Railways Bill
Thursday, 10 September 2026
Contributions
Committee (2nd Day)
Scottish and Welsh l egislative c onsent sought. Relevant document: 4th report from the Delegated Powers Committee
Clause 5: Co-operation with relevant local government bodies
Amendment 22A
Moved by
22A: Clause 5, page 4, line 5, leave out “may” and insert “must”
Baroness Pidgeon (LD)
My Lords, the noble Lord, Lord Blunkett, had hoped to be here today but found himself with other commitments, and therefore asked me to move his Amendment 22A, which I also support. This is a probing amendment on whether the provision in the Bill which enables Great British Railways to enter into partnerships with mayors—we will debate whether it should be mayors or others later—could be strengthened. I would be keen to hear what the Minister has to say on that. The Bill sets out a partnership structure that enables collaborative working, local funding commissioning and other benefits, but this wording change from “may” to “must” would really strengthen the requirement for a partnership with mayors. I hope the Minister agrees that Great British Railways must treat mayors—and others, as we will come to—as genuine partners, and that the Government will consider this amendment seriously. I take this opportunity to speak to the other amendments in this group. I think it is a very important group and that is not just because my background, like many noble Lords’, is in local and regional government. I am very aware that, for example, Transport for Greater Manchester, Transport for London and others are concerned about the Bill as drafted because it does not treat them as real partners at the table; it feels like a consultation or tick-box exercise rather than a genuinely equal partnership. I just remind noble Lords that, when responding to my amendment on rail devolution on Report of the Passenger Railway Services (Public Ownership) Bill, on 6 November 2024, the Minister said: “I can reaffirm to your Lordships’ House that the railways Bill will include a statutory role for devolved governments and mayoral combined authorities. They will be involved in governing, managing, planning and developing the railways ”.—[ Official Report , 6/11/24; col. 1543.] Yet I believe—as do others here, hence all the amendments—that the Bill as drafted does not provide the statutory powers that mayoral and strategic authorities and others require. Since the Bill was introduced to Parliament, we have of course seen a new Prime Minister, one committed to devolution to mayoral and strategic authorities, so I really hope that some things will change. I have already talked about the amendment that I am moving on behalf of the noble Lord, Lord Blunkett, which I hugely support as it strengthens the Bill. I hope the Government accept that. It would be useful if the Minister could set out how the Government see Clause 5 enabling Great British Railways and these authorities to develop local commissioning partnerships. I stress that this clause is particularly important for Greater Manchester, because the city region wants to take on a more meaningful role, similar to London’s, in shaping and commissioning rail services. Many of the amendments in this group, which we will hear about, are trying in different ways to ensure that strong role for local and regional government. They include the sensible amendments from the noble Lord, Lord Lansley, which seek to bring in the term “strategic authorities” from recent devolution legislation. I hope the Government will be sympathetic to many of those amendments. In many ways, the amendment from the noble Lord, Lord Blunkett, is the simplest way to strengthen regional and local government’s hands. The noble Lord, Lord Grayling, has Amendment 147, which allows for an authority to declare a service wholly within its area as a mayoral concession service, so it can be run rather like Transport for London is. I think that is interesting, as it feels like, to date, Transport for London and others have had to go with a begging bowl to government to take over metro railway services for their area. This would shift the balance, so I think it is an interesting proposal to discuss. Amendment 159 from the noble Lord, Lord Moylan, would expressly forbid the transfer of TfL services to Great British Railways. This again highlights the tension between national and regional services, and concerns about the powers of Great British Railways. I look forward to the rest of the debate on this group and the Minister’s response. Given this new Government’s agenda around devolution, I hope that we start to see a shift and, potentially, some government amendments in this area. I beg to move.
Lord Lansley (Con)
I think it might fall to me to speak next, if my noble friend does not want to speak to his amendments at this stage.
Lord Moylan (Con)
I will speak at the end, if I may.
Lord Lansley (Con)
I have four amendments in this group: Amendments 26, 64, 304 and 333. They are all on the same point, which is that, in the Bill, the definition of a “relevant local government body” is expressed as mayoral combined authorities, mayoral combined county authorities and passenger transport executives. Those first two—mayoral combined authorities and mayoral county combined authorities—are, I think, based on the proposition from some months back that, over time, all the strategic authorities would move towards being mayoral strategic authorities. Since the original drafting of this legislation, we have completed the English Devolution and Community Empowerment Act. Those of us who worked on that legislation will recall that Section 1 defines strategic authorities, and it does not do so by reference to whether or not they have a mayor; they are, basically, single-foundation strategic authorities, combined-foundation strategic authorities or county combined strategic authorities. It seems to me that, for the purposes of this legislation, the relevant local government bodies with which Great British Railways, in particular, and the Secretary of State should work would be all the strategic authorities. Why would we exclude those that do not have mayors? I say this because, whether it takes a year or two—or three or four—there will be some strategic authorities that may not have a mayor for a very long time. I do not say this because I want them not to have mayors; I am in favour of them having mayors. It is just that we are quite a long way from that happening. From my quick survey, looking across England, we probably have two long-term single-foundation strategic authorities: Buckinghamshire and Northamptonshire. By my reckoning, at the moment, we have at least four, perhaps five, combined county authorities—Lancashire, Cornwall, Surrey, Devon and Torbay, and Norfolk and Suffolk—with no intention of having mayors. Interestingly, that includes Cornwall. The Minister will remember that, last week, when the Prime Minister was answering questions in the other place for a very long time, he referenced devolution in Cornwall and said “with or without a mayor”. Therefore, we are in a very simple position: we want devolution. We want GBR to have regard to the transport plans of strategic authorities. We want GBR to consult with strategic authorities, with the responsibilities that they have. We want statutory information sharing between GBR and strategic authorities. If we put “mayoral” in this legislation, we will restrict the availability of all the statutory consultation, information-sharing and advisory relationships between GBR and non-mayoral strategic authorities. I am sure that that is not anybody’s intention. The simplest thing to do would be to reference the definition of strategic authorities in Section 1 of the English Devolution and Community Empowerment Act; that would be altogether simpler and better in the long run.
Lord Harper (Con)
My Lords, I rise briefly to support what my noble friend Lord Lansley has said on his Amendment 26. I had some dealings on this when the Prime Minister was the Mayor of the Greater Manchester and when Andy Street was Mayor of the West Midlands. Both of them engaged with the department on their desire to integrate the national rail network into their plans locally. They wanted to have those conversations, which worked well. In those cases, obviously, they were both mayors. I agree with my noble friend Lord Lansley. Given the announcement this week that local government reform and the bringing together of unitary authorities, which is, in many cases, a precursor to having mayors, have been held up and there have been legal challenges, it would be much more sensible, as my noble friend says, if we made sure that GBR could have those sensible conversations and had the powers to do that with all appropriate local authorities with a strategic transport function. We should not limit that to those authorities with a mayor. As my noble friend said, although it was at least the preference of the Government led by Keir Starmer that there should be limits to what you could devolve if you did not have a mayor, it sounds like, from what the Prime Minister said in his answers to Cornish MPs, that he is open-minded about that. Therefore, we could have some significant local authorities with transport powers without a mayor. I know from my own experience that there are a number of proposals in the Cornish area, for example, for some rail infrastructure that would bring significant benefits to the Cornish economy. It would be perverse if the Cornish council could not have those conversations with GBR or if people had to work out weird ways of having to facilitate those conversations because we had not provided for that in this legislation. I agree with my noble friend. The Minister would be wise either to accept his amendment or, if it needs to be worded differently or other changes need to be made, at least to take it away and come back on Report with a government amendment, or suite of amendments, to achieve the same function. That would improve the position and, in fact, get to a position that I think is the Government’s intention—certainly the current Government’s intention. It may not have been when the legislation was drafted but I think that it would more accurately reflect the position now.
