(2 months, 1 week ago)
Commons ChamberThe ability of local areas and local transport authorities to take back control of their bus services is crucial for rural areas, because they know their communities best. Those decisions should not be made from places in Westminster or Whitehall. Again, local transport authorities understand the specific needs of their local communities, be they rural or urban, and are best placed to make those decisions and design the network around those needs.
I welcome the statement and draw to the Minister’s attention the Transport Committee report, “Bus services in England outside London”, which was produced under the chairmanship of my hon. Friend the Member for Nottingham South (Lilian Greenwood), who is now Under-Secretary of State for Transport. There are some excellent recommendations in there. In regions such as Greater Manchester, the process of introducing bus franchising has been quite lengthy. Granting combined authorities the ability to directly award contracts would significantly shorten that timeline, allowing areas such as the north-east to bring about faster improvements. Will the Minister confirm that the better buses Bill will include provisions for direct award powers?
I can confirm that my officials are investigating the means to do just that, and I will update the House accordingly as progress continues.
(2 months, 1 week ago)
Commons ChamberI will not detain the House too long—[Interruption.] Hooray! I just want to make a couple of points. As the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), indicated, we both served on the Transport Committee in the last Parliament, and the Committee did quite a detailed inquiry on the sustainability of fuels in all sectors. We made several recommendations, and I do not believe that there is a cigarette paper—perhaps that is a non-PC term—between the two sides of the House on the issue, but I want to ask a couple of questions.
This subject is really complicated and is plagued with acronyms—HEFA, SAF, ATF, eSAF, HPBM, Jet Zero. I will not be tempted into aviation puns, but there are some important stats. As the Minister stated, estimates suggest that the sustainable aviation fuel industry could create up to 60,000 jobs by 2050—the shadow Minister said that there would perhaps be 10,000 new jobs, but that is in a longer timeframe. The shadow Minister also said that the SAF industry could contribute as much as £1 billion to the UK economy, but by 2050, it could contribute as much as £10 billion, so it is clearly a very important sector.
I am concerned about ensuring that sustainable aviation fuels under this mandate be required to meet the strictest sustainability standards. We must ensure that they are green fuels, and that there is a staged progression towards jet zero—we have heard what that is: 2% from 2025, 10% by 2030 and 22% by 2040—and we really must ensure that the greener fuels are responsibly sourced from the most sustainable locations, preferably in the United Kingdom. We had a debate last week about the launch of GB Energy and the importance of not exporting the jobs created through our efforts on decarbonisation. Will GB Energy play a role in some of these new technologies? We may well develop a hydrogen fuel cell that can produce green hydrogen much more cheaply, but in the meantime, to plug the gap, we must ensure that efforts are made to onshore as many of the jobs and benefits of this exciting opportunity as possible.
I call the Liberal Democrat spokesperson.
(2 months, 2 weeks ago)
Commons ChamberNo, I will make some progress.
For the reasons I have described, we have also tabled amendments to put some conditions on franchises moving into the public sector. Under the Secretary of State’s plan, the running of trains on our network will increasingly be tasked to a little-known Government company called DFT OLR Holdings Ltd, or DOHL, the current operator of last resort. It seems to me a huge risk to expect DOHL to successfully take over and run every franchise in the country. DOHL has had, shall we say, mixed results with the franchises it has taken over, and expecting it to run a further 10 on top of the four it is currently operating strikes me as a lot to ask. I recognise that the Bill makes reference to that risk by providing for franchise extensions where it would not be practical to bring the service in-house, but under the current plans, that would be decided by the Secretary of State. It is not that I do not trust the right hon. Lady, but she has shown herself to have a great deal of confidence in public operators, in the absence of any substantial grounds for that confidence.
I have been told that there is no plan to increase headcount, budget or resources of any kind for DOHL as it takes on that increase in workload from four to 14 franchises. I welcome the Government making an effort to achieve efficiencies at the centre, but I struggle to believe that more than tripling the number of franchises brought in-house will not involve some increase in resources. We therefore think it would be prudent for the Office of Rail and Road to form an independent judgment on whether DOHL has the capacity and expertise to take on each new franchise as it comes up, and to run it, at a minimum, as well as it is already being run. That could be done well in advance of most contracts ending, so it would not really be a hindrance to the Secretary of State’s plan, but it would provide a great deal of reassurance to passengers, and all of us as their representatives, about the capacity of the Government to successfully take over the functions of so many train operating companies.
