Railways Bill (Sixth sitting)

Rebecca Smith Excerpts

Tuesday 27th January 2026 Public Bill Committees

[Jerome Mayhew]

I agreed with the hon. Gentleman until that last sentence, because new clause 40, which I will come to in a moment, would require not the removal of subsidy but looking towards it—it is aspirational. It would set GBR’s sights on minimising its costs to the taxpayer, not through penny pinching if that would be the wrong decision, but through growth in its revenue by becoming efficient and doing more for less. Those are all good incentives that a private business inevitably has because of the challenge of competition.

New clause 39 would require Great British Railways to focus on other opportunities for funding and on minimising operational costs, just like any other business. The areas of focus under subsection (7) are the revenue opportunities.

New clause 40, on non-reliance on taxpayer funding, would make the direction of travel for GBR clearer. It may be—in fact it is almost certain—that it will never achieve it, but it is a noble objective. It should be clear that GBR should aspire to reduce the need for the taxpayer to support the rail sector by making it as efficient and attractive to passengers as possible, thereby attracting more passengers and freight on to the railways. That would create a virtuous circle, rather than the opposite. We should start thinking about that, which is what new clause 40 is intended to achieve.

New clause 41, also tabled in my name, would require Great British Railways to publish an annual statement of its financial performance. The new clause builds on the theme, forcing Great British Railways to focus on its financial performance and reduce its reliance on the taxpayer. It may be the skimmed-milk version of new clause 40 that the hon. Member for Birmingham Northfield might find more palatable.

It is important that we do everything we can to design into a nationalised structure, where there is no competitive tension, incentives for GBR naturally to seek to achieve efficiency and productivity enhancements. There is a very real need for that, because the taxpayer’s pound can only be spent once, and funds are needed in many areas of Government. Apart from anything else, we need to reduce the tax burden, which this Government have raised to the highest on record, so anything we can do to build a structure that incentivises GBR to reduce its dependence on the taxpayer is a good thing. It also forces public accountability.

Finally, new clause 44 would require the Secretary of State to give GBR an annual savings target. Taking all the new clauses together, the intention is to allow GBR to focus on providing genuine value for money for the taxpayer, not just in abstract terms, and to cut away some of the existing inefficiencies in the infrastructure commissioning and decommissioning process, to provide a longer period of certainty for the supply chain so that it can pass on the resultant efficiencies to the taxpayer. That money can be either reinvested in accelerated infrastructure roll-out, rather like the ability of ScotRail electrification to do more for less, or—heaven forbid—used to produce tax cuts for the hard-pressed taxpayer. I hope the Minister will be bowled over by those suggestions, and look forward to hearing his response.

[Rebecca Smith (South West Devon) (Con)]

It is an honour to speak with you in the Chair, Mr Western. I will touch on three of the new clauses—one at greater length than the others—to follow up on the words of my hon. Friend.

For me, new clause 39 highlights something that is clearly missing from the Bill: what actually happens when these currently franchised, privately run rail services come into public ownership across the board. Over many years, unions have fought hard for terms and conditions for staff and railway companies, but these are not uniform across the board. There is a huge differential in the terms and conditions that staff are subject to.

I pay huge tribute to the men and women who work on the railway; they are a brilliant group of people. I am obviously on a train every week, coming up and down from my constituency. However, it is really important that we have this conversation about what the Bill will actually mean. As my hon. Friend pointed out, value for money is mentioned only once in the Bill. We are, in effect, writing a blank check for GBR to spend whatever it wants on bringing all these staff into its employment.

We were told very clearly when the Committee began that this is not a civil service; it is the public sector, so there is a difference there, but it is effectively a private body as well. I would be interested to hear the Minister’s comments about how staff are being brought across—obviously some franchises have been brought into Government control already—and about the Department’s plans going forward, because time and again, we see pay going up for public sector workers without that necessarily reflecting any changes in performance.

[Laurence Turner]

The 1992 White Paper that preceded the Railways Act 1993 said that, at the time, British Rail had the second highest workforce productivity of any railway in Europe. What does the hon. Member think went wrong in all the years under privatisation that followed?

