Passenger Railway Services (Public Ownership) Bill

Caroline Nokes Excerpts

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

[Caroline Nokes in the Chair]

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I remind Members that in Committee they should not address the Chair as Madam Deputy Speaker. Please use our names when addressing the Chair. “Madam Chair”, “Chair” and “Madam Chairman” are also acceptable.

Clause 1

Prohibition on franchise extensions and new franchises

[Helen Whately (Faversham and Mid Kent) (Con)]

I beg to move amendment 18, page 1, line 12, at end insert—

“25B Report on impact of prohibition on franchise extensions and new franchises

The Secretary of State must lay before Parliament—

(a) within six months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, a report on the anticipated impact of the prohibition on franchise extensions and new franchises under section 25A; and

(b) after a period of five years has elapsed after the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, a report outlining the actual impact of the prohibition on franchise extensions and new franchises under section 25A.”

[The Second Deputy Chairman]

With this it will be convenient to consider:

Clause stand part.

Amendment 19, in clause 2, page 2, line 14, at end insert—

“(1AA) Before making a direct award of a public service contract to a public sector company under subsection (1A), the relevant franchising authority must provide information to the Office of Rail and Road on the public sector company’s ability to become responsible for the provision of the relevant passenger railway services.

(1AB) The information provided under subsection (1AA) must include an overview and analysis of the capacity of the public sector company to provide the relevant services while maintaining or improving existing service provision.

(1AC) Following the receipt of the information provided under subsection (1AA), the Office of Rail and Road must publish an opinion on whether it is reasonably practicable for the public sector company to provide, or secure the provision of, the relevant passenger railway services.”

Amendment 13, page 2, line 17, at end insert—

“(1BA) Every contract made in accordance with subsection (1A) shall place a duty on the public sector company to encourage and invest in innovation across all aspects of its operations, including but not limited to—

(a) operational efficiency;

(b) fares and ticketing;

(c) stations and onboard services;

(d) passenger information; and

(e) digital transformation.”

Amendment 14, page 2, line 17, at end insert—

“(1BA) Every contract made in accordance with subsection (1A) shall place a duty on the public sector company to consider the needs of—

(a) passengers;

(b) residents of rural areas;

(c) residents of areas underserved by the rail network; and

(d) the wider rail network

when considering making changes to existing service levels.”

Amendment 1, page 2, line 22, leave out subsection (3).

Amendment 6, page 2, line 22, at end insert—

“30ZA Impact on provision of rolling stock

(1) The Secretary of State must, within six months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, lay before Parliament a report on the impact of the awarding of public service contracts to public sector companies under section 30(1A) on the provision of rolling stock by rolling stock leasing companies.

(2) The Secretary of State must consult with other franchising authorities before finalising a report under subsection (1).”

Amendment 7, page 2, line 22, at end insert—

“30ZA Impact on procurement

(1) Within six months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, the Secretary of State shall publish details of the Government’s proposed approach to procurement once passenger rail services are provided by public sector companies under public service contracts awarded under section 30(1A) and the impact of the awarding of such contracts to public sector companies on procurement processes.

(2) Any publications relating to the Government’s proposed approach to procurement under subsection (1) should include details of the approach towards—

(a) technological development;

(b) the management of demand and supply;

(c) the supply chain;

(d) future sectoral planning.”

This amendment would require the Secretary of State to publish details of the Government’s proposed approach to procurement and the impact of the Bill on procurement processes.

Amendment 8, page 2, line 22, at end insert—

“30ZA Independent financial monitoring of public sector companies

(1) The Secretary of State must, within three months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, instruct an independent body to conduct monitoring of the financial management of any public sector company with whom a direct award of a public service contract is made under section 30(1A).

(2) For the purposes of subsection (1), “monitoring of the financial management” includes the auditing of accounts, the review of spending efficiency, and the making of recommendations to improve cost-effectiveness.”