Lord Berkeley (Lab)
My Lords, I rise briefly to speak to the amendments in my name, Amendments 298, 299 and 300, which follow on from the amendments about which noble Lords have spoken. I want to double-check that there will be consultation with the relevant authorities—whether it is Scotland, Wales or other authorities—before any change is made to access charges, timetables or anything else. Several noble Lords have spoken about Cornwall, where I live. It may be down as a mayoral authority but, knowing the politics of Cornwall, I think that it is highly unlikely that anything credible will come out of that. Whether that is good or bad, we can debate. There is also the question of what improvement—or lack of improvement—is needed to the railway in Cornwall and, to some extent, in Devon. We have been debating for many years whether the line at Dawlish is at risk and by how much. I know that my noble friend the Minister has said that it is all going to be fine. Rock bolts are being put into the hillside to stop it falling down, which I am sure is a good solution, but we still only have one rail line going to most of south Devon and the whole of Cornwall. It would be nice to think that the local authorities—the south-west regional authority is already doing some work on this—are able to take some of that forward with a budget to look at the alternatives and make sure that the various authorities, whoever they may be at the time, are properly consulted, especially on access, charges and things like that.
Lord Moylan (Con)
My Lords, before I turn to the substance of this group, I would like to say that I received this morning from the Minister, as I imagine other noble Lords have, a letter setting out certain corrections to statements that he made on Tuesday. I have not had the opportunity to study that, but I hope that there will be an opportunity at a later stage in Committee, if necessary, to come back and question the noble Lord on the points made in that letter. However, I also yesterday received an email from a group calling itself the Association of British Commuters. It referred to the debate that we had on Tuesday concerning what constituted in this context a wholly owned subsidiary of GBR and whether that was consistent with some sort of public/private partnership for the purpose, for example, of developing land. This was not a strange email; it was very coherent, sensible and well written. The thrust of it was that not only did noble Lords on these Benches get it all wrong—if I may say so to my noble friend Lord Lansley; if he has not received the email, I will send it to him—but so did the Minister. I have two questions before I start on this section. First, has the Minister received this email? If not, I am very happy to send it to him. Secondly, does he expect to return to the Committee at the earliest opportunity to make corrective statements? Clearly, if he has not seen the email, he will not be able to answer the second question, because his officials will not have had the chance to advise him, but he is under an obligation to return at the earliest opportunity if he has something to correct, as he has today—I am giving him that opportunity. When I sit down, I will send him the email. If he tells me at the end that he has not received it, I will very happily send it to him, as I will to my noble friend Lord Lansley. I turn to the group of amendments that we have been debating. I shall speak to—I shall not read out the numbers—all the amendments that I have tabled in this group, which are quite a lot. I shall also speak briefly on Amendment 27 on behalf of my noble friend Lord Grayling. These amendments go to the heart of the devolution agenda. None of us is satisfied with what the Bill contains on devolution to local authorities, strategic authorities, regional authorities—whatever they are called. I have been thinking about why none of us is satisfied and what the fundamental flaw of the Bill is in this regard. The answer is that there is no devolution in it. What the Bill does is give those authorities the right to request things from Great British Railways—as I said on Tuesday, I find the phrase “right to request” quite objectionable in a free country, because we all have a right to request things of Ministers as part of our democracy. In other words, they have the right to ask to become customers. If those things are granted to them, they will have those services provided by Great British Railways and they will make payments towards them, if necessary, to justify the carriage of passengers on that particular route. All they have, therefore, is the right to request to become customers. There are no devolved powers in any of this. There is no devolved running of railways, because that would be inconsistent, I suspect, in the Minister’s mind with the single directing brain that is going to be controlling the railways. So there is very little. The amendments that I have tabled fall into two groups. Two of them relate to devolution in general, and the second group relates to TfL in particular. To start with TfL, I need to start by saying that although it is not a current interest, as many noble Lords in the Room will know, I used to be deputy chairman of TfL and indeed worked closely with the Minister during that time. The Mayor of London has made it clear that he wants further devolution of rail services to TfL. In fact, this is a process that started when I was deputy chairman of TfL and the Minister was commissioner, and very successful it has been. Lines that were, in effect, abandoned became busy commuter routes, with very little investment—just through good management, making the stations attractive and having some new trains. It has been a huge success. The London Overground is one of the huge rail successes that this country has achieved in the past few years—all of it run on a concession model, incidentally, involving the private sector or external train companies of one sort or another. The Mayor of London wants more of that—that is understandable. I think Londoners want more of that. The Mayor of London now has a high-powered friend in Downing Street. The Prime Minister has said that power has been hoarded in SW1 for too long. He wants power carried to every postcode in the land—et cetera—and the Government will be redistributing power. This Bill does not redistribute power to anybody in local government. So I would hope that the Minister would have changed his mind in recent weeks and would be extremely sympathetic to these amendments. Amendments 28 to 30 seek to ensure that the Secretary of State remains properly involved in arrangements between GBR and TfL, rather than allowing those relations to be determined solely within GBR. This is the bear in the room again. GBR is going to be so huge. It will make all the decisions. Everybody else is just a taker of decisions by GBR, they are not participating in them. Amendment 159 seeks to protect existing TfL and London Underground arrangements and would ensure that they could not simply be displaced without proper process and consultation. Amendment 301 makes the principle even simpler: where GBR is making a decision affecting TfL, it should inform TfL and allow TfL itself to determine whether the decision is sufficiently significant to require consultation. That seems entirely consistent with the Prime Minister’s philosophy. The same principle lies behind Amendments 23 to 25, 156 and 297 in relation to mayors and local government more widely, to which I now turn. Amendments 23 and 24 would give greater flexibility for railway functions to be exercised locally and for the necessary financial arrangements to flow in either direction. At the moment the Bill allows GBR to collect money from local authorities. Why should it not be the other way round? What if GBR makes a profit on a line? Why should it not pay money to the local authority? Why is everything so one-sided in the Bill? Amendment 25 would provide an independent route to the ORR where agreement cannot be reached. There is no way in the Bill of resolving disagreements. So let us provide one. Let us have an appeal to an independent ORR. It is not that I think the ORR is tremendous, but it is currently the only available appeal body. If the Minister says he is happy to have an appeal but would like a different structure, we would be open to discussing that, but let us have an appeal route so that disagreements can be resolved independently. Amendment 156 would allow mayoral and combined authorities to procure local passenger services through concession agreements, including using private operators where that offers the best solution. Currently they are limited to using GBR to provide the services. What if GBR is no good? I know that GBR is going to be managed beautifully and nothing will ever go wrong in the utopian vision we are looking forward to, but what if it is not actually very good? What if people are constantly on strike? What if the management is sloppy? Why should you not be able to turn to a private train operator to manage your local service? This is not a question of track access or timetables, because they have been agreed, but why would you have to use GBR to provide these services if you are genuinely enjoying devolution? Amendment 297 would require GBR to notify a mayoral combined authority before taking a relevant decision. I accept the point made by my noble friend Lord Lansley that that terminology might be improved, but I am not entering into that issue at the moment. That would allow the authority itself to judge whether the decision is sufficiently significant to require consultation. Why should GBR be the body to decide whether something should be consulted on, when it is the local authority that has the knowledge of how sensitive it might be with the local communities that could benefit from consultation? These amendments test how far the Government intend to follow through on the Prime Minister’s policies. Do they genuinely trust mayors and local authorities to shape local services? Do they support further rail devolution to London where TfL can demonstrate that it would improve services? Will they ensure that GBR becomes a partner in genuine devolution—not simply acquiring local authority customers—rather than just a national body through which decisions are centralised? Given the new Prime Minister’s stated agenda, I hope we will see a different approach from the Minister for the first time. The amendments tabled by the noble Lords, Lord Blunkett and Lord Berkeley, and my noble friends Lord Lansley and Lord Grayling are at the heart of many of the issues that I have raised in this group. They also sit squarely with what the Prime Minister himself advocated when he was Mayor of Greater Manchester—a song that he has continued to sing, on the whole, since he became Prime Minister, about the importance of devolving power, giving local leaders greater control over transport and allowing places to shape growth around their own priorities. It is time for the Minister to step up, get real and get with the swing of where, we are told, Burnham’s Britain is going.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, before we move on, I return briefly to a point raised in Committee on Tuesday on Amendment 146, regarding the long-term rail strategy and its relationship with devolved railway responsibilities. I was less than clear on this issue when we discussed it previously and thought it would be helpful to make a point of order to provide clarity and correct the record. For clarity, the Government consider that Clause 15 is correctly drafted and accurately reflects the devolution settlement. The Secretary of State’s long-term rail strategy will cover Great Britain. It will cover all of England and Wales and will address the railway in Scotland with regard to reserved matters only. Reserved matters include issues such as cross-border services, technical standards and railway safety and security. Scottish Ministers have devolved responsibility for matters such as Scottish passenger services and Scottish funded infrastructure. Accordingly, Clause 15(3) prevents the long-term rail strategy making provisions about functions of the Scottish Ministers, who will cover those matters in their own strategy. I hope that explanation is helpful. The key point is that there is no inconsistency between describing the strategy as Great Britain-wide and providing an appropriate carve-out for devolved Scottish functions. I also reassure noble Lords—
Lord Lansley (Con)
I have a quick question. Why, then, is there not a similar provision saying that the rail strategy may not make provision about the functions of Welsh Ministers?