On impact assessments and how we can have confidence that DOHL will improve performance, we can look at past performance. I remind the shadow Minister that the operator of last resort currently runs 14 franchises. Since the east coast main line, which serves my region, was taken over by LNER, revenues have grown substantially. Since TransPennine Express was brought back into public sector operations in May 2023, we have seen cancellations decrease from an average of around 20% to 5%. In the last quarter, TransPennine, which is run by the operator of last resort, DOHL, was the most improved operator in terms of cancellation scores compared with the same period last year.
I accept some of the points that the hon. Gentleman made. That is why I said that the record of DOHL had been mixed. Sometimes there has been improvement in performance, but that is not the case for all the franchises it runs. That is my reason for not being confident that it is the right organisation to take on such a large increase in its workload, particularly without any further increase in its resources, including some operators that are performing better than the train companies that he mentioned.
We want every contract that is awarded to place a duty on DOHL to look at how to modernise our network and to ensure that passengers are at the forefront of all decision making—passengers not just in urban areas and around London but, crucially, in rural areas and places that have traditionally been under-served by the rail network. Time and again, the Secretary of State has said that her No. 1 priority is passengers—that she will protect their interests above all else, and that it is for them that she is seeking this change. This is a chance to put her money where her mouth is and create a legal duty that promotes the needs of passengers in all future agreements with public sector operators. That will build in a layer of accountability on things that we all agree are important.
On amendment 8, public bodies marking their own homework is not something that Opposition Members believe leads to good results. I know from my time in government that independent scrutiny makes life harder for Ministers, but it also improves accountability, and with that outcomes. That is why we seek to introduce proper financial reporting and oversight for public sector operators. Under the franchise system, whatever its shortcomings, train operators are incentivised to increase passenger numbers and control costs. That has been an undeniable success of privatisation. Passenger numbers have doubled and costs have been controlled, increasing at a far slower rate than revenue.
In future, passengers and taxpayers will have to foot the bill for any loss of control on costs, any inefficiencies or any failures to innovate. That is a serious implication, and something we should do our best to protect people from. Creating, or recreating, some incentives is a good place to start. We will need to know how well the public train companies are performing—what they are doing to increase passenger numbers and drive growth in rail services, how reliable their services are, how well they are keeping costs under control, and how satisfied passengers are with the service they provide.
Our proposals will allow us to identify both good and bad performance, hold the managers of those companies to account and reward them accordingly, such as by linking managerial pay to performance. Those companies will no longer have shareholders to answer to, or the financial incentives that go with a senior role in the private sector. The Government have told us that part of their rationale for these changes is to better align the incentives of train operators with the interests of passengers, but the Bill currently provides no mechanism for that. We are not seeking to frustrate a change that this Government were elected to deliver; we simply wish to bring proper transparency and accountability to the process. That includes reporting on the costs involved in bringing operating companies into public ownership.
Government Members will no doubt point to the money that will be saved by removing management fees, but this equation is not one-sided. While the Secretary of State might be saving £150 million each year on fees, industry experts have predicted that the Bill could cost passengers and taxpayers up to £1 billion a year in lost productivity and growth—and that is before accounting for the Government’s taking on all the long-term liabilities of the companies. Pension obligations, rolling stock and long-term leases will all be transferred on to the Government balance sheet, and we have had alarmingly little information on what that figure will be.
I will not speak for a great deal of time, as this issue is largely devolved in Scotland. However, I welcome the Bill, and the Scottish Government have been keen to support it through a legislative consent motion. That supports the work that has already been done in Scotland. We have put the railway into public ownership as a last resort, but the Bill will provide stability going forward for the Government and the operator and enable them to do much better on medium and long-term planning, with certainty on what the future holds.
