Passenger Railway Services (Public Ownership) Bill

Baroness Randerson Excerpts

Report stage
Wednesday 6th November 2024 Lords Chamber

[Baroness Randerson (LD)]

My Lords, Amendment 1 is impossible to disagree with. It is fundamental to the survival of our railways that things improve. They have reached crisis point because of decades of under- investment, poor management and poor political decision- making. However, the presence of this reminder might be useful for the Secretary of State. It might be a statement of the obvious in some ways but useful for her because the big problem with nationalisation is that Governments in the UK have consistently failed to invest long-term. We can improve buses by investing within a couple of years, but when you invest in the railways it takes a couple of decades for it to make a big difference. That is the Government’s challenge in renationalising the railways and the buck now stops with them.

On Amendment 16, I understand and strongly support the wish for thorough and transparent public consultation on the contents of the forthcoming rail Bill. I remind noble Lords of the example of the public consultation undertaken by the previous Government on their plan to close ticket offices. It led to a massive national outcry, forcing them to drop the plan, so I am a great believer in the impact of public consultations. The Bill that we are expecting in the near future is considerably more complex, but the problem with this amendment as written is that it extends the timescale that it all will take. It will take far too long before we get the legislation that we all hope will make the big difference. I will listen very carefully to the Minister. We hope that there will be some legislation by the end of next year at the very latest.

One way or another, the Minister has been associated with plans for the future of the railways and the creation of Great British Railways for some years now. There is surely nothing raised in our debates that he has not thought of, he has not worked on, or that would come as a surprise to him. He has been exceptionally generous with his time in cross-party discussions in the last couple of weeks. I urge him to explain when he replies what the timescale is likely to be and to assure us that there will be full consultation and that there is a grand plan.

[Lord Moylan (Con)]

My Lords, we have had lengthy discussion on this Bill in Committee, and it is not my intention today to repeat unnecessarily the arguments and the evidence adduced during those debates. The longer that we went on in Committee, the clearer it became that this is a very bad Bill that has been accompanied by a degree of arrogance. I do not say this as a personal comment on the Minister; it is on the part of the Government in general. There has been a tone, sometimes said quite explicitly, of “We won so we can do what we want”. That is an argument. It has some merit, but the merit that you would expect to find in an argument made in a playground.

Another type of arrogance has also been underlying our debates: “We want a better railway, but we are not going to tell you what it will look like. That’s all going to come in the future—don’t ask your pesky questions now. That will all be dealt with, and you have to trust us”. That is not a basis on which the House should be passing this type of legislation. The amendment in the name of the noble Lord, Lord Berkeley, goes some way to address that latter point. We all have a common desire for a better railway, but we will no doubt disagree on the details of how it is to be achieved. My noble friend Lord Grayling said that these are very complex issues. I do not think that anyone would disagree.

Therefore, on the prospect of having the Bill published in draft for pre-legislative scrutiny, I disagree with the noble Baroness, Lady Randerson. I do not think that will add materially to the time taken before legislation is enacted because it is likely to produce a better Bill when it eventually arrives in your Lordships’ House, one that can go through faster and be implemented better with better outcomes. It is the outcomes that we are interested in, not a particular timescale, although like her I will hold the Government to their undertaking that a Bill will come forward within 12 to 18 months.

It is more important to get the outcome right than to worry about a few weeks here or there, which is as much as we would be discussing in relation to the amendment tabled by the noble Lord, Lord Berkeley. I am deeply disappointed that he is not going to press it to a Division as I would be very tempted to support it if he did. However, I expect and hope that the Minister, when he stands up, can satisfy the noble Lord, Lord Berkeley, by saying that there will be some sort of pre-legislative scrutiny of the very large and complex Bill that he is expecting to bring before your Lordships’ House in the next 12 or 18 months, to use his phrase.

The amendment in the name of my noble friend Lord Lansley is very good and commends itself. Like him, I would like to hear what the Minister says in response. I note that my noble friend does not intend to press it to a Division.

Amendment 1, tabled by my noble friend Lord Gascoigne, is indispensable. A number of things are missing from this Bill. A number of important parties have been wholly excluded. One of them, for example, which we will come to later in debate, is the staff. There is no reference to the staff in this Bill. We take for granted that they will be TUPE-ed. That basic legislative cover is there and does not need to be stated. They will not lose their jobs as a result of this but will be TUPE-ed over. However, has any consultation been carried out with the staff? You would expect that normally, would you not? Do they want to change their employer? Do they want to be working for the Government? They may all say yes, but one would have thought that in an undertaking such as this the Government would have bothered to ask them. There has been no consultation with the staff.

