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.

Railways Bill

Lord Young of Cookham Excerpts

Committee stage
Tuesday 8th September 2026 Grand Committee

I almost get a sort of PTSD when I think about this from my telecoms days, because we used to spend hours arguing with Ofcom and DCMS about merits-based appeal versus judicial review. The risks of merits-based appeal is that, when you have big tech with completely unlimited legal budgets fighting against minnows, a merits-based appeal can really slow down the work of a regulator. We do not have that in this case, as I sincerely hope that GBR is not going to have enormous legal budgets funded by the taxpayer to fight competition cases, and the independent retailers we are talking about are not of the scale of the tech titans. I therefore do not think that merits-based appeal is dangerous, and my experience from telecoms is that, in the beginning of a new regime, merits-based appeal can make the difference between the small independents surviving and them being killed while they win the argument in the courts. With that, I know I have used every second of my time. I promise I will sit down after moving my amendment. I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I have added my name to five amendments in this group. I am the lead name on Amendment 31, which would require the Secretary of State to issue directions to promote fair competition, and on Amendment 48, to which my noble friend referred. It has the same objective as the other amendments, particularly those ably moved by my noble friend, but it does so by making it a condition of GBR’s licence that GBR does not distort the market in ticket sales. The advantage of that amendment is that it is upstream—it is proactive—in that GBR would not get its licence until it had satisfied not just Amendment 48 but, in conjunction with Amendment 47, the CMA had signed off the necessary precautions and provisions that my noble friend has just referred to to make sure that any competition is fair. The other amendments would place a duty on GBR to compete fairly, but they would bite only if it was alleged that it was not doing that. The advantage of Amendment 48, in conjunction with Amendments 47 and 49, is that it is upstream and hopes to avoid the problem.

I am grateful to the Minister for the meeting he held on 3 September when he confirmed that he wanted a fair and open market when it came to retailing. There was some good news at that meeting in that the Minister confirmed that GBR will not be selling tickets that only GBR can sell—a practice to which my noble friend referred. He confirmed that anything that GBR sells will be available to online retailers, and it would be helpful if we could have that on the record. The ORR has already done a review of the benefits of an active retail market, and this is what it said in 2015:

“Third party retailers play a key role in improving ticketing for passengers. They offer different ways to access information about rail fares and journeys and provide more choice in where and how to buy tickets. They also play a role in expanding the rail market (to the benefit of TOCs and taxpayers) and in putting competitive pressure on TOCs to improve their offering, including by innovating”.


A recent review by a firm called Teneo estimated that third-party retailers added an extra £450 million per year in additional revenue for the rail industry by attracting new customers, reducing friction in the rail journey and supporting revenue protection. The independent sector pioneered digital ticketing. It paid 70% of the £30 million upgrade to the new barcode infrastructure. Those benefits can carry through to GBR, but only if there is fair and open competition.

The independent retailers are used to competing with train operating companies. At the moment, they are prevented from unconstrained subsidy of their retailing by the public service obligations in transport. They are happy to continue to compete with GBR, but they are anxious that there should be a level playing field, as my noble friend has just explained. She quoted from the CMA; the following sentence adds force to her argument. About the risks, it said:

“In a more closely integrated model, additional safeguards are likely to be required in order to achieve the government’s aim to ensure the sector benefits from the effects of fair and open competition between GBR and TPRs”.


Those additional safeguards are the subject of all these amendments.

One possible solution would have been to adopt the model of SNCF, a publicly owned French railway company whose website is a separately owned company. However, the Minister has made it absolutely clear that he does not want that option; he wants an integrated GBR, so I will not pursue it in that particular form. But insisting on an integrated model does not mean that the cost of online retailing should not be identified—a point made by my noble friend. Separate and transparent financial accounting should be a cornerstone of the safeguards that the CMA and ORR want. My noble friend referred to British Telecom; there is a parallel here. Both GBR and British Telecom owned the network but sold services using that network in competition with others. As my noble friend said, the solution insisted on by the regulators was clear separation.

May I draw on my experience as a former Treasury Minister and Transport Secretary to outline the risks that I see ahead? In the next few years, there will be enormous pressure on the Department for Transport. It is an unprotected department, and the IFS has estimated that it will have to cut its budget by 3 percentage points between now and 2029. It will get a letter from the Treasury asking it to identify savings of between 5% and 10%, in cash terms, in order to keep the Government within their fiscal target. The Secretary of State will reply by thanking the Treasury in courteous terms and saying that it can meet that target only by either cutting investment, cutting the rolling stock programme, which impacts on growth, putting up ticket prices, which impacts on the CPI, or cutting branch lines that run through a whole lot of ministerial constituencies.

