Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

2nd reading
Monday 7th October 2024 Lords Chamber

[Lord Moylan (Con)]

My Lords, I congratulate all those who made their maiden speeches in this debate. They made excellent speeches and will make a great contribution to the House in the future. The noble Lord, Lord Cryer, referred to 1920s capitalism. I look forward very much to having a drink with him one evening, I hope, and discussing the very different attitudes that capitalism had to free markets in the 1920s. I remember that Lord Ashfield, who chaired and brought together the London Transport system in the private sector over a period of 30 years, could hardly bring himself to use the word “competition” in his shareholder letters. If he did, it was always coupled with the adjective “wasteful”, normally following the verb “eliminate”: “We must eliminate wasteful competition”, he said quite nakedly to his shareholders. His attitude to free markets and that of Mrs Thatcher must be regarded as two very different aspects of capitalism, not easily confused.

I also welcome the Minister to her place, and I thank all who contributed to the debate. It is invidious to mention any names, but I want to select the speech of my noble friend Lord Young of Cookham, who set out with great lucidity the problems that privatisation was meant to address. If privatisation has to a degree failed, by whatever measure we choose to apply to it, his essential point was that the problems have not gone away. They are essentially the same problems, and the Government will have to come up with different solutions to them. So far, we have seen nothing of that.

We can all agree that reform of the railways is necessary to some degree. The last Government initiated that process with the Williams review, which contained many detailed recommendations—on fares, ticketing and other matters, for example—that I imagine will appear in the promised rail reform Bill next year, or whenever it appears. Given that it is several years since Williams reported, I am surprised that the Government need a further year to bring that Bill forward. My fear is that, as with the last Government, the complexities involved may be so great that we never actually see it and that, importantly, today’s Bill, far from being an interim measure, could end up being a sort of permanent state.

The Williams review was widely welcomed cross party, and the part of it that is most relevant to this debate and the Bill is concerned with the structure and franchising of the railways. As referred to by the noble Baroness, Lady Pidgeon, the model envisaged by Williams was based on a successful model used by Transport for London for all its services, other than London Underground, which is directly provided. That model differs from the current arrangements for national rail. The key difference is that the fares risk is carried by Transport for London, in contrast to the rail privatisation model, which sought to transfer that risk to the train operating companies. That aspect of rail privatisation has never worked well, because it turns out that fares risk is closely linked to the economic cycle: as the economy booms, more people take trains and, if there is a recession, fewer people do so and the fares fall. That is a well-demonstrated economic phenomenon, but the train operating companies are totally incapable of managing it; they cannot manage the economic cycle.

As each franchise has been renewed over time, we have seen the Department for Transport agreeing contracts and franchises whereby more and more of the fares risk remains with the Department for Transport and, therefore, with HM Treasury. This process was brought to its ultimate logical conclusion by the pandemic, when there were no fares at all and all the fares risk was transferred to the Department for Transport, where it has largely remained under the contracts that have been renewed since then, even as passenger numbers have picked up, with the fares going straight to the Government.

By contrast, the TfL model leaves the private sector responsible for managing the risks that it is actually equipped to manage. For trains, buses and trams, this means having them in the right place at the beginning of every day, pointing in the right direction and with the appropriate staff on them, to an agreed standard of cleanliness—all the things that train operating companies are good at managing. If they fail to manage them properly, they receive a financial penalty. This system demonstrably works, which is no doubt why its adoption on national rail was recommended by Keith Williams as a former TfL board member, as indeed am I.

However, that was not what the unions wanted. I do not like to bring the unions into this after the minatory comments of my noble friend Lord Balfe—I am actually quite friendly towards trades unions—but I want him to reflect for a moment that one of the objectives of the unions and one of the consequences of the Bill is that, if there is a national strike on the railways in the future, his ability to get to Cambridge by one of the three alternative lines that currently serve him, and which allow him to escape the effects of a strike on one line, will be taken from him. He would be marooned in Cambridge and unable to put his services at the disposal of your Lordships’ House if there were a national strike, which is of course the power that the trades unions would like to be able exercise.

That part of the Williams prescription has been junked, and instead the phrase “single employer” has crept into the debate, appearing in Labour documents. There is to be a single employer with single terms and conditions; that is a very different thing from Williams and does not have cross-party support. We are moving from a tried and tested system, recommended by Williams and tried and tested by TfL, to one that is not tried and tested at all—or, if it was, it was in the period of the Attlee Government and the 1950s. The Government run the risk that the logo of Great British Railways will be the curly British Rail sandwich, which some of us are old enough to remember.

The logic behind the Bill is not without merit—there is a case for it—and it is that the network effects of the railways require a single controlling brain, but that single controlling brain largely exists at the moment. Following the scrapping of the Strategic Rail Authority, it sits explicitly in the Department for Transport, which awards the franchises, runs the system and is the controlling brain. The creation of Great British Railways is an admission that the Department for Transport has failed in that role. But having a single controlling brain does not necessarily mean that you need a single operating arm, as TfL illustrates.

There are logical inconsistencies in the Bill’s approach, the first of which relates to devolution. If there is an argument for a single brain to control a single national network, how does that fit with devolution? As several noble Lords have asked, how does it fit with a system whereby, in London, the most congested and busiest part of the network, you will have two competing networks? You will have a network run by TfL, using the private sector, and a network run by Great British Railways, often with services on the same tracks, from which the private sector is going to be banned. How can the private sector be unacceptable on some services on those tracks but perfectly fine on others?

The Government have no coherent answer to the question about London or what they are going to do. They could say that they will just leave it alone and not do anything with it, but of course the mayor has been accreting responsibility to himself for additional lines in London over time and he wants more—and there is an argument that he should have more. Are we to see a moratorium on the movement of responsibility for lines from Network Rail to the mayor? Is it all going to be frozen just as it is? Are we going to allow that process to continue, or are we going to reverse it in the interests of having a single controlling brain and the logic that exists behind Great British Railways? We have absolutely no idea. Even if all the services provided by TfL were not provided by the private sector, the logical question of having two different brains would still arise.

The other problem is to do with open access. The Government say that they are in favour of open access, but logically they should not be if they believe in a single brain and a single operating arm. Many of us are sceptical about whether they are truly committed to open access. On the other hand, as my noble friend Lord Young of Cookham pointed out, in the European Union open access has been pursued with great vigour in recent years under European Union law that has mandated it. Incidentally, the direction that we are going in is a Brexit bonus—I do not think that the Government have fully appreciated the difficulties that they would have had with this enactment if we were still a member of the European Union.

We have a report here, published only in August by the European Commission, on the benefits that have accrued from open access. It finds that

“where competition is more mature, the following effects could be noticed … Lower fares … Potential cost reductions … Increased frequencies”

and improved services. Specifically on fares, the report says:

“On average ticket prices have decreased by 28% on the selected case studies due to a non-incumbent operator entering the market”.


The Government have decided to turn their back on all that. Perhaps the cool reception that the Prime Minister had when he met Mrs von der Leyen not so long ago followed his explaining to her that he was about to exclude from access to British railways the many European companies that operate on them already and might want to bid for services in future. That might explain a great deal—I do not know.

As the debate has made clear—the Government have not really denied it—this is a rushed Bill. The result of that, as we are told in the impact assessment that accompanies it, is that there has been no time to look at alternative models. It says:

“The Bill has been prepared to enable swift delivery of a Government manifesto commitment”—


not to improve matters for passengers—

“As such, it has not been practicable for the Department to undertake the usual long-listing process”

of options that might be legislated for instead. That is what we are getting: a rushed Bill with no alternative solutions. Yet the debate today in your Lordships’ House has indicated an appetite for that.

I have tried to address the broad principles underlying the organisation of the railways. It has been suggested that this is a trivial and tiny Bill and that all the serious discussion will happen in a year’s time, or whenever the rail Bill comes. But actually, as the debate has made clear, this Bill is pregnant with huge consequences for the future, which is especially true if it gets pushed off further and further into the future. Even if the Government meet their timetable and have a Bill in front of your Lordships’ House 12 months from now, it will still take several years to implement it in practice. What we are setting up today could be the shadow arrangements that we live with for many years—but we have heard no serious discussion from the Government about issues such as performance monitoring and accountability.

I have mentioned devolution and open access. We do not understand where the investment is going to come from in future, a question repeatedly asked by noble Lords. At the end, the noble Baroness on the Lib Dem Benches brought in the important question of industrial relations and terms and conditions, but we do not know how that will work when people are TUPE-ed across to government employment. What is the cost of that going to be and how is it going to be affordable? Furthermore, what is the consequence of bringing the pension liabilities of the train operating companies over on to the government balance sheet, and what effect will that have on public finances?

There is an opportunity for us to discuss all those things in Committee, and I look forward to doing that when the time comes in a couple of weeks.

Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

Committee stage
Monday 21st October 2024 Lords Chamber

[Lord Morgan (Lab)]

My Lords, I would like to intervene because I frequently travel on the railways of France; my wife is French. The contrast between the railways in France—and, for that matter, in Italy—and those of this country is quite extraordinary. The railways were aptly referred to by my colleague on the Back Benches as a shambles and so they have been. It is therefore highly important that we have a properly integrated and effective service, which has been part of the tradition of infrastructure of this country for a very long time. I cite someone whose name will register on the other side of the House: Winston Churchill. He was, in his time, a strong supporter of the nationalisation of the railways, partly on efficiency and technical grounds, based on his experience in Lloyd George’s coalition Government of the First World War, and partly on grounds that, fortunately, we hear less about now—questions of labour and industrial relations; I think the railways were almost next to the miners in industrial conflict in that period. We suffer by comparison with our neighbouring country colleagues—and, I hope, shortly, allies—and therefore the social and economic rationale of this Bill is profoundly important.

[Lord Moylan (Con)]

My Lords, I start by apologising to the noble Baroness, Lady Randerson, if I caused any confusion; I will try to do better. I welcome the noble Lord, Lord Hendy, back to his place from his excursion, no doubt by rail, in foreign parts. We missed him at Second Reading, but we had an excellent substitute in the shape of the noble Baroness, Lady Blake of Leeds.

I will make a preliminary remark at this stage, which I intend to save me making it on future groups of amendments. It is that we are, essentially, at least as far as the amendments tabled by Members from the Conservative Party are concerned, seeking information from the Government in relation to this Bill. If the Government are candid with us and give us the information that we are looking for, we will have achieved our objective on behalf of the public, and that will be the end of the matter.

I turn to the debate that has taken place so far. The part that has sparked me most, which I felt I had to answer, were the remarks of the noble Lord, Lord Snape. First, I agree with him about what a degradation it is that passengers have become customers when, of course, they really ought to be passengers. But there is also the question of ideology, which I hope to take out of the debate that we will have in Committee today and on Wednesday.

Of course there is always an element of ideology when one talks about privatisation and nationalisation. The railways, which, I think, are 200 years old next year, have been nationalised for only about a quarter of their entire existence. We must not think that nationalisation is the natural condition of railways in this country. They flourished and grew and were developed in private hands; we should always remember that. The truth is that in 1945-46, the railways were nationalised largely because, after six years of war, they were bankrupt. There had been no investment in them during the whole of that period, and they had deteriorated. Nor was there any prospect of their making sufficient profit that private capital could have been recruited to make up that deficiency.

Whether the then Government believed in nationalisation as an ideological matter or not, if the railways were to continue running at all it was going to have to be in government hands. Parts of the system were privatised in the mid-1990s for equally practical reasons—we discussed some of them at Second Reading. One reason was to attempt to improve customer service through competition; one was to recruit private capital into the railways on a consistent basis, which the Government had never been able to provide during the whole of the time they owned the railways—not enough capital and never enough consistency because no budget went beyond 12 months—and another was to try, frankly, to break the grip of the rail unions on pay, so that the astonishing disparities that exist between, let us say, a train driver and bus driver, which are entirely due to the monopoly supply of labour by ASLEF, might be evened out.

What we discussed at Second Reading, I am perfectly happy to admit, is that on some of these fronts privatisation has been successful, and on others less so. If the Government, who have won a majority on the basis of promising to nationalise the train operating companies, wish to give the other side of it a kick and see if they can make it work on that basis, I do not personally object—at least not on ideological grounds. But the House is perfectly entitled to have its practical questions about how this will work addressed. That is what the amendments in this group and many that will come before the Committee later intend to address.

The Government claim that this is a very small Bill. On the other hand, when they talk to the public it is a huge Bill, “because we are nationalising the railways”. They are not really nationalising the railways, because to nationalise something you normally have to pay for it and this Bill is not something where they are paying out to shareholders. All they are doing is letting the franchises that exist expire and then tying their hands and preventing themselves from renewing them except in emergency circumstances. It is, as I would have said at Second Reading if I had had more time, less nationalisation and more like dismissing your chauffeur at the end of his contract and deciding to drive the car yourself. At least you knew the chauffeur had a driving licence and some experience and qualification in driving the car, but now we will have the Secretary of State—we were told at Second Reading that she prefers to be known as the passenger-in-chief—as, in effect, driver-in-chief as well. We will see how that works out.

It is a big thing when the Government talk to the public—it is nationalisation of the railways—but when they talk to noble Lords it is a very little thing. All the big things, we are told, will happen in the next Bill— the train further down the line, expected in roughly a year or 18 months. That is the Bill in which many of our questions should be addressed, we are told—we should not ask those questions now. I think we should ask many of those questions now, for two very good reasons. The first is that the Bill presents us with a measure regarded by the Government as preliminary to that very large Bill, so it has long-term consequences. The second—a point made by the noble Baroness, Lady Randerson—is that the Bill sets up a shadow structure that could persist in operation for four or five years or even longer because, first, it will take us a year or 18 months before we see the Bill that will make these great reforms; and, secondly, as anyone who has been involved in the railways or any other large organisation will know, implementing significant change as a result of that legislation is likely to take several further years. We will have to live with the shadow structures set up as a result of the Bill for many years, and their practical consequences deserve the most careful scrutiny.

[Lord Snape (Lab)]

Can I ask the Minister, sorry the shadow Minister—

[Lord Moylan (Con)]

I am not quite yet the Minister, but the way the Labour Party is going, who knows?

[Lord Snape (Lab)]

I asked for that one, I have to say. It is mistakes being made at both ends of the Corridor recently.

Arising from what the noble Lord has just said, can I ask him to clarify two points? First, on the delay in moving on to the more detailed Bill, bearing in mind that it was 2016 when the Government he favours brought forward the proposals for Great British Railways, what were the Government doing in the eight years since then? Secondly, I have a simple question about the ideology of privatisation: if nationalisation is so bad, why was almost the first act of Governments in two world wars to nationalise the railway industry? What makes it so essential in wartime and yet it can be handed out piecemeal in peacetime?

[Lord Moylan (Con)]

If the noble Lord will forgive me, I am asking the questions in this scenario, and I do not feel I necessarily have an answer to his question about wartime. I might pass it on to the Minister, who once arranged for me to go and see deep in the bowels of Mayfair, under the former Down Street Underground station—I am sure that if the noble Lord, Lord Snape, has not been, it can be arranged for him to see it too—the wartime headquarters of the railway operations executive, including what is claimed to be, although I think with no historical foundation, a tin bath in which Churchill once took a bath. I will say no more about the war than that.

On the former question, I do not know the answer, but I would like to know. Why was it that the then Government, having published what they called the Williams-Shapps review written by Keith Williams—I think he is correct in saying that it was in 2016—and having promised a transport Bill in the King’s Speech one but last, did not come forward with the measures they thought they could offer in that regard? I do not know the answer to that, but I am willing to have a guess and it is relevant to what the Government are embarking on now and to whether they are going to meet their 12 to 18-month deadline of delivering us with this massive Bill that is going to transform the railways. My guess is that the then Government found that grappling with the intense difficulties of reforming the railway on such a large scale meant that, try as they might, they found considerable difficulty in putting together that Bill. It may be that is exactly what the Minister finds as he comes to address these difficulties. This only adds further to my point that the shadow arrangements we are setting up today could be with us for a very long time.

I come to the first amendment in the name of my noble friend Lord Gascoigne. The Government say they have a purpose—they are not doing this for ideological reasons or at the behest of the trade unions—which is to improve passenger services. At Second Reading, I pointed out that in the final stage impact assessment produced by the Department for Transport, given the opportunity it had to say exactly that, it said something completely different. It said that the Bill had been

“prepared to enable swift delivery of a Government manifesto commitment”—

not to improve matters for passengers—and that was why it had not looked, as it normally would, at the alternative options that might be put forward to achieve a similar purpose. That is another reason why it is incumbent on us in this House to look in great detail at what the Government are putting before us. They are in effect asking us to buy into an article of faith. They are simply saying, “Well, it couldn’t be worse than it is at the moment”—that is simply untrue; there are problems with the railways, but they could be a great deal worse than they are at the moment—“so it is bound to be better if we take it over and run it ourselves as part of a national enterprise”. But they have not provided any evidence for that; they have simply stated, “This must be the case and you’ve got to believe us”. As I say, that is one of the reasons why our job is not to do so.

--- Later in debate ---

[Lord Liddle (Lab)]

Can I try to help the noble Lord? My understanding is that the Government are committed to a comprehensive package of rail reform, and that the Bill for the comprehensive package will be introduced next spring. The purpose of this Bill is a relatively minor reform, in my view, in the context of the much bigger reform, which is to make sure that the franchises can transition to public ownership at minimum cost to the Exchequer. If we are going to do it at minimum cost to the Exchequer, we have to do it quickly; that is why this is one of the earliest Bills that the Government have put forward.

[Lord Moylan (Con)]

The noble Lord puts the Government’s case very well. How much the House has lost in not seeing him on the Front Bench as the Minister, given that he was the shadow Minister up until the general election.

We are told by the noble Lord that the Government have a package of reforms. We all have a package of reforms. We know what the package of reforms looks like; it is in the Shapps-Williams review. Yet what we are seeing from the Government is a package of reforms that differs significantly from the Williams review; that is why it needs such careful scrutiny.

Given the passage of time, I will be brief on the remaining amendments. All the amendments in my name seek to test the effects of this measure on the performance of the industry in the light of the nationalisation that the Government are proposing.

Taken separately, the amendments deal with different types of performance. Some deal with the performance of the railways in so far as they engage with passengers; that is, on timeliness, efficiency, service quality and so forth. Some relate to the performance of the railways in relation to finances; we will come to finances in more detail later. The Government claim that this Bill has no financial consequences—there are those of us on this side of the House, including the noble Baroness, Lady Randerson, who treat that approach with great scepticism. Other amendments seek to examine the measure’s effect in relation to the performance of the network as a whole.

I hope that all these amendments will be accepted by the Government. If they are to make these changes, there needs to be transparency and the public need to be able to see metrics published, possibly by an independent body or possibly by the Department for Transport—we are open to persuasion on that—which show how the railway is performing.

Having come to power committed to transparency, I know the Government would not want to resile from that. So, if they are not able to support the detailed amendments as tabled, I expect that the Minister will have no difficulty in saying that the Government will put forward amendments on Report showing how this Bill will be monitored in its implementation.

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

First, I thank the noble Lord, Lord Gascoigne, for his welcome; it is nice to see him again in different and more august circumstances—different, at least, from those that applied in the old City Hall. I thank him, and the noble Lord, Lord Moylan, for their explanations of this group of amendments, most of which require some form of reporting or assessment of the impacts of public ownership or the performance of publicly owned operators.

Like my noble friend Lord Snape, I am fascinated by the plethora of reports proposed at this stage of railway reform. Given that LNER has been in the public sector for six years, and Northern for four, it is strange that the measures now proposed for public sector train operators were never contemplated or enacted by the previous Government, who clearly never thought that they needed them. In simple terms, this Government do not either.

I welcome the support of the noble Lord, Lord Gascoigne, for railway reform. His Amendment A1 does not call for any reports but requires the Secretary of State to have regard to a specific purpose —to improve the performance of passenger services—when exercising functions under the Bill. I entirely support that purpose, and it is at the heart of what we are doing, but there are also many other purposes: stripping out inefficiency and waste on behalf of the taxpayers who fund the railway, simplifying fares and increasing patronage, connecting communities, driving economic growth and promoting opportunity for all. It is not right that the Bill should suggest that it has only that one purpose, important though it is.

Amendment 2, tabled by the noble Lord, Lord Moylan, would require the publication of two reports: the first outlining the anticipated impact of public ownership, and the second assessing its actual impact some years after the event. Regarding the first of these reports, the Government have already fulfilled the proposed obligation through the impact assessment published earlier in the year. Among other expected impacts, the taxpayer will no longer have to fund many tens of millions of pounds in fees currently payable to private sector operators each year, even when their performance is sub-standard. Furthermore, public sector operators will prioritise the interests of passengers and taxpayers, not the demands of their shareholders.

A similar report is envisaged in Amendment 48A, tabled by the noble Lord, Lord Gascoigne, but focused specifically on the impact on performance. I can assure the noble Lord that the Government certainly expect public ownership, and our broader reform proposals, to unlock the significant improvement in the performance and efficiency of the railway which he is looking for; we do not need to publish a report to say that.

Turning to the second proposed report envisaged in Amendment 2, there is no need to wait for three years before we start to consider whether train operators’ performance is improving. A wide variety of data is already routinely published about the performance of both public and private sector train operators. This includes reliability and punctuality, service quality, customer complaints, financial performance and efficiency, among other measures. This Bill does not change any of that, but as part of our wider reform plans, we will further improve access to data. This will be specific to individual routes and/or service groups, not just aggregated at the level of whole franchises, so that passengers can see at each station how services are performing on their local routes and, importantly, what is going to be done to improve them.

The Government can and will monitor performance closely on a continuing basis. We will hold operators’ feet to the fire when their performance is inadequate, irrespective of whether they are privately or publicly owned. The Secretary of State and I have already demonstrated that we will not accept the poor standards that have been tolerated in the past. We have demonstrated that from our first days in office by holding meetings with the managing directors of several train operators alongside their Network Rail counterparts to address poor performance and demand immediate action to raise standards.

In that respect, in answer to the noble Lord, Lord Grayling, we are not discriminating between the public and private sectors and will not do so, as indeed he did not in his time. He rightly gave me a hard time in 2018 in respect of electrification in the north-west of England; even if it was not Network Rail’s responsibility, it related to the failings of GTR as an operator.

Amendment 26, tabled by the noble Lord, Lord Moylan, would require the publication of a further report—or perhaps 10 reports, one after each transfer—setting out the expected impact of the transfers on various aspects of train operators’ performance. Again, once transfers have taken place, it would be more instructive to consider the actual performance of train operators.

Amendments 21 and 22, also tabled by the noble Lord, Lord Moylan, would require the reporting and independent assessment of the performance of publicly owned train operators. That is unnecessary because, as I have set out, the Government will themselves be monitoring their performance closely and will work to ensure that as much performance data as possible is published for the benefit of the travelling public, in a form that is useful to them and that allows for effective scrutiny.

