Infrastructure Bill [HL]

Lord Bradshaw Excerpts

Monday 3rd November 2014 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, I support my noble friend and will briefly speak to some of the amendments in this group, namely Amendments 2, 2B, 5, 6, 6A, 7 and 7A. I will not repeat all that my noble friend has said, because the various amendments that we have tabled between us provide the basis for the proper link between primary legislation and the licence, which, as my noble friend said, is so lacking in the Bill.

I started off by looking at the relevant clauses of the Railways Act 1993 and the Railways Act 2005, which we discussed in Committee and in some helpful meetings with the Minister and officials, for which I am grateful. It was remarkably easy, at this comparatively high level, to cross out “rail” and put in “road”; they are very similar. If, as my noble friend said, we are to have a company that looks after the strategic roads in a way that is similar to what Network Rail became in September by becoming fully government-owned, it would seem logical that the legislation under which this happens would be similar.

I will not go through all the amendments in detail; my noble friend has done that very well. However, I have two questions for the Minister when she comes to reply. First, under the Bill, will it still be possible for Members of Parliament and of this House to table Written Questions and ask questions of Ministers, as we currently can with the Highways Agency? Noble Lords will know that we cannot do that for Network Rail, because if you table a question about it the answer comes back, “Write to the chief executive”. I am sure one gets good answers from the chief executive, but one does not see the answers that other noble Lords get to the questions that they ask the chief executive. I hope that the same thing will not happen with the strategic highways company and that we will still be able to table questions about its operations and the company generally, and to get a proper Written Answer or be able to have an Oral Question or debate on it as the circumstances demand.

I also hope that when Network Rail becomes subject to the Freedom of Information Act on 1 April next year, that situation will apply to it. Clearly, we would not want to ask whether a motorway sign or signal had been moved; that would be a ridiculous waste of ministerial time. On the other hand, there are many things that it would be useful to ask such questions about for the purposes of parliamentary scrutiny.

My second question for the Minister concerns my Amendment 7A which relates to Section 48 of the Health and Safety at Work etc. Act 1974. This exempts Crown-owned companies, or officers or companies of the Crown, from being taken to court by the Health and Safety Executive if it believes that they have contravened the Act. I know that the Highways Agency itself is exempt, being a Crown agency. It would be nice to know whether any change was planned in this relationship, and therefore the exemption, when the strategic highways company comes into existence. I believe that Network Rail does not have an exemption, because the Health and Safety Executive, through the Office of Rail Regulation, has taken action against it on several occasions. There should be a balance between the two and as much transparency as possible. I am very much looking forward to what the Minister has to say in response and fully support the amendments of my noble friend.

[Lord Bradshaw (LD)]

I shall say just three things. The Government are mistaken. The Office of Rail Regulation should, under that title, oversee roads as well. In spite of all the arguments, if it were signalled, it could change its name at some future date. It could be planned for and there would not be a lot of expense. It would be much more understandable to motorists and everybody else who the regulator was, whether it was a railway regulator or a transport regulator.

I also endorse the points made by the noble Lord, Lord Berkeley, about safety. One thing that the Office of Rail Regulation has done is to drive up safety standards on the railways. Although the Government keep saying the safety standards on the roads are the best in Europe, these are really quite deplorable, as we see with the continued deaths of cyclists in London, for example.

Lastly—I know I am reaching for the moon here—would it not be better to be honest and say that we have to adopt road pricing some time and, to make it acceptable, to say that the money raised from it would be used for roads and motoring purposes? If you explain what the money is for, people are much more likely to embrace the idea. A recent opinion poll in one of the national papers showed that people were against raising taxes, but if they were specifically asked whether they would pay more tax to improve the health service, they said yes. The same applies to road pricing.

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[Lord Judd (Lab)]

My Lords, I spend a great deal of my time on the west coast line. All I can say is that when for one reason or other I use the east coast, I look at it with some envy. It is a very successful operation. I cannot believe that this is happening for any reason other than ideological commitment. That is a daft way to run an essential national public service. Pragmatism is the order of the day.