The Treasury will then go through the department’s budget line by line and suggest savings. It will ask why so much has been spent on first-class travel and why it has so many press officers. In relation to this debate, it will say to the GBR, “Why are you paying £200 million in commission to independent retailers when GBR has its own website?” It will suggest to the Department for Transport that it cuts the commission from 4.5% to 2%. It will say that, historically, it was 10%, but it was cut, and it was cut again by the RDG to 4.5% in 2021, I think. The Treasury will argue that the pain should be shared not just by the Department for Transport but by independent retailers, and that with AI and by seeking new markets and doing more advertising, it can reduce its costs. The online retailers will say, “This totally destroys our business model. There is no way we can survive on 2%. It will drive us out of business”. There will then be no pressure to innovate and no consumer choice, and we will be left with a GBR monopoly with no pressure to innovate or improve passenger standards.

They may actually go further and say that the website that should be taken down is actually GBR’s. They will say that there is no way that GBR could survive on 2% and may well allege that the website costs far too much to set up, that it is overstaffed and that the costs of the premises that the website occupies are not accurately reflected. I do not take sides in that great debate, but the only way that the ORR or CMA will resolve it is with some facts and figures that identify exactly what costs are involved in GBR’s exercise.

The Minister may argue that these amendments are not needed because GBR would already be bound by competition law—and it is—and there is already a statutory obligation to do what I have said, so what we are doing would simply duplicate that obligation. But how would that competition law be enforced if we do not have the data?

He may also argue that GBR is an integral entity quite different from an online retailer, that online retailing is lumped together with the ticket offices and call centres, that it is quite impractical for GBR to identify one means of selling its tickets from the others, and that it makes no sense to regulate online retailing separately from them. The Bill wants to lump it all together so that GBR’s online harm—online arm; I am sorry—can hide inside the wider retail function. That argument sits uneasily with a commitment to fair and open competition. The station ticket offices and call centres do not compete with the online market. The website does; online retailing does. Treating all retailing as one function allows GBR to claim that its online arm is merely part of a broader retail activity, enabling it to argue that competition duties do not apply to its online parts. Crucially, it allows the cross-subsidy from infrastructure budgets to be buried inside retailing and enables GBR to avoid the cost of sale parity by hiding online costs.

I noticed that these amendments are signed not just by Conservatives but by Liberal Democrats and Labour Members. So there is a real imperative on the Minister to indicate some flexibility on this matter, and some willingness to have further discussions and, crucially, to table some of the amendments or variations on them with the assurances that all those who have signed these amendments are after.

[Baroness Alexander of Cleveden (Lab)]

My Lords, I apologise to your Lordships for not being here at the start of proceedings. Noble Lords put me on to the Economic Affairs Committee yesterday; it had its inaugural meeting this afternoon and it demanded my presence. I am so sorry to have missed the first two groupings, but I am here for this one.

I will speak to the two amendments to which I have added my name—Amendment 117, to which the noble Lord, Lord Young, just referred, and Amendment 136, in the name of the noble Baroness, Lady Harding. My reasons for supporting them closely parallel the arguments that we have heard. I do not have the distinguished history of having been a Rail Minister, as the noble Lord, Lord Young, was—at least not in Westminster—but I had that role in the Scottish Parliament and I understand the risks of unprotected departments. Therefore, we have a duty in the Bill to consider how to protect the incredible digital innovation that we have seen in the provision of retailing services that have been widely welcomed by passengers across the country. The noble Baroness, Lady Harding, and I share a common interest in the whole area of digital regulation, as she said. The risk of leaving ambiguity surrounding the role of regulator and not putting obligations in the Bill may lead to unintended consequences down the line.

I thank the Minister and officials for the recent engagement they had with noble Lords around the intent in these areas of rail retailing. I appreciate that the retail code of practice will be published prior to Report; it will go some way to allow all parties to assess whether the code meets the Government’s stated objective of fair competition in retailing.

--- Later in debate ---

[Lord Young of Cookham (Con)]

My Lords, I intervene briefly to support my noble friend Lord Moylan’s amendments on this. In many ways, this debate is similar in its nature to the one we have just had, in that it relates to how the GBR relates to an independent sector. In the previous debate, it was independent retailers; in this case, it is the independent operators using open access. Again, the terms of trade are being changed. If one looks at the consultation document on this, it says that:

“GBR will become the decision maker for key decisions on access terms that are currently led by the ORR: the duration and form of access rights, developing and setting the access charges framework and the design of performance incentive regimes contained in track access regimes”.


It goes on to say that:

“For GBR to have the space and authority to take access decisions on the best use of its network, the ORR’s current role must change”.