My amendment 6 brings into the debate the role of rolling stock leasing companies, or ROSCOs. Many Members on the Government Benches will agree that the ROSCOs are taking a huge profit out of the public sector. Rolling stock contracts in the past couple of years took more than £3 billion each year, and the amount of profit being taken from that is in the billions over the lifetime of the contracts. That money could be reinvested in the railways. I appreciate that it is not for this Bill, but I would like the Government to come forward with proposals on ROSCOs in the next Bill that will come forward later in the Session.
That is all I want to say at the moment. I do not intend to press my amendment to a Division, but I would like some assurance from those on the Government Front Bench that serious consideration will be given to how we deal with ROSCOs and the amount of profit being taken.
I start by declaring an interest. I am proud of the fact that I am a trade unionist and have strong links to the transport unions, particularly Unite, the National Union of Rail, Maritime and Transport Workers, and ASLEF. Indeed, as I pointed out on Second Reading, when I was a young fellow many years ago, my first job was on the railways, when they were part of British Rail. In those days, I was a member of the National Union of Railwaymen. More recently, I served on the Transport Committee for almost six years, and I am delighted that many of the arguments and issues that I and many other stakeholders raised in numerous sessions have finally found their way into a Government Bill and on to the Floor of the House of Commons.
The privatisation of the railways was a privatisation too far, even for she whose portrait should be removed. Does my hon. Friend agree that it is utterly ridiculous that the only nation state on the planet not able to run the railway in this country is this one?
Absolutely. If ever there was a charge of political dogma to be made, it must be about the fact that, under the terms of the privatisation, the British taxpayer and the British Government are not allowed to own a stake in our own railway. For too long, private companies have provided a substandard service while making substantial profits. Over the last seven years, the remaining private train operating companies—I apologise for misleading the Committee, but I misspoke earlier when I said that there were 14 of them; there are 14 franchises in total, four of which are operated by the state through the operator of last resort—have paid out an average of £130 million annually to their shareholders. Those companies are often owned by foreign Governments —in Germany, Italy, France and across Europe and the world. Meanwhile, passengers’ day-to-day experiences have been of overcrowded carriages, delays, service failure and, worst of all, some of the highest fares in Europe.
It is worth thinking about the costs, and the profits that some private train operators have been able to generate for shareholders. Figures released just this week show that Govia Thameslink Railway paid out a staggering £82.4 million in dividends, with £62.3 million of that being for the 2023-24 financial year. That represents a 268% increase from the previous year. In return for those princely profits, Govia consistently failed to meet two thirds of its customer service quality targets, as reported in the Financial Times. The situation was encouraged to persist under the last Conservative Government. I welcome the fact that Labour is making this a priority from day one, as that is fundamental to fixing the foundations and delivering the economic growth promised by the Prime Minister.
I support the comments made by my hon. Friend the Member for Derby North (Catherine Atkinson) and the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter) about the rolling stock companies—the so-called ROSCOs. Many commentators see a problem with the newly formed Great British Railways having to continue to lease rolling stock from ROSCOs, as that would allow those companies to profit from taxpayers’ money. My view is that ROSCOs are an unnecessary link in the chain. I frequently raised the issue with experts and industry leaders on the Transport Committee, and I believe that we would benefit from meeting our rolling stock needs by placing orders directly with UK-based manufacturers such as Alstom and Hitachi, rather than enriching the ROSCOs.
Despite being in post for a relatively short time, the Secretary of State has made a strong start with the Bill. However, I urge her to consider the points raised by me and Members on both sides of the Committee about how we continue to procure rolling stock as we move forward. On Second Reading, the Under-Secretary of State for Transport, my hon. Friend the Member for Wakefield and Rothwell (Simon Lightwood), said that purchasing existing rolling stock would not be a responsible use of taxpayers money. I understand that, but will the Minister, in responding, clarify whether in the future, under GBR, there will be an option to purchase new rolling stock directly, instead of having to continue to lease through the ROSCOs?
As my hon. Friend the Member for Derby North said, the UK needs to upgrade to 4,000 units of rolling stock over the coming decades, with Network Rail estimating costs in the tens of billions of pounds, so this is an ideal opportunity to explore a new financing model for rolling stock. I am not naive—I understand the financial situation that we have inherited from the last Government—but I ask the Government to explore not-for-profit financiers if rolling stock cannot be nationalised under GBR. May I point out respectfully that Eurofima, a supranational not-for-profit financier, has stated that, for every £1 billion of financing on UK railways, it could save the taxpayer £350 million over 30 years due to its lower financing costs? That is compared to using the existing ROSCOs. Will the Secretary of State update us on the possibility of using not-for-profit financiers for rolling stock in preference to the ROSCOs?