[Rebecca Smith]

That is a very long time ago. Under privatisation, the unions have done a very good job. In my constituency in the south-west, there are no seven-day contracts, for example. If I want to get a train up from my constituency on a Sunday, those trains are cancelled quite regularly, because the service relies on the good will of the staff to do overtime to make the train even come up to London.

Whatever we do, we need to look carefully at the terms and conditions that will be brought forward into this new public body. Up to this point, it has been down to each individual company to negotiate. That has been done with highly professional and competent union representatives, but we are not on a level playing field at the moment. As a member of the public, I want to be sure that those public sector staff are not receiving undue recompense for what they are doing, which would not be in accordance with other public sector bodies.

Private companies have been expected to give their staff a huge amount of benefits—quite rightly; that is their choice as private companies. If the staff become public sector, things like free rail travel need to be on the table. We must at least acknowledge those issues and make a decision to continue them, rather than assuming it is a given, which is down to unions to negotiate.

There is no conversation in the Bill about that TUPE-ing across of staff members. Value for money is really important. We do not want inequality being built into our public sector workforces simply because we are renationalising something.

Subsection (7) of new clause 39 provides that we should be showing where revenue comes from. That is absolutely justifiable. The private companies that will continue to operate in the railway system will have all that information available to their shareholders—to the people they are reporting to. If Great British Railways does not show that information, there is, again, no opportunity for scrutiny. If commercial retail income is flopping because GBR is not doing a very good job, we have no way to hold it to account for that. I do not see why it should be frightened to share that revenue information. It should instead see this as an opportunity to show good practice and how things could potentially progress under GBR.

I have one more point, which came up right at the end of the Select Committee hearing—I managed a question to the Minister, Lord Hendy, but have not seen a response. There is a huge amount of land and value that belongs to these railway stations, currently run by private companies, in some cases, including for things such as parking. What happens with all that income and all the opportunities for Great British Railways to potentially make some money? How will we know about that money and where it is coming from? New clause 39 seeks to bring that information to the fore and ensure that it is transparent and in the public domain.

Turning to new clause 40—this might be something of a segue, but I am going take the opportunity to put it on the record anyway—there is something about the aspiration to move from heavy taxpayer-funded reliance that speaks to the devolution conversation that we have been having. We have had multiple conversations, and I am sure we will have more, but ultimately GBR is being set up to give more powers to certain local authorities and local areas if they wish it, which is great—we want those communities to be able to control more of what happens. However, as we have been discussing, we are effectively developing a two-tier system, whereby anyone who is not in a mayoral authority will effectively be paying into the railway company and GBR, but not necessarily getting the levers to effect change locally. The Minister has reassured me that that will be done through business units and so on, but given that we do not know the scale of those business units or which regions and communities they represent, it is important that we know how that taxpayer money is to be used for funding across the country.

There has been a huge amount of storm damage in the south-west this weekend. Where will the funding come from under the new GBR? The south-west is not a mayoral strategic authority. Will we get our fair share of funding through the set-up for GBR? New clause 40 sets out the aspiration to move away from taxpayer funding and would surely create a more equitable system for the future.

Finally, new clause 44 would introduce a savings target. My hon. Friend the Member for Broadland and Fakenham has been alluding to the point about the costs we currently see in the system, particularly around infrastructure. That has certainly come up in the Transport Committee, in terms of how much it costs to build a bridge or a new station and the lack of competition and challenge. The new clause would create an opportunity to ensure that we pay as little as possible for the best outcomes. We have had lots of evidence in the past few months to show that other parts of the world can produce the station infrastructure that we need for a lot less than we are paying for it. I believe that is down to how the system currently works, and new clause 44 would force us to look at how it could work under GBR.

[Keir Mather]

I thank Members for tabling amendments on GBR’s funding and financial framework. In this chunky group of important amendments and new clauses, I first turn to new clause 26, tabled by the hon. Member for Didcot and Wantage, which would require the Secretary of State for Transport to publish a mid-funding period review of GBR’s funding, and new clause 41 from the shadow Minister, which seeks to create a GBR annual statement of financial performance.

