dates unless the relevant contractual conditions for early termination are met. So the Government will continue to monitor operators’ compliance with their contracts closely; the Secretary of State, as passenger-in-chief, has made clear that she will not hesitate to take further action where appropriate. Ministers have already met Avanti and CrossCountry and their Network Rail counterparts to challenge them on poor performance and demand immediate action to deliver improvements. The Secretary of State has also put in place a formal remedial plan for CrossCountry.

Noble Lords may question why we intend to bring services back into public operation as existing contracts expire, rather than starting with the poorest performers. That is a good question, but this is the right thing to do because it is the way to avoid paying compensation to the outgoing operators for ending their contracts early. Our blueprint for rail reform, Getting Britain Moving, published before the election, was clear on this commitment.

I reinforce that reform does not end with the Bill. This is just the beginning. As I alluded to earlier, this Government plan to introduce a wider railways Bill, which will include provisions for establishing Great British Railways. Consistent with the Secretary of State’s commitment to move fast and fix things, in advance of that Bill, she has already established Shadow Great British Railways to improve services for passengers, unlock barriers to delivery and move the rail network towards greater financial sustainability. Made up of leaders from DG Rail Services Group under DfT, Network Rail and DfT’s holding company for public sector train operators, it will signal a new way of working together to deliver a simpler and better service.

Shadow GBR will also be responsible for designing Great British Railways and will play an important role in improving the reputation of the railway with customers. It will build and exemplify the culture and ways of working in rail that we want to take into Great British Railways. The wider railways Bill will be for future debate in this House and elsewhere but I dare say that noble Lords will want to express some of their views on these matters today. I welcome those contributions. We are keen to ensure that we take the time to hear and understand views from interested parties, including noble Lords. As we refine our detailed plans for the wider Bill, I am sure that the Government will have more to say about these plans in the weeks ahead.

To conclude, this Government will put our rail system back on track to deliver for passengers and support our growth and opportunity missions, with clear strategic direction and proper integration and co-ordination. This Bill presents an unprecedented opportunity to begin reforming the railways in such a way that it will benefit generations to come. The passenger and the taxpayer have for too long been at the mercy of the private companies that operate our railways. This Bill is the first step in ending the decades of failure that have become synonymous with rail travel in this country. There is much to be done; once up and running, Great British Railways will be able to put the passenger and freight user front and centre, seizing opportunities for renewed economic growth, innovation, accessibility and a sector that we can be proud of. Public ownership is a vital ingredient in our plan to fix our railways. I beg to move.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

My Lords, I thank everyone who has participated in this very rich debate. I pay particular tribute to our three excellent maiden speeches. Well done to all three noble Lords. The reputation of the noble Baroness, Lady Pidgeon, on the London Assembly comes before her; I know that she is a fearsome scrutineer, and I very much look forward to working with her.

I have to be honest: the noble Lord, Lord Grayling, has brought back some very painful memories. The last one concerned Leeds Bradford Airport—he was so positive about us getting a station next to it. Unfortunately, as I am sure he is aware, it is still on the drawing board. It reminds me that when I became leader of Leeds City Council, I had no idea how much of my time would be taken up discussing rail. Transport, yes, but rail: it was quite an extraordinary time.

I really welcome my noble friend Lord Cryer and thank him for his wonderful speech. Of course, coming from West Yorkshire, I took my kids on the Keighley and Worth Valley Railway. I worked very closely with my noble friend’s mother, for whom I have the hugest admiration; she is such a strong and powerful advocate of support for vulnerable women in particular.

Before I move on, I want to reference the narrow scope of the Bill. Of course, we will explore many of the issues in Committee, but I ask for patience: a lot of the debate will take place on the main Bill when it comes forward. As we have heard, this is one of the first major pieces of legislation from this Government, delivering a manifesto commitment, and I feel very privileged to speak for the Government at Second Reading. I am very grateful to all Members who have given their support to the Bill, while raising very pertinent questions. I welcome the comments of the noble Baroness, Lady Jones, the noble Viscount, Lord Hanworth, my noble friends Lord Faulkner and Lord Liddle, and many others. Of course, I am also very grateful for the support of my noble friend Lord Hendy.

Going back to the beginning of the debate, I thank the noble Lord, Lord Bradshaw, for exposing the problems and all the good points he made. I thank my noble friend Lord Faulkner for recognising that the Bill’s being introduced so early in the legislative cycle is a real demonstration of the Government’s commitment. Obviously, we would like to continue the briefing sessions we have had thus far. Several speakers have questioned the case for public ownership, and we acknowledged and expected that. I will keep making the point that the privatised railways are simply not delivering for passengers or taxpayers. We cannot keep doing the same thing over and over again and expect a different result.