Lord Hendy of Richmond Hill (Lab)
The answer is that the infrastructure arrangements in Wales are significantly different and Wales does not have its own settlement in that respect. I reassure noble Lords that engagement between the Government and Scottish and Welsh Ministers on both strategies is productive and will continue until their publication. I am grateful to noble Lords who raised this issue, providing an opportunity to place my clarification on the record. In respect of the second point made by the noble Lord, Lord Moylan, about an email from—
Lord Harper (Con)
Before the Minister concludes, may I respond, since I was one of the Members who raised this issue? I thank him for what he has just said and for the very helpful letter that he sent, to which the noble Lord, Lord Moylan, referred. I took the time to study it this morning, since I was the one who raised the issue, and I am grateful to him for making it clear that “strategy” means something slightly different north of the border, in Scotland, because of the role of Scottish Ministers. Again, it is an asymmetrical position with Wales, as my noble friend Lord Lansley, has just highlighted, because in Wales Welsh Ministers do not have the responsibility. That is very helpful, and I am grateful for the Minister’s clarification that the Government do not have to come back with amendments to fix the Bill.
Lord Hendy of Richmond Hill (Lab)
I am grateful to the noble Lord. We thought that we had been saved by the bell, but we were not, so I thought that it was right to put it right. I should say to the noble Lord, Lord Moylan, that to my knowledge I do not have an email from the Association of British Commuters, although I do get several emails a day. If he sends it to me, I shall talk to officials about what it suggests. I think that is the most I can say.
Lord Moylan (Con)
It is on its way in a matter of seconds.
Lord Hendy of Richmond Hill (Lab)
On group 1, of course this matter is of significance to this Government, with a new Prime Minister, and I firmly believe that the Bill already empowers mayors in local areas. I am clear that Great British Railways will not work unless it works for and with mayors and local communities. In answer to the noble Baroness, Lady Pidgeon, who quoted me, I stand by what is said. This is absolutely not a tick-box exercise. I turn to Amendment 22A in the name of my noble friend Lord Blunkett, to which the noble Baroness, Lady Pidgeon, has kindly spoken today. I absolutely agree with him and with the noble Baroness that the partnership approach that the Bill sets out must be effective. GBR must engage with partnership offers seriously, and the bar for GBR to reject a partnership must be exceptionally high. As we are aligned on the intent behind the amendment, which she described as the principal amendment in this group as it covers all circumstances, I commit to taking it away and I shall see what can be done after this debate. I turn to Amendments 147 and 156. The Government absolutely support further rail devolution where it is in the interests of passengers and the wider rail network. That is why the Bill already provides a route for passenger rail services to be devolved through exemption from designation by the Secretary of State in Clause 28. Where services are devolved, mayors already have flexibility to choose their approach to securing passenger services and may secure them via a concession contract, including to the private sector, if they so wish. The Bill does not change that. TFL, as the noble Lord, Lord Moylan, describes, operates on precisely this basis. There is therefore no need to duplicate the existing devolution provision in the Bill, which already achieves that intent in full. On Amendments 23 and 24, Clause 5 is already intended to support local commissioning arrangements: it enables mayors to contribute funding where they wish to secure services or improvements that reflect local priorities and go beyond the national railway offer. This gives local leaders a mechanism to invest in additional rail outcomes for their area where they choose to do so, providing the local input that we know is so important for enhancing our communities. The details of these arrangements, including revenue-sharing options, will be agreed separately from legislation via collaborative partnerships between GBR and mayors. Work on developing this model has already begun, using Greater Manchester as a pathfinder—I am going to meet the new mayor of Greater Manchester tomorrow. The Government absolutely support greater local influence over rail services, but allowing mayors to run rail services is a financially significant decision, with safety and public interest impacts; that is why it is right that the current process in the Bill for devolving services to local leaders remains the route that is used for this. That route is well understood, familiar to industry and proven effective. Allowing mayors to run GBR services outside of the usual process is not necessary and does not better serve local communities. I turn to Amendments 26, 64, 304 and 333. The Bill is focused on mayoral strategic authorities to reflect their growth across England and the role that mayors can play to convene local partners and tackle regional challenges. Mayors have the most far-reaching and flexible powers; therefore, this level of authority is of the appropriate scale and capability to integrate rail with wider public transport, enabling them to engage effectively with Great British Railways. Furthermore, as outlined in the Cabinet statement Rewiring the State , published in July, the Government consider that mayors who are directly accountable to the residents who elect them can provide the best governance for their communities. As a result, the suite of powers available to areas with mayors will be commensurately greater, recognising the role that they play as leaders in their regions. However, this is not to say that other levels of local government will be excluded from engagement with Great British Railways, and I take the point that it is important that no local authority is left out, as indeed the Prime Minister said a few days ago. The plan is for all tiers of local government to benefit from local GBR business units, and some existing authorities have collaborated well with the existing structure, including Devon, with several new stations, and, recently, Cornwall, with the Mid Cornwall Metro. Our approach does not intend to exclude anyone from working with the railway, but we think it is sensible to use mayors as a focal point for powers, responsibilities and representation in their local areas. That said, I am happy to see if there is anything we can do outside the Bill to reassure foundation authorities that their views will be properly considered, and I will reflect on that further.
Lord Lansley (Con)
I thank the Minister for his response to my amendments. To avoid us further returning to this issue, I should say that there are other amendments to exactly the same purpose that I did not notice had not been grouped together, in Clauses 16 and 83 and elsewhere in the Bill, so I hope we will treat this as the one debate about that issue. The route ahead, if I may say so to the Minister, is a very straightforward one: relevant local government bodies—for the purpose of information sharing, taking advice and co-ordinating with transport strategies—should be England wide, and therefore it should be all strategic authorities. If the Minister and the Government, understandably, want to go further and have a category of strategic authorities with mayors which have the ability to go further in terms of working with GBR and taking responsibilities, the route would be to put in something for that purpose in relation to established mayoral strategic authorities, which clearly have the financial basis on which to do that. Distinguishing between those two would make this work much more effectively.
