Wales Bill

Lord Hain Excerpts

Report stage (Hansard - continued): House of Lords
Wednesday 14th December 2016 Lords Chamber

[Baroness Randerson (LD)]

My Lords, I look forward to the Minister’s response to this because he is not on a good wicket at the moment. This is not a good week to be defending privately run franchises or arguing that railways run by the private sector are automatically the solution to all our problems. I reassure the Minister that on these Benches, we are not massive fans of nationalisation either—we are fans of what works. As you study franchises across Britain and railways across Europe and the world, you will see that all sorts of configurations work in different circumstances and that similar configurations do not work in other places. There is no one solution.

I do not think it is necessarily appropriate for the Welsh Government to be trying to run a railway service. However, it is conceivable that the Welsh Government might wish, for example, to enter into a partnership with the private sector on some kind of joint venture, or to set up some sort of novel structure, of which they would be a part, perhaps on a not-for-profit basis. I remind the Minister that Transport for London is a real success story in many respects, and has a structure that quite clearly includes a government element. I also remind the Minister that when the Government were forced to take over the east coast main line from a failing private sector franchise, they did rather a good job of running the railway and saving the situation. Therefore, we support in principle the idea of giving the Welsh Government the freedom to decide what shape of franchise they want and to participate in that process if they wish to do so.

I realise that the Minister will say that there are practical difficulties because the railway runs not just in Wales but in England. If the rail franchise is run by the Welsh Government, it might be regarded as slightly irregular, I suppose, for the service in England, but no more irregular than the private sector franchise being run by the Dutch state railway company, which is what happens in England at the moment. I also realise that we are talking about a long way into the future, because the processes for the next franchise will not be prepared until 2028. For that reason, I hope the Minister will listen and think about this. There is value in playing the long game on the railways and in looking at how we can get the best investment in services in the long term. One thing that would persuade the Welsh Government to invest in railways in Wales would be to give them a little more power and control over them.

[Lord Hain (Lab)]

My Lords, in supporting my noble friend Lady Morgan’s excellent speech, I make one brief point. The Welsh Government are not seeking to have their civil servants run the rail franchise—I do not believe anybody thinks that that would be a good idea—but to configure the right package for Wales. We can take the example of Welsh Water. To be precise on this and, I hope, not pedantic, Welsh Water is a not-for-dividend company. It is not a not-for-profit company. It has to make profits to invest. Any entity taking over the Wales rail franchise would have to do the same. But Welsh Water is run much more efficiently than privatised water companies in England because it can raise its capital at a far cheaper rate on the market than private companies—noble Lords can look at the figures—because it does not have to satisfy the shareholders’ speculative roundabouts. The amendment would give the Welsh Government the opportunity to invite bids of that kind.

Finally, if the Minister is serious about his support for devolution to Wales, why does he not respond to the Welsh Government’s specific request to have this amendment carried into statute?

[Lord Hunt of Wirral (Con)]

My Lords, I have a great deal of sympathy with the amendment and the wise words of the noble Baroness, Lady Randerson. Having listened to the discussions on the Bill, however, I strongly support a step-by-step approach. I can see the arguments on either side and recognise that the Silk commission recommended devolution. My recollection is that it recommended that the executive responsibility for the Wales and border passenger rail franchise be fully devolved. But it did so with a number of conditions and safeguards. The Government confirmed in the St David’s Day Command Paper that they would consider which non-fiscal parts of the Smith commission agreement might be implemented for Wales, including the commitment to amend Section 25 of the Railways Act 1993 to permit public sector operators to bid for rail franchises, for which Scottish Ministers are responsible.

As I understand it, the commitments that have been made have now caused the two Governments to work together on the detailed arrangements for the next franchise, including how cross-border routes could be procured and managed and signalling the likelihood that services primarily serving English markets would be transferred to other franchises for which the Secretary of State is responsible, all of which is welcome. I suppose my main question for the Minister is: can he please give us an update on exactly where we are because I would not want us to accept the amendment if it flies in the face of the careful consideration between the two Governments of how this could all be brought into effect in time for the next franchise, but in particular during the course of next year?