Contribution
I thank my noble friend Lady Harding of Winscombe for her excellent opening of this group, the comprehensive way in which she did it and—I think this is a powerful point—her real experience of a similar process and what actually happens in practice. One of the values of this House is having not just theoretical debates but Members who have experience of how these things work in practice. It is no good just legislating for what we think might happen; it is about what will happen. That was particularly valuable.
In this area, unlike some of the areas in the Bill, there is broad consistency among everybody who has spoken so far. At Second Reading, in other fora and in writing, the Minister set out that the Government want a competitive retail landscape and recognise the benefits of that. So what we are debating here is not the principle but how best to achieve that shared goal in practice. I will try to add to this debate.
Practically, the suggestion in my noble friend Lord Holmes’s Amendment 182 of a functional separation —which the noble Baroness, Lady Harding, also raised—is the cleanest and most sensible solution. That means that GBR is not in a position where it is tempted to abuse a dominant market position. It has a separate retailing arm, the rules can operate in a transparent way, you avoid a lot of trouble and you do not have to set up a complicated mechanism to deal with that abuse. I understand that the Government have set their face against that, but I reinforce that that would be the best solution and would solve a lot of these problems.
If the Government do not want to do that, for whatever reason, we absolutely need to make sure, first, that there is transparency. If all this is hidden away, it is very difficult for whatever mechanisms are put in place, whether it is the CMA, the ORR or whatever legal processes the independent retailers have to do. As the noble Baroness, Lady Harding, said, they are not huge companies with bottomless pits of money to be able to do this. If you do not have transparency, people do not know what is going on.
I will make a slightly different argument, bringing in our friends from the Treasury, than the one my noble friend Lord Young of Cookham made. This is one where the Treasury should be on our side. One of the important things that the Treasury wants to achieve is to reduce the subsidy paid to the rail network because, post Covid, the rail network does not send money to the Treasury; it sucks money away from the Treasury. The only way that will change on the operating side is if there is innovation and more passengers use the rail network. The ticketing retailers are one of the ways, in the innovative way they retail tickets. Importantly, if leisure travel is to be a growth area, the partnerships that they strike with providers of leisure opportunities can then be combined with travel to produce innovative packages. If you are going to do all that, you need that thriving, competitive retailing operation, so the Treasury should want that to be successful.
The other thing the Treasury should want is that the operating cost of GBR’s own ticketing operation should be as low as possible. On the cost of running that operation, I challenge what my noble friend Lord Young said. We know what the third-party retailers get because we know what the percentage commission is. If GBR’s retailing operation is not able to run its services for less money than that, it should not be in business, frankly, because it is adding no value at all and should not be running it. My hunch is it that it will not be able to, which is why, when I was Secretary of State, I said it should not really get involved in this business at all because there were lots of competing providers that were much better at it and, frankly, it should just get those to do it.
However, for reasons I do not quite understand, Ministers want GBR to be involved in this process. So, it is critical that the accounting—I declare my interest here as a chartered accountant—should be absolutely transparent so that we can see what it costs. From the Treasury’s point of view, as I said, it wants to be sure that no subsidy is going into the ticketing operation from the rest of the thing, given that there are competitive operators that can deliver this, I suspect, more cost effectively. That is an argument for the Treasury supporting some of these amendments.
On the subsidy point, I believe there is a question that is not resolved, which the independent retailers are concerned about. I understand that, in written correspondence with the Independent Rail Retailers, the department has asserted that GBR’s online retailer will not be subject to the Subsidy Control Act 2022, arguing instead that it will be governed solely by the Public Service Obligations in Transport Regulations 2023. That approach is inconsistent with the legal framework and assurances given by Ministers during the passage of the Bill so far that GBR will remain subject to public law, competition and subsidy control requirements.