I am afraid that a culture of failure has been tolerated, although I acknowledge that there are exceptions, as raised by the noble Lord, Lord Balfe. Our approach has clear public support. Just last month, a YouGov survey found that 66% of people nationally agree that railway companies should be run by the public sector, and only 12% favoured private operation, as referenced by my noble friend Lord Browne. As we have heard, there is broad consensus about the need to end the current fragmentation and refocus the whole railway system on serving passengers and freight users. The Williams Rail Review, which we have heard about, commissioned by the noble Lord, Lord Grayling, shared these aims, and Keith Williams himself agrees that public ownership should deliver better integration.

My noble friend Lord Liddle hit the nail on the head regarding the delays in implementation: simply too many years have gone by with no action. We have had so many reviews, and now I am delighted that we are here talking about how we can start to move things forward. I have outlined some of the progress that has already been made in public ownership, turning around the performance of franchises that have failed in private hands. Public ownership means that the whole railway can pull together for the benefit of passengers, instead of different companies, as we have discussed. Public ownership will also pave the way for the wider railways Bill and for Great British Railways, properly integrating track and train. I do not think we can repeat this point enough. This would simply not be possible under franchising, or even under the concession model operated by Transport for London, as outlined by the noble Baroness, Lady Scott.

I shall give a few examples of what an integrated, publicly owned railway might mean in practice. First, we are looking at decisions about when to close the railway for essential maintenance—this can be so chaotic. It needs to be planned in a joined-up way, taking account of the needs not only of the engineers and those doing the work, but also the needs of passengers, minimising both the cost and the disruption involved.

Secondly, it will allow us to fix the delay attribution regime, which has created a wasteful industry of arguing over who is to blame for delays and moving money between Network Rail and train operators to compensate. Great British Railways will focus on identifying and tackling the causes of delay, making services more reliable.

Public ownership will allow us to address the overcomplicated fares system. We have heard several comments about the fares system today. It confuses passengers, erodes trust and actually turns people away and prevents them taking the services that they could and should take. It will help us avoid repeating the unintended consequences of franchising. As an example of the waste and inefficiency, I point out that at least four passenger train operators each has its own train crew depots in Newcastle alone, duplicating the costs of mess-rooms, management teams and other overheads. Keith Williams’s review found that there were around 75 different types of passenger train. This is an inefficient way to run any transport system and means that there is no consistency for the passenger. Such examples are repeated right across the system.

My noble friend Lord Faulkner gave a great exposé of what needs to be done to achieve modal shift: how we actually persuade people to get out of their cars or not to take the domestic flight. On integration, railways have been in a difficult environment for so long. Again, I was very pleased to meet my noble friend in Leeds for the first time, at the Middleton heritage railway—his passion for that came through in the debate today.

The noble Baroness, Lady Pidgeon, raised important points about the accessibility of the railway and the inconsistent assistance offered by different train companies. I have heard the noble Baroness, Lady Brinton, speak on the subject before: her passion and determination to make progress are touching and informative, and I really that hope everyone stopped to listen. Another unintended consequence of the fragmented system is that it can be so much more difficult than it needs to be, especially for disabled people. She raised important points about accessibility and, most importantly, the inconsistent assistance offered by different train companies.

Although there has been some improvement over the last few years—for example, the new two-hour booking window for assistance and the Passenger Assistance app—the proliferation of different booking systems means that, too often, customers still do not get the assistance that they have booked, and certainly do not get the assistance they deserve. This issue exists across all areas, including the number of different train designs, which all require different adjustments from disabled people. Over time, public ownership will allow us to meet passengers’ needs in a more coherent, consistent way.

I was disappointed that the noble Baroness, Lady Grey-Thompson, was unable to attend the beginning of this Session, but I am delighted she is here today. Her extraordinary commitment is a testament to the power required to bring the change we need. I know the Rail Minister has met with her about her recent experience, and I pay tribute to her for raising the public profile through what happened to her. It is so important that these stories are told, heard and, most importantly, acted on. As we know, the train operator concerned, LNER, is conducting a formal investigation into that specific issue. I also know that the Secretary of State and the Rail Minister will take a keen interest in ensuring that the findings are fully and swiftly acted on.

[Baroness Brinton (LD)]

Will the Minister agree to meet both of us to discuss other issues, such as the apps and the inconsistencies between the train companies? Things are not quite as shiny and rosy as she was describing them.

[Baroness Blake of Leeds (Lab)]

My apologies. I was not trying to make things out to be shiny and rosy; I was just trying to say there was a proliferation of different types. I would be delighted to meet with both noble Baronesses.

I also reassure the noble Baroness, Lady Brinton, that Clause 2 simply provides that services must be secured by awarding a contract to a public sector company. It does not prevent us from improving services or terms if needed. There is nothing to prevent services being changed for the better when they come under public operation.