I will take up the point made by the shadow Secretary of State about the pay review bodies. May I point out that they are not universally welcomed? I have been looking at responses to pay review bodies in the health service, and the last Government had a less than wonderful record when it comes to implementing the recommendations of pay review bodies, not least those relating to junior doctors. The Royal College of Nursing has said of pay review bodies that there is “nothing independent about them.” The chairs and members of pay review bodies are hand-picked by the Prime Minister and Government Ministers, and the terms of reference are decided by the Government. There is some scepticism about how independent they truly are, and about whether, when they make recommendations, the Government are obliged to implement them in full.
I ask the Minister if it is possible to provide a timetable for the next steps. When will future Bills be introduced to the House, and when is Great British Railways expected to be fully established? I acknowledge and express my appreciation for the engagement of the Front-Bench team. I stress that I support the Bill because I believe that it represents a critical step in fixing the long-standing issues in our rail system. The current privatised framework is giving a fragmented railway, and has failed to deliver value for money, an efficient service or customer satisfaction. I am pleased that we are moving towards a model that prioritises the needs of passengers over the profits of shareholders. Rethinking our approach to rail management and financing is a crucial first step towards fixing the foundations and putting Great British Railways at the service of the travelling public.
The Greens are not agnostic on privatisation. We very much support the principle of the Bill and look forward to its progress. I want to make a short speech on amendments 2 to 5, which I tabled. They are very simple and common sense; their goal is to leave open the opportunity for elected devolved bodies to set up companies that they own, in order to bid to run railway services under the overall guidance and wing of Great British Railways. The Bill, which restricts the definition of a public sector company to those owned by Ministers, either here or in Wales or Scotland, does not allow for that. That seems to clash with the direction of travel towards more public sector devolution, with which my party and I agree.
It would improve and future-proof the Bill if we amended proposed new section 30C of the Railways Act 1993 so that Ministers could in future choose a company set up or owned by combined authorities, or by groups of unitary, county, district or borough councils who decided to co-operate, ahead of further devolution, on improving their railways. Any decisions on the award of franchises, on the suitability of a body to run and own local railways, and on where investment should go would remain fully with Ministers. I tabled the amendments in a constructive spirit, and I hope that they will start a constructive conversation that will continue here and in the other place as the Bill progresses.
(3 months, 3 weeks ago)
Commons ChamberCongratulations on your election, Madam Deputy Speaker.
I declare an interest, as I have a long association of mutual support and respect with the transport unions, particularly Unite, the RMT and ASLEF, and with all the trade unions more generally.
I welcome my right hon. Friend the Secretary of State to her new post, and I congratulate her most sincerely on prioritising the public ownership of our railways from the Government’s first day in office. This is a really important Bill, which gives me and many others on the left of the party hope and faith that this Labour Government, in which we have placed our faith, will deliver for us.
I had meant to wear my British Rail tie, because when I started work 45 years ago, or thereabouts—my goodness—I worked for British Rail in York and Scarborough. The tie is my treasured possession, but it is more elusive than a Conservative Back Bencher in a public ownership debate. I just could not find it.
I have spent quite a number of years on the Transport Committee, which scrutinised the last Government’s draft Rail Reform Bill. I welcome the Passenger Railway Services (Public Ownership) Bill, but it is clear to me that the franchising model has failed for three decades. It is now time to put passengers before private profits. By establishing Great British Railways, this Bill is the first step in taking back control.
A number of Members have raised points with which I agree, and I will mention them. I also take this opportunity to mention a local issue in my Easington constituency. The train stations in Horden and Seaham should provide easy access to Middlesbrough, Sunderland and Newcastle for employment, education and leisure. However, my constituents often experience unreliable and, at times, dangerously overcrowded services, with the chronic overcrowding meaning that passengers are often left on the platform or travelling in distressingly overcrowded carriages.