My department is currently reviewing the standard terms of the service agreements that are entered into between the Secretary of State and public sector operators, in readiness for future transitions to public ownership. Public operators will be set targets in key areas such as punctuality and reliability and other aspects of the service. Work is under way to identify the right targets and measures for the period ahead in order to focus operators on delivering the best possible outcomes for passengers and taxpayers. As part of the service agreement review, we will consider the arrangements for publishing those targets and operators’ actual performance in comparison to them.

Amendment 22 refers to performance improvement plans. I reassure the noble Lord that improvement plans are already a feature of the Government’s service agreements with each public sector operator. I confirm for noble Lords that similar mechanisms will continue to exist in future, both through contractual terms and through the controls that DOHL exerts over its operators on behalf of the Secretary of State. As I have said, where performance is falling short, we will not hesitate to demand that things are put right, regardless of whether the operator is privately or publicly owned.

Amendment 45, tabled by the noble Lord, Lord Moylan, requires the publication of an independent assessment of the performance and efficiency of the rail network five years after the enactment of this Bill. By that time, the Government will have established Great British Railways, which will have taken over responsibility for both track and train. New arrangements will need to be put in place to oversee and scrutinise the effectiveness and efficiency of GBR, so in due course we will set out our plans for holding it to account as part of our plans for the wider railways Bill. We should not pre-empt those future arrangements by seeking to legislate for them now.

I hope we will deal with all the noble Lord’s other points during the rest of Committee, as we shall with the detailed comments of the noble Baroness, Lady Randerson, on staff morale and the British Transport Police. In answer to the noble Lord, Lord Lansley, I confirm that there are no changes to Section 4 of the 1993 Act.

In answer to my noble friend Lord Snape, in the present Bill there will be no change to the role of Office of Rail and Road; he needs to await the substantive railway Bill for that, at least with regard to the railway element of the ORR. There will be public consultation on the wider Bill before it comes, so there is no need to wait until the publication of the Bill itself.

I also say to the noble Lord, Lord Moylan, that there is currently no meaningful private investment by train operating companies, so we are not losing anything in the Bill that is on the table today. Contrary to his assertion about the Williams report, its author, Keith Williams, envisaged public ownership as a necessary condition to rationalise a number of things on the railways, in particular fares, ticketing and information.

The Government are fully committed to openness and transparency in train operators’ performance; that is true whether they are in the public or private sector. There is no need to legislate for all these additional reports and reviews. In fact, nearly everybody in the transport industry has written either a report or a review on some aspect of the railways. I have written several and my noble friend Lady Blake is the joint author of another, all while the franchising model has gradually disintegrated before our eyes. What we need now is action to move fast and fix things, as opposed to the interminable wait for reform since 2018 that I and everybody else in the industry have endured. That is what this Bill is all about. I urge noble Lords not to press these amendments.

[Lord Moylan (Con)]

My Lords, I am clutching my copy of the Williams rail review in my hands. I think I am going to refer to page 55 at another stage—my eyesight is not good enough to give the quote straightaway —when I will have the opportunity to point out that Williams’s approach to nationalising the train operating companies was somewhat more subtle and differentiated than the Minister has just claimed. But I want to ask him about a different point. It is a genuine curiosity I have about what might be described as the theology of Great British Railways and the new system that the Government are putting in place.

My understanding was that Great British Railways would be the single controlling brain operating the system and using a concession system to do that—let us say it is doing that itself now in the new system. It would be setting the goals of the railways through routes, service frequencies and so forth, and indeed running the fares and ticketing system. It would then be monitoring how these shadow or publicly owned companies were doing. We are now told by the Minister that all the monitoring functions he has referred to, which I would like to see set out transparently in advance through the Bill as being by independent bodies which we can trust, will be done by the Department for Transport. I ask him to be clear with us: in this system, who is responsible for monitoring and to whom is the system accountable? Is it to Great British Railways in its shadow form—now that it has been established and has a chairman, staff, a transition team and so forth—or is it the Department for Transport? The answer to that question has very significant consequences and it appears to be a moving target.

[Lord Hendy of Richmond Hill (Lab)]

I should respond to the noble Lord on three or four points. First, whatever the Williams report said—and it was adequate in what it said at the time—I took the trouble, only a few days ago, to confirm with its author that he acknowledged we could not change the fares, ticketing and information systems without taking the train operating companies or their activities into public ownership.

Secondly, the noble Lord knows perfectly well how a large public body can behave in monitoring activities, whether it carries them out itself or has contractors or concessionaires to do it, because he will be as familiar as I am with the experience of Transport for London. It monitored its own activities, published them and allowed others to scrutinise them. That principle is the one which should be adopted by Great British Railways.

[Lord Moylan (Con)]

So is it Great British Railways that will be doing it, like TfL, and not the Department for Transport? I am very confused.

[Lord Hendy of Richmond Hill (Lab)]

Well, the noble Lord should not be, because it is quite clear to me that the Government intend to take a large amount of activity out of the Department for Transport and put it in a body that is responsible for the performance of the railways. That being the case, it would be extremely logical that monitoring performance is done by GBR but properly scrutinised by others.

Lastly, I simply say to the noble Lord opposite that there has been a change of government. The policies that this Bill and the railways Bill will seek to enact are the policies that the Government were elected to carry out.

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In conclusion, the Government have a flexible approach to certain elements of the private sector. But they have a hardline approach to other elements, such as train operators. Even at this stage, I urge them to reconsider this, to allow good private sector operators to extend their franchise while the Government concentrate their efforts on the worst-performing areas, because that will certainly take all of their capacity.

[Lord Moylan (Con)]

My Lords, I begin by speaking briefly to Amendment 30, standing in my name, which proposes the deletion of the word “reasonably” from Clause 2, line 29. At this point in the Bill, the prohibition on the Secretary of State from renewing franchises is alleviated by this clause in certain circumstances. One of them is where the Secretary of State is satisfied that it will not be reasonably practicable to provide or secure the provision of the franchise service, et cetera.

This is a simple probing amendment, on which I do not want to spend a great deal of time, other than to simply ask what the Government mean by the word “reasonably” here. What is “reasonably” adding to “practicable”? It seems that it is creating potential difficulties for the Government. On one hand, if they were challenged in court about this—I hasten to add that I am not a lawyer—I think they would find that one of the tests they would be put to is whether they had acted reasonably, and that would be true whether the word was in the statute or not. Here, it seems to me that there is a double standard of “reasonably” being applied to them. What do they mean by “reasonably”? In what circumstances do they envisage having recourse to it, and would the Bill not actually be better without it? I would be grateful for the Minister’s comments on those points.

On the substance of the debate, I congratulate the noble Baroness, Lady Scott of Needham Market, on having secured universal approbation for her proposal from all speakers who have spoken today. She wants something that appears to be very common-sensical: that the poor franchises should be terminated and cleared out as soon as possible and before the well-operating franchises are cleared out, so that we do not have a situation where good operators are removed from service while poor operators are left in place.

Yet, because of the rush with which the Government have come at the Bill, and because of their determination to be able to say, “We’ve achieved something in the manifesto as fast as we possibly can”, that is exactly the effect of the Bill as it is constructed. Operators that we know to be poor will continue for considerably longer than those that are in fact performing very satisfactorily. I suspect that the Government will say that this is because they have to terminate franchises at the time they fall due, because to terminate them any earlier would cost public money and they would need to pay compensation. As the noble Lord, Lord Liddle, said, that is of course the legal advice they would receive, though what exactly some of these poor performers would expect by way of compensation is a political question and one that could easily be put to the test, as the noble Lord said.

The other matter here is that the Government already envisage that some franchise contracts, despite the prohibition in the Bill, may be renewed for practical reasons, reasonably or otherwise. It is possible to renew a franchise on a short-term basis. In fact, nearly all the franchises currently operating are operating on very short-term contracts. The financial liability carried with those short-term contracts is very small. So, even if a good performer were to have their franchise fall in very soon, if an appropriate exemption to the prohibition were inserted in the Bill, they could still be kept going on a short-term contract without creating a significant new liability to the Government, while the poor contracts fell in and were terminated without any risk to the Government. If the Government were not in such a terrible rush, all of this would create a logical structure for the termination of contracts which passengers would understand and which would not run the risks that were stated so clearly by the noble Baroness who moved the amendment.

There is a great deal to be said for this. I hope the Minister, when he replies, will not take refuge in simply saying, “Oh, we’ve got no choice because this is what the public finances dictate and it is all driven by finances and contracts”. The management of these contracts—by a confident Government who know what they are doing and a Secretary of State who wants to achieve something and knows the direction in which she is heading—is essentially a political matter. It can be done and the Government should step up to the plate and do this for their own sake if they wish their reforms to get off to a good start.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I thank noble Lords for explaining their amendments in this group, which consider some of the practical aspects of the Government’s plans to transfer services to public ownership. Amendments 1 and 48 focus on the contractual arrangements that allow the Secretary of State to terminate a franchise early, following a breach of contract or other sustained poor performance. I make it absolutely clear that this Government will not hesitate to act decisively where an operator’s unacceptable performance means that the contractual conditions for early termination are met. The Secretary of State has made this plain on a number of occasions and I am happy to reiterate it to your Lordships today.

However, I am very much afraid that the terms of the contracts we have inherited from the previous Government do not make this easy. It is far easier for an operator to return the contract to the Government than it is for the Government to take back a contract for poor performance. It is deeply regrettable that in the past couple of years, some of the poorest performing operators have been awarded the longest contracts.

Noble Lords will not be surprised to know that we have looked very hard at the form of the contract. We are closely monitoring train operators’ compliance with their contract, but at present we are not in a position—with any operator—where the Secretary of State has a contractual right to terminate for poor performance. Noble Lords might be amazed to know that Avanti has not yet triggered the need for a remedial plan, although it may well do so. While CrossCountry has triggered the need for a remedial plan, we need to let that work through, together with the timetable reduction that the Secretary of State was deeply reluctant to agree to, before we discover whether its performance then merits some further contractual remedy.

Unless and until that contractual right arises, the only sensible approach is to transfer services to public ownership when the existing contracts expire. Any other approach would require taxpayers to foot the bill for compensation to operators in return for ending their contracts early, which the Government made clear in our manifesto that we would avoid, if only because of the state of the public finances we inherited.

I have also heard representations on behalf of operators—or, rather, their owners—that, rather than transferring services as contracts expire, we should leave their services in private hands for as long as possible. All the owning groups knew of these dates and would have planned financially for them in any event. The concern seems to be that service quality will suddenly collapse, or that current plans for service improvements, or for the rollout of new train fleets, will suddenly grind to a halt.

There is no basis for these claims. DOHL is experienced in transferring services into the public sector smoothly and without disruption, as it has proved in the difficult aftermath of past franchise failures. As services transfer, the same trains will be operated by the same staff as before, and no doubt often by the same management, as happened with LNER six years ago. The improvements that are already in train will continue. I have no reason to think that performance will deteriorate. Extending specific operators’ tenure will simply delay the process of bringing services back to public ownership, where they belong, and the financial savings that will result.

In answer to the noble Lord, Lord Grayling, while there have been transfer costs from franchise to franchise, he will of course recognise that the incoming franchisee would not pay that cost gratuitously; they would simply add it to the subsidy bill for the franchise they were inheriting. In the end, the public sector pays, as it has always done. In fact, since Covid, the operators have not funded anything at all, so the quantum in the future is likely to be extremely limited.

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In light of my explanations, I hope that the noble Baronesses and Lords can be persuaded not to press their amendments.

[Lord Moylan (Con)]

I will not pursue the question of “reasonably” at this stage, but I was struck by the Minister saying that the Bill should not trammel the Secretary of State’s power in relation to how she manages contracts and franchises. However, that is exactly what the Bill does in Clause 2. What he wants is the liberty, within reason, of the Secretary of State to terminate franchises. But Clause 2 specifically sets out, in very clear language, a prohibition on the Secretary of State to award a contract to anything that is not a public sector company. It says that she may do so only

“by making a direct award of a public service contract to a public sector company”.

Admittedly, further down the page, there are, as we have discussed and as the Minister said, one or two very narrow exceptions for practicality, or reasonable practicality. But why do the Government feel that the Secretary of State should have complete liberty when it comes to terminating franchises, but is so untrustworthy and unreliable, so enamoured of the private sector and so easily seduced into re-awarding them the contract that there has to be a legal prohibition on her doing it here? All Members of the Committee are asking for is some flexibility in Clause 2 about what the Secretary of State is allowed to do—why not? Can she not be trusted?

[Lord Hendy of Richmond Hill (Lab)]

The answer is that it is the Government’s policy to take train operations into public ownership. The words the noble Lord mentions in Clause 2 just emphasise that intention.

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[Baroness Randerson (LD)]

My Lords, this has been a very interesting group of amendments to debate so far, and I am very taken by the latest thoughts from the noble Lord, Lord Berkeley, on playing around with the definition of open access operators and what will be accepted. I was interested, too, in Amendments 28 and 29 and the thoughts of the noble Lord, Lord Young, who is always very thought-provoking. His amendment, as he said, is very much the obverse of the ones put down from these Benches. I urge the Government to look at this and allow themselves the flexibility to change the order of nationalisation in order to allow good franchises to flourish and to give themselves time to unravel privatisation more slowly and more logically. It has to be more than just, “This was in the manifesto and therefore it will happen whether or not it is logical”.

I am really sorry that the noble Lord, Lord Liddle, is not in his place, because Amendment 35 is fascinating. It refers to a broader definition of what a public sector company should be, so that it includes public/private partnerships and co-operative ventures. I do not need to remind noble Lords opposite that some of them have been, or may still be, members of the Co-operative Party. As Liberal Democrats, we share an enthusiasm for co-operatives as a form of company and operation. I can envisage that a smaller rail line, perhaps in a rural area, would work very well on a co-operative or a public/private partnership basis. After all, it would bring in fresh investment without, in any way, undermining the Government’s commitment to a nationalised structure overall for the railways.

Finally, I urge the Government to look again at their plans and the precise terms of the Bill through a post-Covid lens. Covid caused the collapse of the railway system, necessitating a whole new approach to franchising for the train operators. It could happen again, either for similar reasons or as a result of a financial crisis, and I urge the Government to look again at the terms of the Bill. Have they allowed themselves sufficient flexibility to cope with the unexpected, to allow rail services to continue to operate even if there is a series of unlikely events that have upset the market for those services?

[Lord Moylan (Con)]

My Lords, my noble friend Lord Young of Cookham said that he thought that the Government’s determination to trammel itself in the way that Clause 2 does was ideologically driven—a commitment to a certain vision of the railways based essentially on a political ideology. I would not be so bold as to disagree—he may well be right—but there is another way of looking at this, which I referred to at Second Reading. What is really driving the Government’s approach to this is that they have absolutely convinced themselves that the only way in which the railways can operate is if there is a single controlling brain, so that every train run in this country for passenger service purposes is run by Great British Railways, and that this body will be the sole provider of railway services.

This is a truly ideological obsession. It is almost a psychological fixation that appears to have gripped the Government, and it needs to be tested. Questions are being asked from every side of the House about its practical effects, and we are getting no answer except, “It’s in the manifesto”, which really is no answer to a passenger standing on a platform waiting for a train that was operating perfectly satisfactorily under private ownership and is now simply not arriving.

I turn first to Amendments 4, 10, 14 and 15 in this group standing in my name. If I had written the explanatory statements rather better, Members would understand—perhaps they do—that these four operate as one. They are consequential on each other and have a single effect, which is to say that the Secretary of State in awarding new services must put them out to tender but on a “concession” basis. Amendment 14 defines a “concession” as

“a contract under which the franchising authority specifies rail services to be provided by a private sector entity and retains the risk of fluctuations in the receipt of fares”.

In other words, this amendment does something that Transport for London has done with great success in relation to buses, London Overground rail services, the Wimbledon tram and the Docklands Light Railway. They are all operated on this basis and although there might be complaints from customers about this, that or the other, there are no complaints about the basis on which the services are operated contractually. Of course, TfL has chosen to brand them all under its own branding, so members of the public and passengers are often not even aware that they are operated on this basis. We have a system that works and that we should consider very seriously by contrast to the determination of the Government that all these services are to be taken in-house and run by a single employer with a great, single, controlling brain.

Amendment 14 does something else: it is in conformity with the Williams review, which I thought was the plan that there was, generally speaking, consensus that we should operate to. There is no other plan or document of any weight or substance that has been produced as a result of an independent review for the future of the railways. When I drew attention in our last debate to what is said on page 55 of the Williams review about the concession model being the pattern taken from TfL that should be used nationally, there was a slightly astonishing intervention from the Minister in which he said that Mr Williams no longer thought that, because he had rung him up and said that we need to have it nationalised. How much else in the Williams review has been vitiated by random phone calls made by the Minister to its author? How much is left of the Williams review, if it is capable of being rewritten by the Minister on the basis of claimed phone calls with Mr Williams?

It happens that Mr Williams and I served together on the board of Transport for London when the Minister was its commissioner. I have to tell him that if I were to look into the contacts in my telephone I think I would find that Mr Williams’s telephone number was in my telephone as well. It is perfectly possible that we could pursue this debate on the basis of various individual and private phone calls that we had had with Mr Williams about what he actually meant, what he thinks now, and whether his view has changed —and then what will be left of this report? Without this report, there is no plan. The Government are, it turns out, now inviting us to take a step completely into the dark. It is not just an act of faith, as I said on an earlier group, that they can run the trains better. It is a belief that they are going to give us a better plan for the future, but that they cannot tell us what the plan is, whereas at least previously they had some basis for saying what it would be. The whole thing really is turning into the most dreadful shambles.

I would like to know why concessions do not work, why something so successful in London will not be allowed, and why what was recommended by Williams is not allowed. I do not, I am sad to say, expect to hear the detailed explanation from the Minister that those questions deserve. The other amendments in this group have similar effect.

My noble friend Lord Lansley would like the Government to have the power, where they choose to, to go out to tender and allow some of these wicked private entities to submit tenders. I may myself be wicked when I say that many of these private entities are not very private—some are the subsidiaries of our great European railway friends. They are state-owned bodies from Europe. Who knows whether the Prime Minister, as he creeps towards a great reset and love-in with the European Union, would not find it quite useful to be able to say that the Italian railways, Deutsche Bahn and Renfe could bid for services running on our railways—just as they can at the moment—and that they are not going to be kicked out of Britain? “Mrs von der Leyen, we are going to let them back in.” Would not that little bit of flexibility that my noble friend Lord Lansley would like to be able to give to the Government possibly be rather welcome in the future?

My noble friend Lord Young of Cookham made a good case for his amendments. I echo the comments of the noble Baroness, Lady Randerson, who said that it is a great pity that the noble Lord, Lord Liddle, is not here to speak to his very intriguing amendment. To a large extent, the argument for it was made very well by my noble friend Lord Young of Cookham.

The possibilities of collaboration with the private sector—indeed, with community groups and, when we come to later amendments relating to devolution, local authorities and local government—are all worth exploring if we are going to reform our railway. All of these are being shut off and closed down now by the word “only”, which the noble Lord, Lord Lansley, and others are effectively suggesting be deleted.

--- Later in debate ---

[Baroness Randerson (LD)]

My Lords, this small group of amendments addresses a number of issues that inevitably raise questions, because this very tightly drawn Bill provides no hint of how they are to be dealt with. I participate in this debate with some temerity following contributions by the noble Lord, Lord Berkeley, and my noble friend Lord Bradshaw, who know so much detail about the freight industry.

Liberal Democrat Amendments 40 and 41, to which I have added my name, are therefore probing amendments looking for details of government plans, which I hope the Minister can supply today. There are thousands of jobs and potentially billions of pounds of investment riding on the Government’s answers to these questions.

Amendment 40 is about a very specific issue but, as my noble friend Lady Pidgeon has emphasised, the role of the British Transport Police is vital, providing the rule of law on our trains. It is important to remember that the rule of law provides consumer and passenger confidence. Those of us who are older, younger or weaker are particularly dependent on the good offices of the BTP because they provide the assurance that people need before they are prepared to travel on our trains.

I emphasise that, as my noble friend said, British Transport Police funding has been provided virtually unseen from within the industry for a very long time. The total amount of money, at nearly £500 million a year, is not inconsiderable. It is therefore important that we have a clear answer now from the Government about they intend to deal with BTP in the future. In particular, how will it be overseen? Will that be with independence and at arm’s length from the Government? Which body will do that supervision?

Amendment 41, on freight, deals with a much more substantial and complex issue, because the freight industry is so complex. As the noble Lord, Lord Berkeley, said, it is essential that the new system be set up to encourage rail freight to improve its efficiency. That will be difficult, as he emphasised, because a centralised, nationalised Great British Railways will be bound to feel pressure to prioritise passenger services. We have crowded tracks running at capacity. We have vocal passengers who want trains at a time and a frequency convenient to them. We have a Government who have sponsored a nationalisation project, and their reputation will be damaged if passengers’ interests suffer. We also have a Government who emphasise that they are facing a financial black hole. Will they be willing to invest in track and signal modernisation of the sort outlined by my noble friend Lord Bradshaw, to benefit freight rather than passengers?

I fear that freight could rapidly become a poor relation, so I am keen to hear details and reassurance from the Minister. I thank him for his letter, but I point out that it says that next year’s railways Bill will “enable” the growth of freight. I emphasise that I would much prefer a duty to promote the growth of freight, rather than simply enabling it.

[Lord Moylan (Con)]

My Lords, I shall speak first to Amendment 40, concerning the British Transport Police, in the name of the noble Baroness, Lady Pidgeon. I associate myself with everything she has said about the importance of the British Transport Police in maintaining safety and law on the railway network and indeed in promoting a sense of safety, which is almost as important. That is particularly true, if I may say this, for women travelling on the railways, perhaps on their own. If they do not feel safe, they will not travel on the railways, it is as simple as that, and the British Transport Police have an important role to play in that regard. Fortunately, there is generally a good record of personal safety on the railways, but we want to see how the Bill will enhance that.

My figures may be terribly out of date, but when I was last involved, half the funding that the British Transport Police received came from Transport for London for services in London, and the rest was spread throughout the rest of the country. I will not say that the railway companies were not procuring enough British Transport Police to do the job—the test of that, of course, is whether there is criminality on the system—but they were not procuring at the same rate of coverage that Transport for London was procuring at. This is an opportunity for the Government to say, as they take control of the companies, how they are going to ramp that up and what investment they are going to make in it. I hope to hear from the Minister on that point.

A very interesting constitutional point was raised by the noble Baroness, Lady Pidgeon, which I had not heard expressed in any way before: how is the British Transport Police Authority to be constituted? At the moment it is constituted in large measure through representatives of the train operating companies. If there is effectively only one train operating company, which is the Government, how is it going to be constituted? As the noble Baroness says, it operates out of the Department for Transport. Is it going to become the first government department in this country—I think this is correct—to have its own police force? Even the Home Office, out of which ordinary policing operates, does not have its own police force; they are all accountable to police authorities or, now, to elected police and crime commissioners in appropriate areas, or to the Mayor of London in his capacity in London, and so forth. Could we end up in a constitutional nightmare here, a car crash that the Government have not properly thought through, as a result of this proposal to nationalise all these railways? Again, I would be interested to hear what the Minister has to say.

