Passenger Railway Services (Public Ownership) Bill

Lord Young of Cookham Excerpts

Committee stage
Monday 21st October 2024 Lords Chamber

My question is therefore very straightforward. When writing legislation, it strikes me that the normal practice of Ministers and of government is not to write legislation so as to restrict their powers. It is normal to write it so as to give oneself the powers to act in ways that one might need in the future. Here we have a very odd situation where the Government are deliberately stopping the possibility of extending franchises that are being successfully operated and are writing the new Section 30 in a way that allows them to make a direct award of a contract only to a wholly owned public sector company, whereas it may be in the Government’s and indeed the passengers’ interest for them to do something different. So, I put it to the Government—that is my probing amendment for this purpose—that they should write the legislation in a way that gives them more powers in the future. I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I will add a footnote to the excellent speech from my noble friend Lord Lansley and note in passing that the Passenger Railway Services (Public Ownership) Bill is running late, with the likelihood of hitting the target of getting to Amendment 11 at a reasonable hour becoming vanishingly small.

This group of amendments is to some extent the obverse of the group that we have just had. The focus of the previous group was on ending prematurely, before the Government would wish, services that were not running satisfactorily, whereas the thrust of this group is to enable the Government to extend beyond the date that they prefer a contract that is running satisfactorily.

In a sense, this is all about ideology. There are two potential views. One was expressed by the noble Lord, Lord Whitty, who on Second Reading said:

“I have an ideological commitment to a nationalised railway system”.—[Official Report, 7/10/24; col. 1883.]

By contrast, in that same debate, his noble friend Lord Liddle—who, as we have heard, was formerly the opposition transport spokesman in your Lordships’ House, said:

“I do not see any ideological objection to public/private partnerships in running the railway”.

He then gave an example:

“You might have a situation where a private company was prepared to commit to electrification plans for a particular line that would not be in the public sector investment plan. My view is that we should allow public/private partnerships on a net additionality rule. If they are going to bring more investment into the rail system, what on earth is the case for not allowing them to do so?”. —[Official Report, 7/10/24; col. 1840.]


Again, in the debate today, the noble Lord, Lord Snape, said he was in favour of a mixed economy. I agree with that approach. If this amendment is opposed, it is because the Government have taken Lord Whitty’s view and they have an ideological commitment to nationalisation—which I thought had been abandoned some 30 years ago under Tony Blair’s leadership.

There has been an argument for flexibility. I want to develop the argument that the noble Lord, Lord Snape, developed about Chiltern Railways and Marylebone station. In the 1980s, Marylebone station was almost moribund. There were a few services to the commuter villages of Aylesbury, Amersham and Chesham, but, in the decade before privatisation, there were proposals from British Rail to close Marylebone. There were also alternative plans to turn the railway into a road. That was before privatisation. Three years after privatisation, 18 miles of single track between Princes Risborough and Bicester North had been doubled. In 2000, the brand new £4.2 million Warwick Parkway station was opened, and, by the end of the first franchise, advance plans were made to double the single-track section between Bicester North and Aynho, at a cost of £53 million. Marylebone station was then extended by adding a further two platforms, and there was an increase in line speed to Beaconsfield. In 2011, Chiltern took over the operating services on the Oxford-Bicester line from First Great Western and opened two new stations, Oxford Parkway and Bicester Village, providing services between north Oxford and Marylebone.

How confident is the Minister that all that would have happened if the line had remained with British Rail, which, 20 years earlier, was planning to close the station? Chiltern could do this because it had a 20-year franchise, which created the incentives for significant investment in rolling stock, major infrastructure and, as a result, timetable enhancements. It delivered its project on time and on budget, and self-financed nearly all the projects that I have just mentioned.

When pressed on why they were doing this, the Minister relied on, “It is in the manifesto”. Well, I hope they can provide a better argument than simply saying that. To use the expression used by the noble Lord, Lord Snape, Chiltern is to be sent prematurely to the “knacker’s yard”. Our debate takes place against a background of a Budget in a few days’ time, with enormous pressure on public expenditure. What the Government are planning to do—we will reach this in a later group of amendments—is bring on to their balance sheet all the private sector investment that has previously been borne by the private sector. Freight was mentioned, and the fact that they want to leave freight and open access operations in private hands perhaps indicates some inconsistency in their view that the private sector cannot deliver good services.

I will briefly mention two other reasons for these amendments. There is a question of the capacity of members of the Minister’s own department to manage all the new franchises that are going to come in. At the moment, they run four rail franchises; they have just two full-time staff and they rely on private consultants to manage these four franchises on a day-to-day basis. They are planning to absorb the remaining 10 franchises, which are now in private hands. They will have to grow significantly their own capacity to manage those departments and, as I understand it, they are in the process of growing their headcount from 21 to 90 by the end of the calendar year; all this at a time when there is pressure on departments to reduce their headcount. All these new people, all the external consultants, will need time to get up to speed with their new roles and build the necessary relationships to be effective, and I think that is a major constraint on their plans.

There is one other reason, which may be a simply technical one. It is possible that the Government may wish to extend an incumbent operator’s franchise, for example due to the lack of internal capacity that I have just referred to; but it may also be that the operator may not be willing to agree to a contract extension. As I understand it, with the Bill as currently written, the Government would not be allowed to appoint an alternative operator on a temporary basis—again representing a significant risk.

So these amendments indicate the need for flexibility, to allow the Government to retain high-performing private sector operators and to continue to give passengers an excellent service while minimising costs for taxpayers. I hope that, when the Minister replies, he will not say, “This is in the manifesto”, but will give some cogent reasons for ending the arrangement that provides, in the cases of Chiltern and Greater Anglia, the two lines that we have heard about, a high-quality service, possibly higher than the public sector would be able to provide.

--- Later in debate ---

[Lord Young of Cookham (Con)]

My Lords, I support the point made by the noble Lord, Lord Berkeley, about the potential conflict of interest under the new scenario: we will have Great British Railways, with a single operating mind, carrying all the revenue risk for passenger train operations, while at the same time there will be open-access operators and freight operators bidding for a limited path on the railways.

The former Secretary of State said:

“I shouldn’t need to approve whether a passenger train ought to be removed from the timetable to allow a freight train to run instead, as I was doing earlier today”.


The question is: who is going to make that decision in the future? If it is going to be GBR, as the noble Lord, Lord Berkeley, said, there is a clear conflict of interest; the company would have an interest in the passenger train operator having precedence in order to secure the revenue. That may be in conflict with government policy, which is to promote the transfer of freight from road to rail. Surely it is important that at the moment, the train operator cannot insist that he has a particular path for his train: he has to bid either to Network Rail or to the ORR. Who is going to make that decision in the future? Will it be a domestic one within GBR? In which case, how will the conflict of interest raised by the noble Lord, Lord Berkeley, be resolved in a way that is satisfactory for both the open-access operator and the freight train operator, which may find that they do not have the paths they wanted?

[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.