My noble friend Lord Berkeley referred to what is happening with Eurostar. I find it extraordinarily irresponsible that a railway system of that kind, which is so basic to the strength of our economy and well-being—the European market, whether we are in the Common Market or not, is so crucial to our economic success—should be handed away from public accountability and control. That is a basic lifeline. Of course this is happening in other industries as well. When I read of the Chinese coming in on certain strategic areas, I begin to wonder where on earth our economic policies tie up with our strategic analysis of the world in which we live.

The great thing to remember—my noble friend Lord Berkeley referred to this too—is that when public companies on the European mainland take the opportunity to provide public services in this country, they do so in a context in which in their own countries this is not seen as an ideological test of purity but a matter of pragmatism: what makes sense to be practically and pragmatically in the public sector and what makes sense in the private sector. In that context, they have been highly successful.

I personally favour—and I find myself cheered to realise that the majority of public opinion seems to be in that direction—a completely publicly owned rail system within this country because it is so crucial to our economy and every other matter. I also think it has a good deal to do with the morale of those working on it. If they feel they are actually providing a public service, and get a professional pride from providing a public service rather that simply providing profits, that has an impact and some significance.

If we are not to have that in the Bill—I hope we may have it at some stage—then it seems that this is a very effective damage limitation exercise. Nobody could accuse it of being doctrinaire politics because it accepts that the private sector will be there; it just says, is it not sensible? If the opportunity occurs, it makes pragmatic good sense and there is a rational way to undertake it, the public sector should be running part of the railway system. It would be a very good test of the comparative merits of both. I find the present situation ridiculous and I am alarmed that this kind of oversimplified thinking can dictate policy on something as vital to our economy as this.

[Lord Bradshaw]

My Lords, I ask the Minister to consider what will happen if the bids received under the franchise competition actually give less money—or are worth less to the taxpayer—than the present east coast trains. If the bids are lower than that being achieved by the present operator, that really does sound like the economics of the madhouse. Those who are bidding have the sword of Damocles hanging over them, because open access operators are allowed access to the track at a much lower price than the franchised operator. It appears that the open access operators are massing for an attack on the east coast line.

Lastly, I recommend to the Minister an article in Passenger Transport, a rather specialist magazine. There is a good two-page article about customer service and its effect on staff morale and how the present franchising system does not allow operators to go strong on customer service. If they do so, they risk losing the next bid because customer service, among other things, cannot be put into a financial evaluation.

[Lord Adonis (Lab)]

Does the noble Lord agree that it is the height of nonsense to allow the state operators of France, the Netherlands and Germany to bid for franchises in this country, but not the existing public operator of the east coast line?

[Lord Bradshaw]

It amazes me that we as a country permit so many foreigners to run our water industry, our gas industry and our electricity industry. They are vital basic services and I think it is rather foolish to leave them in the hands of foreign operators. We have seen what has happened with prices for water, for example, which have gone through the roof. I am sure that in the public sector, such increases would not have been allowed.

[Lord Stoddart of Swindon (Ind Lab)]

My Lords, I have intervened on this Bill only once, and I probably will not do so again, but I support the amendment. I do so as someone who, first, has worked on the railways—a very long time ago, I have to say: in the late 1940s, when I worked for the Southern Railway. I became not expert but knowledgeable about lock and block signalling, which has now of course been overtaken by electronic signalling.

I also represented Swindon, which was a great railway town. In those days, I spent most of my time trying to save the railway workshops, which were highly efficient and had a good history, from being closed by British Rail. When we talk about public ownership, people appear to believe that we want to go back to British Rail. There are all sorts of ways in which you can introduce public ownership, which have been mentioned. As the noble Lord, Lord Bradshaw, and others have pointed out, we allow foreign nationalised industries to take over our industries, but we will not allow our public services to take them over.

I was very interested to listen to the Chancellor of the Exchequer talking about city regions. There is every reason why, if we are to have city regions, we should allow them, or conglomerates of city regions, to be able to bid for a rail franchise. After all, they are there to serve their electors and probably know better than any railway company what their electors want. Local government has a great history of providing public services. Our water services would not be what they are but for local government and the power given to it under the Local Government Act 1888.