In my view, the Bill already creates sufficient transparency about how GBR is funded. Further process could constitute unnecessary bureaucracy. Under paragraph 7(2) of schedule 2, the Secretary of State is already required to publish details of the financial assistance given to GBR using the funding period review funding power. Under paragraph 5 of schedule 2, GBR must publish its business plan and keep it up to date throughout the five-year period. Between those two commitments, the Transport Committee of the House of Commons will already have key information about how much funding the Secretary of State is providing to GBR, and the details on GBR’s business plan to understand what GBR is doing with its money. It would be unnecessary and inefficient to conduct an extra review.

New clause 34 would require the Secretary of State to set funding two years in advance of the funding period. First, I believe that it is misplaced to require that funding be committed two years in advance. There will inevitably be changes to economic circumstances over a five-year period, and new projects will surface. That was well acknowledged by all the witnesses at the oral evidence sessions, including those representing the railways supply chain. If there is no practical discretion, a settlement agreed two years in advance will be redundant before it even starts.

I can also assure the hon. Member for Broadland and Fakenham that the Bill already accounts for the need to provide the railways with certainty, and ensures that the funding process completes before the start of the next five-year funding period. The ORR, which will run the process, intends to set deadlines so that funding is committed in time for the industry to prepare. Secondly as with new clause 26, new clause 34 seeks to introduce additional reporting requirements that are unnecessary, given the transparency requirements already provided for in the Bill.

I now turn to new clauses 39 and 40. New clause 39 would create a duty for GBR to achieve value for money and long-term fiscal sustainability. New clause 40 would require GBR to develop a transition plan toward ending any reliance on taxpayer funding within its first operational funding period. I agree with the hon. Member for Broadland and Fakenham that GBR must deliver as efficiently as it can, ensuring good value for money and reducing costs to the taxpayer, and I assure him that the Bill is already very specific about GBR’s achieving value for money. Clause 18(2)(f) includes a specific legal duty on GBR and the Secretary of State to take into account

“the costs that will need to be met from public funds and the need to make efficient use of those funds”.

The ORR must also provide advice to the Secretary of State on whether GBR’s estimated costs in GBR’s draft business plan represent good value for money, with a requirement to publish a summary of that advice as part of the funding process. That is before the Secretary of State signs off on the business plan. Therefore, the hon. Member’s intent is already achieved by the Bill, and the amendment would only create extra bureaucracy and inflexibility without adding to transparency or financial sustainability.

A statutory transition plan to eliminate taxpayer funding would be unrealistic, and would undermine the railway’s ability to achieve its social goals. The reality is that taxpayer subsidy will always be needed for some parts of the railway. For example, while we aim to have the most profitable and efficient network possible, there will always be some lower-population regions of the UK in which rail travel will not make a profit and will need taxpayer subsidy. Clearly, it would not be appropriate for the Government to withdraw funding and neglect connectivity in those important rural regions, whether that be in Devon, Dorset or elsewhere—constituencies represented by Members across the Committee. Rapidly forcing GBR to operate without public support would be devastating for the economy and for the mobility of the public, not to mention reducing efficiency and the long-term capacity of the network.

Finally, new clause 44 would require the Secretary of State to set and publish an annual savings target for GBR. Introducing a statutory savings target risks creating a rigid measure that might not reflect the operational realities of the railway. Efficiency is already embedded in the Bill’s framework and will be a key consideration when GBR publishes its business plan and sets out how to meet its objectives, including on efficiency. Statutory targets are therefore not required to drive performance.

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[Keir Mather]

I respectfully disagree with the shadow Minister’s interpretation. This is about how GBR discharges those legally binding duties, and whether we should be overly prescriptive about the means by which it does so. It is important to have flexibility. Given the amount of technological change that we have seen in railway processes over recent decades, as well as socioeconomic factors and the need for GBR to balance those duties, we cannot be overly prescriptive about how we ask it to meet them—apart from the fact that it is legally required to do so.

I assure the hon. Member that GBR’s business plan will have not just a robust but a comprehensive set of KPIs against which it will be held to account. Progress against them will be tracked, and GBR will publish updates in line with the requirements in the Bill. The ORR will also monitor GBR and its business plan, and provide advice to the Secretary of State.