We have heard a great deal about actual performance. I will pick up on the aspects raised by several Members today. The noble Lord, Lord Young, made comments about strikes, for example. Every time the noble Lord, Lord Balfe, speaks, I think we pay tribute to his experience with the unions and the issues they bring. The noble Lord, Lord Whitty, also asked questions on this subject. The approach has to be to work with the trade unions rather than against them. As the experience of the last few weeks has shown, we have already drawn a line under two years of industrial action, allowing train operators to get on with delivering the improvements that are so badly needed. It is not rocket science and it needs to be recognised and taken seriously.

We have heard about the impact on private investment. The noble Earl, Lord Effingham, raised his concerns about this. I do not believe the premise that the approach will stifle private sector investment. Since the start of the Covid pandemic, the costs of operating franchise passenger services have been borne by Government, not by private train operators. That means that private operators no longer fund their own running costs or investments. We have to really ask ourselves how much real private investment is coming in at the moment, and of course we need to encourage it where we can. I have already highlighted the financial savings to the taxpayer from no longer paying fees to private operators. Public ownership will improve services while reducing the cost to the public purse. I absolutely acknowledge my noble friend Lord Berkeley’s comments about value for money.

I draw attention to my noble friend Lord Liddle’s comments about transparency, oversight and scrutiny. I reassure him that the contrast is published so it can be seen. I am more than happy to circulate a copy to anyone who would like to see it.

The noble Baroness, Lady Scott of Needham Market, raised the issue of staffing when services transfer. To operate services successfully in the public sector, it is vital that existing staff transfer with them. The regulations—commonly known as TUPE—are designed to achieve this outcome, preserving key terms and conditions for staff as they transfer. These regulations will apply to future transfers from private to public operation, as they have done previously. There might just be a small number of people who do not transfer, as we have heard—for example, if they are seconded into a train operator from another employer. This process, combined with the expert staff already working in DOHL, will ensure that both strategic and operational roles are filled by people with the right experience to succeed. We have heard fears expressed around continuity, and I hope my answer undermines that point of view. Continued access to the railways pension scheme will also be assured, as it has been in previous transfers to public sector operation.

Many points have been raised in the debate about the Government’s plans for reform beyond this short Bill, including the arrangements for Great British Railways. I know that Ministers will enjoy debating these issues further with noble Lords and others as we develop our plans and once the further railways Bill is before your Lordships’ House. Although that debate is for the future, I am grateful for the views expressed today. I reassure the noble Lord, Lord Moylan, that the appetite for this debate is real and urgent; we can feel the great enthusiasm for moving the agenda forward.

I also reference the comments made by my noble friend Lord Tunnicliffe around growth and how we can bring all these issues together. The issues that the noble Lord, Lord Moynihan, raised about sustainability, ecology and other environmental matters will be fundamental.

I will give some more reassurance: Great British Railways will be operationally independent, with day-to-day decisions made by professionals and experts, not politicians. It will not mark its own homework. Our proposals will ensure sound oversight, and we will consult on them so that noble Lords and others can consider them and share their views. The Office of Rail and Road will continue in its role as safety regulator, building on its world-leading record in this area.

Let me also reassure my noble friend Lord Tunnicliffe and the noble Baroness, Lady Randerson, that we are proceeding with this Bill first so that we can start the process of bringing train services in-house. As I have said, it is expected that the Bill will come forward in this Session when parliamentary time allows. It is a priority. Again, I reassure my noble friend Lord Tunnicliffe of the wider issues that will come together when we discuss this.

There has been a great deal of concern about freight. The Bill sets out specifically to end the franchising of passenger services, so it has no impact on rail freight. However, there is a crucial future role for freight businesses, so the railways Bill will require Great British Railways to enable the growth of rail freight. The Secretary of State will set an overall freight growth target to ensure that it remains a key priority.

Many issues were raised about this not being centralised and the fact that devolution is absolutely critical. I will comment on my noble friend Lord Whitty’s concern about passengers as consumers. The proposed passenger standards authority should help to reassure the voice of passengers, as we have said all the way through.

I think we have dealt with the constraints of the contracts put in place for poorly performing operators, such as Avanti. I assure the House that the Secretary of State will not hesitate to act if the contractual conditions for early termination are met. We cannot burden the taxpayer with the cost of compensating private operators for otherwise ending their contracts early.

I am absolutely sure that we will come back to discussing rolling stock in Committee. I recognise the concerns raised and comments that have been made. I thank my noble friend Lord Hanworth for his contribution and reassure my noble friend Lord Snape that we are not bringing rolling stock back into public ownership.

Once again, I thank all those who have spoken today for their thoughtful contributions. It has been encouraging to hear the broad consensus in favour of industry reform to put the passenger and freight user back at the heart of our railways. I am pleased to be here today to get the reform on track. This Bill will allow us to start bringing services back into public hands, providing the strongest possible foundation for our wider programme of reform.

Bill read a second time and committed to a Committee of the Whole House.