Lord Harper (Con)

My Lords, I wish to speak to several amendments in this group. They cover the role of the ORR. As my noble friend Lord Grayling has just said, it is arguably a bit weird continuing to have a regulator when you are bringing track and train together in GBR. He also highlighted the reason why it matters: the ORR has an important role in making sure that fair decisions are made. We will talk about it a bit at various stages during the Bill. Fair decisions should be made for access to the network for open access operators and freight, and that those powers are exercised in a fair and reasonable way. We will have some debates later about whether the way in which the Bill is set up for GBR means too much marking of its own homework. I speak first to Amendment 134 in the name of my noble friend Lord Lansley; he is sadly unable to be here today and asked one or two of us to speak to his amendment. It has been co-signed by my noble friend Lord Moylan. It would have the effect that the ORR’s duty to promote competition continues to apply to its functions under Chapter 1 of Part 3, relating to access and use policy, infrastructure capacity, the working timetable, the capacity duty, the charging scheme, the performance scheme and appeals in respect of those policies. I shall listen carefully to what the Minister says when he responds to this group. It may be that he says that the reason why the role of the ORR is being constrained in the way it is in the Bill as drafted is so that the ORR does not use its powers to undermine the directing mind of GBR. That is a flawed argument. The great majority of passenger services and ownership of assets are in the hands of GBR, or will be when the remaining franchises have expired and GBR has taken over those routes. The promotion of competition operates at the margin. However, that does not mean that competition does not have enormous value because its role can demonstrate the value of particular routes, and more efficient and consumer-responsive services. Let me give an example that may appeal to those who are particularly keen on the European Union. The European Commission, in a report based on services in Spain and Italy, found that open access on their high-speed rail network could reduce prices, improve quality and frequency, enlarge the rail market and passenger numbers and—this should be attractive to the noble Baroness, Lady Jones—encouraged modal shift. It is important to recognise that the duty to promote competition is linked to the benefit to consumers. It is important to preserve that element of potential challenge. The ORR has limited powers, but we should maximise the extent to which it can use them. I shall give an example in this country. The importance of capacity—we have had this debate previously—is that you cannot have competition unless there is capacity. It is important that when decisions about capacity are being taken, they must make sure that we can have competition. The line that has capacity is the east coast main line. There, three open access operators—Grand Central, Lumo and Hull Trains—all provide competition against LNER. That is valuable not just because those three open access operators provide different types of services to those of LNER, and a number of them are focused on providing very low-cost rail services, but the effect of having those three operators—this has been documented by independent economic analysis, I understand—is that it holds down ticket prices on LNER. Even people who never use open access operators but use the existing main operator benefit from the existence of the open access operators. That is why it is important to make sure that we preserve that element of competition. I listened very carefully to the argument put forward by the noble Lord, Lord Boateng, on his Amendment 142 about promoting regional growth. He is right that there is a lot of evidence that improving rail connectivity—it is true of improving road connectivity as well—can deliver economic growth. We have seen that very clearly in what happened—and it is not even complete yet—once we got to the point where we were constructing the first phase of HS2. Anybody who has been to Birmingham will have seen that, even before the rail line is completed, once it was clear that it was going to happen, there has been an enormous amount of investment and economic development in central Birmingham with companies relocating their operations. That has happened on a prospective basis because people knew that that was going to happen, so the noble Lord is correct that regional economic growth is driven by rail. I think I can reassure him a little bit. When the Government make these decisions about where they invest—the investment that Network Rail and GBR make in the infrastructure is public money—they look at the cost-benefit ratio. Some of the things they look at are not just time savings, but wider economic benefits. That is not the easiest thing to capture when you are looking at prospective benefits and economic growth. Being able to nail that down and produce an economic analysis that is robust that you can turn into numbers that you can then weigh up against the cost is not that straightforward. I do not know exactly how many, but the Department for Transport has a significant number of economic analysts who produce all this information for Ministers when they are taking these decisions. Whether we need to add it to the Bill, I am not quite sure, but the thrust of the noble Lord’s arguments about the importance of the rail network for regional economic growth is absolutely spot on. There are already a lot of things that make sure that that is taken into account, but I support the thrust of what he says. I will listen, as will the noble Baroness, Lady, Jones, to the Minister’s response, but I take a much more positive view about the benefits of competition on the rail network. As I said in the points I just made, competition helps to keep down costs to consumers and drive passenger growth, particularly by attracting people on to the rail network who perhaps cannot afford to travel on some of the existing services. Some open access operators have specifically gone for no-frills, low-cost services that attract people who would not otherwise use the rail network. You therefore get modal shift, with people shifting off more environmentally impacting forms of transport that produce more carbon per passenger mile on to the rail network, which I think is a good thing. It is good for consumers and the environment, and competition helps to drive that. That is, in effect, as I know my noble friend Lord Young would say if he were here, what happened post privatisation. There was a vast increase in investment and in passenger numbers, which took a lot of people off roads and aviation and put them on to the rail network, which was good for them, the economy and the environment. I want to make sure we maximise the extent to which competition exists with this new model as we move to GBR.