Amendment 9, page 2, line 22, at end insert—

“30ZB Report on cost of contracts with public sector companies

(1) The Secretary of State must, within three months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, instruct an independent body to report on the total cost to the Government of contracts awarded in accordance with section 30(1A).

(2) The first report under this section must be laid before Parliament within twelve months of the first award of a public sector contract in accordance with section 30(1A), with subsequent reports to be laid annually.

(3) Any report published under this section must include consideration of any liabilities previously held by franchises which are now public sector liabilities.”

Amendment 10, page 2, line 22, at end insert—

“30ZC Annual reporting of performance of publicly-owned train operating companies

(1) The Secretary of State must lay before Parliament an annual report on the performance of public sector companies to whom public service contracts are made under section 30(1A).

(2) An annual report published under subsection (1) shall include details of a company’s—

(a) financial performance;

(b) revenue growth;

(c) cost control;

(d) innovation;

(e) service quality metrics;

(f) customer satisfaction metrics; and

(g) value for money.

(3) The first annual report under this section must be laid before Parliament within twelve months of the first award of a public sector contract in accordance with section 30(1A).”

Amendment 11, page 2, line 22, at end insert—

“30ZD Performance-based assessment of publicly-owned train operating companies

(1) Public sector companies with whom public service contracts are made in accordance with section 30(1A) are to be subject to performance-based assessments in relation to their management of the relevant passenger railway services.

(2) Performance-based assessments of public sector companies under subsection (1) are to be conducted by an independent body instructed by the Secretary of State.

(3) In conducting a performance-based assessment the independent body must assess the public sector company against published targets in relation to—

(a) the punctuality of services;

(b) customer satisfaction;

(c) revenue and passenger growth; and

(d) operational efficiency.

(4) Every contract made in accordance with section 30(1A) must place duties on relevant public sector companies—

(a) to prepare performance improvement plans where published targets are assessed under this section as not being met;

(b) to place limitations on the remuneration of senior managers while a performance improvement plan is in force.”

Amendment 12, page 2, line 22, at end insert—

“30ZE Impact on performance and efficiency of the UK rail network

(1) The Secretary of State must, within five years of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, instruct an independent body to conduct a review of the impact of the Act on the performance and efficiency of the UK rail network.

(2) A report on the findings of the review must be laid before Parliament.”

Amendment 15, page 2, line 22, at end insert—

“30ZF Impact on open access operators

The Secretary of State must, within twelve months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, lay before Parliament a report on the impact of the awarding of public service contracts to public sector companies under subsection 30(1A) on open access operators in the UK.”

Amendment 16, page 2, line 22, at end insert—

“30ZG Impact on exemption of passenger services

(1) The Secretary of State must, within twelve months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, lay before Parliament a report on the impact of sections 25A and 30, as amended by the Passenger Railway Services (Public Ownership) Act 2024, on the exemption of passenger services under section 24.

(2) A report under subsection (1) must include whether the coming into force of the Passenger Railway Services (Public Ownership) Act 2024—

(a) has made, or is expected to make, it more or less likely for an application for an exemption to be made to an appropriate designating authority;

(b) has made, or is expected to make, it more or less likely for an application for an exemption to be granted by an appropriate designating authority;

(c) has made, or is expected to make, any difference to the basis on which decisions as to the granting or refusing of applications for exemptions will be made by the appropriate designating authorities.”

Amendment 17, page 2, line 22, at end insert—

“30ZH Independent body to advise on pay and terms and conditions of employment for employees of public sector companies

(1) The Secretary of State must, within three months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, establish an independent body with responsibility for—

(a) providing advice to Government on the—

(i) remuneration, and

(ii) terms and conditions of employment

of employees of the public sector companies providing passenger railway services under a contract awarded in accordance with section 30(1A);

(b) advising the Government on value for money during the negotiation of the terms and conditions of employment of employees of the public sector companies providing passenger railway services under a contract awarded in accordance with section 30(1A); and

(c) preparing an annual report to be laid before Parliament by the Secretary of State on the terms and conditions of employment of employees of the public sector companies providing passenger railway services under a contract awarded in accordance with section 30(1A).