At the moment, the ORR has the last word on an open access application, and the department cannot overrule it; that is going to change. We have had representations from the open access operators. I have had also representations about the Elizabeth line and Heathrow Express, which are both anxious that they could be adversely affected by this change in responsibility.

The noble Lord may remember a debate we had in the Moses Room about 18 months ago on this particular subject, which I introduced. At that point, I referred to another debate in the other place, where there was a lot of support from Labour MPs for the principle of open access: their constituents had benefited from it, and they were concerned that it might be curtailed. My noble friend Lord Moylan referred to access charges and how changing the access charge could make it uneconomic.

I want to approach this from a slightly different point of view, which concerns the criteria that the ORR uses to decide whether to grant open access. If there is no capacity on the rail network, it is clear that the application should be refused. If there is capacity, the ORR refers to the NPA—not primarily abstractive—rate. That means that if you want to open a new service, you must add at least 30p of new revenue for every £1 you abstract from the existing ones. In other words, any new service must not rely on more than 70% of its revenue to justify its application. There is concern that that abstraction rate might be changed. One assurance that the Minister could give, which would reassure the operators of open access, is that GBR will not change the abstraction rate. The rate has been in operation for some time. It balances, on one hand, the cost to the taxpayer and, on the other, the benefit to the traveller in terms of improved connectivity and, in many cases, lower fares.

We know that the concern is justified from the letter that the Secretary of State, Heidi Alexander, wrote to the ORR back in January. The ORR is already mindful of the cost to the taxpayer—that is reflected in the abstraction rate—but the letter reminded it of that cost. There was a clear implication that not enough attention was being paid to that factor, hence the concern. I hope the Minister will be able to give assurances that, apart from the issue of the access charges addressed by my noble friend, the abstraction rate will not be altered either.

--- Later in debate ---

I am sure that noble Lords can agree that it makes sense for GBR and operators to try to come to an agreement in the first instance. But to be clear, if such dispute resolution fails, the Bill already provides a further route of appeal to the ORR in disputes concerning the working timetable. The amendment would therefore duplicate an existing appeals route, creating the potential for unnecessary complexity, bureaucracy and confusion. I hope noble Lords agree that the right of appeal to the independent regulator already set out in the Bill is sufficient. Given that the Bill clearly already has achieved the noble Lord’s aims, I urge him not to move this amendment. We look forward to substantive discussion about access when we get to Clauses 26 to 31.

[Lord Young of Cookham (Con)]

I understand that we will be having a separate debate on this, but is the Minister able to give the assurance that I asked for that the abstraction rates will not be changed?

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord for his question. I will not give it now but will come back to that in the debate. I should also say for the benefit of the Committee that Network Rail is publishing the access and use policy consultation tomorrow, which will apparently address the noble Lord’s questions on abstraction. I am sure we can debate his points further when we get to the detailed debate.

Railways Bill

Lord Young of Cookham Excerpts

Committee stage
Thursday 10th September 2026 Grand Committee

[Lord Lansley (Con)]

I am not sure if that is a question to me, but let us assume it is. I am not sure that I am saying that. I am saying that, as things stand under this Bill, the Secretary of State is not providing money to GBR for the purpose of providing railway passenger services. The Secretary of State has the power to do it under the 2005 Act. Nothing I am saying determines how that money is to be used.

[Lord Young of Cookham (Con)]

My Lords, Amendment 314 in my name, supported by my noble friend Lord Moylan, enters the arcane world of Treasury theology—what is and what is not public expenditure. It would require the Secretary of State to report on the impact of the Bill on public finances. This is important because the Government constantly emphasise, rightly, their commitment to the fiscal rules to contain borrowing, build market confidence and reduce upward pressure on interest rates and taxes.

One of the fiscal rules is the investment rule: public sector net financial liabilities— sometimes known as PSNFL—which is a broad measure of national debt, must be falling as a share of the total economy by 2029-30. Another is the stability rule: the Government must forecast a surplus on day-to-day spending by 2029-30, meaning that regular public services are funded entirely through tax revenues rather than borrowing.

Clearly what GBR spends is public expenditure, but expenditure or borrowing by private companies can be classified as public expenditure if certain qualifications are met. Decisions on that are taken not by the Government but by the Office for National Statistics, and it operates according to international definitions. It does not allow for consideration of political or commercial significance when making its classification decisions; they are essentially statisticians.

The Minister may not have read “UK Economic Statistics Sector and Transaction Classifications: The Classification Process”—he may not even have heard of it—but it is relevant to Amendment 314. I shall summarise: the difference between the public and private sectors is determined by where control over the organisation lies rather than by “ownership” or whether the entity is financed from public funds. Control is the ability to determine general corporate policy. I will come on in a moment to the relevance of this to the rolling stock companies where, under the new scenario, GBR will be the principal customer, but there are two relevant instances where attempts by government to circumvent these rules have come unstuck, with consequences for the balance sheet.