The other glaring omission from the Bill is, of course, the passenger. It is a passenger railway services Bill, yet it says nothing at all about the passenger. My noble friend Lord Gascoigne is attempting to put this lacuna right and to put the passenger back at the head of the Bill, as the driving force of what the Government are trying to do and to require Ministers to test their actions under this Bill against the standard of whether it will improve matters for the passenger. That is why, if my noble friend intends to divide the House and seek its opinion on this matter, I recommend that we support him.

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[Lord Moylan (Con)]

My Lords, in the course of debate at Second Reading and in Committee, numerous noble Lords drew attention to the fact that the manner in which the Government are approaching the termination of franchises is going to result in some very perverse outcomes. Admittedly, most of the franchises still in existence are relatively short, but the Government—with a view to saving money, as far as I can make out—are determined to terminate them in the order in which the contract falls in.

That has the bizarre consequence that some of the most popular, effective and highly rated franchises are going to be terminated early at the head of the list, while those that are most reviled by the public—I am not going to mention any names in the course of this brief speech—and regarded as being hopeless at what they do will have the longest continuation in existence. It is of course the case that if they fell into default, the Government could terminate them early without expense, but we heard from the Minister earlier that none of them is as bad as that. None the less, some of them are very bad indeed.

This case was made most compellingly at Second Reading by the noble Lord, Lord Browne of Ladyton, but it has been made by other noble Lords as well. I think there is strong demand among noble Lords for the worst franchises to be brought to the head of the queue. My Amendment 2 would have the effect of bringing that about: the worst-performing operators would be terminated first, while services that are currently working well would be enabled to continue. Amendment 10 in the name of the noble Baroness, Lady Randerson, has a similar intent and effect. It is drafted differently—it is expressed as providing flexibility to the Government, whereas mine is perhaps a little more mandatory in its tone—but they are similar in various ways.

With the time the Government have had for reflection on the strength of feeling in the House about this issue, they should be able to come forward and say something now that would alleviate noble Lords’ concerns. Otherwise, I will be interested in testing the opinion of the House on my Amendment 2.

[Baroness Randerson (LD)]

My Lords, I will speak to Amendment 2, and to Amendment 10 in my name and that of my noble friend Lady Scott. Amendment 2 was the Liberal Democrats’ Amendment 1 in Committee, requiring the Secretary of State to terminate franchises for default and to nationalise the worst-performing operators first, while allowing train operating companies that are currently working well to continue.

The Minister explained to us, both in this Chamber in response to our amendment and in private discussions, that this cannot be done without major costs to the taxpayer. The existing contracts have been written and signed by the previous Government so as to make it difficult to penalise defaulters. We accept what the Minister says and we are not prepared to cause the taxpayer greater costs than necessary in this process. So, having listened and learned, we turned our amendment around and wrote Amendment 10, which simply proposes giving the Secretary of State the freedom to enable services that are working well to have an extension to their franchise and to continue for a period of time suitable to the Government. Can the Minister explain to us the Government’s approach to this and whether existing contracts could be extended, as our amendment suggests?

Our view is that the Government are going to be hard pressed in dealing with the numerous parts of the rail systems that are failing, and they need to allow themselves a bit of space by letting the bits that are working well continue until they get around to the overall process of nationalisation. The Government’s whole approach has been nationalisation gradually rather than one big effort, and I hope this amendment works with the grain of their intentions.

[Lord Liddle (Lab)]

My Lords, from listening to the noble Baroness, Lady Randerson, I think there is a misunderstanding about what the Government are trying to do. As I understand it as a humble Back-Bencher, we are trying to get rid of the franchising system because, as it is, it does not help us to run a railway in the way we want to. In his opening remarks the noble Lord, Lord Hendy, said that one of the points is to have a simplified fare system that will greatly raise the prospects of increasing passenger revenue and passenger use of the railway, because the fare system is an obstacle to that. We cannot do that while we have the franchise system, so we have to get rid of the franchise system.

