Britain’s Railways

Lord Moylan Excerpts

Monday 24th May 2021 Lords Chamber

[Baroness Vere of Norbiton (Con)]

My Lords, there will not be two types of passenger service contract. There will be many types because the noble Lord is right. Some may incorporate revenue risk in due course to encourage innovation and get passengers back on to the railways.

[Lord Moylan (Con)]

My Lords, rail fare income is closely correlated with the economic cycle. The new arrangements involve a complete transfer of fare risk from the train operating companies to the taxpayer. This means that the Chancellor of the Exchequer is going to have to be very indulgent towards Great British Railways, especially in an economic downturn, if falling fare income is not to cannibalise the investment programme. Has my noble friend reached a specific agreement with Her Majesty’s Treasury on its approach to this aspect of funding Great British Railways? If so, will it be in the public domain?

[Baroness Vere of Norbiton (Con)]

The five-year business plan that will be developed by Great British Railways will be in the public domain and it will set out the capital and revenue funding over that period. I agree with my noble friend that passenger demand is challenging to predict as we move out of the pandemic. Evidently there will be risks for the Government as the holder of the revenue risk. The Government have supported the railways to the tune of £8.5 billion in the last financial year. However, on a positive note for the Treasury, we expect that the reform package will deliver savings of around £1.5 billion per year after about five years. That is 15% of pre-pandemic income.