Turning to freight, I share the concern of the noble Baroness, Lady Randerson, about expressing too definite opinions on this topic, especially in the presence of the noble Lords, Lord Berkeley and Lord Bradshaw, who have such considerable and long-term prior knowledge of it. I have some slight sympathy with the Government on the point because, while I may be wrong about this, I understand that there are freight companies that have rights to paths which they do not use but will not relinquish because they may be useful in the future—and why should they relinquish them?—while, at the same time, they might want to have access to other paths which they cannot get hold of. This is slightly a mess, so perhaps there is some work for the Government to do here to sort it out.

The previous Government also had, as I understand it, a rail freight growth target: to increase rail freight by 75% by 2050. So far, that has not been mentioned and we have not heard yet whether the new Government wish to commit themselves to that target. Again, there is an opportunity for the Minister to say that that is his target when he gets to his feet. We would like to hear more about that.

The Minister may want to say that some of those points can be addressed in the future Bill—the Bill we are promised that is further down the road—but he cannot say that of the points raised by my noble friend Lord Young of Cookham and the noble Lord, Lord Berkeley, both of whom made the point that the way in which this is now proceeding, by contrast with the Williams report, creates a fundamental and ineradicable conflict of interest in the role of Great British Railways. When it was the body—the great controlling brain, as I referred to it—that was going to establish who could run what railway services where and, where appropriate, award franchises or concessions for passenger railway services, while also allowing open access and allowing freight services to take place, it could do that from a disinterested position. It would be allocating resource presumably according to some sort of rational principle that could be explained and interrogated by interested members of the public and other parties with a stake in the matter.

Now, of course, it is always going to be the case that Great British Railways will also be the operator of the passenger services—so what about the other services? What about open access and, most particularly as far as this group of amendments is concerned, where does freight get a look in? How does it make its case and to whom does it appeal if it feels it is unjustly done by? Is it to be allowed to appeal only to the courts or could there be a truly independent body outside Great British Railways—perhaps the Office of Rail and Road; I do not know—to which appeals could be made and which would decide and allocate these paths, where they are constrained, on a rational basis?

We have no idea about this because the Bill, as I said earlier, is being rushed through for manifesto and publicity reasons—for headline reasons, fundamentally—without these crucial questions that it throws up being answered. They are not my questions; I did not table these amendments. They come from Benches on all sides of the House. These questions are being thrown up and the Government have no answer, except the tune we are getting accustomed to, which has as its first verse, “It’s in the manifesto” and as its second verse, “We’ll tell you when we get to it some time next year”. I hope we can do better than that when the Minister gets to his feet.

Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

Committee stage
Monday 21st October 2024 Lords Chamber

Moved by

[Lord Moylan]

7: Clause 2, page 2, line 15, 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, maintain and improve the existing level of service. (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.”Member's explanatory statement
This amendment requires that the relevant franchising authority provides information to the ORR on a public sector company’s capability to provide adequate railway services.

[Lord Moylan (Con)]

My Lords, I will speak to Amendments 7 and 9, which together constitute this group. Both are concerned with what the Government say they intend to be the effect of the Bill: the improvement of passenger services. Again, they are largely probing amendments, although we would expect the Bill to be amended, if not with a purpose clause, as proposed earlier by my noble friend Lord Gascoigne, then at least with measures of the character contained in these two amendments, which seek to set a safety net, in effect, in different ways, for the services being provided.

Amendment 7 would have the effect that the relevant franchising authority must give to the Office of Rail and Road—it could be to some other trustworthy and credible body, such as the Department for Transport, if it is not the franchising authority—an assessment that the company that will take over the franchise is capable of doing so. People might ask: what company? The company that will take over the franchise as proposed by this Bill will be a shell company—an off-the-shelf company purchased by the Department for Transport; a perfectly ordinary company under companies law such as anyone might buy off the shelf. That already starts to raise questions around why we would think that it had any competence to run a railway. People will say, “Don’t be silly, that is just a form”. The form is an empty-shell company constituted under companies law, but the sole shareholder of that company will be the Department for Transport. In effect, the Department for Transport will be running this service through the shell company that it has bought off the shelf in order for it to be the recipient of the public service contract, which is the only type of contract that the Secretary of State will be able to award.

But the Minister said a little earlier in the debate— I cannot pin it down exactly without looking at Hansard, but I do not think that he will deny that he said it—that one of the main purposes of the Bill was to take out of the Department for Transport a whole load of stuff that it was no good at doing and give it to Great British Railways, because it would be better at doing it than the Department for Transport. Here we have a system proposed by the Bill in which the responsibility for operating a service will be taken from a train operating company with decades of experience of providing the service—perhaps, in some cases, hundreds of years of experience if it is a foreign railway company putting its foot into the British market and providing services to us—given to a company bought off the shelf, which is owned and controlled by a department that the Minister himself said should have functions taken away from it and transferred to Great British Railways. What sort of a mess is this?

That is why, very simply, this amendment asks for an assessment in advance as to whether that company —the operator—is fit for purpose. We are looking not simply at the shell company but at its shareholders and controllers—the people making the decisions. Why should not the public have that level of assurance before a franchise is terminated and transferred to such an entity? That is what the amendment is calling for, and there is a very strong case that it should be done.

The second amendment, Amendment 9, is not the same, but it points in a similar direction. Nothing is said in this Bill about what level of service the new operator will offer compared to the old operator. It is presumably for the Department for Transport or shadow Great British Railways—we do not know—to decide the terms and conditions of the public service contract that it will award. If it is the Department for Transport, it will award the contract to itself or to its shell company; if it is shadow Great British Railways, it will award it to the Department for Transport. Somebody will have to sit down and decide what those terms and conditions are. All we are asking in this amendment is that the services offered to the public should not be of a lower standard than they are under the existing franchise.

That is not to say that there is not the possibility of some sort of public consultation. That is what we have inserted. We have said that you can lower the services but that you have to consult publicly in advance. At the moment, that would be true on a transfer of a franchise. We have had no assurance from the Government that there will be a public consultation on the termination of a franchise and the award of a public service contract directly to one of the Department for Transport shell companies.

This is one of those issues about which the Government may want to say, ah ha, this will all be dealt with by the great big Bill coming down the rails towards us. That would be a grave mistake, because these issues relate specifically to this Bill and to what will happen the moment it starts to be implemented. As we discussed earlier, this Bill could be the governing statute of the operation of the railways for as much as four or five years, even if the Government have a good headwind behind their new measures and they come forward in time and are implemented reasonably. The public will want to know that our service levels are protected. Will they be consulted? Will the people who run these trains be fit for it, given that we know from the Minister that he does not think that they are fit for much else on the railways? I beg to move.

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, I thank the noble Lord, Lord Moylan, for his amendments.

Amendment 7 considers the capability of public sector companies to take over services and operate them to an appropriate standard. It is clearly a key priority for the Government that services should transfer to public ownership smoothly, without detriment to the quality of service during the transition. For this reason, the transfer of services will take place using established arrangements and processes which have previously fulfilled the Secretary of State’s operator of last resort duties. I remind the noble Lord, Lord Moylan, that this has taken place under the previous Government and their predecessors four times with no obvious risk to the delivery of service.

DOHL is the publicly owned company that already oversees four existing publicly owned operators. It has had significant experience of managing the transition of services from private to public operation in recent years. These transfers have been completed successfully and smoothly despite challenging timescales and circumstances, which have included franchise financial failure and poor operator performance. DOHL is therefore well-placed to manage future transitions and is building its capacity to do so as we speak.

The Government have made it clear that we will transfer services on a phased basis as existing contracts expire. This measured, responsible approach will further de-risk the transfer process. As an additional safety net, the Bill includes provision at Clause 2 to allow for temporary continuation of an existing franchise where the Secretary of State is satisfied that it is not reasonably practicable to complete a transfer in the timescales originally planned. We do not plan to use this power other than in genuinely exceptional circumstances, but it is prudent that it should be available if necessary as a last resort, given that everybody would agree that disruption to passengers should be avoided.

Amendment 7 also seeks to provide a new role for the independent regulator, the Office of Rail and Road. The ORR is the regulatory authority responsible for granting operator licences and for assessing, approving and issuing operators’ safety certificates. This Bill does not change this. In its existing role, the ORR will assess carefully the suitability and readiness of any operator—public or private, passenger or freight—to take over services and to operate them safely, and is experienced in doing so. Considering DOHL’s previous experience and track record, the further safeguards I have described and the existing regulatory role of the ORR, the Government do not see any need to commission further analysis from the ORR as this amendment proposes.

Amendment 9 would require the Secretary of State, Scottish Ministers or Welsh Ministers to undertake a public consultation before specifying or allowing any reduction in service levels at all within a contract with a public sector operator.

I start by saying that the Government want to grow rail passenger demand and revenues; we are not starting out with an objective to cut services. When services transfer to public ownership, as now, we will expect operators to clearly communicate all changes to services. I agree that, if there were to be a plan for material reductions in service levels, this should be the subject of public consultation. However, I cannot support a statutory obligation to hold a public consultation in relation to every change to the timetable or to any other aspect of the service specification that somebody might consider to be to their disadvantage.

If a service is so poorly used that it is clearly unnecessary to carry on running it, and there is an alternative train available at a similar time of day, is it really sensible to expend time and public money on a consultation process? If there is a high-frequency service and a slight reduction at a quieter time of day would enable train and/or infrastructure maintenance to be carried out more efficiently and effectively, does this really merit a public consultation? If, God forbid, there were another global pandemic, or other immediate and extraordinary event that caused a serious reduction in passenger demand, I submit that it would be absurd to suppose that a public consultation would be necessary before reducing service levels.

There should of course be consultation on material reductions in services, but to require it regardless of the scale or impact of a proposed change would impose a disproportionate burden. I therefore urge the noble Lord not to press this amendment and to withdraw the amendment I spoke to first.

[Lord Moylan (Con)]

My Lords, will the Minister state at the Dispatch Box not that there should be a public consultation in the event of a material reduction of services on transfer of a contract but that there will be? If so, I would be very happy to leave the matter there. I would like to give him the opportunity to say that it is the Government’s policy that there will be a consultation if there is a material reduction in services on transfer.

[Lord Hendy of Richmond Hill (Lab)]

In response to the noble Lord, I do not see those circumstances arising. However, I will take the point away and consider it during the progress of the Bill.

[Lord Moylan (Con)]

I note that the Minister has not been able to give that commitment. With that, I beg leave to withdraw my amendment.

Amendment 7 withdrawn.

--- Later in debate ---

Moved by

[Lord Moylan]

8: Clause 2, page 2, line 15, at end insert—
“(1AA) Every contract made in accordance with subsection (1A) must place a duty on the public sector company to publish a plan for investment for 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.”Member’s explanatory statement
This amendment requires all public sector companies awarded a contract to publish a plan for investment in every operational aspect of the railways.

[Lord Moylan (Con)]

My Lords, I think we are getting to the point where every question has the same answer, which is essentially either, “It is in the manifesto”, or “We’re going to tell you about it in the future”, or “How dare you imagine for a moment that anything could go wrong on our watch?” I suspect that this is where I am going to end up with this amendment.

The amendment is very simply stated. It requires that, before there is a transfer to a public sector operator, an investment plan should be published so that we know what will happen on the railway. The proposition is so simple, so self-evident and so straightforward that it hardly requires argument, and it certainly does not require any great explication. With that, I beg to move.

[Lord Teverson (LD)]

My Lords, I did not speak at Second Reading, but I often speak on issues around public investment. One of the things that concerns me greatly about this move, although generally I might be in favour of it, is that, internationally, public investment in this country tends to be extremely low. In fact, over the last 25 years, the average public sector investment is 1.8% of GDP, which most of the time is well below our equivalent G7 nations. However, if you look on it year to year, the graph is a rollercoaster that Alton Towers would probably be favourable to, because it goes up and down, up and down.

I was privileged—it was a great company—to work in the public sector for a short period of time in the transport sector, not on the railways but in another area. Certainly, one of the concerns we heard very regularly from organisations equivalent to us within the public sector—I was in the freight sector, which was so small that the Treasury did not worry about it—was that investment in the public sector operating companies tended to vary year by year depending on what the Treasury felt was possible in terms of public investment, which completely disrupted a regular, predictable and sensible investment programme in what were effectively commercial public enterprises. I would like to hear from the Minister how there will be effectively that barrier between what the Treasury wants to do year to year and the genuine needs of public sector railway companies to offer a consistent and improving service to the travelling public.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord, Lord Moylan, for his Amendment 8, which would require public sector operators to publish plans for investment and innovation. I would dispute the proposition that a move to public ownership will produce a decrease in investment. As I have previously said, currently no meaningful private sector investment is being funded by franchising.

[Lord Moylan (Con)]

I have not said that a move to public operation would reduce investment, nor have I argued it either here or anywhere else. The question put by the amendment is quite different to that.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord for his intervention. I did not say that he had made the assertion; I was disputing the proposition that a move in that way would produce a decrease in investment.

As I said, no meaningful private sector investment is being funded by franchised operators at present, so we are losing nothing by moving to a public ownership model. The Government are already reimbursing the legitimate operating costs of private sector operators and receiving the revenue. Even before the Covid pandemic, the main private investment in our railways was in rolling stock, generally funded by the rolling stock market, not by train operators or their owning groups. Given that the rolling stock market is not impacted by the Bill, there is no reason to see that change.

The Government, of course, wish to see innovation and investment in areas such as those described in the amendment. In fact, the public sector is already demonstrating its commitment to innovation. We have committed to reviewing the overcomplicated fares system, with a view to simplifying it and introducing digital innovations. Change is already being delivered: for example, by the slightly delayed, extended pay-as-you-go in the south-east and fares reform on LNER. Public ownership is essential to progress these fares and ticketing innovations and other reforms. Unlike under franchising, with public ownership we will be able to get these sorts of reforms done without needing a commercial negotiation with up to 14 different operators, each seeking to boost their profit at the taxpayer’s expense in return for agreeing to implement those reforms.

However, the Government do not consider it appropriate to spell out detailed requirements such as these in the legislation. To do so would constrain future flexibility to adapt operators’ obligations to suit changing circumstances. It is not necessarily the case that constant investment and innovation across all these different aspects of the customer offer is the right approach. The focus of innovation should be on those areas where improvement is most needed at any point in time, and not those that are already working well. Moreover, it will not be coherent for passengers, nor efficient for the taxpayer, if up to 14 separate publicly owned operators in England, plus those in Scotland and Wales, are each pursuing their own separate innovation and investment strategies across all these different aspects of the passenger offer.

A key purpose of our wider reforms, starting with the establishment of shadow GBR, will be to drive a much more coherent, cross-industry approach in areas such as those described in the amendment. GBR will be the right body to consider investment across the railways, and I ask noble Lords to wait to consider the Government’s proposals on GBR in the coming months, though I feel very confident that a coherent guiding mind for the railways will produce a longer-term and more consistently argued approach for investment than has been true in the past.

In summary, I support the underlying sentiment that investment and innovation are needed to drive improvements in many aspects of the passenger offer, but the proposed amendment is not the right way to deliver it. I offer my reassurance that investment and innovation are critical to our plans to reform the railways, but I urge the noble Lord to withdraw his amendment.

[Lord Hendy of Richmond Hill (Lab)]

A coherent guiding mind is far more likely to produce a long-term business plan for the railway that justifies future investment than the previous fragmented system. Very few of the owning groups or train operating companies have ever made any significant investment. The principal investment that has been made in passenger services is with the rolling stock companies, whose position is unaltered in the proposition of this Bill.

[Lord Moylan (Con)]

My Lords, I come away from each of the Minister’s responses slightly more baffled and frustrated than I was before. Let us try and get clear what I think he is saying. This in part is my attempt to frame at least a model answer to the question raised by the noble Lord, Lord Teverson.

At the moment, the Minister would say that there are in principle three sources of investment in the railway. There is what is put in by the private sector—that happens to be a nil set, the number is zero, but in principle it is there. There is what is provided by the private sector for the purpose of acquiring trains for the purpose of leasing them out—that is unaffected by the Bill, so that is not going to change, and nor is there any suggestion, incidentally, although I may be wrong about this, of course, we wait to see, that that is going to change as part of the Great British Railways Bill coming down the track. Then there is the part that is put in directly by the Government and that is currently negotiated by Network Rail in a series of five-year control periods. I forget where we are in the current control period, but we are vaguely half way through a five-year control period.

So, in the future, what is the Minister holding out to us that is going to be different? The contribution from the train operating companies will continue to be zero, because they are now going to be simply shell companies or part of that. He is quite clear we are not losing or gaining anything on that particular front. There will be no change to the way in which the roscos are set up for the purpose of leasing trains. So everything is thrown back on the comparison with the Network Rail negotiations in relation to the current control periods. Somehow, because that is Great British Railways, it is going to be transformed.

We have just heard that it will be longer term, so it will not be a five-year control period, it will be a 10-year control period or a 15-year control period. That might be very desirable—but why? Why is the Treasury going to agree to a 10 or 15-year control period or whatever the number is beyond the five years that exist? And if it is not going to be a larger sum—he did not say a larger sum—it will at least be a more efficiently deployed sum, so that every pound will buy a little bit more than it would have bought under the current arrangement? Again, the question is: why?

The sort of answer we get is, “It is all going to be absolutely wonderful. It will be different and it will be wonderful, but it’s going to be the same and I can’t explain why”. That is where we seem to be left the whole time. Anyway, with that, I beg leave to withdraw my amendment.

Amendment 8 withdrawn.

--- Later in debate ---

[Lord Moylan (Con)]

In speaking to these amendments, I say first that I thought the speech just made by the noble Baroness, Lady Pidgeon, was extremely sensible and contained a great deal with which I agree. It asked a series of important questions of the Minister. I have been around just long enough to have realised that getting actual answers to questions in Committee in your Lordships’ House is a pretty remote prospect, but these questions are of such importance that the Minister might make a bit more than the normal effort to address them.

I draw attention to Amendment 49 in my name, which raises the question of minimum service levels, which the last Parliament enacted as means of ensuring continuity of some service on the railways if strike action were to take place. The Government have not said whether they intend to avail themselves of that legislation and in what circumstances, but nor have they said they are going to repeal it. Many passengers in the country at large, looking to this as a means of protecting them from the ravages of what is sometimes thought to be excessive and persistent industrial action, would expect the Government to have a clear view on when they are going to use these measures—or even if the answer to that is “never”. I hope we can get a straight answer from the Minister on that.

I turn to Amendment 18 in the name of my noble friend Lord Young of Cookham, which relates to an independent pay review body. That amendment or something similar was discussed in the other place when the Bill was before that House, and the Minister in fact gave some encouragement, saying that the Government would at least look at it as part of the great reform Bill coming down the tracks towards us. I would like to hear whether government thinking has developed in any way since then and if there is anything the Minister can add to it.

On the face of it, the amendment deals primarily with agreeing and setting, in a semi-binding way, the pay rates and terms and conditions for railway staff analogously to those in other parts of the public sector. After all, it is the Government’s policy that these people should now be public employees. They should come under a single employer, a single brain and a single wallet, so it would be an independent pay review body along those lines. However, my noble friend Lord Young of Cookham took the amendment in another direction as well and made an interesting point, one also made by the noble Baroness, Lady Pidgeon: how are the Government going to amalgamate, smooth out or harmonise the varying terms and conditions and rates of pay that exist among the different train operating companies as currently constituted, as they bring them under this great big umbrella? Is there going to be a levelling up all round?

Will there be a cost to the public purse? The Government have claimed that the Bill involves no cost to the public purse, but it is patent that, if you employ a large number of people and end up adjusting their pay scales on the grounds of equity, and if those pay scales tend on average to be higher than before, a cost has been incurred directly as a result of the Bill and the action being taken under it. How is that cost to be dealt with? Where is it to come from? Why are the Government not being honest about the Bill involving costs of that character? This is a point we will return to, I am sure, when we come to look at other liabilities being transferred to the Government as a result of proposals in the Bill, as we will do later in this Committee. I invite the Government to think about this seriously, because these are important issues and they should be looked carefully.

Finally, and taking account to some extent of the lateness of the hour, when we started debating this group it was my intention to rise to offer some level of support to the amendment tabled by the noble Lord, Lord Berkeley, relating to minimum rest days. But the comprehensive and unremitting demolition of his position advanced by the noble Lord, Lord Snape, was so persuasive and irresistible that I have decided to abandon that effort.

[Lord Snape (Lab)]

I am grateful to the noble Lord for his kind words. I would just refer him to the proposed new clause to be inserted by the amendment in the name of his noble friend Lord Young, which is headed “Independent body to advise on pay and terms and conditions of employment for employees of public sector companies”. I make it that, during this debate, the party opposite has proposed no fewer than seven different bodies, groups, organisations or committees—call them what you like. As the Opposition rails regularly against too much bureaucracy, I am astonished that they want to create yet another body. In the event of a pay dispute, does the noble Lord not agree that that is why, many years ago, we created the conciliation and arbitration service? Such matters are better referred to it—we are surely running out of lawyers to sit on all these bodies—rather than creating yet another bureaucratic organisation.

[Lord Moylan (Con)]

In response, I say only that seven would be a fantastically tiny number compared to the number of internal boards, committees, liaison bodies and so forth that Great British Railways is likely to require to explain to itself what it is doing, before it even gets round to explaining to the public what it is up to. I regard seven as a very modest and economical number.

[Lord Hendy of Richmond Hill (Lab)]

I thank my noble friend Lord Berkeley for his Amendment 11, regarding rest-day working. Rest-day working provides resilience in response to spikes in leave, sickness and training, and it rewards the workforce when extra hours and days are worked. It can offer benefits to rail employees, as well as to passengers. It is likely that it will always be necessary, to some extent, to effectively deliver the timetable. However, rest-day working should be used where there is an operational benefit and employees are willing to volunteer, rather than trying to mandate in legislation how and where it is used. Our focus is instead on ensuring, as soon as possible, that the railway industry has enough staff to operate services reliably for the benefit of passengers and employees, without excessive rest-day working.

My noble friend Lord Berkeley referenced the new trains on South Western Railway. I say to him that they are now entering service and, further, that Network Rail in fact substantially changed terms and conditions two years ago for greater flexibility and in agreement with the workforce, and that is now reflected in greater efficiency. That deal demonstrates what can be achieved in the public sector.

The noble Baroness, Lady Pidgeon, referred to uncertainty. There can be no greater uncertainty than has existed for the last 30 years on the railway, in which anybody of long service has changed their employer at least once, sometimes several times, while doing the same job. The people whom I meet going around the railway talk about it as “the railway”, many of them because their employer has changed so often that they cannot even remember the name of the company that they used to work for. Some stability in respect of the employers of staff on the railway, many of whom are deeply committed and have had long service, is overdue, and this Bill will move towards it.

Will there be a workforce plan? Yes. Is there one at the moment? No. As the train operating companies come into public ownership, they will have to have a workforce plan. Personally, I am absolutely committed to the maximum recruitment of drivers as early as possible, to the benefit of the drivers themselves and the service that the railway operates.