If there is any fault in what is happening at the moment, it lies on the opposite side of the Chamber and with the Transport Ministers who gave operators such as Avanti the very loose targets that they have to meet. I advocate that we should be tougher with Avanti, have it in every month, and if things have not improved, we should take the risk of taking the franchise off it and saying, “See you in court”. That would be my approach, but the problem is what the Conservatives have left us with, and that is very difficult to solve. I do not support this amendment, which would result just in extending the existing system.

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[Lord Snape (Lab)]

My Lords, I rise to say a few words on Amendment 13 and the future of rail freight once this legislation becomes law.

Traditionally, on nationalised rail in the past, freight was often seen as the poor relation. Trying to attract people to the freight side of the former British Rail, particularly getting management involved, was much more difficult than the passenger side. There was a bit of glamour about fast passenger trains that the freight network never shared. My noble friend the Minister spoke in Committee about the Government’s intention to increase rail freight by 75% by 2050. I would be grateful if he could provide some clarification as to how that will be done.

I look at railway operations from time to time on the website OpenTrainTimes—I am a devotee, and this is a terrible confession to make. I note how close to the timetable rail freight adheres these days, which was not necessarily true in the past. There was a welcome introduction of relief from access charges for new business, as far as rail freight was concerned. Can my noble friend tell us whether there is any intention to extend that? Indeed, we should go further. In Committee I pointed out the imbalance in taxation in this country that makes it cheaper and more attractive to buy a fleet of lorries and put them on our road network—where, of course, the infrastructure is paid for out of general taxation—than it is to run rail freight, as Royal Mail has, deplorably, just demonstrated.

While I would not seek to pin down my noble friend the Minister as far as future taxation policy is concerned, I certainly hope he can press Treasury Ministers to see whether something can be done in future to rectify that imbalance between rail and road. In speaking to Amendment 13, I hope that my noble friend can give me some reassurance as to how this envisaged increase in rail freight—welcome though it is—will be implemented.

[Baroness Randerson (LD)]

My Lords, these three amendments deal with crucial aspects of the running of the railways and they are issues that we on these Benches probed in Committee. I certainly anticipate that, when we get the full Bill next year, there will be long and vigorous debate and discussion about them and I have serious reservations about the possible plans. However, we on these Benches accept that, however concerned we are about freight or open access or competition, the Government have chosen to write a very tightly drafted Bill and to separate ownership from operational organisation in that Bill and it is not appropriate to try to write, in a rather haphazard way, the big, final Bill on Report in this House at this time.

[Lord Hendy of Richmond Hill (Lab)]

I thank noble Lords for their amendments in this group. In response to Amendment 3, from the noble Lord, Lord Lansley—and I thank him for our discussion a few days ago— I will highlight two important ways in which this Bill promotes competition.

First, there will continue to be huge opportunities for competition between businesses in the supply chain which publicly owned operators and Network Rail will continue to depend on. I was speaking this morning at the Railway Industry Association’s conference and it welcomed clarity about the Government’s intentions with enthusiasm, because it knows as well as we do that the railway, after six years of being promised reform, needs to understand what reform might look like in order for its businesses to prosper. Public ownership and our plans for GBR to provide long-term strategic direction for the whole railway will give greater clarity and certainty to businesses in the supply chain and so will support healthy competition.

Secondly, in relation to competition between train operators, the Bill preserves the existing arrangements for open-access operators. Open-access services are the only source of meaningful competition between operators on today’s railway, and this Bill makes no changes to the way in which open-access applications are treated by either Network Rail or the independent regulator, the Office of Rail and Road.

Having set out how the Government’s approach is consistent with a duty to promote competition, I also note for completeness, referring to the propositions of the noble Lord, Lord Lansley, that the Section 4 duty applies to the Secretary of State only when she is exercising certain functions under the 1993 Act. It does not apply to the exercise of her functions under Sections 23 to 31, which are the franchising functions that are amended by the Bill. As such, there can be no question of this Bill impairing the Secretary of State’s ability to comply with the Section 4 competition duty.

Turning to Amendment 17, tabled by the noble Lord, Lord Moylan, open-access operators are a valuable part of the system and will remain so following this short Bill. Looking ahead to the wider railways Bill, we see a continuing role for open-access services where they add value and capacity to the network. I will say more in a moment about how their interests will be protected. In the meantime, I reiterate that the current short Bill has no impact on open-access operators, the services they provide or the process by which they can secure rights to operate on the rail network. For this reason, the report required by this amendment would serve absolutely no purpose; the Bill plainly has no impact.