[Rebecca Smith]

I am thinking through the schedule. Forgive me if I am wrong, but ultimately, it is GBR’s business plan. Effectively though, there are going to be wheels within wheels, in terms of each of the business sectors, the different mayoralties, and the operators that are doing different things in different countries. To me, it feels overly simplistic: we have got one plan, which is the plan for the funding of the entirety of GBR, but if there are no KPIs at all, how are we supposed to even compare parts of the country against each other? Surely there will be different funding streams and business cases for different things. To me, it just feels like one overarching plan. How on earth are we supposed to hold the Government to account for delivering that, let alone ensuring parity and equality across the country, and making sure that funding is going into the right places, where it is most needed?

[Keir Mather]

That is a very important point. While the hon. Member points to a system that is simple in the objectives that it sets out for the railway overall, I see one that provides sufficient breadth to allow the organisation to develop over time and offer a system of operation that is closer to the communities it seeks to represent—and which, most importantly, is agile in adapting to changing socioeconomic circumstances and technological innovation.

The need for objectives that are not overly prescriptive, and the place for KPIs being in the business plan, allows a holistic approach to setting objectives for the railway, which can guide work overall for a national organisation, offering a single uniting mind, while at the same time not fettering GBR’s ability to evolve as an organisation in future.

In that sense, I believe we desire the same outcome: to make sure that the railway operates in the most effective way possible. In the light of the measures in the Bill that I have outlined, I hope that the hon. Member for Broadland and Fakenham will withdraw the amendment.

Amendment 125 would require GBR to include in its business plan information about how it will minimise costs to the taxpayer, while amendment 127 would require the ORR to advise the Secretary of State on this. I agree that it is important for GBR to deliver in the most efficient way that it can. That is why GBR, the ORR and the Secretary of State—all the people involved in the railway, and in the business plan—are all subject to a cost and efficiency duty, which is applied by clause 18. That will ensure that GBR aims to be cost-efficient at all times, which aligns with the intent of amendment 125.

Adding additional requirements for GBR in this space could create perverse incentives. For example, a focus on minimising costs, without other checks and balances, could drive GBR to cancel unprofitable lines even if they are important to local communities because doing so will save money. Clearly, it would not be appropriate for GBR to neglect connectivity in those important rural regions. GBR will also be robustly scrutinised from a value-for-money perspective by the ORR, and the Secretary of State will need to consider the ORR’s advice before approving GBR’s business plan. I hope that is enough to assure the hon. Member for Broadland and Fakenham that the Bill can deliver the outcome he seeks without amendment, while allowing GBR the autonomy necessary to plan in the way it sees as most appropriate.

Finally, amendment 128 seeks to limit the information that GBR could redact from its approved business plan. I agree that GBR’s activity must be transparent, and that will be an important part of how we hold GBR to account. That is why the Bill already requires GBR to publish its business plans. The Bill provides for slightly more discretion for GBR to redact sections of the business plan than amendment 128 proposes. That is because it is important that all types of sensitive data, not just the commercially sensitive, are able to be protected. Personal data, security-sensitive information about stations or anything legally privileged are all examples of content that may need redaction from the final plan. A flexible requirement can be better used to navigate these nuances. However, let me be clear that GBR’s public law duties and wider accountabilities framework will ensure that GBR will not be able to hide information that is important and relevant to public scrutiny.

In the light of these considerations, I ask the hon. Member not to press the amendments.

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Rail Forum is right, is it not?

[Rebecca Smith]

I want to briefly speak to the proposed new subsection added by amendment 23, which would offer anybody given conditions by GBR the opportunity to appeal that decision to the Office of Rail and Road. The issue of accountability and the unequal playing field faced by those on the outside compared with those on the inside came up in the Transport Committee’s evidence sessions and last week. Having heard a lot of that evidence, the amendment appeals to what I think is the right way to do things. We must ensure that organisations engaging with the railway, or offering services to the railway—even if they are being paid separately for them—have the opportunity to appeal a decision that affects or impacts them. I feel that not having such an opportunity is particularly onerous. I support amendment 23 and concur with everything that the shadow Minister has said.

[Keir Mather]

I thank the shadow Minister for tabling amendments 22 and 23 and the hon. Member for South West Devon for speaking in their support. Amendment 22 seeks to require GBR to set reasonable charges for the delivery of its functions, and amendment 23 seeks to require the ORR to provide an appeals role for anyone who considers the charges set by GBR to be unfair.