I also very much thank the noble Lord, Lord Young of Cookham, for Amendment 18, which suggests that an independent body should be established to advise the Government on the pay and terms and conditions for railway staff under public ownership. We are committed to delivering the biggest overhaul of our railways in a generation. It is right that, as part of that process, these matters are considered. Employment conditions are an important issue and one that we are determined to get right.

My officials are at the early stages of exploring a number of options, including a pay review body, so that we can consider the most appropriate approach to meet the needs of a transformed industry. A number of different approaches exist across the public sector, including pay review bodies and wider guidance, and, as my noble friend Lord Snape said, the use of the Advisory, Conciliation and Arbitration Service. We need more time to reach an informed conclusion on the best approach for the rail sector. It would be inappropriate to commit to the introduction of an independent body before that work is completed. In particular, we do not need to do this now in relation to this Bill.

Amendment 49 is in the name of the noble Lord, Lord Moylan. It seeks to require the Secretary of State to produce a report on how public ownership will impact the implementation of the Strikes (Minimum Service Levels) Act 2023. The noble Lord must surely be aware, however, that the Government have already committed to repealing the Strikes (Minimum Service Levels) Act 2023. That is because this Government are committed to strengthening the rights of working people by empowering workers to organise collectively through trade unions.

No relevant employer, under the Strikes (Minimum Service Levels: Passenger Railway Services) Regulations, has chosen to implement minimum service levels under this legislation and, in fact, they will not work. Instead, we will work in partnership with trade unions, as we have done in recent weeks to bring an end to two years of disputes that have meant needless disruption and misery for passengers. So I must say to the noble Lord that the Strikes (Minimum Service Levels) Act will not be implemented for publicly owned services, or indeed at all under this Government—as, in fact, it was not under the last one. The suggested report, therefore, would be redundant.

Finally, I will respond to the points made by the noble Lord, Lord Young, on the classification of the costs of rolling stock for publicly owned train operating companies when I respond to Amendment 19 in group 10 in the resumed Committee stage on Wednesday. I note for now that, whatever the position is, it must already apply to the four publicly owned train companies. I urge the noble Lord to withdraw his amendment.

Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

Committee stage
Wednesday 23rd October 2024 Lords Chamber

Moved by

[Lord Moylan]

12: Clause 2, page 2, line 21, at end insert—
“(1D) The relevant franchising authority must consult the Council of the Nations and Regions before making a direct award of a public sector contract to a public sector company for a rail service that serves destinations in two or more of England, Scotland and Wales.”Member's explanatory statement
This amendment requires the relevant franchising authority to consult the Council of the Nations and Regions before making a direct award of a public sector contract to a public sector company for a rail service that serves destinations in two or more of England, Scotland and Wales.

[Lord Moylan (Con)]

My Lords, we come now to one of the most important debates in our consideration of this Bill in Committee: a group of amendments on devolution and the powers of local authorities, devolved authorities and combined mayoral authorities in relation to the vision of passenger railway services. At this stage in the debate, I intend to speak only to the amendments in my name—Amendments 12, 13 and 50—although I will offer general support to the others in this group, many of which I have added my name to. I may have more particular comments about them later in the debate when their movers have had a chance to speak to them.

I shall dispose briefly of Amendments 12 and 13, which were intended to be helpful. Indeed, Amendment 12 is still intended to be helpful. It would require the relevant franchising authority to consult the newly established Council of the Nations and Regions, which the Prime Minister has set up, before awarding contracts to a public sector company. We on this side of the House thought that it might be useful for the new council to have something practical to do; I would have thought that considering the provision of railway services is something that would take up a considerable amount of its time and generate a great deal of interesting debate. I shall say no more about this amendment because I imagine that it will be happily accepted by the Minister.

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, I start with a brief apology to the noble Lord, Lord Snape, for not having signed his amendment and assure him that if he wishes to approach me in the corridors between now and Report, some sort of grubby deal can probably be done between us in that regard. My signature is readily available for the many wise things that he has said in this debate.

[Lord Snape (Lab)]

If we are going to meet to discuss these future amendments, grubby deals or otherwise, better in one of the bars where the noble Lord can put his hand in his pocket.

[Lord Moylan (Con)]

There is the basis of a grubby deal, I suppose, but I am sure it will be done on an equal, Dutch, shared basis.

The Minister has heard what the Committee has had to say from every corner, and he will know that his response will have left noble Lords on all sides bitterly disappointed. He has promised to combined mayoral authorities, to local authorities and to regional authorities every conceivable aspect of devolution except the right and the possibility to run their own trains, which has been done so successfully in London and, I understand although I have no personal experience of it, on Merseyside. That is now suspended; it is off the table, for a number of years at the very least, on no rational grounds at all. As the noble Lord, Lord Berkeley, so rightly said, we need to know the final outcome now.

For all the Minister’s talk of this being a narrow and technical Bill, its effect, in combination with his letter, is to put an end to the further devolution of rail services to local and regional authorities for the foreseeable future, and that is something the Committee is clearly not willing to accept. There is a fundamental difficulty at the heart of this Bill, and that is the commitment made so fulsomely to devolution, endorsed or otherwise by Mr Williams, whose views seem to be plastic and developing and to respond differently to every telephone call he gets from the noble Lord—it is possibly getting to the point of rent-a-quote from Mr Williams. Despite all the commitments made by Mr Williams and by the Labour Party in its pre-manifesto document on rail services, there is not going to be any meaningful devolution. Those commitments are not consistent with the Government’s other commitment to the single controlling brain. It is a contradiction at the heart of the legislation.

As for the ability of local authorities to commission services, as the noble Lord, Lord Berkeley, so rightly said, it is all a question of money. We promise it for buses, but as we said when we discussed the Statement made on buses—on that occasion too the noble Lord, Lord Snape, was very helpful in supporting what I said —it is all very well telling local authorities they can commission new bus services, but they do not have a bean to do so. It is all very well telling regional authorities they can commission more rail services, but unless we understand, as the noble Lord, Lord Berkeley, said, who is going to pay for it and who is going to get the fares revenue, it is all pretty meaningless.

It seems to me that the great single brain is already suffering a serious headache and that the paracetamol of devolution may be what it needs to dilute the effects and to take the pressure off that brain. I think this is a point on which the Government are going to have to give some ground, and I certainly think it is one we will debate again when we return to the Bill on Report. With that, I beg leave to withdraw my amendment.

Amendment 12 withdrawn.

--- Later in debate ---

[Lord Ranger of Northwood (Con)]

My Lords, I will briefly offer my support for my noble friend Lord Hamilton of Epsom’s Amendment 14A and echo the comments of the noble Baroness, Lady Brinton, about what services we are looking to deliver when we talk about driverless vehicles, trains, et cetera.

In referring to my register of interests, I recognise that I have spent my entire career with one foot in technology and the other in transport. The two have overlapped, and we have seen great innovation in technology in transport. This takes me back to what we achieved in London Underground and Transport for London: we looked at how bringing in gate-line technology and new systems such as the Oyster card would enable us to rely less heavily on ticket offices. Eventually we removed a lot of them. That was not just because we wanted to get the people out from behind those ticket office windows; we wanted those people, freed from sitting behind that thick piece of glass, to support passengers on the Underground system by providing assistance, information and other services. This is about innovation evolving the service and removing the need for one sedentary type of activity, enabling something else to happen.

When we think about our trains—again, I note the observations of the noble Baroness, Lady Brinton, on the kind of support that can be required on a train, especially for long-distance journeys—safety and security are primary. It would also be good if we could have more services, if the food and beverage shop stayed open a bit longer because people are there, and even if somebody is there to help you connect to the wifi, which is always eternally promised but sometimes hard to achieve. Having a greater sense of the passenger experience, focusing on developing the passenger experience by freeing people from the role of sitting in the ticket office and allowing them to do other things, will be of great value.

The main point is that we need to leave space for the design of innovation. It is always hard to tell at the early stages what we will be able to do later with that innovation, but as long as we leave space in the Bill to consider it, we can, I hope, achieve our aim of really improving the passenger experience.

[Lord Moylan (Con)]

My Lords, I am not accustomed to making speeches on technological matters but, on this occasion, I feel I have some modest qualifications for doing so—although I must say in advance that I do so with a degree of trepidation, because nearly everything I know about driverless trains I have been taught by the Minister. I therefore sit in the uncomfortable position of being subject to not only his correction but his immediate correction the moment I sit down and he comes to respond.

It is possible to get oneself into a tizz about these things called driverless trains when what one is in fact discussing is signalling. When I first got involved in railways, I thought that signalling was a system where arms went up and down and red and green lights flashed, but that is all in the past. Modern signalling is, in effect, a huge computer brain that fundamentally drives the trains. It tells the trains when to go, when to stop and how fast to go in between. Its purpose is to maintain a safe distance between trains as they travel, taking account of the speed and the track’s condition and nature. It is specific to the track.

Although the noble Lord, Lord Snape, will find counterexamples—I am sure that he is right to do so—broadly speaking, it is safer to have the train driven by this great controlling brain than it is to have it driven by a human being. A large number of historical train accidents have been caused by driver inattentiveness. Indeed, in Committee on Monday, it was the noble Lord, Lord Snape, I think—it may have been another noble Lord—who drew attention to one cause of such accidents, driver tiredness, whereas the machine does not get tired. It knows what it is doing. It knows where every train is going and where it is in relation to every other.

The noble Baroness, Lady Brinton, spoke of the person who remotely drives the train. There is not a person remotely driving the train; it is the great computer brain.

[Baroness Brinton (LD)]

From my experience on the then Automated Vehicles Bill, there is a person who watches various vehicles driving. If there is an issue, they will intervene. That is how reassurance was given, so it is not left only to the computer.

[Lord Moylan (Con)]

My Lords, I was going to come to a point relating to that. I am sure that what the noble Baroness said is absolutely correct in relation to automated vehicles but, like automated planes, automated vehicles are very different from automated trains. An automated plane—indeed, any plane—must be 110% safe and known to be safe before it takes off, because if it develops a problem when it is in the air there is nothing you can do about it.

With an automated train, the approach to safety is totally different. Safety is based on fail-safe devices. If the computer brain sees that something is wrong—for example, if it loses a train on the system and does not know where it is—everything is brought to a stop. That is the solution. That is how you guarantee the safety of not only that train but the trains close to it. The trains further down the line are brought to a stop, which is of course not remotely possible when you try to apply a different technology to the air and to automated vehicles. That is the sort of system we are talking about. The level of automation that can be achieved is graded. Level 3 automation, as it is known, requires a driver to be present, although the driver is not actually driving the train.

My noble friend Lord Hamilton of Epsom referred to the Docklands Light Railway coming into operation in the 1990s. I think I am correct—here, I very much worry that I might have got this wrong and that the Minister will correct me—in saying that the Victoria line, which was introduced in the 1960s, was introduced with automated signalling at level 4. There was a driver in the cab, but they would arrive in stations reading the newspapers. This so disconcerted passengers that a stop had to be put to it and they were told that they could not read the newspaper while they were sitting in the cab, at least not while they were in or coming into a station.

So we know perfectly well that this can be done safely. We know that we can run trains much closer together and provide greater capacity if we have an automated system, because it is safer. That is why, if you go down to the Victoria line today—it benefits not from a 1960s signalling system but from a brand-new signalling system installed in the last few years—you will see the trains coming into the station so fast that the previous one hardly has time to get out before the next one arrives. If you had a driver driving that train, the headways between them would have to be much greater. By comparison, on the Piccadilly line, which, as I have mentioned on several occasions, has a signalling system so decrepit that it is hardly a signalling system at all, you can see how slowly the trains come into the stations. The driver has to conduct himself with great caution whereas, with automated signalling, they will come in faster and stop in exactly the right place. They do not have to make the human judgment that the driver has to make about stopping exactly on his mark; that is what he is meant to do, but it takes time.

I think that everybody who is involved in railways wants to head towards that; it is the direction we want to go in. The question then arises: if you have driverless trains with literally no driver in the cab, how are you going to handle the customers? First, as some people have said, there will be trepidation on the part of customers. I think that will be overcome. Even I have a degree of trepidation; I took some flights over the summer. Not many people realise that the pilot is already pretty redundant in most of the aeroplanes they are flying in. Conscious of this, I was thinking about it when I took off the other day, so trepidation is a factor.

The noble Baroness, Lady Brinton, makes a much more serious point perhaps, which is that services are required for passengers in the train and in the event of an emergency. As I said, an emergency is likely to result in the train being stopped in the middle of nowhere, and possibly stopped long enough that passengers have to be disembarked. Who is going to do all that? Of course the train has to have people on it; it has to have staff on it. Although the Docklands Light Railway has no driver—which, as noble Lords probably know, allows children to sit up front and even adults to fulfil their childhood fantasies by sitting up front—even it has a member of staff on it to deal with the sort of eventualities referred to by the noble Baroness.

There is a sort of fantasy here. I depart slightly from remarks made by some of my Conservative colleagues—not here in your Lordships’ House but in other fora—that this will somehow free the railways from dependency on staff and, therefore, on the unions. It will not, of course, because those staff will have to be present even if they are not in the cab. They will probably be members of the RMT, too, which is not exactly freeing yourself from the trammels of the trades unions.

The general intention behind my noble friend Lord Hamilton’s amendment is an extremely good one. We should be moving, as far as we can, from level 3 to level 4. Over time, it is an inevitability, and the costs involved in doing so will have to be found. The increase in both capacity and safety that will arise from doing so will probably be worth 10 HS2s or HS3s or whatever we provide on the existing lines.

Knowing the Government’s intentions on this will be extremely helpful. Knowing how it will be afforded and prioritised in an entirely nationalised system is something that we would all like to know. I suspect, as on previous occasions, that the answer from the Minister will be that we will have to wait, that he is not going to tell us, that this is a very narrow, technical Bill, that all the goodies are coming down the track in 18 months’ time, and everything else. I hope he is taking account of the fact that the Committee is very concerned about this—that technological change has to be at the heart of the modernisation of the railways and that the Government are going to find the investment capacity to do so. It is a matter of priority and money. Can he tell us about it, please, when he stands up?

--- Later in debate ---

The Government quite rightly want urgent improvement on the railways. There is no reason why a focus on passengers should not be a big step towards that improvement. I urge the Government to amend the Bill to specify legal obligations with respect to disability access. We on these Benches give notice that we may well return to this on Report.

[Lord Moylan (Con)]

My Lords, we have heard some very powerful and moving speeches, based on their own personal experience, from the noble Baronesses, Lady Brinton and Lady Grey-Thompson. I feel it would almost be impertinent of me to try to add to what they are saying, given how rich and deep their experience is of travelling on the railways as passengers who are confined to wheelchairs. They also spoke, as did the noble Baroness, Lady Randerson, and others, of those with other forms of disability, including those affected in their sight and their hearing.

However, if I were to add anything of any great substance, it would probably be along the lines of the excellent speech made by my noble friend Lord Moynihan, who clearly set out a programme—a challenging and demanding programme, admittedly, but one that should be embraced by the Government and by Great British Railways—for improving the experience of disabled passengers on the railway. It is very important for us to hear what the Minister will have to say in response to that. I know that he personally is very sympathetic to the experience of disabled passengers and the difficulties they have. However, although I do not make this as a personal remark, Network Rail as an organisation has been making similar noises for a long time, yet the difficulties continue—perhaps not always the same difficulties, and there are some improvements from time to time, but none the less the difficulties continue, and here we are today, hearing these speeches. I look forward to what the Minister has to say.

I was interested in the amendment proposed by the noble Baroness, Lady Scott of Needham Market, in relation to the passenger standards authority. We have heard too little in our Committee debates so far about the role and purpose of that authority. It is promised in the document Getting Britain Moving, but what scope it will have as a strong voice for passengers—that is how it is described—and how it will be much in advance of the existing passenger representative bodies, we have yet to learn. It would be helpful if the Minister could explain his vision for the passenger standards authority. I hope we do not have to have that deferred until we hear about the next Bill coming down the line at us, because I think it is what people want to hear.

I have an amendment of my own in this group. It will not take me a great time to speak to it. It relates to something else that we all want to know about: discount fares. Perhaps I should declare that I am the holder of a senior railcard—I hear a certain hum around the Chamber that suggests, to my surprise, that I may not be alone in that—but there is a multiplicity of other railcards too. If you click the button on the website that says, “Apply a railcard discount to this fare”, you will find a drop-down box containing a whole list of the various railcards that are available. I think passengers want to know that those railcards are going to continue to be available to them in the new system.

One of the difficulties that the Government have—indeed, that we all have—is that we are told, “We’ll pass this Bill and then everything is, so to speak, frozen until we get the next Bill”. As I have said repeatedly, and perhaps I have bored the House by saying it, simply getting the next Bill does not change anything. Change has to follow the Bill, and change is itself very time-consuming to implement. So, even on a good timetable for the Government, we are talking about four or five years before we see change, yet we are getting the impression of life being frozen in the meantime. Hence, we get pleas from the noble Baroness, Lady Randerson, for something to be done about ticketing in the meantime. We all want to know, not just on ticketing but on other matters, what is going to happen in the meantime when, in a sense, no one is in charge because shadow Great British Railways will have been set up but it will have no powers. We will be awaiting Great British Railways and things will not actually be happening.

To come back to my own amendment, that situation applies also to discounted fares. Are they to continue as they are? If they are to be changed—and there may be an argument for change; it may be that a new one has to be added or some have to be deleted, merged or changed in some other way—what would be the mechanism for doing that? I do not mean simply the legal mechanism, because that exists already and it is not being abolished, but who is the driving force behind that? What is the machine that is going to run that sort of thing and make the decisions? We would like to know about all those things. We want some assurance about their continuation but, more importantly, we would like an understanding about the change and the directing mind in this transition period, which could go on for several years.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord, Lord Moylan, for the remarks that he has just made. He talks of delay and nothing happening. One of the reasons why I personally am here is that I have been waiting six years for rail reform and, in the end, when I was asked, I volunteered to see whether I could move it forward, because it has taken a very long time. Not much has happened since the timetable crisis of 2018 and the report that Keith Williams wrote.

I thank the noble Baronesses, Lady Brinton, Lady Grey-Thompson and Lady Randerson, for Amendment 17, which is supported also by the noble Lord, Lord Moylan. I absolutely recognise the need to address the passenger experience, and I know that my noble friend Lady Blake, who took the Second Reading, recognises it too. Improving accessibility on the railways is a key priority for the Government and something that the Secretary of State and I are personally committed to. We know that the assistance that passengers receive too often falls short of what they deserve and what they have every right to expect.

I was going to list a range of areas where things need to change, but I am embarrassed to do so because so many speakers in this debate have listed them themselves. All I can do is acknowledge that I have heard the list quite clearly. We know that we need to do better, and it hurts me that the public service that I care about fails so regularly to look after people in the way that it ought to. I personally—and the Secretary of State is in the same position—will do my best to do differently in future.

Many of these issues are, frankly, best solved under public ownership, as the problems that have arisen are a direct result of the current fragmented system. For example, on the specification of new trains, which the noble Baroness, Lady Brinton, and others referred to, a guiding mind will take an approach to a greater consistency of design and improve the outcomes for disabled passengers.

In addition, it has been explained, more eloquently than I can do, how many apps there are, how weak they are and how they fail to work. The noble Baroness, Lady Grey-Thompson, took me through, and showed me a huge litany of things that are wrong with, a variety of apps, all of which she needs to make quite simple journeys. I am terribly embarrassed by that. Why should we need so many different electronic devices to deliver such a relatively poor service and outcome in such circumstances? That is an obvious case where consistency is desirable. I referred earlier today to not having a proliferation of train operators, and this is one of the reasons not to do so. We do not want everyone inventing their own process; we want one consistent process, designed with the people who use it, not done for them and not delivered to them after it is done. I have heard the experiences of the noble Baroness, Lady Grey-Thompson, and others of getting something that they wanted but then discovering it did not do what they wanted.

I contend that one of the clearest reasons for the Bill, which seeks to take train operations back into public ownership progressively, is to make those sorts of improvements a great deal easier to deliver in future. Public ownership and control give us the best platform possible to do that. I appreciate the engagement that I have had to date, especially with the noble Baronesses, Lady Brinton and Lady Grey-Thompson. I believe I have offered a meeting to both of them— I hope I have, but that is done for me—and we will have that before Report. That is not an explanation; it is more of an apology, but I hope that for now it will allow them to withdraw their amendment.

Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

Committee stage
Wednesday 23rd October 2024 Lords Chamber

Moved by

[Lord Moylan]

19: Clause 2, page 2, line 23, at end insert—
“30ZA Independent financial monitoring of public sector companies(1) The Secretary of State must, within three months of the day on which the Passenger Railway Services (Public Ownership) Act 2024 comes into force, 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.”Member’s explanatory statement
This amendment requires that the Secretary of State instructs an independent body to conduct financial monitoring of the public sector companies.

[Lord Moylan (Con)]

My Lords, I suspect that this will be one of the shorter debates in our consideration of this Bill in Committee, but it is one of the most important. It will be short, I suspect, because this group is rather technical, but it has very great significance, not only for the operation of the railways but for the passenger experience.

There are four amendments in this group, all of them in my name. The first two, Amendments 19 and 20, are closely related. They relate to the very peculiar situation in which we are now going to see the railways operated in this country: that is, that they are going to be practically unmonitored independently as far as their finance is concerned. Compare the railway sector to the water sector or to electricity. These sectors have economic monitoring to ensure that best value is being delivered to the customer. Nothing of the sort is envisaged in relation to our new nationalised railway. There is to be no economic monitoring and no supervision of the setting of fares, and that is what these amendments relate to. One is to do with charges to customers—that is Amendment 19—and the other is to do with the costs incurred by the utility. The railways are a utility, and that is how they are going to be run.

Of course, if they were run by the private sector—as they would be if they were water or electricity—that economic monitoring would cover both the costs charged to the customer and the costs incurred by the operator, because their efficiency would be monitored. As I say, none of that is envisaged here. We are asked to assume that, in public ownership—I am not now talking about a Bill that is going to come to us in 18 months; I am talking about the direct consequences of this Bill as soon as it starts to come into effect and as these franchises move over—the Government are going to set fares in a reasonable way that is not exploitative of customers.

It could be said that that can be assumed because it is not going to be run by the private sector—that the Government are not going to gouge our eyes out, because Governments do not do things like that. But they do. Tell somebody who is applying for an urgent passport at a cost of £1,000 that they are not having their eyes gouged out. Tell someone applying for a statement of their nationality that recognises an existing British nationality who is charged well over £1,000, including each time for their children on top, that they are not having their eyes gouged out—that is several thousand pounds for a family that are already British and simply want to have it recognised, as they are allowed to do, and register as British because they are already British.

We know from experience that Governments are perfectly willing to charge very high fees for their services in order to make a profit. Sometimes, this profit has been complained about—for example, in relation to nationality, not least by the noble Baroness, Lady Lister of Burtersett, and others on the Labour Benches when we have debated matters such as that.