Lord Hendy of Richmond Hill (Lab)
I am grateful to the noble Lord. I am particularly grateful for his suggestion that we debate this only once. I have listened carefully to what he has just said and I will reflect on it, as I said I would do on the rest of the subject. I am grateful to him for that, and indeed the Hansard record is useful in being able to cross-reference it further to this Committee session. I turn to the proposals on Transport for London. Amendment 27 seeks to provide all mayoral authorities with the same powers as TfL. Of course, the Government support rail devolution where it can deliver better outcomes for passengers and local communities, but those arrangements should reflect the circumstances, capabilities and aspirations of individual areas rather than applying a single model everywhere. The TfL model has a distinct legislative and governance framework developed over many years, and it would not be appropriate to automatically confer all existing or future TfL powers on every mayoral combined authority. The other point worth noting is that the geography of London includes several complete railway services, unlike much of the geography of the rest of the combined authorities in England. The Government have already published guidance on applications for rail devolution and, as I have already said, the Bill includes a route to devolved rail services for those seeking that in Clause 28. Therefore, should mayoral authorities want to pursue full devolution of certain services, as TfL has, they are welcome to use those established routes to seek it. Devolution arrangements should be considered on their merits, taking account of local circumstances and the outcome sought for passengers. A one-size-fits-all approach will not serve all local communities. On Amendments 28 to 30, Clause 6 of the Bill requires GBR and TfL to co-operate on railway matters, including co-ordinating passenger services and sharing relevant information to help to integrate rail with the wider London network. As the directing mind for the railway, GBR will be responsible for those operational matters and how they will be discharged when collaborating with TfL. I do not believe that expanding the Secretary of State’s role further would reflect that clear division of responsibilities, but I can reassure the noble Lord that, via amendments that the Government brought in on Report in the Commons, the Secretary of State is still enabled to enter into arrangements with TfL to support the future devolution of rail services where that is needed. The Government believe that this approach is sufficient to support TfL to integrate and co-operate with the wider rail network. On Amendment 159, I reassure the noble Lord that the Government are supportive of the success TfL has made of rail devolution, and existing devolved arrangements will continue. To that end, existing exemption orders in relation to TfL concession services do not have an expiry date. The Bill also contains safeguards governing access decisions, including duties on GBR, a requirement to have regard to the Mayor of London’s transport strategy, a requirement for GBR and TfL to co-operate in relation to all services, and an independent route of appeal to the ORR. Likewise, Amendment 25 seeks to enable mayors to appeal access decisions if they affect services in their area. Clauses 83 to 86 already allow GBR to request advice from mayoral authorities about services in their area, require it to consult them if a decision will significantly affect their area and, if a decision will affect the local area, GBR will work with local partners weighing up trade-offs between local and national network priorities. This enables issues to be resolved through collaboration rather than requiring relevant local government bodies to challenge GBR through the access appeals regime. Despite this, all local authorities are able to appeal an access decision they are aggrieved by, under provisions already in the Bill. On Amendments 297 to 301, Clause 83 already requires GBR to consult mayoral authorities where a relevant decision would significantly affect their local area, including the interests of the local economy or of people living in, working in or visiting the area. The amendments would therefore add little practical benefit beyond further bureaucracy, slowing down decision-making, while mayors would have to review hundreds of decisions, often irrelevant to them, before any progress can be made. On Amendments 298 to 301, I reassure my noble friend that the Bill is already clear, through Clause 83, that GBR will have to consult mayoral authorities on its access and charging decisions where these relate to a GBR railway passenger service in the area and would significantly affect the local region. Alongside these legislative commitments, it is the Government’s clear intention for GBR to work in partnership with mayoral authorities. I am determined that GBR will absolutely be a proactive partner of those authorities, maximising the benefits that the Bill can bring to local areas. As a result, I hope noble Lords are reassured that the Government share their ambitions on local devolution and I ask the noble Baroness to withdraw her amendment.
Lord Berkeley (Lab)
My Lords, before the Minister sits down, I am very grateful for his response to my amendments, but on the relationships between local authorities and central government, we already have an example in the south-west—and, I think, in south Wales—where the train operators and the local authorities have come together and developed a new wifi system so that you can get wifi on the trains, which is quite important these days. They installed it in one train and it worked beautifully, and many of us have tried it. They asked the Department for Transport whether they, as the regional authority, could take over the procurement of improved wifi on all the trains on the GWR network and have it done more quickly. This was refused by the Department for Transport, which said that only it is capable of doing a procurement exercise on something as important as wifi on trains. Now, I hope that is just a one-off—my noble friend is aware of it—and that in the new GBR set-up, there will be more flexibility as to who does what.
Lord Hendy of Richmond Hill (Lab)
In quick answer to my noble friend, the only reason it should be procured centrally is because improved wifi is needed on every railway service in Britain. Therefore, the department is determined to deliver it on all those services, and fragmenting the procurement would lead only to increased cost and probably significant delay elsewhere. I have absolutely no intention of getting in the way of wifi for the south-west, I would just like it to be delivered in other parts of Britain at the same time.
Lord Moylan (Con)
My Lords, I think that illustrates a point. The Minister talks of devolution, but everything is flowing one way, so I will come back to this point. It arose in relation to Scotland—and, I think, also Wales—on Tuesday. GBR will be obliged to consult with local authorities on matters of significance. Significant is the word. But GBR will decide what is significant. Amendments I tabled that would allow the local area, or, in the case of Scotland, Scottish Ministers, to decide what is significant for them were brushed aside on the grounds that it would be far too difficult, they would have to review hundreds of decisions and could not possibly do that. Of course, GBR has to review hundreds of decisions to decide whether they are significant. In local authority terms, one picks out very quickly what the significant decisions are because one has the local knowledge of what will cause a terrible fuss, which GBR does not have. Does the Minister see that the Bill cannot survive claiming a devolution mandate on the basis of this mentality, which keeps coming back? The Minister wants to be a proactive partner but, given GBR, I find that a rather terrifying thing, because it suggests that the other partner will be managed the whole time by GBR; then, at the end of the process, it will think it had a successful partnership. It is the wrong mentality, and it has to change.
Lord Hendy of Richmond Hill (Lab)
I think the noble Lord is in a different place in his imagination of this. These proposals will generally originate with GBR. Its structure, which I described on the first day in Committee, will be organised locally and regionally and so it will know how those proposals are going to affect local communities. There will be timetable changes, station improvements and infrastructure improvements. It is much easier for GBR to identify those in relation to the local and combined authorities that it deals with than it would be for them to sift through what, sadly in many cases, is railwayese in describing what is going on. I do not agree with the noble Lord. I believe this will work and that it will be a genuine partnership with those authorities.
Baroness Pidgeon (LD)
I was really pleased to hear the Minister say how devolution is of such importance to the Government. We have had an interesting debate. I am glad he has committed to take this away and see what can be done with the proposal in Amendment 22A and reflect on the point about strategic authorities; I think they are both really relevant and will strengthen the Bill. On that basis, I agree to withdraw Amendment 22A.
Amendment 22A withdrawn.
Amendments 23 to 26 not moved.
Clause 5 agreed.
Amendment 27 not moved.
Clause 6: Co-operation with Transport for London
Amendments 28 to 30 not moved.
Clause 6 agreed.
Clause 7: Directions by Secretary of State
Amendment 31 not moved.
Amendment 32
Moved by
32: Clause 7, page 5, line 29, leave out from “section” to “in” in line 30 Member’s explanatory statement This amendment, and the amendment in the name of Lord Lansley to Clause 7, page 5, line 36, would remove the exclusion of issues including access to infrastructure, the infrastructure capacity plan, the working timetable, the charging scheme and performance scheme from the requirement to consult the Scottish or Welsh Ministers insofar as they have delegated their functions to GBR.