(2) Advice provided in accordance with subsections (1)(a) and (b) shall be based on annual investigations of working practices conducted by the independent body and consider—

(a) value for money;

(b) affordability;

(c) domestic and international comparators;

(d) the future of the rail network, including the modernisation of working practices.

(3) Advice provided in accordance with subsection (1)(b) shall include advice on whether any conflicts of interest exist between any Government Minister and any union involved in the negotiation of the terms and conditions of employment, and how any such conflicts should be managed.

(4) An annual report under subsection (1)(c) shall include a comparison with the terms and conditions of employment under the franchise which provided the relevant passenger railway services prior to the awarding of a contract in accordance with section 30(1A).

(5) The first annual report under subsection (1)(c) must be laid before Parliament within twelve months of the first award of a public sector contract in accordance with section 30(1A).”

Amendment 22, page 2, line 22, at end insert—

“30ZA Review of impact on exemption of passenger services

(1) The Secretary of State must, within one year of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, conduct a review of the impact of that Act on the exemption of passenger services under section 24 of this Act.

(2) A review conducted under subsection (1) must consult—

(a) the Scottish Ministers;

(b) the Welsh Ministers; and

(c) English combined authorities

on their willingness and ability to make an application to the appropriate designating authority for the grant of an exemption from designation under section 23(1) for the purposes of applying for or being awarded a public service contract under section 30(1A).

(3) The Secretary of State must lay a report on the findings of the review before Parliament.”

Amendment 2, page 3, line 23, after “Scottish Ministers” insert—

“or an elected public body”.

This amendment, and accompanying Amendments 3, 4 and 5, would expand the definition of “public sector company” to enable public service contracts to run passenger railway services to be awarded to public sector companies owned by local elected public bodies.

Amendment 3, page 3, line 25, after “Ministers” insert—

“or an elected public body”.

See explanatory statement for Amendment 2.

Amendment 4, page 3, line 27, after “Ministers” insert—

“or an elected public body”.

See explanatory statement for Amendment 2.

Amendment 5, page 3, line 27, at end insert—

“(ba) ‘elected public body’ means a body which is—

(i) a mayoral combined authority;

(ii) a combined authority; or

(iii) a unitary, county, district or borough council

or which is composed of more than one of the bodies listed above.”

This amendment in consequential on Amendments 2, 3 and 4.

Amendment 20, page 3, line 32, at end insert—

“30D Independent body to provide advice on proposed contracts

(1) The Secretary of State shall, within three months of the coming into force of the Passenger Railway Services (Public Ownership) Act 2024, establish an independent body with responsibility for advising the Secretary of State on contracts proposed to be made in accordance with section 30(1A).

(2) The independent body must provide advice to the Secretary of State, including recommendations as to how or whether to proceed with the agreeing of the contract, within three months of a request for such advice being made by the Secretary of State.

(3) Should the Secretary of State wish to proceed with the agreeing of a contract—

(a) having received advice against proceeding with the agreeing of the contract from the independent body; or

(b) without taking such steps as were recommended by the independent body,

the Secretary of State must make a statement in Parliament of the reasons for doing so.

(4) The Secretary of State shall consult other franchising authorities before finalising proposals for the establishment of the independent body under subsection (1).”

Amendment 21, page 3, line 32, at end insert—

“30D Annual report on ticketing effects of public service contracts

(1) The Secretary of State shall lay before Parliament an annual report on the effect of public sector contracts awarded in accordance with section 30(1A) on—

(a) ticket pricing,

(b) tap-in, tap-out options,

(c) single-leg pricing,

(d) digital season tickets,

(e) compensation for delays and cancellations,

(f) ticketing interoperability with—

(i) other train operators, and

(ii) bus and light rail system operators.

(2) The Secretary of State shall consult other franchising authorities before finalising a report under subsection (1).