Requiring this report—not just once but every single year in perpetuity—would simply place an additional reporting burden on Network Rail and the Office of Rail and Road, and potentially also on open-access operators themselves if they were each required to provide information about their services to inform each report.

Finally in this group, Amendment 13 deals with freight. My noble friend Lord Berkeley is a staunch advocate of the rail freight sector and I hope that I can reassure him and the noble Lord, Lord Moylan, about the Government’s intentions. The Government hugely value the rail freight sector and recognise the importance of its contribution in reducing congestion on our roads and in helping our transport system move towards net zero.

I entirely agree that the Government’s plans for reform under the railways Bill must ensure that Great British Railways promotes growth in the freight sector and must provide suitable protections for freight operators. We will set out our detailed plans in the consultation I have already referred to as soon as we are able to.

In the meantime, I am very happy to reassure noble Lords on three fronts. First, our proposals for the railways Bill will include a statutory duty on Great British Railways. I have reflected carefully on the remarks of the noble Baroness, Lady Randerson, in Committee, and the remarks just made by my noble friend Lord Snape, and as a result I now confirm that this duty will be not merely to enable the growth of rail freight but to promote it. My noble friend Lord Snape referred to variable access charges. I very much agree that we would seek more of that in the future to encourage more freight traffic.

Secondly, the Secretary of State will set a specific freight growth target for Great British Railways. I cannot confirm today the specific detail of what that target will be, but we will set out our plans for that in due course.

Thirdly, I thank my noble friend Lord Berkeley in particular for his comments on the importance of a fair system for the allocation of access. As discussed with my noble friend last week, I have confirmed today that there will be consultation on the Government’s reform proposals, and that the consultation will set out the proposed role for the Office of Rail and Road in the access decision-making process. Any changes will then be set out in the railways Bill itself, so noble Lords will have ample chance to debate these matters before changes are implemented.

I also reassure noble Lords that our proposals for allocating capacity and granting access to the network will include safeguards to ensure that both freight and open-access operators continue to be treated fairly. As I have already said, I would be delighted to meet with my noble friend and other noble Lords with an interest once the consultation has been published, so that we can discuss the details and continue the very helpful conversations we have started here.

Turning to the specifics of the noble Lords’ Amendment 13, the statement required by this amendment would be very short and sweet. There is no need to wait six months after Royal Assent for me to provide this statement; I can give it to the noble Lords now. The Bill is narrow in scope. Its purpose is simply to allow the Government to transfer the operation of franchised passenger services to the public sector. It does not make any changes to the arrangements under which freight services operate. This means that the Bill will not, and cannot, have any adverse impacts on the freight sector or on freight growth.

I have clarified the impacts of the Bill on competition, open access and freight, I have confirmed that we will soon publish a consultation document setting out our proposals for the railways Bill, and I have reaffirmed that these proposals will consider appropriate protections for freight and open-access operators. In light of what I have said, I hope that noble Lords will agree that there is no need to pursue their amendments further today.

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[Baroness Randerson (LD)]

My Lords, this group raises some interesting questions about the various shapes that the ownership of rail services can take. Our interest on these Benches, which we raised in Committee, is specifically the interface between the Government’s picture for national rail services run by the Government and those run by devolved authorities. We are interested in seeing that nothing in this Bill attacks devolution as it currently exists or stops the further development of devolution when it is properly and fully thought through. We are interested in ensuring that nothing in this Bill would prevent current devolution models continuing and new ones from being established. Those devolution models include aspects of private sector involvement.

In addition, in Committee, the noble Lord, Lord Liddle, raised some interesting questions about alternative public/private models and not-for-profit models. I hope that he will speak about those again in this debate.

I will be listening very carefully to the Minister’s response. If I understood him earlier in our discussions about this, he has reassured us about devolution, but I need an additional public response on that issue. With that, I take note of a very interesting aspect of this debate.

[Lord Liddle (Lab)]

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

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

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

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[Lord Moylan (Con)]

My Lords, I will speak to the amendments in this group, particularly Amendment 12 standing in my name. I have a great deal of sympathy with the amendment moved by the noble Baroness, Lady Pidgeon. Both amendments are aiming at the same thing.