Lord Lansley (Con)
My Lords, there are two sets of issues in this group. Mine is terribly simple and it is by way of a question to the Minister, just to be clear. I do not understand why, in Clause 7, at the point the Secretary of State may give directions to Great British Railways about the activities in Scotland and Wales, in each case the requirement to obtain consent from Scottish and Welsh Ministers is disapplied if those directions relate to what is in Chapter 1 of Part 3, which is access, charging and timetable capacity. Timetabling and so on seem, on the face of it, to be tricky things where if these are directions to GBR which impact in Scotland and Wales, they should certainly require the consent of the Scottish Ministers—for reasons that we touched on earlier, a different requirement may rest in relation to Welsh Ministers. But I am surprised to see that the implication of Clause 7 is that the Secretary of State can issue directions to GBR impacting on, for example, the timetable in Scotland but does not require the consent of Scottish Ministers. Amendments 32 and 33 in my name are to probe why that seems to be the case. I beg to move Amendment 32.
Lord Harper (Con)
My Lords, I will speak briefly to Amendments 35 and 36, which are in the names of my noble friends Lord Grayling and Lord Moylan. Respectively, they deal with amending Clause 7, on the power to give directions, and Clause 9, on the power to give guidance to GBR. They specifically refer to some extra duties that would fall on Ministers if they were giving specific directions around fares and the fare structure. They set out that if Ministers are giving directions or guidance “about the level or structure of fares” they would have to set out “the assumptions, criteria and objectives used … so decisions can be assessed against passenger growth and affordability”. I support both these amendments, for the following reasons. One of the important decisions that Ministers have to take about the railways is to balance the cost of running them and how that cost is split between the fare payer—and of course not just that person who actually uses the railways but, when it comes to track access charges, the other users of the railway network—and the taxpayer. It is a very important decision, given that most people in the country either never use the railways or do not use them very often. A relatively small number of people use railways frequently, and it is important to get the balance of costs split correctly. Ministers also have to make an important decision in their negotiations with the Treasury around the cost that falls on the department—the taxpayer subsidy piece. I think Ministers signed up to some quite challenging targets in the last spending review to reduce the taxpayer subsidy. There are two ways you can do that: either you cut services significantly or you have to grow passenger numbers. If Ministers are making directions or guidance about fares, it is important to understand which model they are using. What are their assumptions and what is the evidence base for the fare structure? What will that do to passenger numbers and, ultimately, to revenue? Then there is any knock-on impact on costs, what it effectively does to the GBR profit and loss account, and therefore the balance of costs that lands on fare payers versus the taxpayer. Having that level of transparency is helpful for the fare-paying public and for taxpayers. It is also helpful for Ministers, because it would force a level of rigour in the modelling that is undertaken and, importantly, the assumptions that are made about how passenger numbers respond to fares. It will also enable us to have a grown-up conversation about how we grow passenger numbers, given some of the innovations and service changes that I suspect will be required, particularly in offering better services for leisure travellers, because that is where there is the potential for significant growth in passenger numbers and revenue and therefore for reducing the overall cost of the railway. These two amendments have a very sensible underpinning. They are not just helpful for taxpayers and fare payers; in the end, they will be helpful for the department, because they would force, as I said, a level of rigour and transparency in its financial modelling. They should therefore also commend themselves to our friends in the Treasury, who I think like rigour and robustness in financial modelling, because this just gets it all above board. Everyone has to be clear about their assumptions. The amendments would also allow us to challenge the assumptions and enable us to have a much better conversation publicly about how we can drive up the usage of our railways and the flexibilities that we will require to do so. That will then, perhaps, provoke some helpful conversations with the trade unions and about the flexibilities that will be necessary to making sure that we have a financially sustainable railway for the long term, which is, in effect, what we need to guarantee secure jobs on the railway. That is the only way in which we are going to do this in the long term, because I do not think that taxpayers are going to continue wanting to subsidise the railway to the level they do now for the foreseeable future, given that many of them do not use railways frequently. I commend these two amendments and look forward to the Minister’s response.
Baroness Pidgeon (LD)
My Lords, these amendments cover directions and guidance from the Secretary of State. They push for greater transparency around those, which is something that we really support. Information that has supported key decisions and directions should be placed in the public domain. It is really important that Great British Railways develops an open culture right from the start and that it is clear where and how decisions have been made and on the basis of what evidence. The amendments in the name of the noble Lord, Lord Grayling, focus in particular on any Secretary of State directions relating to the level and structure of fares, which are, I think, of great interest to everyone. Clarity on these points from the Minister would be helpful as we continue our scrutiny of the Bill.
Lord Moylan (Con)
My Lords, I shall speak to Amendment 37 in my name, which is a probing amendment. It would limit the power of the Scottish Ministers to issue directions to GBR to circumstances where a KPI has been missed or performance has not been up to snuff. I do not advance that because I think it is an appropriate thing to put in the Bill; it is a question of probing when the Government think the powers should be used, because it is not clear. We are meant to have a single directing mind—GBR is meant to be the single directing mind—but, as I said on Tuesday, we have several other directing minds here, too. One of them is the Secretary of State, who can issue directions—after all, directions are exactly what a directing mind would be expected to produce—but, now, we also have the Scottish Ministers issuing directions, and it is not absolutely clear that they cannot overturn the directions of the Secretary of State. I want to know what the powers can be used for, how clashes and contradictions can be avoided, and how all this is coherent with the Minister’s claim that he is creating a single directing mind in the shape of Great British Railways. I wish to comment briefly on the other amendments in this group. My noble friend Lord Grayling has tabled Amendments 34 to 36, to which I have added my name. It is an important constitutional principle that directions issued by the Secretary of State are not only published but laid before Parliament. The Minister will say, “You can’t possibly expect MPs to read these things. They haven’t got time. They might be full of railwayese. What is the possible advantage of putting them in front of MPs?”, but I think that MPs and Peers would value having these important directions put before them so that the Secretary of State can be held accountable for his or her actions in the management of the railways. My noble friend Lord Lansley’s Amendments 32 and 33 are also entirely reasonable. Where relevant functions have been delegated and the Secretary of State proposes to give GBR directions affecting infrastructure, capacity, timetables, charging or performance in Scotland or Wales, surely it is right that the Scottish or Welsh Ministers are consulted.
Lord Hendy of Richmond Hill (Lab)
My Lords, I am grateful to noble Lords for their contributions to this group. On Amendments 32 and 33, tabled by the noble Lord, Lord Lansley, access to railway infrastructure is a reserved matter. It is important that access and timetabling decisions make sense across the entire rail network; therefore, there must be one central decision-maker, to avoid fragmented and disparate decision-making, which increases delays, cancellations and disruption. However, GBR must consult Scottish and Welsh Ministers before issuing, revising or replacing its access and use policy. It must consult them on other decisions if those decisions may affect their interests, and must take into account their transport plans when making access decisions. There are therefore already adequate safeguards for devolved Governments in relation to the access regime.
Scottish Ministers can also issue directions to GBR as to the exercise of its statutory functions in Scotland, so this also provides protection. The MoUs previously referred to will set out ways of working to ensure that the respective direction powers are not used in opposing or disjointed ways. As I have said, Scottish and Welsh Ministers are content with the drafting of the directions consent clause.
Amendment 37 from the noble Lord, Lord Moylan, goes in the opposite direction, seeking to limit the circumstances in which Scottish Ministers may issue guidance to GBR to situations in which GBR is failing to meet a key performance indicator. I do not consider this amendment necessary, as guidance is intended to be a flexible tool. It helps Scottish Ministers communicate priorities and provide clarity on their expectations for Scottish railway activities, which as local leaders and funders it is absolutely their right to do. Neither guidance nor directions are intended to operate solely as a mechanism for addressing performance failures.