(3) The first annual report under this section must be laid before Parliament within twelve months of the first award of a public sector contract in accordance with section 30(1A).

(4) Each subsequent annual report must be laid before Parliament before the end of July in each subsequent calendar year.”

Clauses 2 to 4 stand part.

The schedule.

[Helen Whately]

It is good to see hon. Members so soon after the summer recess. I know that the Secretary of State for Transport, the right hon. Member for Sheffield Heeley (Louise Haigh), has been busy over the summer, but I hope that she managed—like the Deputy Prime Minister—to find some time to let her hair down.

When we last met, I set out why the Conservatives cannot support the Bill. I do not doubt that Government Members sincerely believe in their plan, in getting rid of privately run train operators, and in putting politicians in charge of running train services, but just because an ideological belief is deeply held, that does not make it right. It is certainly not the same as using evidence as a basis for decision making.

Our railways are vital to our economy: millions of people rely on trains, whether to get them to work or school, to make essential journeys, to see family and friends, or simply to visit other parts of the country. Our rail system is complex—a mix of public and private built up over many years. One thing it is not, though, is a toy train set to be played with, but I fear that is the approach this Government are taking. They are rushing through this ideological reworking of our rail system despite the absence of solid evidence to back up their approach, at a time when other countries are choosing to increase private sector involvement and competition in their rail systems.

There is no good reason for this Committee stage to be raced through in one day, rather than through a normal Bill Committee that would allow proper time for consideration and discussion, the time appropriate for such a substantial and significant change. Proper time would allow this legislation to be made better—indeed, fit for purpose—drawing on the strengths of our rail system as well as the weaknesses, and using the lessons of our experience and that of others, while still fulfilling the Government’s intention as set out in their manifesto. Instead, in their haste, this Bill simply takes a one-size-fits-all approach, pulling the plug on even the best train operating companies despite the mixed record of the Department for Transport when it comes to the performance of the franchises it runs already.

In the Government’s haste, the Bill lacks any controls or incentives to reduce the risk of increased costs to taxpayers and passengers. We can say the same for performance: where in this Bill are the incentives to improve that, or the protections for passengers should performance worsen when the right hon. Member for Sheffield Heeley is at the controls of our trains? In the Government’s haste, those things are missing too. In their haste, if they do what they said in their manifesto, they are going to bring thousands of rail workers into the public sector, all under a single Government employer. We will have unions reclining comfortably on ministerial sofas as they discuss pay for thousands of people, funded by the taxpayer, with no safeguards to speak of to make sure the taxpayer gets a good deal.

On Second Reading, I said that some more thought should go into the Bill over the summer. I asked a series of questions and made a number of suggestions. At the very least, I was expecting the Government to table some amendments, but I am sorry to report that, as far as I can see, they are going full steam ahead. There is no sign that any serious thought has been given to the long-term impact of Government-run train companies on growth, or on the efficiency of our railways. There is barely a word on the liabilities that this Bill would transfer on to the Government’s balance sheet, and crucially, no evidence has been shared about how passengers and their journeys will be affected.

Fundamentally, the Government are rushing ahead but travelling blind, pressing on irrespective of the impact on passengers or taxpayers, which they simply do not know. The right hon. Lady has made herself passenger-in-chief and then set off on a journey without knowing the destination. That is not a sensible way to govern. Passengers should always come first, above providers, unions and ideology. That is why our first amendment would require the Government to set out what impact they believe the Bill will have.

--- Later in debate ---

[Richard Burgon]

The shadow Secretary of State is making a case from her ideological point of view, although she denies it. Running through her speech is a deep suspicion of the public sector. Suddenly she is suspicious about the quality of service for passengers. Suddenly she is suspicious about the quality of service provided, and the amount of money being spent on it. If only those suspicions and that scrutiny had been applied by the shadow Secretary of State and her colleagues while they were in government to the disastrous privatised railway service. Is she really trying to convince this House that privatisation of the railways was in any way a success? It seems to me that she is trying to stand as a barrier to public opinion and the Bill’s progress, because the majority of people in this country support public ownership of the railways and the Labour Government were elected with that as a clear manifesto pledge.