Who will decide how fares are set, what the logic is, and what the railways’ aim is in setting those fares? This is particularly true in the case of railways, because they inevitably have variable fares. It is part of the nature of a railway that they aim for the highest return they can get from particular passengers; they are then willing, because of the nature of the structure of the business, to take marginal fares to cover marginal costs from other passengers who might pay very little for the same journey because they are willing to go at a certain time or book a certain distance in advance, and things of that sort. Those who do not have that advantage may find themselves being gouged because they need to travel at the last minute or because they are captive customers. Do not forget how many captive customers the railways have. There are not necessarily a lot of captive customers on the long-distance railways, but on the commuter network, especially around London, they are, in effect, captive customers. How attractive to the Treasury to turn the railways into a mill for generating money for the Government, if that is what it wants to do.

I am not saying what the fares policy should be. What I am saying is that there should be some independent monitoring of how it is done so that customers—or passengers, as I must remember to call them, remembering what I said to the noble Lord, Lord Snape, the other day—do not find themselves trapped in a system and exploited. No independent monitor is proposed, so we have to trust either the Department for Transport or Great British Railways. I am not sure which it will be in the long term, but in the short term, over the next few years, we have to trust the Department for Transport to set fares in a way that is not designed to maximise revenues from those who cannot resist paying them.

Similarly, if this were in the private sector, through the setting of charges there would be economic regulation—as there is in the water industry, at Heathrow Airport and so forth—of the efficiency of the costs with which the railways conduct themselves. There is no sign of that either in the Bill. Again, we are asked to trust the Department for Transport to ensure efficiency. Considering how many staff the Department for Transport employed to monitor and shadow the staff employed by HS2 Ltd, I do not regard it as a great guarantor of the efficiency of delivery and the control of costs. There ought to be an independent body to do that.

That deals, as far as I am concerned, with Amendments 19 and 20. We then come to Amendment 23, which is rather different but again relates to something the public should be entitled to know about: the great transfer of pension liabilities that will occur as a result of moving pension responsibilities from the train operating companies to the Department for Transport. I want to be clear about this: I completely understand that the staff are largely currently members of the national rail pension fund and that they will remain members of the same pension fund. The contributions and so forth should not in themselves change simply because of the Bill—I perfectly follow that. The costs will not increase as a result, but the purpose of this amendment is to probe where they will lie in balance sheet terms. Will they be a liability fully on the Government’s balance sheet? What consequence will that have for the national debt? This is something that we should know, because the railway pension scheme is, obviously, one of the largest pension schemes in the country. These are not trivial sums; they are very significant sums in terms of pension funds.

Finally, I have Amendment 25 on lease payments. I will not trespass into this very deeply because a similar amendment in the name of my noble friend Lord Young of Cookham is due to be debated later, and I know that he is much more knowledgeable about these matters than I am, but it is certainly the case that the lease arrangements that exist for the rolling stock are between the train operating companies and the roscos, the rolling stock finance companies. That is where the lease liability exists. Are these to be transferred to the Government? If they are, where will they sit in balance sheet terms? What balance sheet effect would that have? Therefore, there is the question of public debt.

There are two separate strands to these four amendments. One strand relates to balance sheet liabilities and the effect on the Government’s balance sheet of the measures proposed. We are told that this Bill has no cost implications, but is that true? The other relates to how we ensure that the railways are properly and independently monitored to make sure that the fares they charge are not exploitative in circumstances where exploitation is open to them, that their costs are efficient and that they are efficiently delivered. Simply saying that we should trust the Government or the Department for Transport on this is, I suggest, not a satisfactory answer.

[Baroness Randerson (LD)]

My Lords, one of the clear attractions of the new system should be increased transparency. There should be no chance that the new authority would be able to hide behind commercial confidentiality. One public body would make life very much easier in terms of national answerability. I do not agree with the mechanism suggested by the noble Lord, Lord Moylan, but he is making a valid point. Can the Minister confirm that the passenger standards authority, the passenger body that is going to be the champion of passenger standards, will have the power to investigate fares and report on problems? I gently point out that the Government will no longer be able to blame the train operators. All the blame will now fall on the Government, and passengers will make judgments based on that. It is therefore important that there is a public way for the Government to explain their decisions in relation to train fares and the fare structure overall.

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[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Baroness for her intervention. Of course, she is absolutely right. The fare system is far too complex, whether it is regulated fares or unregulated fares. One of the primary purposes of bringing train operations into public ownership is to provide the basis of rationalising that fare system without the associated complications of either compensation to private sector operators or, indeed, their saying that some of the information needed to do that is commercially confidential and hence cannot be used to rationalise the system that nobody understands.

On Amendment 19, the department already holds its public train operating companies to account for their financial management through regular review of their management accounts and business plans, as part of its routine contract management activities. That is equally true in relation to privately owned operators whose costs are funded by taxpayers. This scrutiny supports the monitoring of performance against the Secretary of State’s priority to deliver an affordable and sustainable railway. The amendment refers specifically to the auditing of publicly owned train companies’ accounts. It is already the case that those companies must publish their audited accounts annually, which are available in Companies House, so there is already full transparency of their financial performance and management. The proposed amendment would add little value to the existing scrutiny of their financial performance by DOHL ass shareholder, the Department for Transport’s contracting authority, and their own financial auditors, as well as the public via the public audited accounts. That would be an unnecessary additional cost to be borne by the taxpayer which I cannot support.

Regarding Amendment 20, the department already publishes information on its website about payments made to operators under its rail contracts. The department’s published annual report and accounts also detail the department’s expenditure on each contract, as well as any associated year-end balances in respect of payments made in advance or still due to be paid. The Bill does not change that, so there is no need for the taxpayer to pay for an independent body to report on the same data. As I have said previously, the most significant financial impact of the Bill will be that taxpayers will no longer have to foot the bill for tens of millions of pounds in fees paid to private operators each year for the benefit of their shareholders.

Amendment 23 raises the specific question of whether public ownership will expose the Government to pension liabilities that previously sat with private operators. Under the current national rail contracts, DfT funds the legitimate actual costs of the train operating companies. For example, this includes the net operational costs of running services and the cost of leasing rolling stock and pension contributions.

The noble Lord, Lord Young, asked a specific question on Monday about how the Office for National Statistics might classify publicly owned operators in future. I cannot, of course, answer that question, as future classification decisions are a matter for the independent ONS, not for me or my department. What I can do is to confirm the current classification of the DfT contracted operators, which are all currently classified as public non-financial corporations, including the four DOHL-owned operators. I can also confirm what has happened previously when a service is transferred from private to public ownership. For example, following the transfer of services into DOHL, the ONS recently considered the classification of TransPennine trains, and concluded that they should remain classified as a public non-financial corporation. That fact that these publicly owned operators are classified in this way, along with the privately owned operators, means that their costs already impact the public finances. For example—and this is particularly relevant to Amendment 25—both private and publicly owned operators’ rolling stock lease payments already come out of the department’s resource budget.

Turning to pensions, I cannot agree with those who assert that the franchising model left responsibility for funding pension liabilities entirely with the private sector. Even under the form of franchising that was in place before the pandemic, pension costs were to a substantial extent a long-term liability for the public sector. First, this is because the franchising system meant the bidder simply priced any changes in costs into their bids at reletting, changing the amount of subsidy payable to the operator or the premium receivable by Government. This meant that the burden of any increases in pension costs arising during the term of the contract would, at the point of retendering, be passed to the taxpayer. Secondly, in the more recent franchise competitions the department was required to share the risk of any adverse movements in pension deficit recovery payments, as that had become a risk that the private operators stated they were unable to bear. The Bill therefore does not materially change the Government’s level of exposure to liabilities.

On the noble Lord’s second amendment regarding pension liabilities, in previous transfers to DOHL the transferring staff have remained within their existing section of the Railways Pension Scheme at the point of transfer. Railways Pension Scheme contribution rates will not change when services transfer from private to public sector operation and, as mentioned a moment ago, the cost of employer pension contributions is already borne by the Government under the terms of the existing contracts.

The noble Lord may also find it helpful to know that the department already reports in its annual report and accounts the employer’s share of the net pension scheme surplus or deficit, the employer’s share of pension scheme assets and the employer’s share of pension scheme liabilities.

In response to the noble Baroness, Lady Randerson, transparency will be enhanced by public ownership. In respect of the question about the passenger standards authority, I am afraid it is too early to say what it will and will not do. That is why we are going to consult about its duties in order to make sure that it represents passengers’ interests in the best way possible.

In view of these observations, noting in particular that the costs of public sector operations are already in the public domain, I urge the noble Lord not to press these amendments.

[Lord Moylan (Con)]

My Lords, I may have expressed myself very poorly when I presented these amendments, but I think it is fair to say—I do not mean to sound overcritical—that the Minister has misconceived all of them, or at least the three that I spent some time on. So perhaps the House will indulge me if I simply run through once again the points that I was hoping to make but obviously have not done so very successfully.

I shall start with the remark about pensions. I was not asking the question, “Who funds the pension contributions?” That is an interesting question but one to which I already had the answer, so I did not feel that I needed to ask it. I was asking a specific question about where the balance sheet liability lies, which is a very different question. Are the accumulated liabilities, including unfunded liabilities, now going to score effectively as government debt—the whole package, not the payment year by year? It is the difference, if you like, between the balance sheet and the profit and loss. I have asked a question about balance sheet and the Minister has answered a question about profit and loss. I do not expect to get anything further out of him today but, once he has had a chance to reflect on my comments, he may want to write to me because it is a point that needs to be properly explored and indeed, I suspect, will be returned to in relation to leases when my noble friend Lord Young of Cookham takes the matter up later.

On the question of fares being charged, I take the Minister back to the pre-Covid period when the system under which we operate at the moment was functioning in the way that was expected—Covid of course destroyed and damaged the operation of that system. It is true that not all the fares but a large number of them were set by the Government, but the Government in that case had no interest whatsoever in allowing the train operating companies to make super profits or to exploit passengers who were effectively captive. It will be a different matter when the company operating the trains is a subsidiary of the Department for Transport, and any surplus—we must bear in mind that there are railway lines in this country that generate surpluses—will accrue to the department and therefore presumably to HM Treasury. I put it as a counterfactual question to the Minister: does he believe that, if passport issuance or visa issuance were in the hands of the private sector, the Home Office would allow the private sector to set such outrageously high fees and keep the profits? Of course it would not. The only reason why the Home Office can set such very high fees for a captive audience is that it can keep the profits, or at least they score against the expenditure of the Home Office. It has a financial interest in super returns, which is not true if the super returns are to be retained by the private sector, as was the case under the system that we are currently operating under when it was effectively running. So I do not think the Minister has quite grasped my point.

A similar question arises in relation to costs. He has explained—and I do not deny for a moment—that the department publishes information on what it pays to the train operating companies under its contracts. I am not asking: what do they pay? I am asking: is it efficiently spent? Once it becomes part of the department, there is no interest in demonstrating that efficiency has been achieved if political interests overwrite that. There will be no way of knowing with confidence whether efficiency is being achieved unless there is some sort of independent monitor.

It is possible that having reflected on my closing remarks the Minister wants to take these matters up in correspondence, or we can come back to them on Report. But I think his responses—and I blame myself for this—have failed to understand the points I was getting at. I thought they were reasonably clear but obviously I did not do a very good job. With that, and with the leave of the Committee, I would like to withdraw my amendment.

Amendment 19 withdrawn.

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Moved by

[Lord Moylan]

24: Clause 2, page 2, line 23, at end insert—
“30ZA Impact on open access operatorsThe Secretary of State must, within twelve months of the day on which the Passenger Railway Services (Public Ownership) Act 2024 comes into force, and annually thereafter, 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 United Kingdom.”

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, earlier in Committee we had a debate on the value of open access and I am not proposing to repeat that. But now that the noble Lord has drawn my attention to the biblical text Getting Britain Moving—which I understand is now the Government’s plan for the railways in the country, the Williams review having been set to one side—I will draw attention to what that document has to say about open access.

It too is full of praise. It says:

“Open access has a proven track record in driving competition”—


competition in this context, at least when the Labour Party was thinking about it before the election, was seen as an attractive thing—

“and better passenger outcomes in countries whose services are run predominantly by public operators”.

We will have a service

“run predominantly by public operators”,

and the implication here is that:

“Open access has a proven track record in driving competition”


and has “better passenger outcomes”, so it must be a very good thing.

That is not the impression I get from the debate so far. I have the impression that there is a degree of resistance to open access on the part of the Government. Indeed, there is a qualification, even in this document, on that. It has to add “value and capacity” to the rail network. Who has to be persuaded that it adds value? Here the document says something that rather confuses me. It says:

“The ORR will continue to make approval decisions on open access applications”.


My understanding was that Great British Railways, not the Office of Rail and Road, was going to make decisions about who could run passenger rail services on the network. Clarity from the Minister on what the intention is in that regard would be very helpful.

If it is Great British Railways, we run into the problem that allowing this to happen will result in competition. The whole purpose of Great British Railways —like that of Lord Ashfield, to whom I referred earlier —is to eliminate what could be regarded as wasteful competition.

This contradiction that lies at the heart of the proposition causes me considerable concern. At the root of it is a rather technical question concerning what is referred to as abstraction. The assumption on the part of those who run the railways—and this has been true of the Department for Transport as well; it is not something new, but I have every reason to think it will continue—is that if somebody provides a railway service in competition with the Government, it is abstracting fares income that otherwise would accrue to the Government. So there is a cost to the Government or Great British Railways, depending on where we are in this process, in allowing open access to operate.

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[Lord Hendy of Richmond Hill (Lab)]

The Bill before the House is specifically about the ownership of services currently operated under contract to the Secretary of State, Scottish Ministers or Welsh Ministers. Transferring and retaining these services in public ownership will not affect open access operators or prevent them running as they do now. It is therefore not necessary, as in Amendment 24, to require the Government to lay a report on the impact of public ownership on open access operators, given that this Bill will not affect the rights of those operators to access the network and run services. I emphasise that as part of the wider railways Bill, any proposed changes to access arrangements and the body that decides them will, of course, be subject to consideration and debate by your Lordships’ House before they are implemented. I beg for some patience in this debate.

Turning to Amendment 27, which requires the ORR to produce an independent report on access, I again reassure the House that under the present public ownership Bill, the ORR will continue its role in relation to access decisions. There is therefore no need for this amendment; an independent function is already in place that will decide on access to ensure there is no disadvantage to non-publicly owned operators. We will set out further detail on GBR roles and responsibilities in the coming months. Given those reassurances and that this Bill does not affect the rights of open access operators to run services, I urge the noble Lord to withdraw the amendment.

[Lord Moylan (Con)]

My Lords, once again I am being deflected more than answered. I did not suggest that existing open access operators were going to be closed down. In fact, it says quite explicitly in the biblical document Getting Britain Moving that current

“independent operators (such as Hull Trains and Lumo) … will remain”.

I take it that the existing operators are guaranteed to remain, at least as far as the current terms of their arrangements are concerned.

I find it very worrying that the Minister cannot say whether his long-term vision includes allowing the ORR to make these decisions, or taking it, which I understood is very much the logic of his Bill, into Great British Railways. It simply is not enough to say that this can be deferred. Open access operators that might want to bid for new services—not the existing ones, I grant you—are now going to be entering a period with a very chilling effect, because they will not know whether open access is going to be welcomed in the future. They will not know, when the new Bill comes forward in 18 months’ time, whether they are going to be welcomed or turned away. That is a direct consequence of this Bill and not something that can simply be deferred on the grounds that it will all be wrapped up in 18 months or so.

I find it very unfortunate that the Minister cannot give a franker and more candid answer on the Government’s intentions at this stage. I fear that the effects for passengers of the measure in front of us are therefore going to be detrimental, even in the short term. With that, I beg leave to withdraw my amendment.

Amendment 24 withdrawn.

--- Later in debate ---

[Baroness Randerson (LD)]

My Lords, the amendment and the speech of the noble Lord, Lord Young, indicate the obvious advantages of nationalisation in terms of greater access to information and transparency; it has disadvantages, which the noble Lord set out, but it also has advantages. The speech by the noble Lord, Lord Sikka, was compelling: the evidence and information he gave us illustrated much better than I have heard before the issues that have been referred to—I referred to them on Second Reading and on Monday—regarding the imbalance between the attitude of the Government towards the speed of taking over the train operators and the fact that they are prepared to leave well alone the roscos, which can quite clearly be seen to be exploiting their situation and therefore getting excess profits as a result. I will be very interested to listen to the Minister’s explanation of why that is happening.

[Lord Moylan (Con)]

My Lords, at this hour I would like to expand considerably on my noble friend Lord Young of Cookham’s remarks on his amendment, but I find there is nothing I can add, given how well expressed his argument was technically. I shall say only that I hope the Minister, by contrast to his response to the previous group, will recognise the serious balance sheet issues that arise in relation to lease obligations. I understand that, while the department currently recognises its obligations to the end of the current contracts, most of which are a matter of months or very few years away, when the responsibility transfers to the Government, they will be responsible for the lease payments for the whole of the life of the remaining contracts for the lease of the trains and these will therefore represent a balance sheet liability, not simply an ongoing cost, that may well need to be recognised. I am not, as I say, as proficient in these matters as my noble friend, but I hope very much that the Minister treats that seriously and gives us a proper and robust answer about how this is to be treated.

I shall save the bulk of my remarks for the amendment moved by the noble Lord, Lord Sikka, with which, it may surprise noble Lords, I have a great deal more sympathy than they might expect, certainly as far as his analysis is concerned, though not necessarily with his solution of total nationalisation and so forth.

The fact is that there is a very large amount of capital in the world, and a capital is seeking a return. However, this capital is not buccaneering 19th-century capital of the sort that built the railways in the first place; this is not capital that is looking for investments at risk; and this is not capital that sees that it might win a large prize on one investment in its portfolio but is willing to tolerate the total loss of another investment in its portfolio. This is capital that is looking for risk-free returns—or returns that are close to being risk free—but at a rate of return that is considerably higher than it would achieve if it invested in government bonds.

Such capital is to be found throughout our economy—this is a criticism not of the current Government but of the previous Government and of the Labour Government as managed by Gordon Brown—because it is the basis on which funding is now provided to most of our utilities. That is why they all belong to large, foreign—although they are not necessarily foreign, and I do not object to the fact that they are foreign, so I will drop that word—investors who are looking for super returns and are achieving them because the Government are so accommodating towards them.

The noble Lord, Lord Sikka, asked why the Government do not do something about this and why they do not nationalise the roscos as well. That would be a true nationalisation. As I said at Second Reading, this Bill is not really a nationalisation of the railways; as I said in Committee on Monday, it is more like dismissing your chauffeur at the end of his contract. That is all that is really happening. If you are nationalising something, you normally have to pay for it and you normally acquire assets. That is not what is happening here, because the assets are all left in the private sector. The Bill’s headline claim of nationalising the railways—after all, that is the main purpose of this Bill: to get a headline out there quickly—is largely bogus. The main reason that the Government are not acquiring the roscos is that they cannot afford to do so.

There is a second reason that the Government are not acquiring the roscos or going even further—as I suspect the noble Lord, Lord Sikka, would—by seizing their super profits and acquiring them at a price that would reflect a reasonable rate of return closer to the risk-free rate of return for the rest of the period of their leases. That reason is that this Government, rather like the previous one, are wholly dependent on that source of funding for nearly every infrastructure project that they want to carry out, be it railways, environmental stuff, net zero and so forth.

In fact, there was a great conclave of these investors only a week or so ago, at which the Government told them what wonderful prospects they would have with their super, close-to-risk-free returns if only they would invest in Britain. It is not that we will get less of this sort of finance that is so objectionable to the noble Lord, Lord Sikka, under this Government; we will get a great deal more of it. That is the simple explanation, whatever the Government say, as to why they will not do what the noble Lord would like them to do, and which anybody who values true competitive capitalism would also consider to be moving towards terminating an outrage.

[Lord Sikka (Lab)]

My Lords, I do not want to reply to the noble Lord, Lord Moylan, because I would be here all night picking holes in every point he made in reference to me.

Perhaps I may help the Minister out. The noble Lord, Lord Young of Cookham, talked about the liabilities of Network Rail. The composition of government debt published by the ONS includes the liabilities of Network Rail, but the assets acquired with that debt are excluded. That means that the government debt is overstated. In a balance sheet, you will have assets and liabilities. In the ONS approach, only Network Rail’s liabilities are included in the debt. I understand that, for quite a long while, the Treasury has been looking at reconfiguring the composition of public debt, and I very much hope that, soon, it will do the proper thing by either taking off the debt altogether from the ONS numbers or including Network Rail’s assets as well.

--- Later in debate ---

[Lord Kennedy of Southwark (Lab Co-op)]

It is now 10.18 pm. I am unable to get agreement from the usual channels to finish the last amendment, which is a bit disappointing. If I cannot get agreement then we will have to adjourn. In all my years as Opposition Chief Whip, I have never been in a situation where one amendment cannot be finished off.

[Lord Moylan (Con)]

My Lords, I understand that there has been agreement with the usual channels. I do not think that the matter is in my hands.

[Lord Kennedy of Southwark (Lab Co-op)]

In this situation, the House will resume. It is very disappointing. Never in my time as Opposition Chief Whip would I have acted like that.

Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

Committee stage
Tuesday 29th October 2024 Lords Chamber

Moved by

[Lord Moylan]

47: Clause 2, page 3, line 32, at end insert—
“30D Management of rail services in Greater London(1) The Secretary of State must make a statement in each House of Parliament on the impact of shared responsibility between Transport for London and public sector companies awarded a contract under section 30(1A) under the management of Shadow Great British Railways, for the provision of railway passenger services in the Greater London area within three months of the day on which the Passenger Railway Services (Public Ownership) Act 2024 is passed.(2) The statement made under subsection (1) must include an assessment of how the provision of any services procured by Transport for London under section 30(1A) can be managed in a manner that is consistent with the remit of Shadow Great British Railways.”Member’s explanatory statement
This amendment requires the Secretary of State to make a statement assessing the impact of shared responsibility for railway passenger services in Greater London following the changes in the Bill.

[Lord Moylan (Con)]

My Lords, a great deal was said earlier in Committee about the achievements of Transport for London in improving passenger rail services in London, predominantly through the London Overground system. It would be wrong and unnecessary for me to repeat that; any noble Lord who wishes to see it summarised can read the excellent speech from the noble Baroness, Lady Pidgeon, who explained it all extremely well.

When it comes to London, the Bill has a huge lacuna at its heart: the mayor. The office of the mayoralty was established by referendum, and it is not to be treated with contempt. I may surprise noble Lords by saying that I had an increasing regard for the first mayor, Ken Livingstone, who defeated his Labour opponent to become mayor in 2000. We bonded over our joint opposition, on which we worked together, to Gordon Brown’s disastrous PPP for London Underground. That brought us together, and he always treated me with great courtesy and kindness. He started London Overground, and it was his success in winning the Olympic bid that secured for Transport for London a huge amount of investment in the capital’s transport, which was transformative.

How do this Government treat his successor? On 9 July, immediately after meeting the Prime Minister and other Ministers in the immediate wake of the election, the mayor said:

“What’s clear from listening to Angela Rayner and Keir Starmer today is they are really keen to devolve more powers not just to London but to other parts of the country. You will be hearing in the course of the next few weeks and months examples of those additional powers”.