On amendment 22, we clearly agree that GBR must act reasonably when setting charges and there is no suggestion that it will not do so. In fact, safeguards to ensure that GBR cannot levy unreasonable charges already exist in the Bill. Clause 18 requires GBR to act in the public interest and to ensure that railway service providers, such as devolved operators, freight operators and open access operators, can plan, invest and make decisions about their own businesses. When setting charges, GBR must therefore do so in a manner consistent with those duties, and it must not set charges that undermine operators’ ability to run viable and successful businesses.

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[Olly Glover]

We have reached a rather long group of amendments at this point in the afternoon. I would generally have liked to have used that as an opportunity to be concise. However—[Laughter.] No, no, the substance is too severe for that to be the case.

Let me start off on a positive note: this rail strategy is perhaps the strongest element of the Bill. It is absolutely what our railways need to hopefully get us out of the endless cycle of decision, indecision, dither and delay: “Yes, we’re doing it,” then, “No, we’re not,” or committing to things that are undeliverable before they have been properly planned, thought through, funded and so on.

In this part of the Bill, we even have the potential to put ourselves on as glorious a footing as Switzerland and its approach to its rail network. Somehow, I have managed to avoid talking about Switzerland so far in this Bill Committee—

[Rebecca Smith]

No you haven’t!

[Olly Glover]

Oh right—okay. I seemingly stand corrected. Well, there we go; this probably will not be the last mention either.

It is good that an element of the Bill enables us to have some hope of reaching the glory of the marvellous rail network in Switzerland, which genuinely merits admiration. We so often assume, lazily, that railways in Europe are better than those here. Some of them are in some respects; others are not. However, Switzerland’s railway is pretty much better than ours all over.

I turn to our amendments. Generally speaking, the intention behind them is either to strengthen or enhance what is already in clause 15 regarding the rail strategy. New clause 2 proposes to expand the number of factors that should be considered in developing the strategy, to ensure that critical elements that have not necessarily been well-planned or managed on our network hitherto are better stewarded in the future.

I turn first to amendment 134. It would very simply put what is currently in an accompanying piece of commentary on the Bill into the Bill itself, including the clarification that by “long-term” we mean “30 years”. The problem is that at the moment “long-term” can mean many things to many people, depending on their own particular agenda. We could include in clause 15 the words “for the next 30 years”. That would make it very clear what the rail strategy was focused on, but would not preclude its being changed in the future. That is important, because any strategy should be regularly reviewed and refreshed in the light of changing circumstances. However, the amendment would enshrine the idea that the strategy is intended to get GBR to engage in long-term thinking in its future planning of our network.

Amendment 137 would add a couple of elements to clause 15. First, it would ensure that the long-term rail strategy considered the support that rural communities need to access rail travel and the need for

“co-operation with relevant local and regional transport authorities”

and GBR. That is so we can have a real focus on

“greater integration between trains, buses, trams, cycling, walking and other active travel options.”

I hope that is welcomed by the Government, given their own commitment to introduce an integrated transport strategy at some point in the future.

Amendment 207 intends to ensure that the rail strategy considers the rail network as a whole and the relationship between the integrated timetables that we need to move to and the infrastructure enhancements necessary to enable those timetables. Let me explain that a little further. The historic focus of development on our rail network has been, with some exceptions, an obsession with reducing journey times to and from London on major inter-city routes. In and of itself, that is not a flawed goal. However, tens of millions of pounds will often be spent on cutting a couple of minutes from journey times.

A particular example of that was removing an avoiding line at Stoke-on-Trent as part of the modernisation of the west coast route. It was for the 7 am Manchester to London inter-city train, which has been the subject of so much controversy recently in relation to ORR decisions. That passing loop was taken out just to save 30 seconds from the journey time for one train a day, which does not even stop at Stoke-on-Trent. That shows the extent of the obsession with reducing journey times to London, which I have just alluded to.

What there has not been is an accompanying focus on trying to improve connection times between trains at Birmingham New Street, for example, or at Manchester Piccadilly or in Leeds. That is important, because there is very little point in cutting some time off inter-city routes if that time saving is negated by having a longer connection and waiting time at a regional hub. What puts a lot of people off using trains is the lack of decent connections and having to wait for their next train at stations that might not have particularly amenable environments.