I said earlier today that there are a number of crucial things missing from this Bill: one is staff, and we will come to that, and another is the passenger, and we have dealt with that. The third is the local authorities, the regions, the metropolitan authorities and devolution as a whole. On this side of the House we have always had great aspirations for the powers of combined metropolitan authorities and regional government, and for their expansion. We are largely responsible for promoting and establishing mayoralties in Manchester and the West Midlands, and in other places as well, such as Teesside and so forth. We have done that with a view to expanding their powers, and part of that was to take on a greater role in transport. We are seeing the beginning of that in Manchester with the buses, and Merseyrail is operated by the combined authority.

In doing that, we are coming from a successful metropolitan model, London, which already has many of these powers. As far as we can make out, these powers, where rail is concerned—not buses—are effectively to be closed down where they do not already exist. They will not be expanded further—the Minister has been quite clear about that—and we will not see the growth of rail on a metropolitan basis.

My Amendment 12 is simpler than that advanced by the noble Baroness, Lady Pidgeon. It would require a preliminary report that outlines the proposed framework in which Great British Railways is going to communicate with local authorities and regional authorities about passenger railway services. That it is going to communicate is something that the Government have committed to, as the Labour Party document Getting Britain Moving said so. There is going to be a great deal of consultation and involvement on every possible front, but, again, we are told that we have to take all of this on trust—that none of this will become manifest until we see the great rail Bill that will come in the future, with a bit of consultation but without seeing a proper text in advance for pre-legislative scrutiny.

We are trying to get it established now, as a principle at least, that the Government can initiate these communications before that Bill comes into effect. They can set up structures that allow those communications to take place; this amendment requires the Government effectively to do that.

If the Minister cannot agree to the precise amendment tabled by the noble Baroness, Lady Pidgeon, I very much hope that he will at least be able to agree to my amendment, which asks him to get those structures—which he envisages happening—in place as soon as possible, so that local authorities and the relevant regional authorities can be involved.

[Baroness Randerson (LD)]

My Lords, in response to the previous group, the Minister emphasised— I think it was in reply to the noble Lord, Lord Moylan—that the concession model would not comfortably fit national rail services. I accept that, and he made my point for me in making his response. The Government must not be allowed to create a national monolith, because one size will not fit all. Part of the variability that we should celebrate in this House is that which comes with devolution, because it fits local areas comfortably.

The Government have made a great deal of the £22 billion or £40 billion black hole and the shortage of public money. Money is undoubtedly in short supply. The Government have also made a lot of their support for devolution, but if devolution on rail transport services is to flourish then there has to be an alternative source of funding and of investment. Local authorities, even on the big scale of metro mayors, will not have the resources to invest in a pure public sector model.

Our concern in our Amendment 7 is that the Government leave themselves the scope to access or call upon alternative models of funding. That would be very much along the lines of what the noble Lord, Lord Liddle, suggested: some form of local partnership or an alternative structure, other than a pure public sector company. As my noble friend Lady Pidgeon says, we will be listening carefully to the Minister’s reply.

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[Baroness Randerson (LD)]

My Lords, I am very pleased to speak in support of my noble friend Lady Brinton and the significant group of signatories to this amendment. This eye-catching group of people campaign on disability-related issues and have made important points in this debate and others aligned with it. In addition to that amendment, which speaks for itself, there is Amendment 11 in my name and that of my noble friend Lady Scott.

Although the experiences of people using wheelchairs and those who do not have perfect sight and so on are very much at the sharp end of passengers’ experiences, the passenger body generally does not have a good experience in Britain these days. There are huge problems for passengers of every age group and every level of physical ability, so there is a massive job to be done in improving that experience. People would put up with a second-rate experience, perhaps, if they were paying second-level fares, but they are paying premium fares for a very rough deal, and those two just do not sit together.

Amendment 11 seeks to establish a body that will work on behalf of passengers: a body dedicated to passengers’ needs and to creating the kind of experience that those of us who are lucky enough to travel abroad on trains know can be achieved with a perfectly normal, non-premium rail service in other countries. If they can do it, I do not see why we cannot.

I am very pleased to see Amendment 15 in the name of the Minister, and I look forward with great interest to what he is going to say about it, because I hope it will reassure us that the Government’s plans include the creation of a passenger standards authority —or something similarly named—that will look out for passengers. I also hope that the Government will produce a commitment that suits the needs of the signatories of Amendment 8.