That applies to transport as well. So many local authorities have a background in and knowledge of transport. Up and down the country they are providing high-quality local transport. These things really ought to be considered by the Government: there is room for public enterprise within the railways. The railways should be allowed to bid for franchises; it is not a question of undercutting but of providing decent services at reasonable cost and perhaps more cheaply than is provided by the private companies.

I was pleased to see this amendment on the Marshalled List. I well remember opposing, from those Benches—I do not know whether I was doing so from the Front Bench at the time—the privatisation of the railways as a result, of course, of a European directive, which said that the infrastructure should be separated from the operation of the services themselves. If this simple and easy amendment is put to the vote, I hope that the Minister will accept it. It does not commit the Government to anything other than considering giving public authorities the opportunity to think about franchises in what, after all, are our railway services.

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[Baroness Kramer]

I will address that point. However, I want to set the context for the discussion because sometimes there is a great deal of confusion around it.

[Lord Bradshaw]

I am sorry to interrupt the noble Baroness but the new rolling stock that is to be included in the east coast franchise is something that every bidder will have to take into account in the bid that they make. If passengers do not think that the rolling stock, which has been virtually designed in Marsham Street, is set at a reasonable price, that will indicate that a bad decision was made over here. There is no doubt whatever that if the present east coast line company runs the franchise with the new trains its returns will go up, but perhaps by only as much as the extra trains will cost. The extra trains are a burden. It is a fallacy to say that the present east coast operator would be worse than any other because the £600 million has not been invested in the track and many other operators have not invested in new rolling stock. They wait for the rolling stock companies to do it and consider that investment in the track and stations is a matter for Network Rail. Therefore, I think that the Minister’s argument is a bit faulty.

[Baroness Kramer]

I am sorry but, as the noble Lord, Lord Bradshaw, will know, these things will be built into the charges. Of course, the addition of new equipment completely changes the profile as it has to be paid for and that money comes from only two places—the fare box or the taxpayer. As I say, that completely changes the profile and I think that many noble Lords will be aware of that reality.

As regards franchising, I agree that the demands we are placing on franchisees to upgrade equipment are far more significant than has been the case in the past. I think the noble Lord, Lord Bradshaw, said that customer service was not rolled into the franchise. I can tell him that it is now and that a significant number of issues concern customer service. We are building on that because the customer absolutely has to be at the centre of the railway industry. It is true that this has not been done historically and that franchises have been engineering-driven, but that is changing dramatically. The noble Lord will start to see the impact of that coming through with the new franchises.

We are also undertaking a complete technical upgrade as we move from an early 20th century railway to a fully 21st century railway. A digital electronic railway will make huge demands on franchise providers in all kinds of ways. This is a very exciting time. There was a question about British companies’ engagement in the railway. We have some of the most innovative companies now—I speak regularly to the supply chains—who are engaged in this cutting-edge research and cutting-edge supply, which will completely change the nature of the trains running on the track. We are coming much closer to engaging with aerospace technology and other areas. Do not think of the railways as an old, staid industry any more. It is a driving, cutting-edge industry, and that change has to come through for us to meet passengers’ demands. I could go on a great deal longer, but I will come back, because you can tell I am an enthusiast about getting these changes driven all the way through.

One of the questions is, “Why don’t we set up a company and let it bid against the others?”. Let us think about that process. If we are to have any other bidders, they have to know that there is a level playing field and that absolutely no advantage is given to the public bidder. This point was, I think, raised earlier. You may be able to set up enough Chinese walls for us to say that we believe this is being done with integrity, but we would have to convince every other bidder. Think about how the railways are financed. That makes it extremely difficult. Would we be providing government-sourced money to our own public company? Obviously, the private companies go out into the capital markets. Or would it be going out into the capital markets and therefore, in a sense, be as far distant from us as virtually any company that we already describe as being a franchisee?

We would have to be absolutely certain that our assumptions on profit, tax, cost and capital in no way advantaged the public body, or we would lose every other bidder on every bid. If we go back and think carefully about what we would have to set up, we would have to set up the company in order to do this. The salaries alone would, I think, be eye-watering.