The Bill already requires, under Clause 23, the previously referred to memorandum of understanding between the Secretary of State and Scottish Ministers, which ensures that the two Ministers work together when issuing guidance to ensure clarity and sensible strategic decision-making for GBR. Ultimately, GBR is not effective if it cannot deliver on the goals of the Government, devolved Ministers and local leaders. Absolutely, it will be empowered to be in charge of the railway, but it must run the railway by trying to achieve the priorities of the respective Governments of the day. Guidance should help it do that effectively. We therefore consider that the Bill strikes the right balance in enabling Scottish Ministers to provide strategic guidance, while respecting the operational independence of GBR.
On Amendment 34, the Secretary of State is already required under the Bill to publish any direction issued to GBR, including when these are amended or revoked. This means that any issued direction will be made publicly available, reflecting the Government’s commitment to ensuring that these powers are used transparently. For the record, I absolutely agree that GBR must be empowered to operate at arm’s length from the Government and trusted to take charge of the railway. If GBR is micromanaged by politicians—as the railway is today, by necessity—it will not be effective. A truly empowered GBR is absolutely the Government’s intention, and directions should never become a routine step.
Although we expect that this power will rarely be used, it is necessary in instances of serious operational failure or unforeseen crisis, where it would be responsible for the democratically elected Secretary of State to take action in the form of a direction. For example, the Oil and Gas Authority has received only one ministerial direction in its 10-year history. I do not recall receiving any in the nine years that I chaired Network Rail—and I would also reflect on the fact that the last Government’s reform Bill, which was published for parliamentary scrutiny, had exactly the same power in it, expressed in exactly the same words.
In those cases, or in an emergency, the requirement to lay a direction before Parliament could delay the ability of the Government to act swiftly, especially if a crisis occurs during Prorogation or a long recess. Nevertheless, as I have explained already, all directions will be published transparently, and I have no doubt that parliamentarians will be well able to hold the Government to account for them in the usual way, via questions and debates, and through the Transport Select Committee and other established methods for scrutiny.
The noble Lord, Lord Harper, spoke to Amendments 35 and 36 on fares, so I confirm that it is not the Government’s intention to set limits or guardrails on fares using the directions and guidance powers. Instead, the public service contract between GBR and the Secretary of State is the appropriate legal and practical mechanism to set out fares parameters for GBR. The public service contract will be published, as will GBR’s business plan, where it will set out its plans for fare setting. Directions are, as I said, a tool to be used only in exceptional circumstances where urgent correction is required, and therefore fare setting would not be an appropriate use of those powers.
I reassure the noble Lord, however, that the Government will absolutely publish the objectives, criteria and assessments used to set parameters for fares and that this will be published within or alongside the public services contract. I hope the noble Lord feels reassured enough to withdraw his amendment.
Lord Moylan (Con)
On my Amendment 37, if the Minister insists on responding solely in the literal sense to explicitly probing amendments—seeking in this case to work out how a conflict in directions between Scottish Ministers and the Secretary of State, for example, might be addressed—all he does is encourage further amendments to be tabled to the Bill to bring the subject back so that it can be debated. One has to keep finding wording that will make that happen. I genuinely would like to know how he sees these multiple direct laws, producing directions, operating together. Do they collaborate, what happens in the case of contradictions, and so forth? These are questions to which Parliament is entitled to an answer.
Lord Hendy of Richmond Hill (Lab)
I believe I did answer the noble Lord: the memoranda of understanding between Scottish Ministers and this Government, and between Welsh Ministers and this Government, set out the processes by which these things will be co-ordinated. Were there to be any real difficulty in the circumstances he is describing, we would not have been able to get as far as we did in drafting the MoUs, which we have done, and in the agreement of Scottish and Welsh Ministers to the provisions of it.
Lord Lansley (Con)
We are grateful to the Minister for his explanations—for my part, on Amendments 32 and 33. The Minister explained why the Bill says that, for reason of reserve powers, the consent of Scottish or Welsh Ministers is not required. This is an opportunity to make it clear that, if we were in the exceptional situation of the Secretary of State issuing directions that impacted in Scotland or Wales, it might be reasonable that the Secretary of State would consult Scottish or Welsh Ministers. I did not hear the Minister say that such a consultation would not take place so, on that basis, I am happy to withdraw Amendment 32.
Amendment 32 withdrawn.
Amendments 33 to 35 not moved.
Clause 7 agreed.
Clause 8 agreed.
Clause 9: Guidance by Secretary of State
Amendment 36 not moved.
Clause 9 agreed.
Clause 10: Guidance by Scottish Ministers
Amendment 37 not moved.
Clause 10 agreed.
Clause 11 agreed.
Schedule 1: Licensing of Great British Railways
Amendment 38
Moved by
38: Schedule 1, page 64, line 10, leave out from “may,” to “the” in line 11 and insert “at the recommendation of the Office of Rail and Road in relation to matters related to safety and standards, and after consultation with” Member’s explanatory statement This amendment would require the Secretary of State to obtain a formal recommendation from the Office of Rail and Road in relation to safety and standards before granting Great British Railways’ licence, and to consult the Passengers’ Council.
Lord Evans of Guisborough (Con)
My Lords, in moving Amendment 38 I will speak briefly to my Amendments 39, 41, 42 and 44 in this group. This group concerns Schedule 1, on the granting of the licence to Great British Railways, and the possible granting of licences to persons other than Great British Railways, to operate railway assets. The purpose of my amendments is to strengthen the roles of the Office of Rail and Road and the Passengers’ Council, which are mentioned in this list of procedures but are regarded largely as consultees rather than having any larger role. They are supposed to be, and have been sold to us by the Government as, bodies which have significant powers to represent passengers and to work to assist with the regulation of the licence. I am afraid that the legislation amounts to an invitation to consult rather than anything stronger. Amendment 38 seeks to ensure that the Secretary of State obtains a formal recommendation rather than just a consultation from the Office of Rail and Road, in relation particularly to safety and standards, before granting Great British Railways’ licence. It would also ensure that there is consultation with the Passengers’ Council as part of that process. I will speak briefly to the other amendments. Amendment 39 addresses the same part of the process and would require an agreement rather than a consultation. Again, “consultation” is a rather weak term in legal circles; “agreement” would require much greater input from the ORR and the Passengers’ Council. It would require the Minister to listen to and work with them to a greater extent than just with a consultation. Amendments 41, 42 and 44 concern the “Grant of licence to persons other than Great British Railways”. They, too, seek to replace the consultation with a process of agreement and to strengthen input from the Passengers’ Council. They concern mainly new Section 8(4) of the 1993 Act, to be introduced by paragraph 3 of Schedule 1 to the Bill, and the two earlier amendments are consequential on that change in subsection (4). I urge the Committee to support these amendments and the other amendments in the names of my noble friends. I beg to move.
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
My Lords, I should advise the Committee that if this amendment is agreed to, I will be unable to call Amendments 39 or 40 for reasons of pre-emption.
Lord Lansley (Con)
My Lords, I have two amendments in this group. The purpose of Amendments 43 and 45 is to explore the circumstances in which the Secretary of State or the Office of Rail and Road grants a licence to a person other than Great British Railways to operate railway assets in Scotland or Wales. As the Bill is structured, under those circumstances there would be a requirement to undertake consultation with the Passengers’ Council if the licence is a passenger licence or a station licence. There is no other requirement for consultation. Let us think of a practical example. I know that licensing is not about operating the railway; it gives one the licence to operate but it does not bestow any ownership over these things. Core Valley Lines in south Wales is a significant set of 57 stations. It is not owned by Network Rail or operated by Great British Railways. Presumably, it is therefore the subject of a licence. If such a licence were to be issued, or changed, in Wales, it seems to me inherent that one would want the granting of that licence to be subject to a consultation requirement with Welsh Ministers. At the moment, there is nothing in the legislation that would require that to happen. Amendment 45 would introduce such a requirement for consultation before those assets in Scotland or Wales were the subject of the granting of a licence to someone other than GBR.