[Lord Moylan (Con)]

My Lords, I rise with some humility to make a few comments on Amendment 8, which, of course, is one where the noble Baronesses, Lady Brinton and Lady Grey-Thompson, bring an experience that cannot be gainsaid in your Lordships’ House. I said in Committee that I fully acknowledge—from my own personal knowledge—that the Minister is personally committed to seeing improvements in regard to accessibility. I know that it is a matter of importance to him, but none the less, fine words and parsnips come to mind. Action is needed and we need to see real progress. If Great British Railways offers something in that regard that has not been offered before, that would be greatly to its credit.

In relation to Amendment 11, from the noble Baroness, Lady Randerson, this is another example of what the Government could be doing now. It is already the Government’s policy to have a passenger standards authority; they have set that out in the document Getting Britain Moving. Like so many other things, it is wrapped up in a Bill that we are told we might see in 12 or 18 months. I have expressed in Committee a degree of doubt and scepticism as to whether the Government will meet that target. I hope they will, but these are very complex issues, and it could take even longer than that before we see the Bill. Then, of course, it has to be passed and enacted, and then, as I keep pointing out, it has to be implemented. Change on that scale does not happen overnight; it will take several years for it to be implemented. Where in that timeframe is the passenger standards authority going to stand? Will we see it coming to life at the beginning of the process or at the end? Could it be four or five years away before it comes into existence? We have no idea.

The amendment from the noble Baroness, Lady Randerson, would at least say, “This is one thing you can get started on now. You can get it up and running very quickly and it could be something that passengers could benefit from at a really early stage”. I really do not understand why the Government cannot accept, if it turns out that is the case, what the noble Baroness is proposing.

I have no comment on Amendment 15 in the name of the Government except to say that it is, of course, entirely unobjectionable from our point of view.

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[Lord Young of Cookham (Con)]

My Lords, Amendment 9 in my name would require an annual report on public operator liabilities. This might sound rather a dry subject with which to lead the last group on Report, but it is an important one, as it has the potential to totally disrupt the Government’s ambitions for Great British Railways. I begin by thanking the Minister for the meeting that we had last week with the noble Baroness, Lady Blake. He listened patiently to my concerns and was able to allay some of them—though not, I am afraid, this one.

This amendment has grown in prominence since last week’s Budget with its clear fiscal rules, and these were needed to give confidence to the markets that the Government could borrow the substantial sums needed to fund their expenditure; we will debate all that on Monday. In a nutshell, my concern is that, if liabilities which are currently off the Government’s books cease to be off balance sheet, we will revert to the position when I was Transport Secretary, with transport bidding for investment against schools, hospitals and defence and always missing out because of political priorities.

I believe the noble Lord has conceded the risk of this happening, because he has said repeatedly that it will be for the Office for National Statistics to decide in the future how GBR liabilities impact the public sector balance sheet and, specifically, public sector net debt. However, it simply cannot be prudent for the Government to embark on a programme of nationalisation without fully understanding the financial consequences of the ONS classifying GBR as “central government” and without taking the necessary precautions.

We can have a shot at what the ONS will do, because it has stated that in circumstances such as GBR it would run what is called the market body test, and we know that GBR, as the Government envisage it being structured, would fail that test. The integration of track and train within a single entity, as set out clearly in Labour’s Getting Britain Moving document, will mean that GBR will fail the ONS market body test, meaning that its liabilities will be consolidated into the department’s accounts. The Minister has argued previously that the position will not be different from where we are now, but it will be. The creation of GBR as a permanent public monopoly will create a completely different system, which will change the way in which the ONS categorises expenditure.

The Labour document is clear that GBR will be a “single employer”. If so, it will simply fail the market test and its accounts will be classified as “central government”, rather than a public corporation, as LNER is currently. The accounts will then be required to be consolidated into DfT’s accounts, like other bodies that fail the market test, and then classified as “central government”. Crucially, these different accounting treatments will make investment, for example, in rolling stock harder, as it will be in competition with other demands for public investment. The Minister has made it clear that GBR will use its purchasing power to commission new rolling stock through the roscos: rolling stock that will then be leased to GBR. He stated:

“GBR will enable a longer-term view of the rolling stock market, and it will reduce the margins it needs to make”.—[Official Report, 23/10/24; col. 736.]


Those long-term liabilities, totalling potentially some £15 billion, will score immediately on the Government’s balance sheet, increasing national debt, even if the money to manufacture the trains comes from the roscos and is raised on the capital markets.