Well, here we are, a few weeks and months later, and what do we hear? But he said something else on 9 July:

“One of the things that was confirmed from the meeting this morning is once those franchises end and are brought into”


the Department for Transport,

“they will be talking to mayors like me about which of those railways we can take over. I’ll be lobbying for once those franchises end, those commuter trains that come into London for us to have that”.

That was the position of the mayor and, as far as I know, it remains unchanged.

But the truth must have dawned on him when he read—if he has by now read—the letter sent very courteously by the Minister on 18 October to noble Lords who spoke at Second Reading, in which he said in unequivocal terms:

“The Government has no current plan to devolve responsibility for operating further national railway services to local authorities”.


I take it—of course, he could contradict me on this—from that and from the tone of the debate earlier in Committee that he includes London and the mayoralty among those local authorities.

So, what is he actually offering? The Mayor of London will have the ability to agree national and regional services with Great British Railways, to be run by Great British Railways, and earlier in Committee, the Minister gave an example of how that might work. Again, I am not reading this from Hansard, but I think my recollection is correct. He told us that he was already in discussions with the Mayor of Greater Manchester about how the mayor could purchase services, I presume from Network Rail at this stage—as we know, Great British Railways does not exist as a legal entity, nor does shadow Great British Railways have any legal substance—which could even be branded with the Bee Network logo, which is the characteristic mark of local transport services in Manchester and of the buses operated by the mayor.

It is worth dwelling on this for a moment. I think I can say—it is very much up to the Minister to correct me—that, had this been put to the Minister when he was commissioner of Transport for London, he would have rejected it out of hand. The Transport for London brand is of huge value, and it goes to the reputation of Transport for London in a very intimate and direct way. There is no way that he, or I think the mayors he served under, would have accepted that services operated by a different operator altogether could have been travelling with the TfL brand on them, over which he had minimal control. Some noble Lords may say, “But doesn’t that happen already? He has private companies operating services in London with the TfL brand on them”. But they are of course operated on a concession basis, and they are very tightly controlled by Transport for London. Transport for London remains in control of its own brand. It is a question of the power relationship.

But what is the power relationship going to be between the Mayor of Greater Manchester and Great British Railways if the services it offers are branded with the Bee Network—which, I admit, does not yet have the global brand recognition that TfL, with its logo, its merchandising, its map and so forth, has? None the less, the Bee Network is an important brand for the people of Greater Manchester. What power is the mayor going to have if those services are operated in a way that is shoddy or objectionable or fails in some way? I will not speculate on the way, because we can all imagine it, whether it is timeliness, frequency, reliability, cleanliness or any of the other standards that have a direct and immediate impact on passengers. Of course, he will have no power at all, partly because he has nowhere else to go. He is simply a mayor, while this is Network Rail. It is huge and he is relatively small.

--- Later in debate ---

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, I start by reminding the Committee that this is a short Bill, simply to bring back the national railway operations into public ownership. This is a popular policy with the public, absolutely necessary to making the railway run properly, and a necessary precursor to a more major Bill next year.

I thank the noble Lord, Lord Moylan, for this amendment, which would require not a report this time—although he has sought to require many—but Statements to Parliament about the relationship between services in Greater London provided under contract to TfL and those for which the Secretary of State is responsible.

There is no reason to expect the Bill, which allows train operations to transfer from private operators into public ownership, to have any adverse effect whatever on the existing collaboration between operators and TfL. The Bill makes no change to the existing duties on the Secretary of State for Transport and on Transport for London under Section 175 of the Greater London Authority Act 1999 to co-operate and co-ordinate passenger rail services in London. Like many noble Lords in the Committee, I know from my own experience how that works. I think we can all conclude that it has worked very satisfactorily so far and there is no reason why it should not continue.

The Bill will not have any adverse effect on those services: substantially the same staff will be running those trains under public ownership on the national railway network, as they do now, so there should be no concern about a sudden deterioration of service. In fact, I expect it to improve: publicly owned operators will prioritise the interests of passengers, rather than exploiting contractual conditions in pursuit of short-term profit.

The Bill says nothing about the devolution of further passenger rail service to the Mayor of London. It would not prevent further devolution, and nothing I have said would prevent that. If they were devolved, they could be operated in the same way as the current London Overground services are operated, under a concession from Transport for London.

When I said, as the noble Lord, Lord Moylan, quoted, that there is no current plan for further devolution, that was an accurate statement. Of course, it may not be an accurate statement in the future, but when I wrote the letter to him and other noble Lords and Baronesses, it was true. We will see what happens. It is only a few weeks since what the mayor said in July and, if he does have aspirations to operate further services, I am sure there will be a cordial discussion under the auspices of Section 175 to discuss whether and how that is carried out and the costs of doing it.

The noble Lord is also mistaken on Manchester. Certainly, the evolving situation I described with the Mayor of Manchester and Transport for Greater Manchester is that services would be operated not by Network Rail, because that is currently an infrastructure provider, but by a train company. In fact, it is most likely to be Northern Trains, which is already owned by the public sector and has been for four years.

As I have already said, I give a commitment that the future, wider Bill will give a statutory role for combined authority mayors that is better than any they have now. I have just repeated it for the avoidance of doubt. In that case, it is under Section 24 of the 1993 Act. If they were to want to operate train services, this Bill does not alter Section 24 and that would be a discussion that could be had. I described the situation as I understand it currently unfolding; in fact, they do not wish to do that, but the Secretary of State could devolve more under Section 24 if she chose to.

At the moment, if I have counted correctly, the operation of rail services in London is currently the responsibility of eight different franchised operators, plus two more under contract to Transport for London. That is without the long-distance operators whose services start and finish in London but do not otherwise serve the London market directly and, indeed, Network Rail, which is responsible for the physical railway infra- structure. Public ownership and subsequent integration into Great British Railways will simplify all this by bringing the currently franchised services together in ownership in one place. If TfL wishes to discuss or influence the provision of other rail services across Greater London in the future, it will have an easier job of engaging with Great British Railways. It will be assured that the train operators that are performing will be interested in acting in the interests of passengers.

The noble Lord, Lord Berkeley, asked where I think it is all going. I will come back and answer that on Report.

It was a pleasure to hear the noble Baroness, Lady O’Neill, talking about the particular circumstances of Bexley, and it is nice to see her in her place. I do not envisage any immediate change to the railway geography of south-east London. I cannot answer for much of the rest of what she said in the way that I once could, as the commissioner of Transport for London, but I am sure that she knows where to go to make the points about the Superloop, ULEZ and the other things she referred to for the benefit of her borough of Bexley.

The noble Lord, Lord Gascoigne, referred to Crossrail 2. It should be evident—I hope it is from what I have now said about Section 175—that, were Crossrail 2 to be promoted and come into effect, it would, like Crossrail 1, be complex, but the outcome would be a significant transfer of services to the mayor, because it would, and hopefully will, eventually take over some national railway services. The ease with which Crossrail has taken over former national railway services in London and transformed them into a coherent service for the benefit not only of London but the national economy would be replicated in Crossrail 2. Nothing in the Bill would change that; nor would it change the way that Crossrail was funded had it been proposed now, or the way Crossrail 2 would be funded if it were proposed in the future.

The answer to a lot of what has been said about the Overground is that the Bill primarily seeks to remedy those parts of the railway network that patently do not work well. I would contend—I have always contended in all my roles and in this one too—that the railway service in London works. It works because it is coherent, and there is no reason for the Bill to interfere with it.

I was very interested to hear from the noble Lord, Lord Grayling. I remember well his position on the devolution of Southeastern services, and he is right that many of them go well beyond the London boundary. There is a democratic issue about how well they serve the areas outside the boundary, and his recollection is correct that at the stage at which it was proposed— I recall it well because I proposed it, even if it was politically advocated by the mayor—it cost more to operate those services separately than it did together. That would be quite a good reason to think carefully about whether a proposition could now be made to do it differently. In a sense, he is making my case because one of the things that we need to have some regard to in a post-Covid railway, with less revenue but similar costs, is the cost of the whole thing. One of the reasons for the proposition in the Bill is to start to sort out the costs of the railway, increase its revenue and improve its performance.

I listened carefully to the remarks made by the noble Baroness, Lady Pidgeon, on devolution and I intend to come back to them on Report.

The Government’s plans will improve co-operation, not hinder it, so I see no need for the statement envisaged in the amendment of the noble Lord, Lord Moylan. I am sure that all involved will work together to ensure that publicly owned and TfL services can co-exist effectively side by side. On that basis, I urge the noble Lord to withdraw his amendment.

[Lord Moylan (Con)]

My Lords, I will briefly deal with two points. In answer to the very reasonable question from the noble Baroness, Lady Pidgeon, the reason for a separate London debate is the three different cases that currently exist for the devolution of rail services. One is London, where services are in large measure devolved—not all of them but there is a large measure of devolution that exists. The second is the other large conurbations where devolution of rail services does not exist—Birmingham, Manchester and so forth, with the exception of Liverpool, which we agreed earlier in Committee was a slightly separate case. The third is the local authorities that are too small to have much credibility as operating services on the national rail network, although there might be specific cases. It seemed to me that, even though it was mentioned at the time, London deserved a distinct debate because it is different from the other cases that we debated.

Turning to the Minister’s response, I think we have had some instances of documents that have rewritten themselves during the course of Committee. The latest is the letter which it turns out we had all misinterpreted because the weasel word “current” had not been given sufficient prominence, but which in fact means that there may well be devolution of the operation of rail services to London and elsewhere. That is not quite what it meant when everyone first read it, but there we are. I suppose the Minister will feel he has got away with that.

But what has he got away with when he offers a statutory role? We have a notion of what is meant by statutory role when we turn to the Labour Party document Getting Britain Moving, which says:

“there must also be a statutory role for devolved leaders in governing, managing, planning and developing the rail network”.

Eloquent by its silence is the word “operating”—it is not on offer. Whatever the Minister says may or may currently be the case, and whatever provisions of existing legislation he refers to, it is not going to happen. It is inconsistent with his argument for a single brain, it is not mentioned in the Labour Party policy document as it could have been, and there is not going to be meaningful devolution unless there is a change to the legislation. This may be a very short Bill, as the Minister says, but it is heavily pregnant with possibilities for the future.

With that, I beg leave to withdraw my amendment.

Amendment 47 withdrawn.

Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

Report stage
Wednesday 6th November 2024 Lords Chamber

[Baroness Randerson (LD)]

My Lords, Amendment 1 is impossible to disagree with. It is fundamental to the survival of our railways that things improve. They have reached crisis point because of decades of under- investment, poor management and poor political decision- making. However, the presence of this reminder might be useful for the Secretary of State. It might be a statement of the obvious in some ways but useful for her because the big problem with nationalisation is that Governments in the UK have consistently failed to invest long-term. We can improve buses by investing within a couple of years, but when you invest in the railways it takes a couple of decades for it to make a big difference. That is the Government’s challenge in renationalising the railways and the buck now stops with them.

On Amendment 16, I understand and strongly support the wish for thorough and transparent public consultation on the contents of the forthcoming rail Bill. I remind noble Lords of the example of the public consultation undertaken by the previous Government on their plan to close ticket offices. It led to a massive national outcry, forcing them to drop the plan, so I am a great believer in the impact of public consultations. The Bill that we are expecting in the near future is considerably more complex, but the problem with this amendment as written is that it extends the timescale that it all will take. It will take far too long before we get the legislation that we all hope will make the big difference. I will listen very carefully to the Minister. We hope that there will be some legislation by the end of next year at the very latest.

One way or another, the Minister has been associated with plans for the future of the railways and the creation of Great British Railways for some years now. There is surely nothing raised in our debates that he has not thought of, he has not worked on, or that would come as a surprise to him. He has been exceptionally generous with his time in cross-party discussions in the last couple of weeks. I urge him to explain when he replies what the timescale is likely to be and to assure us that there will be full consultation and that there is a grand plan.

[Lord Moylan (Con)]

My Lords, we have had lengthy discussion on this Bill in Committee, and it is not my intention today to repeat unnecessarily the arguments and the evidence adduced during those debates. The longer that we went on in Committee, the clearer it became that this is a very bad Bill that has been accompanied by a degree of arrogance. I do not say this as a personal comment on the Minister; it is on the part of the Government in general. There has been a tone, sometimes said quite explicitly, of “We won so we can do what we want”. That is an argument. It has some merit, but the merit that you would expect to find in an argument made in a playground.

Another type of arrogance has also been underlying our debates: “We want a better railway, but we are not going to tell you what it will look like. That’s all going to come in the future—don’t ask your pesky questions now. That will all be dealt with, and you have to trust us”. That is not a basis on which the House should be passing this type of legislation. The amendment in the name of the noble Lord, Lord Berkeley, goes some way to address that latter point. We all have a common desire for a better railway, but we will no doubt disagree on the details of how it is to be achieved. My noble friend Lord Grayling said that these are very complex issues. I do not think that anyone would disagree.

Therefore, on the prospect of having the Bill published in draft for pre-legislative scrutiny, I disagree with the noble Baroness, Lady Randerson. I do not think that will add materially to the time taken before legislation is enacted because it is likely to produce a better Bill when it eventually arrives in your Lordships’ House, one that can go through faster and be implemented better with better outcomes. It is the outcomes that we are interested in, not a particular timescale, although like her I will hold the Government to their undertaking that a Bill will come forward within 12 to 18 months.

It is more important to get the outcome right than to worry about a few weeks here or there, which is as much as we would be discussing in relation to the amendment tabled by the noble Lord, Lord Berkeley. I am deeply disappointed that he is not going to press it to a Division as I would be very tempted to support it if he did. However, I expect and hope that the Minister, when he stands up, can satisfy the noble Lord, Lord Berkeley, by saying that there will be some sort of pre-legislative scrutiny of the very large and complex Bill that he is expecting to bring before your Lordships’ House in the next 12 or 18 months, to use his phrase.

The amendment in the name of my noble friend Lord Lansley is very good and commends itself. Like him, I would like to hear what the Minister says in response. I note that my noble friend does not intend to press it to a Division.

Amendment 1, tabled by my noble friend Lord Gascoigne, is indispensable. A number of things are missing from this Bill. A number of important parties have been wholly excluded. One of them, for example, which we will come to later in debate, is the staff. There is no reference to the staff in this Bill. We take for granted that they will be TUPE-ed. That basic legislative cover is there and does not need to be stated. They will not lose their jobs as a result of this but will be TUPE-ed over. However, has any consultation been carried out with the staff? You would expect that normally, would you not? Do they want to change their employer? Do they want to be working for the Government? They may all say yes, but one would have thought that in an undertaking such as this the Government would have bothered to ask them. There has been no consultation with the staff.

The other glaring omission from the Bill is, of course, the passenger. It is a passenger railway services Bill, yet it says nothing at all about the passenger. My noble friend Lord Gascoigne is attempting to put this lacuna right and to put the passenger back at the head of the Bill, as the driving force of what the Government are trying to do and to require Ministers to test their actions under this Bill against the standard of whether it will improve matters for the passenger. That is why, if my noble friend intends to divide the House and seek its opinion on this matter, I recommend that we support him.

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

I thank the noble Lords, Lord Gascoigne and Lord Moylan, for Amendment 1. I absolutely support the idea that the Government should be clear about what the railway is for and what we want it to achieve. Far too many conversations in this industry are about tracks, signals and trains and how the railway works—or, in many cases, does not work so well. There needs to be much more focus on what the railway is for, but you can do that only if the organisation fundamentally works.

I am clear that when we establish Great British Railways, we should set out a clear statement of purpose, and we will set out a proposal for this statement of purpose in the consultation we will launch ahead of the substantive railways Bill. I am also very clear about the purpose of the Bill and the Government’s wider plans for the railway. Improving the performance of passenger services is clearly a big part of that purpose, but it is not and cannot be the only purpose. The Secretary of State has set out six key objectives against which she expects the railway to deliver. In summary, the railway should be reliable, affordable for passengers and taxpayers, efficient, of suitable quality, accessible and, of course, safe. She and I are reminding senior railway leaders of these objectives very clearly and very often. I expect that to carry more weight than a statement of purpose in a Bill that, if we are honest, might not be read widely by those on the front line of running the railway. Given the range of objectives that the Government wish to meet, I would not support the idea of singling out one objective, even a vital one, and placing it in this Bill.

Turning to the specific wording of the amendment, which is about performance, the easiest way to improve the performance of passenger railway services would be not to run so many of them, and to try to run fewer freight trains. It would be much easier to make trains run on time if the railway were less congested. Of course, I do not advocate that as a solution, but it illustrates the point that trying to reduce the Government’s objectives for the railway to a single purpose might be counter- productive. I hope that my remarks will have reassured the noble Lord that I am entirely on board with his underlying suggestion that the railway needs a clear statement of purpose, but I am not convinced that it needs to be enshrined in primary legislation right now, nor that it should focus exclusively on the performance of passenger services.

The noble Lord, Lord Grayling, asked me to set aside my ministerial hat and opine about the performance of the London Overground and the type of operator that operates it. I shall not set aside the hat, but I will say that one of the differences with the Overground is that it operates within a consistent and easily understood fares structure, which has enabled a significant increase in patronage over the period it has been operating. We must change the railway fares: there are far too many of them and they are deeply confusing. But one of the reasons for public ownership of the main network is to ensure that we have control of the operation and that there is enough information to be able to do that.

I will not trouble to respond to the point about arrogance and the Government acting, according to the noble Lord, Lord Moylan, as if we won the election, because it is rather self-evident that we did. I will remind him that this measure is very popular with the public, and every recent opinion poll suggests that a very large majority wish to see the railway in public ownership. We will return to the matter of the staff, but he acknowledges that the transfer of undertakings regulations will apply, and they do involve some consultation. But if you went to Waterloo station today and asked the staff there whether they want to change their employer, most of them would tell you that they have changed employer so often that some of them cannot remember who their employer is, and do not much care. The most frequent description of railway employment that I get when I speak to railway men and women—

[Lord Moylan (Con)]

Are not the staff of Waterloo station already employed by Network Rail?

--- Later in debate ---

Moved by

[Lord Moylan]

2: 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) The Secretary of State must assess and rank existing franchise agreements according to performance criteria established after consultation with relevant stakeholders.(3) Subject to subsection (1), the Secretary of State must only terminate a franchise agreement pursuant to a break clause if—(a) there are no other franchise agreements which are performing worse under the criteria in the list referenced in subsection (2), and(b) the Secretary of State is satisfied that provision of the services by a public sector company will improve existing service provision.(4) 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 terminate franchise agreements for default and to nationalise the worst performing operators first, while enabling services that are currently working well to continue.

[Lord Moylan (Con)]

My Lords, in the course of debate at Second Reading and in Committee, numerous noble Lords drew attention to the fact that the manner in which the Government are approaching the termination of franchises is going to result in some very perverse outcomes. Admittedly, most of the franchises still in existence are relatively short, but the Government—with a view to saving money, as far as I can make out—are determined to terminate them in the order in which the contract falls in.

That has the bizarre consequence that some of the most popular, effective and highly rated franchises are going to be terminated early at the head of the list, while those that are most reviled by the public—I am not going to mention any names in the course of this brief speech—and regarded as being hopeless at what they do will have the longest continuation in existence. It is of course the case that if they fell into default, the Government could terminate them early without expense, but we heard from the Minister earlier that none of them is as bad as that. None the less, some of them are very bad indeed.

This case was made most compellingly at Second Reading by the noble Lord, Lord Browne of Ladyton, but it has been made by other noble Lords as well. I think there is strong demand among noble Lords for the worst franchises to be brought to the head of the queue. My Amendment 2 would have the effect of bringing that about: the worst-performing operators would be terminated first, while services that are currently working well would be enabled to continue. Amendment 10 in the name of the noble Baroness, Lady Randerson, has a similar intent and effect. It is drafted differently—it is expressed as providing flexibility to the Government, whereas mine is perhaps a little more mandatory in its tone—but they are similar in various ways.

With the time the Government have had for reflection on the strength of feeling in the House about this issue, they should be able to come forward and say something now that would alleviate noble Lords’ concerns. Otherwise, I will be interested in testing the opinion of the House on my Amendment 2.

[Baroness Randerson (LD)]

My Lords, I will speak to Amendment 2, and to Amendment 10 in my name and that of my noble friend Lady Scott. Amendment 2 was the Liberal Democrats’ Amendment 1 in Committee, requiring the Secretary of State to terminate franchises for default and to nationalise the worst-performing operators first, while allowing train operating companies that are currently working well to continue.

The Minister explained to us, both in this Chamber in response to our amendment and in private discussions, that this cannot be done without major costs to the taxpayer. The existing contracts have been written and signed by the previous Government so as to make it difficult to penalise defaulters. We accept what the Minister says and we are not prepared to cause the taxpayer greater costs than necessary in this process. So, having listened and learned, we turned our amendment around and wrote Amendment 10, which simply proposes giving the Secretary of State the freedom to enable services that are working well to have an extension to their franchise and to continue for a period of time suitable to the Government. Can the Minister explain to us the Government’s approach to this and whether existing contracts could be extended, as our amendment suggests?

Our view is that the Government are going to be hard pressed in dealing with the numerous parts of the rail systems that are failing, and they need to allow themselves a bit of space by letting the bits that are working well continue until they get around to the overall process of nationalisation. The Government’s whole approach has been nationalisation gradually rather than one big effort, and I hope this amendment works with the grain of their intentions.

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[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord, Lord Young, for his intervention. I think he is right, but he will forgive me if I consider it further and write to him.

[Lord Moylan (Con)]

My Lords, with the leave of your Lordships’ House, I may speak for slightly longer than would be normal because I would like to address a comment made by the noble Baroness, Lady Randerson, about my Amendment 2. She said that it was the same as Amendment 1 tabled by the Liberal Democrats in Committee. In fact, that is only superficially the case. While proposed new Sections 25B(1) and (4) are the same as in the amendment tabled in Committee— I think, by the noble Baroness, Lady Scott of Needham Market—the meat in the sandwich, so to speak, has changed. There would be no additional cost in early termination fees as a result of this amendment as drafted because the franchises would be terminated not as they fell in but in order of worst first, even though that might take a little longer.

I listened very carefully to what the Minister said. Although the Minister found it helpful, the intervention from the noble Lord, Lord Liddle, was, to this side of the House, slightly infuriating. Throughout the debate in Committee there was a constant jumping between asking us to please focus on this narrow, technical Bill to then, when we wanted to talk about the narrow, technical Bill, being told that we should be talking about the great, big, wonderful Bill that will be coming in 18 months, because that is really what this is all about. But we cannot talk about that Bill because we have not seen it—indeed, we are not even going to get to see it in pre-legislative form. So although the Minister found it helpful, it illustrated the constant problem we have had in dealing with the Government on this measure.

For that reason, I am afraid I am not sufficiently satisfied with the Minister’s comments in respect of my Amendment 2 and I would like to test the opinion of the House.

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[Lord Lansley (Con)]

My Lords, the purpose of Amendment 3 in my name is to explore the question of when and under what circumstances it is the Government’s intention to meet their duty in Section 4(1)(d) of the Railways Act

“to promote competition in the provision of railway services for the benefit of users of railway services”.