One that will be familiar to the Minister was Network Rail. Network Rail was set up in 2002 as a private company limited by guarantee, primarily to keep its massive debt off the Government’s balance sheet. By structuring Network Rail as a private company limited by guarantee without shareholders, the Government could then borrow large sums of money for infrastructure upgrades without adding those billions to the official national public debt.

However, in 2014, ONS reclassified Network Rail as a central government body in the public sector, and this resulted in roughly £30 billion of debt moving on to the Government’s balance sheet. The Minister will have had direct experience of the consequences of that at Network Rail. We know because we have the Hendy report, which sets out the consequences for Network Rail of this reclassification. Debt was controlled, capital was rationed, assets were sold off and upgrades were postponed. I think the last thing the Minister wants to do is to write another Hendy report, mark 2, when rolling stock is classified as Network Rail is.

Railways Bill

Lord Young of Cookham Excerpts

Committee stage
Wednesday 16th September 2026 Grand Committee

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to make the first contribution from the cushion-less seats—perhaps that will change for me when we get to day 4 of Committee.

I congratulate the Minister on everything he did when he was in charge of TfL on innovation and the smart use of data. There is nothing smart about data in itself; it is the uses we put data to that make it smart. That is what is behind my two amendments and those to which my noble friend has eloquently spoken in this group. When the Minister was in charge of TfL, he transformed how the network ran and, critically, the passenger and user experience. His legacy lives large today on that network.

But when we come to this Bill, we do not see very much of that at all—there is nothing that is even a distant echo of what was achieved at TfL—so my amendments are somewhat probing but also offer some solutions. Amendment 130 seeks to put a technology and innovation imperative on GBR. I have set up some technologies but the key when drafting amendments and indeed legislation is to be tech-neutral, because by being tech-neutral we have a good chance of being tech future-proofed.

Whether it concerns passenger safety, passenger experience or the efficient running of the rail network itself, you would imagine that all forms of AI would have a role to play. My second amendment, Amendment 329, goes to the heart of the issue of cyber. We currently have a cyber Bill in your Lordships’ House, but I would really like to see specific cyber requirements across the slate of legislation coming through. Otherwise, how will we have a sense that something as critical as the rail network has the protection and the posture it requires in the face of the key cyber risks? Those risks are here today; this is not something for tomorrow. Surely that must be a key consideration and function, or perhaps direction, for GBR, because without it, we will leave the railways open or with optionality to take a view on this. Cyber is critical, so there should be something in the Bill to this effect.

This is perhaps even more significant than the other technology and innovation amendments in this group. I look forward to the Minister’s response to them all.

[Lord Young of Cookham (Con)]

My Lords, I intervene briefly to speak to my noble friend’s Amendment 63A, on innovation and new technology. This country has had a fine tradition of both innovation and technology in the railways, right from the beginning. We have had the finest engineers—in Victorian times, and then, in the last century, in the 1920s and 1930s, we produced the fastest steam train.

Under British Rail, the engineering was of the highest quality, but it was focused on the heavier end of the rail industry: rolling stock, signalling and track. Post privatisation, innovation and technology switched to customer service, marketing and cutting costs. That was because, under the franchise system, which you did not have under a monopoly, there was an incentive to win new customers, improve customer service and reduce running costs. None of that was there with the previous monopoly, and there is a risk that once you move again to a state monopoly, the incentives we had in the private sector to innovate and use technology will fall away.

There is a risk of losing another change that happened post privatisation. If one franchise, such as Chiltern Railways, introduced a new innovation or service, customers would then expect the same, or an improvement, on Greater Anglia or Great Western Railway. Once you move to a monopoly, that sort of competitive advantage within the industry falls away, and you rely on looking at what happens overseas. That is why I wanted to intervene: to underline the importance of driving forward innovation in technology in the absence of the drive of the profit motive and the need to win business—a motive that risks falling away once we move over to GBR.

[Lord Harper (Con)]

My Lords, I will speak briefly to this group. First, I echo what my noble friend Lord Moylan said about the courtesy of the Minister. I thank him for the two letters I received this week. One, which I think was also sent to my noble friends Lord Moylan and Lord Lansley, was about GBR subsidiaries and clarified in a helpful way that those not doing railway functions can be majority owned by a body other than GBR. The Minister has satisfied me as far as that goes. There was also his further letter to me on licensing, which again was helpful and clarified matters to my satisfaction. I am grateful to the Minister for his courtesy in responding so promptly.