Lord Harper (Con)
My Lords, I shall speak briefly to Amendment 46 in the names of my noble friends Lord Grayling and Lord Moylan, which I think is a probing amendment. It would remove proposed new Section 8(6) in Schedule 1, which says: “The Office of Rail and Road may not grant a licence … unless the Secretary of State consents to the grant, or … the licence is granted in accordance with a general authority”. I want to probe the circumstances in which the Minister envisages the Secretary of State to have, in effect, a block. My preference would be that the Office of Rail and Road can issue those licences. The new section envisages a general authority having been given by the Secretary of State to the Office of Rail and Road to issue those licences. The only circumstance in which the Secretary of State is required to grant something is if the ORR is trying to do something outside that general authority. Given that it is a general authority, that rather suggests it will give the Office of Rail and Road some broad powers to issue licences, but what are the circumstances in which the Minister envisages that the general authority that the Office of Rail and Road has would not empower it to issue a licence, and therefore when is the Secretary of State’s veto going to be effective? The whole point, I think, is that we are trying to have GBR operating, as I think the Minister said in his answer to the previous group, without excessive micromanagement by Ministers. Again, if the Office of Rail and Road has been given a general authority to grant operating licences, it would seem to me not helpful if it had to be second-guessed a lot by the Secretary of State. What are the circumstances when the general authority would not run and when the Secretary of State would have to, in effect, give permission? If it turns out that the general authority is very broad and there are not really any circumstances, that power may be otiose and therefore really should not be in the Bill. I am just trying to understand the limits on that general authority that is given to the Office of Rail and Road, and I would be grateful if the Minister could set that out when he responds to this group.
Baroness Pidgeon (LD)
My Lords, the amendments in this group are about strengthening the requirements for Great British Railways before it is able to grant a licence and to strengthen the Passengers’ Council in areas such as safety and standards. They would also strengthen the role of the Office of Rail and Road, which is something I believe is on this Government’s agenda. The concerns of the noble Lord, Lord Evans, about consultation-only powers, rather than real teeth, for the Passengers’ Council, and the query from the noble Lord, Lord Lansley, about ensuring that Scottish and Welsh Ministers are consulted on a licence, are both very relevant, and I look forward to the Minister’s clarification on these issues.
Lord Reay (Con)
My Lords, I thank my noble friends Lord Evans of Guisborough, Lord Lansley and Lord Grayling for their amendments in this group. I will address Amendments 41, 42 and 44 first. The Government have repeatedly emphasised the importance of independent regulation under the new system. They tell us that the ORR will remain an independent and expert regulator, while describing the new Passengers’ Council as a powerful new voice for passengers. These amendments ask how much power these bodies will actually have. Under the Bill, the Secretary of State may modify GBR’s licence after consulting the ORR and, where the changes concern its functions, the Passengers’ Council. However, consultation is not agreement. The licence is fundamental to how GBR operates and to the conditions against which the ORR will ultimately regulate and enforce its performance. If the ORR is to be the robust and independent regulator that the Government say it will be, why can the Secretary of State alter that licence without its agreement? The same question applies to the Passengers’ Council. The Government describe it as a powerful new voice, but the Bill requires only consultation. There is no express requirement in this provision for the Secretary of State to have regard to the council’s consultation response. The Secretary of State must subsequently consider representations or objections made during the formal notice period, but that is not the same as giving the passenger watchdog a meaningful role in agreeing changes that may directly affect passenger interests. I turn to Amendment 46, tabled by my noble friend Lord Grayling. Under the Bill, the ORR may grant a licence to a non-GBR operator only if the Secretary of State consents or if the licence falls within a general authority previously given by the Secretary of State. As my noble friend Lord Harper asks, why is that ministerial veto necessary? If the ORR—the independent regulator that the Government repeatedly tell us will remain robust and expert—has considered an application and concluded that a non-GBR operator satisfies the relevant requirements, why should the Secretary of State have the final trump card? If the Government genuinely want an independent regulator and less day-to-day political interference in the operation of the railway, surely licensing decisions of this kind should rest with the regulator. I would therefore be grateful if the Minister could explain in what circumstances the Government envisage the Secretary of State refusing consent to a licence that the ORR considers should be granted and why that power remains necessary. Amendment 45, tabled by my noble friend Lord Lansley, seems entirely reasonable. Where a GBR licence concerns railway assets located in Scotland or Wales, I see no good reason why the relevant Scottish or Welsh Ministers should not be consulted.
Lord Hendy of Richmond Hill (Lab)
My Lords, I am grateful to hear from noble Lords on this group, and it is a special pleasure to hear from the noble Lord, Lord Reay. Amendments 38 and 39 would undermine one of the fundamental principles that the Bill seeks to establish. The Secretary of State will set the overall strategic direction for GBR, and the Bill provides her with the sole ability to issue GBR’s licence. This reflects that it is the Secretary of State, not the ORR or the passenger watchdog, who is ultimately accountable for GBR both to Parliament and to the wider public. This aligns with the wider programme of regulatory reform that this Government are undertaking, where Ministers set the strategic direction and regulators are empowered to enforce against that. Regulators should not be making key strategic or political decisions for fundamentally important sectors. However, regardless of who issues the licence, the ORR will enforce GBR’s compliance with it exactly as it does today. It has strong enforcement powers to ensure that GBR does not contravene the terms of its licence, including mandatory, legally binding directions requiring GBR to change its behaviour. It would not be appropriate to provide the ORR or the passenger watchdog with the power to veto the licence. The Secretary of State will, however, consult both those bodies and consider their views before issuing the licence. On Amendment 38 specifically, I reassure noble Lords that safety remains fundamental to the operation of our railways and that the Bill does not weaken or alter the existing railway safety regime, nor the ORR’s role within it. No licence will be issued that is not fully compliant with safety regulations and safety law. Furthermore, we expect that GBR will have a licence condition to support the continuity of the current industry safety and standards framework to preserve our world-leading culture of rail safety. The Secretary of State will consult the ORR on the licence precisely to ensure that these kinds of conditions are fit for purpose. I turn to Amendments 41 to 46. Currently, the Secretary of State is the ultimate licensing authority for the railways under the Railways Act 1993, and the current Bill does not change that. As it does now, the ORR will continue to issue all non-GBR licences under the general authority given to it by the Secretary of State. Not only would removing the Secretary of State from the process or requiring the ORR to consent undermine continuity and stability for the industry but it would be superfluous in practice, as the ORR already issues these licences on behalf of the Secretary of State. Let me also clarify that railway licensing is, and will remain, a reserved matter. Scottish and Welsh Ministers are not licensing authorities under the current system, and the Bill will not change this. However, that does not mean that Scottish and Welsh Ministers are prevented from making their views known. The ORR is required under the Bill to provide notice prior to any licence being issued and to consider any representations, including any by Scottish and Welsh Ministers. We therefore do not consider it necessary to create an additional consultation requirement specifically for Scottish and Welsh Ministers. I also note that the Government have spent long and productive hours discussing the provisions of the Bill with Scottish and Welsh Ministers and, in both cases, they are content with the licensing provisions as drafted. In fact, Scotland has already published its legislative consent Motion. I therefore ask noble Lords not to press their amendments.
Lord Lansley (Con)
Can I ask the Minister why, if it is not necessary to create a statutory consultation requirement, it is necessary to have a consultation requirement in relation to the Passengers’ Council? Can it not respond to the consultation on a licence in the same way as Scottish or Welsh Ministers could?
