Contribution
My Lords, my amendments in this group relate to value for money, but I say to begin how pleased I am to see my noble friend Lord Parkinson’s amendment, which I wholeheartedly support. There is a feeling that there is widespread support for ensuring the sustainability of the heritage railway. Let us hope that if the Minister cannot accept my noble friend’s amendment as a whole, he might reassure the Committee that the Government take the heritage railway industry seriously and will give direction that it ought to be preserved—that is probably the right word—and nurtured as part of our very important national heritage.
My Amendments 119A and 122A aim to achieve a similar outcome to those tabled by several other noble Lords, including Amendment 119 in the names of the noble Lords, Lord Moylan and Lord Berkeley, namely, the strengthening of the duties on Ministers, GBR and the ORR with regard to delivery of value for money—a perennial problem when you take the market out of an operation.
It is of course right that those in charge of our railways have to balance numerous duties and goals—and noble Lords would agree that having a punctual railway is important—but noble Lords may remember that during the pandemic the punctuality of the railway soared because there were very few passengers travelling. I am not suggesting for a moment that minimising the number of passengers travelling is a desirable goal; I am merely illustrating that when one part of the balance moves, so do the others, and that it is important that we aim not only for punctuality but for widespread use. As the noble Baroness said in introducing this group, of course we all want to see greater use of the railways, but we do not want to see crowded trains, so where does the balance come in?
That is where the definition of “value for money” is important. I would contend that the current wording in the Bill on financial efficiency is too vague and open to being interpreted in too many different ways and therefore loses its clarity. What is the context of efficient use of public funds? Does it mean in a specific fiscal year? Does it mean in the five-year control period or in the multi-decade horizon of the envisaged long-term rail strategy? Perhaps the Minister could enlighten us as to the thinking in that.
We all know that in a constrained fiscal environment and in public hands the railways will be even more subject to these pressures than at present. In a constrained fiscal environment, spending and investment will have to be prioritised. As the Minister has said many times, our railways consume many billions of pounds of taxpayers’ money every year and somebody has to be accountable for that. My amendments therefore seek to require Ministers, GBR and the ORR to apply a more comprehensive value for money test and to be accountable for it in determining how we invest in our railways. It will require those in charge to look beyond a vague efficiency test and consider whole-life costs, the opportunity cost of investing in one specific project at the expense of another, a quality risk-management test to avoid unnecessary gold-plating of standards, and the knock-on costs from infrastructure spending on the operation of services.
Let me draw as an example on the analogy with PFI contracts, which illustrate my point rather sadly. In the short term, PFI contracts to build new schools and hospitals could be regarded as an efficient use of public funds as they enabled the assets to be built much earlier and at a much lower cost to the public purse than would have been the case had they been funded in a more traditional manner. But as we now know, in the long term these contracts have saddled the public purse with exorbitant long-term costs that, taking a longer-term perspective, cannot possibly be regarded as efficient. If the longer-term perspective had been put into the balance when the crucial decisions were made, the question of efficiency might have been held in the balance rather differently. Similarly, new rolling stock may have an attractive purchase price, but if the contract comes with hefty maintenance contracts with the OEM, does the whole-life cost represent value for money? I am sure the Minister will be able to enlighten us as to how he sees these matters.