Railways Bill

Lord Young of Cookham Excerpts

2nd reading
Tuesday 7th July 2026 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, the noble Baroness, Lady Brinton, has just told a very moving story, and I think everyone who listened to that will agree that that state of affairs is simply not acceptable.

I join others in paying tribute to the valedictory speech of the noble Lord, Lord Wilson. He was an excellent Permanent Secretary at the Department of the Environment in the 1990s, when I was Minister of Housing and Planning. He was a source of wise advice, and he kept me out of serious trouble for three or four years.

Speaking in this debate is a bit like attending one’s own funeral, because the Bill basically undoes the reforms I oversaw as Secretary of State between 1995 and 1997. It is worth reminding the House what those reforms achieved. As my noble friend Lord Lansley said, passenger numbers doubled; services improved by one-third; an operating deficit under British Rail was turned into an operating surplus; investment in rolling stock, electrification, signalling, and station modernisation improved, as the dead hand of the Treasury was removed from the capital programme; passenger safety improved; industrial relations improved; branch lines were reopened; and passenger fares were capped at RPI minus 1%, a reformed abandoned by the then incoming Labour Government, who kept everything else the same for about four years. It is worth making the point that many of those improvements and reforms, post privatisation, were driven by former employees of British Rail, who welcomed the challenges and freedoms that came with the policy.

However, we are where we are. The Government have a mandate for what is in the Bill, which is basically to bring the system under one ownership. On that, I was struck by what the Minister said in response to a recent Oral Question:

“Virtually the whole of the world, in countries that run railways, is incredulous that this country managed to separate the infrastructure from the operations for more than 30 years”.—[Official Report, 20/4/26; col. 503.]


That simply is not the case. Most European Union members have legally separated their rail infrastructure management from their train operations, as mandated by a European Union directive. In fact, we can do what is in the Bill only because of Brexit—something I am not sure the Minister mentioned. The countries that have done what he finds incredible include Sweden, which did it before we did, as well as France—where SNCF has two separate subsidiaries to promote competition—Spain, Italy, Denmark and Finland.

That brings me to the related argument that underpins the Government’s policy. According to the White Paper, A Railway Fit for Britain’s Future:

“This is a necessary first step towards ending fragmentation … That is why we will establish Great British Railways … a single ‘directing mind’”.


However, that is not the model used by successful companies throughout the world. What the Minister calls “fragmentation”, they call specialisation: the ability to secure the component goods and services needed from a variety of sources, ensuring innovation, competition and resilience. BAE Systems and AstraZeneca in this country—and Apple abroad—do not do everything themselves; they outsource, commission and buy in the marketplace. They have been successful because of what the Minister calls “fragmentation”.

The Minister may say that this does not apply to transport because it is different—but it is not. The safest and cheapest form of transport in this country is by air, but you could not find an industry that is more fragmented. The airlines do not own the aircraft; they do not own the terminals; they do not run the national air traffic system; and they do not do the security or the baggage handling. Some airlines do not even employ pilots; they hire qualified self-employed pilots. I challenge the assertion that an industry that is fragmented or specialised is less efficient than an integrated one. Nor incidentally does aviation have a single “directing mind”, which has Orwellian overtones.

My concern is that the three main benefits that came with privatisation will be lost under these reforms. Investment in rail was taken almost entirely off the public sector balance sheet in 1995; it created a market of train operators to replace a public monopoly, and the business model forced the industry to look outwards towards its customers not inwards to the sponsoring department.

On the first, I had the pleasure of negotiating the transport budget with the Treasury both before the railways were privatised and after. Before privatisation, I would go to Star Chamber and they would say, “George, we’re really pleased to see you. We’ve just had the Health Secretary, who wants more doctors and nurses; we’ve had the Education Secretary, who wants more teachers; and we’ve had the Secretary of State for Defence, who wants more soldiers. Priority is the language of politics, and politics is the language of priorities. We’re very sorry, George, you can’t have your new train set for Christmas”. After privatisation, that dialogue simply did not take place; the market responded to the business case that was made.

There is also a risk that the Office for National Statistics will put the rolling stock companies on to the Government’s balance sheet—as it did with housing associations—because of the degree of control over the investment that the Government propose. That would play havoc with their borrowing requirement.

The second advantage was to bring in other successful transport operators: people who ran buses, airlines, shipping or train services overseas. Their skills were applied to running the railway here and to breaking the British Rail monopoly. The Government are not even adopting the concessions—the management contracts with the private sector—that were so successful with the bus companies in London and Manchester, as my noble friend Lord Lansley said.

At a meeting with the Minister last week—he has been very generous with his time—he said that the franchise or concession model was not adopted for GBR because the train operators were not interested in the deal. That is strange, because those train operators are the very same companies that run the bus operators that have successfully run exactly those contract arrangements in Manchester and London. Perhaps they overplayed their hand. We are now back to a monopoly, with the risk of a national strike by train drivers, which was avoided by franchising or concessions.

The third innovation was the incentive to grow the market, to look outwards towards the customer. Under privatisation, once a company had won the franchise, the only way that it could increase turnover and profit was by winning more customers. However, when I was Transport Secretary before privatisation, it made little difference to British Rail whether it had more or fewer customers; it just meant that it got more or less subsidy from the Secretary of State. I was its real customer and not the passenger.

For me, the jury is out as to whether what is proposed will give the industry the secure, efficient and customer-focused future that it really needs.