This could easily be solved by running four carriages instead of two, especially during peak periods when there is predictable demand, including on match days when my team, Sunderland, are at home at the Stadium of Light or when Newcastle United are at home at St James’ Park. Northern Rail invariably runs only two-carriage services at peak times, which seems incredible. I hope Northern Rail will address this issue.
I believe that running rail under one public entity will save taxpayers money and allow revenue to be reinvested in improving capacity and service frequency, both in my constituency and across the country. The British public have lined the pockets of private shareholders for 30 years. Over the past seven years, private train operating companies have paid, on average, £130 million to shareholders in dividends while taking public subsidies. Under the terms of the Bill, these profits will be reinvested in our railways.
We have seen how LNER, on the east coast main line, has paid more than £40 million to the Department for Transport since it has been in public ownership under the operator of last resort, but this Bill will go still further. There will be no more hefty management fees and performance bonuses to train operating companies, with more money paid back into Great British Railways.
I understand the safeguards for open-access operators, where they add value and capacity. In east Durham, Grand Central has applied to the Office of Rail and Road for four daily calls at Seaham station in my constituency, which would provide a direct connection to London, alleviating pressure on the overcrowded routes from Seaham to Sunderland. Open-access operators can benefit the network, so I hope the ORR approves these new services at the earliest opportunity.
I congratulate the Minister on building consensus with those on the frontline who run our railways, and I note the vocal support for the Bill from the RMT and ASLEF. I have long campaigned with the RMT and ASLEF for public ownership as the first step towards creating an integrated railway that prioritises passengers and our economic wellbeing over and above shareholder dividends.
The Secretary of State is on the right track—excuse the pun—and, while she is on a roll, I urge her to go a little further by reforming how we procure rolling stock, which Members on both sides of the House have mentioned. At present, the rolling stock companies lease trains to the operating companies at exorbitant prices. In fact, £409 million was paid in profits to shareholders last year, a 41.6% increase on the previous year. When Opposition Members ask where the money is coming from and how we will wring economies out of the system, there is £409 million that we could get out of the system relatively painlessly.
One of the original ROSCOs, Eversholt, is owned by CK Hutchison Holdings Ltd, a Hong Kong company set up by the billionaire Li Ka-shing, who also has shares in Northumbrian Water, which provides water and sewerage services in my region—another company that is failing the public by making millions from taxpayers. During the pandemic, the public purse subsidised train operating companies at unprecedented levels while the ROSCOs’ profits continued to soar. Yet with all operators set to be under public ownership by 2027, surely now is the time to reconsider how we procure trains for Great British Railways. Labour has a mandate for change. We can end the abuse of the British taxpayer inflating profits for privatised monopoly industries that should be publicly owned, including water, rail and energy. At least for rail we have begun the process of change.
To meet decarbonisation goals, the UK needs to upgrade up to 4,000 rolling stock units, which will cost tens of billions of pounds, so we will need a new financing model to meet those demands. With adequate planning, that could also mean ample orders to sustain our British-based train manufacturing industry and avoid the gaps in the order books we have recently seen at Alstom and Hitachi. I praise the Secretary of State and her ministerial team for the effort and energy they have expended in trying to seek a solution.
With Great British Railways, I urge the Secretary of State to ensure that ROSCOs do not continue to exploit the taxpayer and that we take back control of our rolling stock. The Great British public deserve better value for money. Public control of our train operating companies is the first step in delivering a better service. I look forward to working with my right hon. Friend the Secretary of State as we set out the finer details for Great British Railways. This is a transformative Bill for our railways—one of the most transformative Bills I have seen in my lifetime—and my right hon. Friend has my full support in delivering the modern and efficient rail service our country needs and deserves.
I call Adam Jogee to make his maiden speech.
The challenge that Labour now has to face is whether they choose taxpayers or fare payers to meet the burden of the cost of the railways. In fact, in recent years we kept rail fare rises below inflation, and we have yet to hear a similar commitment from the Government.
The impact assessment on the policy is very clear about what the Government have committed to achieve: absolutely nothing. It says it in black and white, on page 3:
“specific quantified targets for each objective have not been set”.
So clearly that leaves us on the Conservative Benches to hold them to account. I have a number of questions that I hope the Minister can address in his closing remarks.