It was prompted by a very brief exchange that took place in Committee, where the Minister confirmed that it is not the Government’s intention to remove that duty. However, it is clearly their intention, in relation to passenger railway services, very substantially to reduce competition and perhaps to exclude it altogether. There may well be other areas of activity in the provision of railway services which are open to competition, and I want to examine where those should be. Of course, I approach this not with the intention that the duty to promote competition should be removed from the Act, but with the view that it should be exercised.

I am in favour of competition. I might say, in this context, going back many years, that where privatisation is concerned, we have found that competition between private organisations yields benefits. In the railways, in some circumstances, we have found that the absence of competition has been at the heart of the problem: that the performance has not been exposed to competition and therefore has not improved in the way we would have wished it to. So, competition works, privatisation does not necessarily work, but the combination of privatisation and competition, in my view, has worked in the past. However, we are not here to discuss privatisation; we are here to discuss competition, and there is a continuing role for competition, in my view.

I am not planning to talk at length about Amendments 13 and 17 in this group, I will leave that to my noble friend on the Front Bench, but Amendment 17 is directly relevant. One of the principal opportunities for competition would be with open-access operators. In Committee, we touched upon but did not find out whether, and to what extent, it was the Government’s intention to continue to permit open-access operators or indeed to promote them. In my view, promoting them can be a very effective way of stimulating competition and innovation, which are often—as Schumpeter would have said—very intimately linked together.

My contention in this amendment is very simple: to explore where competition will be available. Clearly, it can be done with things such as the provision of rolling stock and services to railways, and maybe, to some extent, in relation to rail freight. As far as passenger railway services are concerned—and we are dealing with that here—the Government’s intention appears to be that every aspect of the passenger railway services should be subject to the “directing mind”—as the Explanatory Notes sets out. Therefore, it will be very difficult for there to be any substantial competition, except if that can be achieved by the role of open-access operators. I hope, when he responds to this debate, the Minister will be able to say they will have a continuing role, or even that they might be encouraged to bring the innovation and competition that would enable us to avoid the downside of a dominant provider.

We have seen this in other circumstances. For example, in France, the dominance of SNCF has led to abuse such as anti-competitive pricing or the overbooking of train paths to restrict competition from other providers. We do not want to see the dominance of public sector providers, on passenger railway services, to lead to that kind of abuse. Still less do we want to see monopoly activity on the part of public sector companies in passenger railway services lead to an elevation of the interests of the companies themselves over the interests of the users of railway services. The general duty to promote competition is for the benefit of the users of railway services because, very often, they are the ones who most see the benefit of that.

I will just tease the Minister, finally, by saying that in this legislation he has the opportunity to move in the opposite direction to the fourth railway package under the EU’s transport legislation. Here is an uncovenanted Brexit bonus for the Government, in being able to move in the opposite direction to the thrust of legislation in the European Union. With that teasing moment, I beg leave to move Amendment 3.

[Lord Moylan (Con)]

My Lords, I rise to speak to Amendments 13 and 17 in my name, but also to respond to my noble friend Lord Lansley in relation to Amendment 3. We come now to the heart of a considerable confusion that exists in the Bill, one that the Government have done their very best to avoid and that needs to be flushed out.

My noble friend Lord Lansley refers to competition. In fact, he refers to the abusive practice by monopoly railways in France. That, of course, is in response to European Union legislation, which has had to mandate access to competition in order for it to flourish in the European Union. It is going in the direction that we went in, somewhat later than us. We are now going back to the Attlee Government, basically, and moving away from that. It is a Brexit bonus, as I think I said in an earlier debate.

The matter is made worse because the Government have not been clear about their view on competition. It has been made much worse by the Government’s confusion and blank refusal to address the question: who is going to make the decisions about competition? Who is going to decide, in relation to open access, which providers will have access to the service? I refer, as I was encouraged to do by the Minister, to the Labour Party document Getting Britain Moving. In its section 7 on “The role of open access”, beginning on page 22, it says clearly:

“The ORR will continue to make approval decisions on open access applications”,


but that is not confirmed by the Minister. Instead, we have the spectre of Great British Railways making open access decisions. That appears to be part of the great controlling brain: one of its functions is that it would make those decisions about open access. But in doing so, it will be making decisions directly about competition with itself.

We are very concerned that the sort of abusive monopoly activity seen in France, which my noble friend has referred to, is exactly what we would be exposing ourselves to if we allowed this measure to go through without having appropriate safeguards in place in advance. That is the thrust of Amendment 17, which simply calls for a report. In Committee the Minister made fun of me for calling for so many reports, but he should understand that we are doing this as a way of drawing attention to an issue of serious concern without trying to hobble or wreck the Bill. He has not given us any assurance in response. He has taken no notice of our very genuine and serious concerns.

Amendment 13 relates to a similar topic, in relation not to open access for passenger railway services but rather to access for freight services. They too compete, so to speak, for paths on the railway; they need access to the railway if they are to operate. The previous Government had an informal and non-statutory target of seeing the volume of freight on the railways increase by 75% by 2050 from a base of, I think, two years ago. This amendment would effectively put that target into the Bill.

Nobody in the Labour Party, either in opposition or in government, has resiled from or rejected that target. If anything, I think they want a more exacting target. The Minister, if pressed, would probably say that it was a perfectly respectable target, one that he would want to sign up to, so there should be no objection to seeing it in the Bill. It would give some assurance that Great British Railways, in its operations, would not simply favour its own activities at the expense of freight operators. Ideally, we would also want some sort of assurance that it would not favour its own passenger activities at the expense of open access operators.

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[Lord Lansley (Con)]

My Lords, this is the last group on which I plan to speak. My amendment was prompted by a debate in Committee that gave rise to the question of how the new legislation would work. We have established, including during the previous group, a number of things that do not change, including the licensing of railway services and the prohibition on operating without a licence. The relationship with open- access providers therefore does not change, since they can make applications to the Office of Rail and Road for that purpose—I am paraphrasing, but that is, broadly speaking, how it works.

Where we have a change is in the process for franchising, which is to be removed. The Government have chosen to change the franchising provisions in the Railways Act, in Section 30 et cetera, and to replace that text with what we see in the Bill. I really want to explore this question: to what extent will all designated railway services be brought under Section 30, from new Sections 30A to 30C? I want to explore the consequence of the use of the word “only” in that provision. It says that a service must “only” be provided by

“a direct award of a public service contract to a”

wholly owned public sector company. In effect, it will be wholly owned by the Secretary of State—not, as we have discovered, other public sector companies.

The removal of the word “only” would, in the way in which the text works, as far as I can see, create an opportunity for the Secretary of State to provide or secure the provision of services by routes other than the direct award under Regulation 17. Clearly, that is not the Government’s intention. I will not return to the debate I promoted in Committee, but it would be good legislation to leave that option open to the Secretary of State, even if it were not the Government’s present intention to use it, because they may find it valuable to be able to do so in future.

Let us look at a practical example. Imagine that the Government thought it desirable to say that a service such as the one from Fenchurch Street to Southend and Shoeburyness should form part of the Overground services under the operating control of Transport for London. As far as I can see, as things stand, if that service is designated under Section 23 of the Railways Act—the designation requirements—it will have to be run by a public sector company wholly owned by the Secretary of State, unless it is the subject of an exemption under Section 24. In Committee, I think we heard the Minister say that the Government have no plans to extend the exemptions under Section 24. That raises another question for the Minister. Would he entertain that there may be circumstances in which it would be desirable to extend Section 24 exemptions? While London is a straightforward example, will the Government be open to that possibility, if it were a practical mechanism of securing the best operation of those services?

To what extent is the language of the Bill very deliberate, in that it requires that the Secretary of State may secure the provision of these services only through a direct award, but it does not say that the Secretary of State may provide or secure the provision of these services only by this route? I am making the distinction between “provide” and “securing the provision of”. This is customarily seen in legislation as a distinction between a government department doing it itself and doing it by means of a contract.

Where in this does the Department for Transport’s operator of last resort holdings company sit? Does giving an award of a contract to OLR Holdings Ltd constitute securing the provision of a service, or does it constitute providing the service? Is it regarded as part of the department for these purposes, or is it part of a wholly owned public sector company? There would be something rather odd now about treating it as part of a franchise agreement, since these franchises have already ended. Bringing it under a regime that is about the ending of franchise agreements seems odd.

My second example concerns East West Rail. We are not far away from the point when East West Rail will be running services itself on its new rail services. That will be very welcome—not least from my point of view, living in Cambridgeshire—when it reaches, as the Budget told us, all the way into Cambridge in due course. It will be running services quite soon in Oxford and Bletchley. It has not had a franchise; clearly, it will not now be given a franchise. It is a wholly owned public sector company. Is it the Government’s intention that it will be brought within the scope of Section 30? If so, this is odd, as this is an arrangement for franchises, but it has never had a franchise.

Of course, on the face of it, the Government will continue to designate railway services. Presumably—and here is a question to the Minister—there will be a comprehensive designation of railway services under Section 23, and that will, as a consequence, bring them all under Section 30 because of the way the legislation is now to be phrased. Therefore, is the intention, in effect, to bring all designated railway services under the scope of Section 30 et cetera, other than those exempted under Section 24?

I am sorry for asking a range of questions to explore how this works. We did, as the Minister has kindly mentioned, have the opportunity to discuss this a few days ago, so I hope he will have had the opportunity to think about explaining precisely how these interactions in the legislation will work. I beg to move.

[Lord Moylan (Con)]

My Lords, I am very grateful to my noble friend Lord Lansley for posing those very interesting questions. I am sure that the Government have answers to them, but they illustrate that this legislation is essentially very rushed and that they have not properly considered it.

I promise not to repeat what I said in Committee, but I cannot resist referring back to the final impact assessment, produced by the Department for Transport. It said that the purpose of the Bill is to meet a manifesto commitment, so it has not undertaken the normal practice of looking at alternative methods by which the same objectives might be achieved, because they are all in a terrible rush as the Government want to have a headline, essentially, and want to get ahead of the franchises as they expire. Therefore, I appreciate what my noble friend Lord Lansley has said, and I look forward to the Government’s reply.

Amendments 5 and 6, standing in my name, are linked. If Amendment 5 were to pass, I understand that there has been discussion with the Government Front Bench that Amendment 6 would pass without a Division in order to avoid having two votes on the same topic.

In Committee, I referred to two different models by which the private sector might be involved in the running of railways. One is the franchise system that we are currently discussing, which is the main subject of this Bill, but the other, generally dubbed the concession system, is the one used by Transport for London for the operation of all its services other than the London Underground, which is directly provided by Transport for London. All the other services—the buses, London Overground, the DLR, the tram and so forth—are provided under a concession system; that is, they are run by private companies on a contract.

The key difference between the franchise system and the concession system is that under the franchise system, as envisaged at privatisation, the fares risk rests with the operator. That was the model that was set up back when privatisation was introduced. If the fares went up and the companies generated more fares income, they would keep it; if they lost money on fares, it would be their problem that they did not make money because the fares were not good enough. Companies had the incentive to generate more fares, principally by generating more passengers, through all the clever things that they would do.

I was frank and straightforward in saying at Second Reading that that aspect of privatisation has never worked well because, essentially, private operators are not in control of fares income, which is closely correlated with the economic cycle—which of course they cannot control, manage or in any serious way mitigate. That aspect has never worked well, and Covid put an end to it in any meaningful sense. It has never recovered from that, nor, given this legislation, is it ever going to have the chance to recover.

The concession system is different, in that the fares risk remains with the franchisor. In the case of Transport for London, it is the franchisor of the services I referred to and it retains the fares risk. The obligation of the private sector operator is simply to have the trains and equipment in the right place, pointing in the right direction first thing in the morning, properly staffed, cleaned to a certain standard and so forth. If it fails to do those things, it will suffer financial penalties. The important point is that all those things are within its control. It receives a fee for that, but, in practice, because of competition, it is a modest fee given that risk is very limited. The risks are all things that are just a matter of it doing its job properly; if it does it properly, it will get that modest fee without penalty.

The purpose of Amendment 5 is to open up an option. It makes no obligation on the Secretary of State. When a franchise is terminated, the Secretary of State would have the option of awarding it not only, as the Bill is currently drafted, to a public sector company that is a subsidiary of the Department for Transport but to a private sector entity on a concession basis. The reason for it is simply that we know that it works. We know from Transport for London that the system can be made to work very effectively. We know that some of the best services on the Transport for London network—some of the best modes—are provided under this system. Why should it be that the Government would want to rule that out? Of course there could be a role for the private sector operating on that concessionary basis.

My noble friend Lord Lansley’s amendment gives the Government more options than mine does. My amendment gives the Government one extra option, but he would give the Government effectively limitless options by deleting the word “only”, whatever options might be available. It would give the Government more flexibility in dealing with circumstances that they may not have foreseen when they drafted this Bill.

Amendment 6 goes with Amendment 5 simply by defining in a separate clause what I mean by concession. Amendment 5 opens up the choice to do something on a concession basis and Amendment 6 says what a concession is. Despite every effort on my part and that of the Public Bill Office, we could not quite combine these into one amendment, so they stand on the Marshalled List as two amendments which, in practice, are closely linked, as one amplifies and clarifies the other.

I would very much like to hear from the Minister why Amendment 5 would not be acceptable, except to a control freak. That appears to be perhaps the Government’s vision for the railways.

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Moved by

[Lord Moylan]

5: Clause 2, page 2, line 15, after “Regulations” insert “or by the competitive award of a contract in the form of a concession to a private sector entity.”

[Lord Moylan (Con)]

My Lords, if I may respond to what the Minister said, he is asking us to make a huge bet on what he refers to as the benefits of public ownership. Most of us who are of a certain age can remember public ownership, and we remember that the benefits were few and far between. He is asking us to take a leap of faith that this time round it is going to be different, but he will not—

[Lord Bradshaw (LD)]

The noble Lord has spoken as if public ownership is something evil. I remember, when I worked on the west coast main line, that 90% of the trains ran on time. That is a far cry from what is now the case. It was so different from what he is saying that he really should take a history lesson in what was right about British Rail.

[Lord Moylan (Con)]

My Lords, I made no reference to good or evil. I am talking about operational efficiency. I am sure the noble Lord is correct in drawing attention, as has happened several times today, to the deficiencies of the current operation of the west coast main line, but other noble Lords have rightly drawn attention to the fact that there are private sector operators in this country currently operating with the efficiency levels that he refers to, and better—so the private sector has a lot to be said for it as well.

The fact is that public ownership is something about which the country largely breathed a sigh of relief when we moved away from it—rightly or wrongly, whatever the history behind that might have been—and every other European country over the last few years has moved away from exclusive public ownership operation. Even train companies such as Deutsche Bahn, which stood once at the pinnacle of public regard, are now something of a joke in their own country.

[Lord Watts (Lab)]

My Lords—

[Lord Moylan (Con)]

I am only trying to move an amendment.

[Lord Watts (Lab)]

It is the introduction to it that is the problem. Is it not the case that the public support public ownership of the railways, and that the public sector had to take over the east coast line because the private company failed to deliver the service?

[Lord Moylan (Con)]

My Lords, the noble Lord brings me to exactly my point. The benefits of public ownership that the noble Lord was able to refer to were, first, that it is popular and, secondly, that it was in the manifesto. Those two things might be absolutely true, but they are not quantifiable passenger benefits. They are not passenger benefits at all; they are political facts that sit there in the background.

Of course the system has broken down, especially since Covid. I have acknowledged that, and the need for reform. What this amendment seeks to do is allow a degree of variability, non-uniformity, difference of practice, choice, options to the Government, rather than having a single, purely nationalised, purely state-controlled machine that we are told will bring us benefits, one of which, as far as I can make out, will be flexibility.

I really did not discern any others, except that we will not be paying fees to private sector operators—a point the Minister has made several times. We will not, but in the picture of the cost of running the railways the fees are extremely small; they are a tiny percentage of what is involved. If the private sector can continue, post Covid, to generate the sort of growth in passenger numbers that it generated before Covid after privatisation, and we can get back to those happy days, the amount of money being paid to operators would be swamped by the revenues that would be coming in. That is the bar that public ownership has to match and we have no guarantees that it will do so. We are asked to take the whole thing on trust. To that extent, I wish to press my Amendment 5 and test the opinion of the House on it.

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[Baroness Pidgeon (LD)]

My Lords, our Amendment 7 is about rail devolution, discussed extensively in Committee from all sides of the Chamber. We believe it is really important that this first piece of rail legislation from the new Government not only meets their manifesto commitment to public ownership of the railways but allows further rail lines to be transferred to metro mayors and local and regional authorities where there is a strong case, and a desire, by the locally elected members. Local accountability is key.

I remind the House that we have discussed in detail the huge success of the Overground and the Elizabeth line in London and of Merseyrail in the Liverpool region, and the desire for metropolitan areas such as Greater Manchester to deliver a truly integrated public transport offer, branded under one logo and accountable to the mayor. These not only improve transport but contribute to housing and economic growth. I hope that the Minister can offer some stronger words today about future devolution, not just the limited existing devolved lines. The Minister started to outline this in response to the previous group, and I hope to hear more.

We on these Benches want our railway to become a reliable, fast, cost-effective and efficient service for everyone, with local services run in a way that serves the needs of local areas and local communities. I sensed in Committee that the Minister was listening very carefully to the points that were made, especially given his direct experience in a former role of running and expanding the Overground service in London.

I thank the Minister for his time, since Committee, meeting with my noble friends to discuss our amendments further and the assurances that we would like to hear at this stage. I hope the Minister can today assure the House that, as franchises end and come into public ownership, there will be genuine consultation and discussion with devolved authorities on how future services should look, and indeed on how best to run them—including the option for locally run and accountable devolved rail services, in addition to those already devolved. We believe that this will help bring about the transformation of the railway that is the aim of this Bill. I look forward to hearing from the Minister real assurances in this area. I beg to move.

[Lord Moylan (Con)]

My Lords, I will speak to the amendments in this group, particularly Amendment 12 standing in my name. I have a great deal of sympathy with the amendment moved by the noble Baroness, Lady Pidgeon. Both amendments are aiming at the same thing.

I said earlier today that there are a number of crucial things missing from this Bill: one is staff, and we will come to that, and another is the passenger, and we have dealt with that. The third is the local authorities, the regions, the metropolitan authorities and devolution as a whole. On this side of the House we have always had great aspirations for the powers of combined metropolitan authorities and regional government, and for their expansion. We are largely responsible for promoting and establishing mayoralties in Manchester and the West Midlands, and in other places as well, such as Teesside and so forth. We have done that with a view to expanding their powers, and part of that was to take on a greater role in transport. We are seeing the beginning of that in Manchester with the buses, and Merseyrail is operated by the combined authority.

In doing that, we are coming from a successful metropolitan model, London, which already has many of these powers. As far as we can make out, these powers, where rail is concerned—not buses—are effectively to be closed down where they do not already exist. They will not be expanded further—the Minister has been quite clear about that—and we will not see the growth of rail on a metropolitan basis.

My Amendment 12 is simpler than that advanced by the noble Baroness, Lady Pidgeon. It would require a preliminary report that outlines the proposed framework in which Great British Railways is going to communicate with local authorities and regional authorities about passenger railway services. That it is going to communicate is something that the Government have committed to, as the Labour Party document Getting Britain Moving said so. There is going to be a great deal of consultation and involvement on every possible front, but, again, we are told that we have to take all of this on trust—that none of this will become manifest until we see the great rail Bill that will come in the future, with a bit of consultation but without seeing a proper text in advance for pre-legislative scrutiny.

We are trying to get it established now, as a principle at least, that the Government can initiate these communications before that Bill comes into effect. They can set up structures that allow those communications to take place; this amendment requires the Government effectively to do that.

If the Minister cannot agree to the precise amendment tabled by the noble Baroness, Lady Pidgeon, I very much hope that he will at least be able to agree to my amendment, which asks him to get those structures—which he envisages happening—in place as soon as possible, so that local authorities and the relevant regional authorities can be involved.

[Baroness Randerson (LD)]

My Lords, in response to the previous group, the Minister emphasised— I think it was in reply to the noble Lord, Lord Moylan—that the concession model would not comfortably fit national rail services. I accept that, and he made my point for me in making his response. The Government must not be allowed to create a national monolith, because one size will not fit all. Part of the variability that we should celebrate in this House is that which comes with devolution, because it fits local areas comfortably.

The Government have made a great deal of the £22 billion or £40 billion black hole and the shortage of public money. Money is undoubtedly in short supply. The Government have also made a lot of their support for devolution, but if devolution on rail transport services is to flourish then there has to be an alternative source of funding and of investment. Local authorities, even on the big scale of metro mayors, will not have the resources to invest in a pure public sector model.

Our concern in our Amendment 7 is that the Government leave themselves the scope to access or call upon alternative models of funding. That would be very much along the lines of what the noble Lord, Lord Liddle, suggested: some form of local partnership or an alternative structure, other than a pure public sector company. As my noble friend Lady Pidgeon says, we will be listening carefully to the Minister’s reply.

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[Baroness Randerson (LD)]

My Lords, I am very pleased to speak in support of my noble friend Lady Brinton and the significant group of signatories to this amendment. This eye-catching group of people campaign on disability-related issues and have made important points in this debate and others aligned with it. In addition to that amendment, which speaks for itself, there is Amendment 11 in my name and that of my noble friend Lady Scott.

Although the experiences of people using wheelchairs and those who do not have perfect sight and so on are very much at the sharp end of passengers’ experiences, the passenger body generally does not have a good experience in Britain these days. There are huge problems for passengers of every age group and every level of physical ability, so there is a massive job to be done in improving that experience. People would put up with a second-rate experience, perhaps, if they were paying second-level fares, but they are paying premium fares for a very rough deal, and those two just do not sit together.

Amendment 11 seeks to establish a body that will work on behalf of passengers: a body dedicated to passengers’ needs and to creating the kind of experience that those of us who are lucky enough to travel abroad on trains know can be achieved with a perfectly normal, non-premium rail service in other countries. If they can do it, I do not see why we cannot.

I am very pleased to see Amendment 15 in the name of the Minister, and I look forward with great interest to what he is going to say about it, because I hope it will reassure us that the Government’s plans include the creation of a passenger standards authority —or something similarly named—that will look out for passengers. I also hope that the Government will produce a commitment that suits the needs of the signatories of Amendment 8.

[Lord Moylan (Con)]

My Lords, I rise with some humility to make a few comments on Amendment 8, which, of course, is one where the noble Baronesses, Lady Brinton and Lady Grey-Thompson, bring an experience that cannot be gainsaid in your Lordships’ House. I said in Committee that I fully acknowledge—from my own personal knowledge—that the Minister is personally committed to seeing improvements in regard to accessibility. I know that it is a matter of importance to him, but none the less, fine words and parsnips come to mind. Action is needed and we need to see real progress. If Great British Railways offers something in that regard that has not been offered before, that would be greatly to its credit.