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I am sure the hon. Gentleman is about to finish.

[Richard Burgon]

I am, thank you. I will bring my remarks to a close by asking, is it not the case that the shadow Secretary of State is being deeply ideological and is only interested in the privatised model and the pursuit of profit, regardless of the effect on the public?

--- Later in debate ---

[Helen Whately]

Unfortunately, the right hon. Lady’s approach is deeply flawed and risks our facing more strikes in future, rather than fewer. [Interruption.] Yes, to directly answer her question, I can assure her that I have spoken to her predecessor in the role, and I know that the reforms proposed to modernise the railways were crucial not only to controlling increasing costs and fares, but to improving the reliability of our train services. Unfortunately, she gave all that up overnight when she gave away a bumper pay deal of almost 15%, with nothing from the other side to improve services.

The independent body I am proposing would look at pay and terms and conditions in the round. It could shed some light on who is getting a fair deal and help put modernisation at the top of the agenda in negotiations. Given that this Government seem to be set on creating a single huge employer across the network, as set out in their manifesto, which surely means harmonising pay and terms and conditions across many thousands of employees, none of whom I suspect will want to give up whatever terms they most value—a four-day working week, 34 days of annual leave and the extra money they negotiated to start using iPads are some examples—can the right hon. Lady imagine what effect this might have on ticket prices and the efficiency of our network? An independent pay review body could at least gather evidence and advise Government on what makes sense to fill jobs and provide value for money for the taxpayer.

Madam Chair, I am grateful to you for giving me some time to outline our amendments, and I am mindful that other Members wish to talk to their amendments or make maiden speeches, so I will wrap up my comments with a couple of final points. As we made clear on Second Reading, His Majesty’s official Opposition do not support this Bill. Our rail system needs reform, and we have set out plans to do that, but this Bill is not the right way to go about it. On the contrary, the Government are being driven by a flawed ideological belief along the lines of “public sector good, private sector bad”. It is not underpinned by evidence of what works, and they are not being straight with people about the possible downsides such as higher fares for passengers, higher costs for taxpayers and less reliable trains.

Why are the Government rushing through this Bill? Is it to please their Back Benchers, who we know are deeply unhappy about scrapping the winter fuel allowance, or is it to please their union paymasters? I know the right hon. Lady has promised everyone that she is going to move fast and fix things, but this looks more like moving fast and breaking things. I say sincerely to her, as I am sure she will want to make this legislation as good as it can be and, like me, wants to do the best possible job for all our constituents and for the country we serve, that she should please consider the amendments we have tabled and think hard about giving them the Government’s support.

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

As a point of information and for my assistance, it would be very helpful if Members wishing to be called could indicate clearly that they wish to speak.

[Several hon. Members rose—]

[The Second Deputy Chairman]

Thank you. I call Graham Stringer.

[Graham Stringer (Blackley and Middleton South) (Lab)]

That was earlier than I expected, Ms Nokes!

Before I come to the amendment I have tabled, I should say that I am probably the only Member in the Chamber who remembers the debate on the National Audit Office report after the original privatisation of rail, and if the hon. Member for Faversham and Mid Kent (Helen Whately) applied her proposal to the original decision to privatise rail, against the criteria the then Government were using, she would find that it has been a complete failure. I remember that when in this Chamber I asked Teddy Taylor, a Conservative I respected greatly, how he justified selling off the railways for less than they were worth, which is what the National Audit Office report said, his justification—the policy of the then Conservative Government—was that it did not matter because they would take all the subsidy out of the railways. Had the hon. Lady been present then and had those tests been applied to the original policy, the Conservatives’ policy of privatisation would be seen to be a complete failure.