First, what will be the exact timetable for renationalisation? We might assume that the Government are rushing to do this so that they can begin with Greater Anglia and West Midlands Trains in September, but all they have said is that they want all the contracts nationalised by October 2027. The Minister will understand the uncertainty that will create for the sector, so can he confirm a more detailed plan to the House for making use of the powers they are asking for?
Secondly, what will be the approach on nationalising terms and conditions? The Minister will know there are a variety of working practices across the railway network, many of them clearly not in the best interests of passengers and taxpayers—for example, the varied approach on mandatory Sunday working, where clearly passengers would be better served by that becoming standard; or annual leave, where again passengers would experience less delays and cancellations if drivers were required to give a reasonable amount of notice. Will the Government introduce a standard contract that prioritises the terms and conditions across the industry that will benefit passengers and taxpayers, or will they be letting the unions dictate a standardised contract that puts the unions first and passengers last?
Thirdly, what plans does the Minister have to secure increased passenger numbers, by how much and by when? We have seen a huge increase in passenger growth since the introduction of the train operating companies. What will take the place of contract incentives to secure that growth in future?
Fourthly, on modernisation, people up and down the country have seen the explosion of technology into our workplaces, but all across the network modernisation is blocked and frustrated with demands of more money from the unions for the introduction of technology. What plans do the Government have, as they directly take over running the railways, to ensure that technological innovation can be implemented across the network without undue barriers or union demands getting in the way?
Fifthly, when it comes to funding, how will they be reallocating the theoretical money saved? They argue they will save £150 million from management fees. Reinvesting that across track and train would mean, in total, a 0.5% to 0.75% increase in the overall annual budget. They need to tell us what exactly it is they will be doing with that money that is apparently going to radically improve our railways.
Sixthly, what are the balance sheet implications? The franchising model allowed the purchase of new trains and other investments to be made with no impact on public debt. Will Labour be adding those costs to public debt in future as yet another excuse for their inevitable tax rises?
Finally, what are the Bill’s implications, direct or indirect, for open-access operators? Whatever the Government may say, I am afraid that the implication of their words and actions is that they do not want the private sector running train services, so are they going to turn their sights on those operators next? If they truly believe in what they are doing—if it is not just designed to appease the left wing of their party—they will have to justify their own inconsistency.
It seems pretty clear that this, the Government’s political priority, is the wrong approach at the wrong time. They should be focusing on getting their union backers to stop frustrating reform of our railways. They should be focusing on taking forward our plans for Great British Railways. They should, at the very least, be transparent with the public about the implications of this rushed plan for fares, punctuality and reliability. There is consensus in the House that a new way of working was needed, and we had begun the process of bringing that forward, but Labour Members are more concerned with re-fighting the political battles of the 1970s and 1980s. Whatever they may say, these are the same old ideas, this is the same old ideology, and this is the same old Labour party.
The hon. Gentleman is presenting an interesting proposal. He has talked of “evidence”. If we look back over the past few years, we see that 70% of train operating companies running train franchises in this country were Government-owned—owned not by the UK Government, but by the Governments of Germany, the Netherlands and Italy. Was this not dogma to prevent an evidence-based build-up around the east coast main line franchise, providing profit and an income stream?
Let me point out to the hon. Gentleman that we also saw an increase of more than 89% in passenger numbers on our railways, and a record level of investment. If taxpayers in other countries want to invest in our railway services, I welcome that. As the shadow Secretary of State said in her opening remarks, we have proved our lack of adherence to ideology by running, when necessary, a number of private sector operators. The point that the Labour Government have to answer is this: if they are so concerned about Avanti and other private sector operators, they have the necessary powers and could do that tomorrow. If they are so convinced of their ability to sort all this out simply through nationalisation—if they are so convinced that Avanti’s performance is one that requires them to step in—let them do it tomorrow. They are not in opposition any more, so they can take steps to do things that they criticise us for not doing.
However, I am afraid that this is the same old Labour: more government good, private sector bad; unions first, passengers last. We on this side of the House have seen it and heard it all before, and we will make sure that everyone knows what Labour has spent its time focusing on and what it has put first when legislating here, politics and ideology, instead of focusing on what will actually make a difference to passengers.