In relation to Amendment 11, from the noble Baroness, Lady Randerson, this is another example of what the Government could be doing now. It is already the Government’s policy to have a passenger standards authority; they have set that out in the document Getting Britain Moving. Like so many other things, it is wrapped up in a Bill that we are told we might see in 12 or 18 months. I have expressed in Committee a degree of doubt and scepticism as to whether the Government will meet that target. I hope they will, but these are very complex issues, and it could take even longer than that before we see the Bill. Then, of course, it has to be passed and enacted, and then, as I keep pointing out, it has to be implemented. Change on that scale does not happen overnight; it will take several years for it to be implemented. Where in that timeframe is the passenger standards authority going to stand? Will we see it coming to life at the beginning of the process or at the end? Could it be four or five years away before it comes into existence? We have no idea.

The amendment from the noble Baroness, Lady Randerson, would at least say, “This is one thing you can get started on now. You can get it up and running very quickly and it could be something that passengers could benefit from at a really early stage”. I really do not understand why the Government cannot accept, if it turns out that is the case, what the noble Baroness is proposing.

I have no comment on Amendment 15 in the name of the Government except to say that it is, of course, entirely unobjectionable from our point of view.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I will speak first to Amendment 8, which was tabled by the noble Baroness, Lady Brinton, and is supported by the noble Baroness, Lady Grey-Thompson, the noble Lord, Lord Holmes, and my noble friend Lord Blunkett, and to Amendment 15 which is tabled in my name. I thank the noble Baronesses for their amendment and for the productive discussion we had last week. As I said in Committee, I feel personally ashamed of the industry that I am so familiar with as so many deficiencies come out of the way that it treats passengers, particularly those in need of some assistance. Many of those deficiencies are a result of the fragmented structure of the privatised railway.

The noble Baroness, Lady Grey-Thompson, has shown me and described to me the plethora of apps that you need to buy tickets, the differences in how they work, what they do and whether they enable you to book a seat, a wheelchair space or a ticket for the whole of your journey. I am shocked by it, and I cannot bear for her to show me much more, because all she would do is show me more apps that work differently from those that she has already shown me. We cannot and should not tolerate that. The lack of consistency in train design has been highlighted today, as has the lack of reliable, accurate information about whether crucial facilities such as lifts and accessible toilets are working, and there are other issues.

Looking ahead to the wider railways Bill, establishing Great British Railways will provide the opportunity, for the first time in three decades, to begin to take a coherent approach to these matters. Some of them can be done quickly, some of them we can start now and some of them will, by virtue of the longevity of rolling stock and structures, take a long time, but if we do not start, we will never achieve them. However, I also agree that the noble Baronesses and the many disabled passengers on whose behalf they speak should not have to wait for Great British Railways to come along before we start to improve things, so, as I discussed with the noble Baronesses last week, the Government have tabled an amendment and we also have a number of verbal commitments that I shall place on record in the House today.

First, the Government will work with the disabled community to develop and publish an accessibility road map that will explain the actions we intend to take to improve things for disabled people or others requiring assistance in advance of GBR being set up. We are not waiting for it to do that. The road map will suggest how the Government can work with the industry to prevent situations like those we have heard about in this House so far. As discussed, it will cover important matters that the noble Baronesses have raised with me. They include measuring and reporting on lift reliability and maintenance, providing confirmation and clarity about the legal obligation of operators to provide every disabled person with assistance when travelling whether or not a pre-booking has been made, and improving consistency in the service provided to disabled people across the board. We will engage with the disabled community on the development of the road map to ensure that when it is finished, it works for them.

Secondly, I commit before the House that this Government will provide the funding to develop phase 5 of the passenger assist app. As the noble Baroness, Lady Grey-Thompson, knows from our previous discussions, I have made it clear and will continue to make it clear to those involved that the development of this next phase of the programme must be done in consultation with the noble Baronesses and representatives of disabled people to ensure that it delivers the assistance that people deserve and addresses their needs.

Finally, we have tabled Amendment 15, which is before the House today. It amends the Equality Act 2010 to make it clear that publicly owned train companies are subject to the public sector equality duty. Although it is the Government’s view that the public sector equality duty already applies to publicly owned train operating companies, we are concerned that that is currently not as clear as it needs to be. By adding them to the list of public authorities in the Act, we will ensure that there can be no mistake. Network Rail and Transport for London are already named in the Act, but train operating companies previously were not, which is something that, if this amendment is agreed, we will remedy.

--- Later in debate ---

[Baroness Randerson (LD)]

My Lords, I have one very brief question for the Minister, following the warnings by the noble Lord, Lord Young. Have the Government looked at this from the point of view not just of what I would call the finished product of the nationalised railway system but of how the categorisation of a mixed economy would work? We, the nation, will be in a situation of a mixed, some-and-some economy for a significant number of years to come.

[Lord Moylan (Con)]

My Lords, my noble friend Lord Young sought throughout Committee, with great forensic precision and courtesy, to get answers to the sort of questions he has been raising today, and I have sought, with rather blundering efforts, to get answers to very similar questions. Here we are on Report, still asking questions that the Government have consistently failed to answer throughout. The reason is that, as I said earlier today, this is a rushed Bill that has not been thought through properly as to its broader consequences. These are consequences not to be dealt with in a future Bill coming down the road but that flow directly from the measures in this Bill. I very much hope the Minister can give some account of them today and explain how the Bill and this nationalisation will affect the public finances in what I call, in my blundering way, balance sheet terms.

There are other items. Since we discussed this Bill in Committee, we and the country have had the body blow of the employers’ national insurance increase delivered by the Chancellor of the Exchequer. Amendment 19 in my name is there to probe what the consequences of that will be for Great British Railways. Will there be a very significant increase in staff costs on the railways as a result, and what impact is that likely to have on the revenue expenditure that the railways can undertake?

In Amendment 18, I ask for clarity on something that also flows directly from the Bill—it is a direct consequence of it, and not something to be dealt with in a future Bill—to do with the harmonisation of staff wages, terms and conditions as they transfer from diverse employers in the private sector to a single employer owned by the state. Drivers and other staff are employed by the railway companies on terms agreed with trade unions but not necessarily the same terms as between one company and another, so drivers’ pay, terms and conditions will vary somewhat between one company and another. The Government have resisted saying, at any point, what they will do about this if they are a single employer. Of course, theoretically, each franchise as it falls due will be placed in a separate company from the others, so it is perfectly possible, legally, for it to have a separate agreement with its staff, different from that which another nationalised company has with its staff, replicating the current arrangements, if it chooses to do so. Is that the Government’s intention, or is there an intention that wages, terms and conditions should be harmonised? If the latter, do the Government imagine that they will be harmonised on the basis of the lowest common denominator, the highest common denominator, or some denominator that might be found in the middle as a sort of average? This is a direct consequence of the Bill, but nothing has been said by the Minister about it.

I come back to the question of staff consultation. There has been no staff consultation about the change of employer. The idea that the Minister might wander around Waterloo station randomly consulting drivers as he accosts them, which he held out when he spoke earlier, is an attractive and enticing one. That is to be encouraged—there are not enough Ministers going around randomly accosting staff whom they employ in the public sector—but it hardly constitutes what might be called formal consultation in industrial relations terms.

I hope I am forgiven for saying this, but earlier I saw the Minister having a quiet chat in a break for a Division with his brother, the noble Lord, Lord Hendy, with his great industrial relations experience. Who knows? Perhaps he was pointing out to the Minister that normal industrial relations consultation requires a little more than simply wandering around and chatting to the staff on the station as you meet them, welcome though that is.

I very much hope that by now, with all the warning that the Minister had about these issues in Committee, he will be able to give an account of himself that will satisfy the legitimate questions of my noble friend Lord Young, and will be able to explain to us what his employment and industrial relations strategy is as a direct consequence of the nationalisations that will take place under the Bill.

--- Later in debate ---

Tabled by

[Lord Moylan]

12: Clause 2, page 3, line 32, at end insert—
“30D Preliminary Report on Communication with Local Transport AuthoritiesThe Secretary of State must, within six months of the day on which the Passenger Railway Services (Public Ownership) Act 2024 is passed, publish a preliminary report outlining the proposed framework for communication between Great British Railways (GBR) and local transport authorities across the United Kingdom.”

[Lord Moylan (Con)]

My Lords, this amendment deals with devolution and requires the Government to start work on that in the next few months and explain how they are going to do it. One thing that is new today, as far as I am aware and I have listened fairly carefully to all parts of this debate, is that the Minister has said that he intends to issue his consultation document before the end of this calendar year. Did my ears hear that correctly?

[Lord Hendy of Richmond Hill (Lab)]

I said I hoped to.

[Lord Moylan (Con)]

On the basis of that “hope”, which I imagine the Minister will expect to be held to—and which I will be holding him to—I am prepared not to move this amendment, because it will simply be timed out by that consultation document which would replace it, so to speak.

Amendment 12 not moved.

Moved by

[Lord Moylan]

13: Clause 2, page 3, line 32, at end insert—
“30D Statement on the impact of the Act on rail freight targetThe Secretary of State must, within six months of the day on which the Passenger Railway Services (Public Ownership) Act 2024 is passed, make a statement in each House of Parliament outlining how the Government’s plans to achieve a 75% increase in the volume of rail freight in the United Kingdom by 2050 are affected by the provisions of that Act.”Member's explanatory statement
This amendment would require the Secretary of State to make a statement outlining the Government's plans to take all reasonable steps to achieve a 75 per cent increase in the volume of rail freight in the United Kingdom by 2050.

[Lord Moylan (Con)]

I am afraid the case is rather different in relation to Amendment 13, which relates to freight and requires the Government to state not simply that they intend to meet the 75% target for the increase in freight volumes but how they intend to do so. It remains wholly mysterious how the Government are going to do this, and it is time that that veil should be drawn back and we should be allowed to know. This amendment would require them to do that. I wish to test the opinion of the House on Amendment 13.

Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

3rd reading
Wednesday 13th November 2024 Lords Chamber

[Baroness Randerson (LD)]

My Lords, I thank the Minister and his team, who have been exceptionally generous with their time in offering advice and assistance on the Bill. The Minister has been willing to give many of the details that we sought about the much-anticipated big Bill that we expect next year.

In addition, the Minister offered an important amendment to the Bill, which he has just referred to, on disability access. That was in response to an amendment in the names of my noble friend Lady Brinton, the noble Baroness, Lady Grey-Thompson, and the noble Lords, Lord Blunkett and Lord Holmes. These new legal obligations will have significant implications for train operators and the rail network generally, and we are very grateful for that commitment, which will make a real difference to the lives of people with disabilities.

From these Benches, we have made it clear that we would not have adopted the same approach as the Government. We would not have divided the issue of ownership from the details of how the system will be organised and how the parts will fit together. The Secretary of State stated on Monday, absolutely correctly, that nationalisation is no silver bullet. In essence, most of the amendments that were put forward, both from our Benches and from the Conservative Benches, simply sought more information on how it would work and where the powers would lie.

As Liberal Democrats, beyond our concern about disabled access, we wanted assurances that passengers would be at the heart of the reforms and that devolution would not just be tolerated but be allowed to grow. We appreciate that the Minister did his best to reassure us on those issues; in particular, he moved some way on devolution. We therefore look forward with enthusiasm to the big Bill, when we can promise him very thorough scrutiny.

I remain sceptical that the Government have the answers to everything; for instance, whether they will genuinely be able to accept private sector operators under a public/private partnership scheme within devolution. I also have reservations about the cost to passengers of the harmonisation of terms and conditions for staff. But I always accept that the Minister understands his brief comprehensively and is absolutely in good faith in his assurances.

We send this Bill back to the other place with the amendments that were passed against the wishes of the Government and are strongly aware of the Government’s majority in the other place. We are realistic about what will happen, but I say to the Government that it would do their cause no harm to accept the good intentions of the first amendment that passed here, which simply stated that it is the duty of the Secretary of State to improve passenger standards. That is, or should be, a statement of the obvious. I hope they might consider bringing forward an amendment of their own on that.

Finally, I thank my colleagues on these Benches for their support and contributions: the noble Baronesses, Lady Brinton, Lady Pidgeon and Lady Scott, and the noble Lords, Lord Bradshaw and Lord Teverson. Finally, I must thank Elizabeth Plummer, our legislative adviser, who was responsible—as always—for excellent advice and for amendments from these Benches.

[Lord Moylan (Con)]

My Lords, before I turn to the substance of the Bill, and in response to what the Minister said, I remind noble Lords who may have forgotten that the remarkable thing about election night in 2010 was that it initiated a period of approximately a week in which, in effect, the country had no Government at all. Labour had lost and the victors were locked in some room in Whitehall trying to work out terms of their agreement. In those circumstances, there was nobody to stop us doing what we did to Tube lines; it shows that you can move fast and fix things when you get the opportunity.

I am very grateful to the Minister for the courtesy he has shown me outside the Chamber as he has given me assistance in relation to this Bill and for the patience he has shown inside the Chamber. It is always difficult for a new Minister when dealing with a Bill which is open to such criticism, but he has handled it with great good grace.

I am also grateful to the Minister’s officials whom I have met and who have offered me advice and briefings. On our own side, I received support in our Opposition Whips’ Office from Abid Hussain and Henry Mitson, and I am very grateful to them. I am also grateful to all noble Lords who spoke in debate in considering this Bill. I shall not attempt to name them; the Minister has already mentioned their names. We had a very good series of debates on this Bill.

None the less, it is not a good Bill. Everyone agrees that the railways need reform. The privatisation model has produced record growth in passenger numbers. There has been a true rail renaissance over the last 25 or 30 years in this country, but the railway has not recovered from the effects of Covid on its operations and reform is definitely needed. The basis of that reform appeared to be the Williams review, which gained a wide measure of cross-party support. It envisaged an important role for private train operating companies but on a different financial and operational model from the existing privatisation model.

Labour has broken that consensus. Why? It is hard to tell, but it is noticeable that the rail unions have been pushing hard for full nationalisation, which will of course increase their power and leverage over the travelling public. Labour now owns the train set and can call the shots. I suspect it will fall to the Conservatives to fix it again when it all goes wrong, as in 2010, on election night, it fell to a Conservative mayor to fix the problems created for London Underground by Labour’s disastrous PPP.

However, the Bill now goes forward to the Commons greatly improved. As the noble Baroness, Lady Randerson, said, it would be churlish and wrong of the Government to refuse to accept those amendments or some variation on them. If we see it back here at all, I hope it will be rather different from how it was when it first came to us.

Bill passed and returned to the Commons with amendments.

Passenger Railway Services (Public Ownership) Bill

Lord Moylan Excerpts

Consideration of Commons amendments
Wednesday 20th November 2024 Lords Chamber

[Baroness Randerson (LD)]

My Lords, I do not follow the Government’s logic so far. They accepted our amendment, in the names of my noble friend Lady Brinton and others across the House, on disability access and the equality issue. That was and is a hugely challenging issue for the railway and for the Government, and a very expensive one to fulfil. Yet they reject this simple statement, which, as the noble Lord, Lord Gascoigne, just pointed out, is simply a statement of purpose.

We are very grateful to the Minister for the discussions and for the way he has moved to address our concerns. But, as the Government have said, nationalisation is not a silver bullet. Across the world, there are examples of both publicly and privately owned railways that provide an excellent service. Unlike both the Labour Party and the Conservative Party, we on these Benches judge a railway not by its ownership but by its efficiency: how good a service provided to passengers is and putting passengers at the heart of things, always. Incidentally, we welcome the Conservative Party’s new-found enthusiasm for passenger efficiency.

This amendment would make it clear that the primary —but not the only—purpose of the Bill is to improve passenger railway services. This should be a statement of the obvious, so I am mystified as to why there is any debate about incorporating it in the Bill. I am also concerned about the points the Secretary of State made in the other place yesterday. It is unrealistic to assert that you can interpret the amendment, specifically the words

“improve the performance of passenger railway services”,

as meaning that the Secretary of State could decide to run fewer services on time, which is, in essence, what she said. I add that if the Government are not happy with the precise wording, because they believe it could be misinterpreted and misused, they could, of course, have offered to amend it.

We would have preferred the issues of ownership to be more closely linked with improvements, passenger standards and other key issues that need to change if we are to have a robust 21st-century rail service. The Government, in our view, have therefore put the vehicle ahead of the delivery. However, we accept that they have a mandate; we accept that there is more than one way to deliver these improvements. We will be listening carefully to the Minister’s response, and I hope that he will be able to be more persuasive than the Secretary of State, because his expertise and reputation are always taken very seriously in this House. If he is able, today, to commit the Government to improvements to passenger services at the core of future legislation, at the core of the responsibility of the Secretary of State, we will be able to support the Government. Passengers desperately need to see improvements, having had a decline in service for so many years under the previous Government. So let us get that commitment on the record; let us get it in legislation, if possible, as soon as possible, so that the work can start.

Very briefly on Motion B, we acknowledge the primacy of the other place on financial issues, but we hope that the Government will continue to apply the flexibility that current legislation affords them so that they will not, unnecessarily rapidly, bring to an end very successful franchises.

[Lord Moylan (Con)]

My Lords, I shall endeavour to be brief. I repeat what other noble Lords have said in expressing my gratitude to the Minister, as I mentioned at Third Reading and when the Bill passed, for his courtesy and collaboration in our debates on the Bill.

The Government’s problem is this: they wish to reform the railways. There is a great deal of support in your Lordships’ House, across all parties, and generally among the public for a reform of the railways. We would like to discuss what the Government are going to do on a number of issues. Had they brought forward the measure in this Bill as part of a large and comprehensive Bill introducing those reforms to the railways, we would have had the opportunity to have those discussions. We would have been able to discuss, for example, the role of freight, and the tension between the priority given to passenger services and freight services that inevitably exists in a constrained system. We would have had the chance to discuss the continuation of open access and competition on the railways. We could have discussed the devolution of the operation of train services to regional and local authorities, such as exists in London and might exist in other parts of the country. We would have been able to do all those things as part of a comprehensive reform Bill.

But the Government have decided not to bring forward a comprehensive reform Bill, of which this is part; they have decided to take this step first—that is, to seize control of the train operating companies—and the great Bill of reform is promised for the future. The Government say that it will be brought forward within 12 to 18 months—that is a challenging target. As I have said, tediously, in the past, over and over again, even after that Bill has gone through its parliamentary process and passed, it will still take several years for it to be implemented.

[Lord Liddle (Lab)]

My Lords, I agree that there is a substantial degree of consensus on the need for reform, which the previous Conservative Government started five years ago with the Williams review. However, when we came into office, we found that a very partial Bill had been prepared which did not cover all of the issues that needed to be included in a railway reform Bill. It is the neglect of his previous Administration that has led to this situation.

[Lord Moylan (Con)]

I am not here to defend the previous Government, and I was not making a tedious trivial party-political point when I said that. I will say that I suspect the previous Government were dilatory and slow in bringing forward a massive reform of the railways because it is a very complicated business, and that goes to my point: I doubt this Government will be able to bring forward a Bill within 12 to 18 months precisely because of that complexity. Because of this large gap in time, through the passage of this legislation we are creating a new situation for the railways that could endure for four to six years, with no sense of accountability or purpose that the Government have, because the answer on everything that we wish to discuss —freight, open access, devolution—has been, “We can’t discuss it now; we can’t tell you anything now; you have to trust us”, just like the Government said “Trust us” to the pensioners, to the farmers and to large businesses that are landed with business rates.

The truth of the matter is that we do not see why we should trust the Government. That is without any disrespect to the Minister, but he is just one person and, like all of us, fragile and frail. We cannot build an entire railway system and entrust it to the Government on the strength of one particular Minister because of his noted, genuine and respected skills. We need to know what the standard will be to which we can hold the Government accountable during this new and quite lengthy period.

The objective of the purpose clause is not to set an objective for the railway, as the Minister has sometimes said; it is to set an objective for this Bill, and the Bill is about seizing control of passenger railway services. All we are saying is that the standard we expect to be set is that the purpose is the improvement of passenger services. If we cannot see those improvements then at least we would have a standard to which we could hold the Government to account, and that should be in the Bill. Warm words butter no parsnips. They are nothing to which we can hold the Government accountable. So, if my noble friend Lord Gascoigne chooses to press his amendment to a Division, we on this side will support him.

I turn to Motion B. I do not think the Government realise how helpful Motion B was intended to be to them. It is after all one of those rules in life that, if something is doing well today, it is likely that tomorrow it will not be doing so well, and vice versa. What are the Government now holding out as a practical prospect? They are going to move ahead, and one of the first franchises they are going to take control of is Greater Anglia, one of the best performing and most popular. What is likely to happen to Greater Anglia? Just by random chance, it will start to deteriorate and the Government’s programme of nationalisation will be damaged in the public eye as a result, whereas if they had seized control of Avanti, which is what we were guiding them towards through Motion B, then some improvement would have carried them forward and shown how well nationalisation was working. So we were trying to be helpful to the Government, but the Commons has claimed financial privilege on this issue and, as far as we are concerned, we give way.

On Motion A, I am sorry to hear the noble Baroness, Lady Randerson, say she is going to trust the Government. She will be joining a long queue of people who have trusted the Government, but I fear she will be disappointed. But that is enough for now.

[Lord Snape (Lab)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Moylan, and I congratulate him on another polished speech. It ought to be well polished—he has made it at least four times during the passage of this particular legislation. He has not said anything new; we have cantered around the same course about Avanti trains and the future of the railway system.

This is a small Bill designed to create an overall body to be responsible for running the railway system. It was an idea conceived by the party opposite.

[Lord Moylan (Con)]

With respect, this Bill does not do that. If this Bill created Great British Railways, that would be another story altogether. This Bill does not create a body; it simply is the Government seizing control of existing railway companies.

[Lord Snape (Lab)]

That is absolute nonsense. This Bill is designed to implement a body, as a result of an inquiry into the railway system set up by the party opposite. Indeed, that party was so impressed when in government by the Williams report that the then Secretary of State for Transport, Grant Shapps, added his name to it. He did not actually do anything about implementing it because the backwoodsmen opposite felt it was a bit too much like nationalisation to have an overarching body responsible for the railway system.

We could have disposed of this particular amendment late at night during the course of the Committee stage of the Bill, but the noble Lord who leads for the Opposition refused to sit after 10 pm. There might have been a good reason for it—perhaps it was past the bedtime of the noble Lord, Lord Gascoigne, or the equivalent, but he and his party were not prepared for a proper debate on this issue, and they still are not.

[Lord Moylan (Con)]

My Lords, the amendment which we did not debate late at night was about the management of the railways in London; it had nothing whatever to do with what the noble Lord says. I see him giggle in the corner now; he knows he is having fun at the House’s expense.

The fact is that this Bill does not do what the noble Lord says it does. The other fact is that the Williams review did not envisage the nationalisation of train operating services in this country but rather the use of the private sector on what is referred to as a concession basis, rather than a franchise basis, the technical differences between which I shall not bore the House with now.

[Lord Snape (Lab)]

My Lords, I am neither giggling, nor am I in a corner. I find the noble Lord’s contribution to be as specious and inaccurate as most of the contributions he has made during the course of this debate. He keeps repeating the same tedious stuff.