What I hope the Minister has done—and if he has done it, no one would be happier than me—is get an undertaking from the Treasury that, if the ONS so classifies GBR debt, the Treasury will ensure that the DfT is insulated from that decision. He may have such a letter in his breast pocket. If he has not, we know what is likely to happen because it happened to Network Rail, which was reclassified by the ONS in 2014. The Minister said at our meeting that there was scope for economies at Network Rail when it was reclassified, and I am sure he was right. But those measures were never going to compensate for all the consequences. Network Rail had to divest £1.8 billion by selling property assets; it had to defer renewal works; it had to postpone completion dates; and it had to renegotiate a lot of contracts. Do we honestly want that to happen to GBR?

So, in a nutshell, I am concerned at the gamble the Government are taking with the future of the railways by going back to the pre-privatisation system, where Ministers will have to compete against other spending departments for what the railways need. I beg to move.

[Baroness Randerson (LD)]

My Lords, I have one very brief question for the Minister, following the warnings by the noble Lord, Lord Young. Have the Government looked at this from the point of view not just of what I would call the finished product of the nationalised railway system but of how the categorisation of a mixed economy would work? We, the nation, will be in a situation of a mixed, some-and-some economy for a significant number of years to come.

[Lord Moylan (Con)]

My Lords, my noble friend Lord Young sought throughout Committee, with great forensic precision and courtesy, to get answers to the sort of questions he has been raising today, and I have sought, with rather blundering efforts, to get answers to very similar questions. Here we are on Report, still asking questions that the Government have consistently failed to answer throughout. The reason is that, as I said earlier today, this is a rushed Bill that has not been thought through properly as to its broader consequences. These are consequences not to be dealt with in a future Bill coming down the road but that flow directly from the measures in this Bill. I very much hope the Minister can give some account of them today and explain how the Bill and this nationalisation will affect the public finances in what I call, in my blundering way, balance sheet terms.

There are other items. Since we discussed this Bill in Committee, we and the country have had the body blow of the employers’ national insurance increase delivered by the Chancellor of the Exchequer. Amendment 19 in my name is there to probe what the consequences of that will be for Great British Railways. Will there be a very significant increase in staff costs on the railways as a result, and what impact is that likely to have on the revenue expenditure that the railways can undertake?

In Amendment 18, I ask for clarity on something that also flows directly from the Bill—it is a direct consequence of it, and not something to be dealt with in a future Bill—to do with the harmonisation of staff wages, terms and conditions as they transfer from diverse employers in the private sector to a single employer owned by the state. Drivers and other staff are employed by the railway companies on terms agreed with trade unions but not necessarily the same terms as between one company and another, so drivers’ pay, terms and conditions will vary somewhat between one company and another. The Government have resisted saying, at any point, what they will do about this if they are a single employer. Of course, theoretically, each franchise as it falls due will be placed in a separate company from the others, so it is perfectly possible, legally, for it to have a separate agreement with its staff, different from that which another nationalised company has with its staff, replicating the current arrangements, if it chooses to do so. Is that the Government’s intention, or is there an intention that wages, terms and conditions should be harmonised? If the latter, do the Government imagine that they will be harmonised on the basis of the lowest common denominator, the highest common denominator, or some denominator that might be found in the middle as a sort of average? This is a direct consequence of the Bill, but nothing has been said by the Minister about it.

I come back to the question of staff consultation. There has been no staff consultation about the change of employer. The idea that the Minister might wander around Waterloo station randomly consulting drivers as he accosts them, which he held out when he spoke earlier, is an attractive and enticing one. That is to be encouraged—there are not enough Ministers going around randomly accosting staff whom they employ in the public sector—but it hardly constitutes what might be called formal consultation in industrial relations terms.

I hope I am forgiven for saying this, but earlier I saw the Minister having a quiet chat in a break for a Division with his brother, the noble Lord, Lord Hendy, with his great industrial relations experience. Who knows? Perhaps he was pointing out to the Minister that normal industrial relations consultation requires a little more than simply wandering around and chatting to the staff on the station as you meet them, welcome though that is.

I very much hope that by now, with all the warning that the Minister had about these issues in Committee, he will be able to give an account of himself that will satisfy the legitimate questions of my noble friend Lord Young, and will be able to explain to us what his employment and industrial relations strategy is as a direct consequence of the nationalisations that will take place under the Bill.