The other point I would like to make about what the hon. Lady said, which a number of interventions from the Government side brought out, is that a huge amount of money has been transferred to other rail systems and to pension funds in north America and elsewhere that could have been used to benefit the transport system in this country. Incidentally, one of the reasons why passenger numbers have increased on the railways is that the previous Government did not invest in roads over many years. That has led to congestion which has forced people on to the railways; it is not the privatisation of the railways that has attracted those passengers. Those profits have gone out precisely because the Treasury did not want the debt on the balance sheet, but one cannot have it both ways. If we are to repatriate those profits, which I believe taking the railways back into public ownership will do, we of course have to take the debt. An accountancy sleight of hand, because the Treasury does not like seeing the debt on the balance sheets, is the direct cause of the profits being taken out of this country.

On the Government side of the House, there is real enthusiasm for this Bill, and the sooner the train operating companies are back in public hands and that money is repatriated to this country, the better. However, I share with the shadow Transport Secretary a worry that officials in the Department for Transport may not be up to it. Excuses may be used to slow things down, because the operator of last resort is not ready and they are worried about taking on the extra capacity. It is a genuine worry, but it is a problem that should and has to be overcome if we want a publicly owned railway working for the benefit of passengers and the taxpayers of this country, not a privatised system. I have therefore tabled an amendment to remove clause 2(3), which could be used as a loophole as it would allow the Secretary of State to carry on with a franchise under certain circumstances. I ask my colleagues on the Front Bench to be explicit about what those circumstances might be, because my worry is that they will be getting advice from officials in the Department for Transport who have not covered themselves in glory and have failed with the railways over many, many years.

As the hon. Member for Faversham and Mid Kent likes evidence, I refer her to a Public Accounts Committee report in May that is excoriating in describing the officials in the Department for Transport and how they have dealt with the railway system. I will read some of the conclusions from that report, because it should worry us all if we want this Bill to work—not just to be passed into legislation but actually to work.

The first point made by this all-party Committee with a Conservative majority in May this year was this:

“It has been six years since the Department identified the need for a root and branch review of the railway, but it has achieved very little in this time.”

It then says:

“There has been too little focus on passengers and taxpayers and how to get them a better deal.”

Those are the first very worrying points from Labour’s perspective.

The report also says:

“Six years since the Department started work on rail reform, it has failed to resolve fundamental disagreements and clarify key aspects of reform.”

There are other points too, but I do not want to bore the Committee too much. The last point is:

“The Department has failed to engage with the workforce to successfully deliver its reform ambitions.”

That is also very worrying.

I note as well the comments of an official from the Department when discussing the appalling performance of Avanti, which I think is permanently in breach of its contract and which has laughed at the Government and the travelling public as it has received massive subsidies. It is not working for profit; it is not at risk. It has just been ripping off the taxpayer for many years—since it took over from Virgin in fact. A DfT spokesperson said:

“Stripping Avanti's contract would just cause more upheaval for passengers rather than solving the challenges the operator is facing. These include restrictive working practices that can’t be reformed without ASLEF’s agreement.”

I think those officials could be and have been a barrier to reform. I would not expect my colleagues on the Front Bench to do anything but be loyal to the officials who work in the Department, but I would like them to respond on how they are going to overcome some of the potential problems they will find in a Department they control. There are not only the problems where there will be resistance. Owing to the way the franchises are dealt with, some of the better train-operating companies—such as Greater Anglia, which has a reasonable record—will come up first, whereas Avanti has eight years left on its contract. It seems to me that it would be easy for officials to recommend dealing with the best first rather than the worst, which is not in the interests of passengers or the taxpayer. We really need as a Government to get control of that and deal with the worst first, because that is where we are losing money, that is where passengers are suffering, and that is where money is being taken out of the system. As I say, I do not expect the Front-Bench team to criticise the officials they have to work with, but I hope they will take on board the fact that there are real problems and that we need to deliver right across the rail system to create a wholly publicly owned industry as soon as possible.