By contrast, that is what has been done so well in Switzerland. It began in 1987, when a national referendum approved what was a 20-plus-year plan, to upgrade the country’s rail network around connections. That led to a nationwide investment in infrastructure improvements designed to enable a nationwide inter-city timetable, so that at all the key hubs—such as Zurich, Berne or Basel—trains would arrive within a 10 or 15-minute window and passengers could easily change from inter-city train to inter-city train, or from a local train to an inter-city train. Such integration is not just limited to the rail network; it is applies to other public transport. Anybody who has travelled extensively in Switzerland by public transport knows that the same level of timetable integration exists for buses, cable cars, mountain railways and so on.

Amendment 207 would create the framework for that kind of thinking: we would have to think hard, in the long-term strategy, about what sort of timetabling we want to see on our network in the future and what infrastructure enhancements are needed to get end-to-end journey times down.

Our amendment 135 would ensure that the rail strategy considers international rail. For the purposes of the Bill, that is not the Dublin to Belfast Enterprise service, which is of course the subject of entirely different legislation—a very good train it is, too, and not just because it is named after that series of wonderful flagships from “Star Trek”—but international rail through the channel tunnel. The amendment would simply require that the rail strategy includes an international rail strategy to support the development of international routes and consider some of the key challenges in increasing capacity, particularly rail depot capacity, to the channel tunnel and beyond, as well as options for upgrading the existing rail network so that we can get far more rail freight directly through the channel tunnel, which is currently not possible because of limited gauge clearance on the existing network.

Our amendment 136 would require the rail strategy to include a network electrification strategy, which another amendment alluded to. Something that has so far been absent from this Government’s thinking, as it was from that of most previous ones, is clear criteria for electrification, of whatever type—including the current fetish for discontinuous electrification with batteries. The amendment would create a framework for us to be very clear about the criteria that will be used for each electrification type, including maximum operating speeds, which lend themselves far more to full electrification than to batteries, the intensity of traffic, whether there is freight, and so on. It is a very strategic amendment that would help to focus the output of the long-term strategy on things that need to be addressed.

I have a bit more to say; I am attempting to be concise, Mr Western, and I thank you for your forbearance, as I thank the rest of the Committee for theirs. Amendment 213 would require the Secretary of State to update Parliament annually on progress on the rail strategy. This is not intended to hamper the strategy or bog it down in bureaucracy; it would merely involve updating Parliament, from time to time, on the development and delivery of the rail strategy. The key purpose is to ensure that the Transport Committee can carry on the great review and scrutiny that it does of so many things—that is not a comment on my contribution, but on that of all Transport Committee members, past and present.

New clause 27 would require the strategy to incorporate a national rolling stock strategy. I understand from remarks made by the Minister and by the noble Lord Hendy in the other place that that is very much the intention anyway. Perhaps we will have another of those debates where they say that that is the intention anyway but for some reason we cannot possibly put it in the Bill. Nevertheless, I will press the new clause, because it is so important.

New clause 28 would require GBR to set out a cyber-security and technology strategy. Technology is changing all the time, and the railway has not always been the fastest at embracing it. There is a particular issue with cyber-security. A couple of months ago, I attended a forum in Parliament, which was well attended by representatives from the rail industry. There are real issues about how software on rolling stock is kept up to date, and the funding for that. The new clause is intended to ensure that proper thought is put into a framework for cyber-security.

New clause 29 would require GBR to publish a report on demand for railway services on Sundays and the current arrangements for staffing of the railway on Sundays, which in my opinion and that of many of my constituents simply does not align with the 21st century nature of the Sunday economy.

Finally, new clause 54 would require GBR, within 12 months of the passing of the Act and every subsequent 12 months, to publish a national signalling strategy. The reason this is so important is that we have been slow to embrace digital signalling and the European train control system in this country. That is starting to improve, with ETCS currently being introduced to the southernmost 100 miles of the east coast main line, but those in the industry are clear that the current fragmented structure makes it hard to introduce ETCS and digital signalling, because open access operators, particularly freight operators, are not necessarily incentivised to align their driver training and locomotive upgrades with the plans to introduce digital signalling.