Passenger Railway Services (Public Ownership) Bill

Baroness Scott of Needham Market Excerpts

Committee stage
Monday 21st October 2024 Lords Chamber

Moved by

[Baroness Scott of Needham Market]

1: Clause 1, page 1, line 12, at end insert—
“25B Termination of existing franchise agreements(1) The Secretary of State must terminate franchise agreements for default in accordance with the terms of the agreement as soon as it is possible to do so.(2) Subject to subsection (1), the Secretary of State must not terminate a franchise agreement pursuant to a break clause unless—(a) there are no other franchise agreements which are—(i) terminable for default or may be terminable in the next three months for default, or(ii) will come to the end of their term within the next three months, and(b) the Secretary of State is satisfied that provision of the services by a public sector company will improve existing service provision.(3) In this section, “break clause” means a contractual provision in a franchise agreement which entitles the Secretary of State to terminate the franchise agreement before the end of the franchise term by notice without reason.”Member's explanatory statement
This amendment would require the Secretary of State to nationalise the worst performing operators first while enabling services that are currently working well to continue.

[Baroness Scott of Needham Market (LD)]

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

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

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

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

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

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

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

[Lord Liddle (Lab)]

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

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

--- Later in debate ---

[Lord Hendy of Richmond Hill (Lab)]

It varies in accordance with the particular train company. Some of them are coming to a natural conclusion, others have break clauses that enable termination and, in a limited number of cases, there are some choices that could be made. To that extent, we will have to make them.

[Baroness Scott of Needham Market (LD)]

My Lords, I am very grateful for the support I have received from across the Committee for my amendment. I am not sure I can remember it happening to me before, and I was basking in the warm glow until the Minister stood up to reply. I am sure that all Members of the Committee will be disappointed because, at the bottom of this, we will be renationalising the Greater Anglia franchise with a performance rating in the 90 per cents, and leaving Avanti in place with its performance in the 60 per cents. Whatever the policy or legal niceties, people will be bewildered by that. I have every sympathy with the Minister; the Government inherited a contract that seems to have allowed extraordinary latitude to Avanti for poor performance. I also recognise the twin problem that it has an extraordinarily long franchise, but I am sure that he has heard very clearly what everyone is saying here. The message to him is: please be absolutely sure that there is not some extent to which political will can find a way through this. A failure to deal with this will leave the travelling public absolutely bewildered. With that, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.