Lord Hendy of Richmond Hill (Lab)
I am sure it could, but it is desirable to mention the Passengers’ Council, since we are setting it up and it is an important body. The distinction I am seeking to draw is leaving the Passengers’ Council as a consultee, rather than requiring its permission.
Lord Harper (Con)
Can I press the Minister on the question I asked? As he said, the Secretary of State is the holder of the licensing power, but the Office of Rail and Road is given a general authority to issue licences for non-GBR operators, but I still do not understand what the purpose is, in new Section 8(6)(a) inserted by Schedule 1, of the requirement for the Secretary of State to consent to the grant. In what circumstances would the Office of Rail and Road be operating outside its general authority? It would be helpful if the Minister could give an example of where that Secretary of State veto would kick in, because I do not quite understand the point of it.
Lord Hendy of Richmond Hill (Lab)
I think we are leaving things as they are, but if the noble Lord would like a specific example, I will have to write to him because I do not have such an example immediately in my mind.
Lord Harper (Con)
That would be very helpful.
Lord Hendy of Richmond Hill (Lab)
The broad principle is that we are leaving licensing in the position it is in at the moment.
Lord Evans of Guisborough (Con)
My Lords, I thank noble Lords for their contributions to this debate, which have been very helpful and largely supportive across parties. I am grateful to the Minister for his response. He has dealt with questions from some of my noble friends to their satisfaction. I am not sure he has dealt with the issue which I originally raised to my satisfaction, but for now I am happy to withdraw Amendment 38.
Amendment 38 withdrawn.
Amendment 39 not moved.
Amendment 40
Moved by
40: Schedule 1, page 64, line 11, after “Road” insert “, the London Transport Users’ Committee,” Member's explanatory statement This amendment, and others in the name of Baroness Pidgeon, seek to include the London Transport Users’ Committee in consultation requirements.
Baroness Pidgeon (LD)
My Lords, I am delighted to move Amendment 40 and speak to the other amendments in this group, which are about London TravelWatch. For those of your Lordships who do not know—although, as we have joked before, I feel this Room is a reunion of those of us who were involved in London government—London TravelWatch, officially known as the London Transport Users’ Committee, is the independent transport watchdog set up under statute speaking up for the travelling public in and around London. It was established in its current form under the Greater London Authority Act 1999, although its roots go back to the Transport Act 1947 and beyond. Its remit covers national rail issues within the London railway area. Those boundaries are defined under the Railways Act 2005 and go beyond what most of us think of as London. It also covers transport services under the responsibility of Transport for London, such as buses and the Tube, and Eurostar services, which is a service not just for those in London.
London TravelWatch shares a very similar organisational background with its sister national watchdog, Transport Focus, which is known officially as the Passengers’ Council. In simple terms, under the Railways Act 2005, the functions of these former regional rail passenger councils passed to a national RPC—now the Passengers’ Council—apart from those in London, which passed to what is now London TravelWatch. On a day-to-day basis, these two watchdogs work closely together. They share resources to support each other’s activities, whether on issues of rail policy and delivery or regarding public appeals against railway bodies where these are passed on to the watchdog by the Rail Ombudsman. The chair of London TravelWatch also sits on the board of Transport Focus, as it is now, so there is that clear link.
However, there are three good reasons why the Bill should be amended to ensure that London TravelWatch is made a statutory consultee alongside the new Passengers’ Council. First, approximately 70% of all rail journeys in Great Britain start, end or go through London, so, as I have already explained, the geographical remit defined as the “London railway area” covers around 400 stations—a significant proportion of the circa 2,500 stations that we have across the whole country—and stretches, going north to south, from Bedford to Gatwick Airport, and, going west to east, from Reading to Stansted Airport. So national rail policies or decisions have a significant potential to affect passengers in that wider London area.
Secondly, London TravelWatch is accountable to and funded by the London Assembly, rather than the Department for Transport, which sponsors and funds the Passengers’ Council as well as being the sponsoring Whitehall department for National Rail. London TravelWatch’s public accountability, combined with its independence from the department, is a really important factor in its ability to champion the interests of passengers in that wider London area effectively. Ensuring that the Bill includes explicit reference to, as I call it, London TravelWatch—the LTUC—as a consultee alongside the Passengers’ Council would therefore offer us a really important opportunity to strengthen the overall independence of the passenger voice in future railway decision-making.
Thirdly, from a purely legislative point of view, it makes no sense to assign statutory consultee status to one existing statutory passenger watchdog and not to another, particularly when they share a similar background. As a statutory passenger body with a rail remit, London TravelWatch should have equal treatment to the Passengers’ Council under the Bill when it comes to consultation on rail policies and strategies that affect the capital. Doing otherwise risks diluting the ability to represent rail passenger views in London in future industry decision-making.
Let me give two relatively recent examples that demonstrate the value that London TravelWatch has brought to rail passengers, working independently of, yet alongside, Transport Focus. First, in 2023, in one of the largest public consultations of its kind, the two watchdogs successfully secured the reversal of plans by rail operators to close ticket offices. London TravelWatch alone analysed nearly 230,000 responses from the public to proposals for 269 stations in the London TravelWatch area. There is no doubt that, by working together, the watchdog secured the right outcome for a poorly-thought-through set of proposals that was deeply unpopular with the public.
Secondly, in 2024, London TravelWatch spoke out publicly about the long-standing problems at Euston station—many of which Members in this Room will, I am sure, have experienced—London’s main rail gateway to four of the other largest cities in the UK. As a result, Network Rail and the then Secretary of State for Transport—he may be in the Room; I am not sure—committed to a five-point action plan to improve the customer experience at Euston. A number of modest but welcome improvements have been implemented since then, ahead of the exciting, long-term plans for redevelopment at Euston. This was an example of London TravelWatch’s ability not just to speak out independently but to do so to the benefit of the public both within and outside the capital, working hand in hand with the other body.
I am grateful to the noble Lord, Lord Moylan, for adding his name to my amendments in this group. I hope that the Minister will be positive in his response to fix this clear anomaly in the Bill. I beg to move my Amendment 40.
Lord Moylan (Con)
My Lords, when I was deputy chairman of Transport for London, I found London TravelWatch a rather annoying body. I suspect that when the Minister was the transport commissioner he found it even more annoying than I did, because of course it was there to complain as well as to make suggestions for improvements, so I can understand that there may well be a level of resistance to the suggestion from the noble Baroness, Lady Pidgeon. However, I have added my name to her amendments because, objectively speaking, she is absolutely right: this is a very important statutory body. It should be treated on a level footing with other transport users’ committees. I can see no possible grounds for objection that the Minister may have. I suspect this will be one of the concessions he makes on Report and, if he does not, it will be inserted in the Bill whether he likes it or not. I look forward to hearing him say that the noble Baroness is spot on about this and that he willing be able to accept, if not her amendments as drafted today, at least amendments in lieu to the same effect that he might produce in the near future.
Lord Hendy of Richmond Hill (Lab)
I thank the noble Baroness, Lady Pidgeon, for these amendments. I should directly contradict the noble Lord, Lord Moylan: as the commissioner of transport for Transport for London, I found London TravelWatch a very constructive body. I enjoyed dealing with it; there were other people we dealt with who were far more difficult.
Baroness Pidgeon (LD)
Don’t look at me.
Lord Hendy of Richmond Hill (Lab)
I shall not list them.
Lord Moylan (Con)
I think they include the noble Baroness, Lady Pidgeon.
Lord Hendy of Richmond Hill (Lab)
Some of the board. As the noble Baroness says, London TravelWatch plays a vital role as the statutory watchdog for London, championing the interests of people who travel across all modes of the city’s integrated transport network. That is precisely why the Bill will strengthen its rail powers to ensure there is consistent passenger advocacy across Great Britain. However, the passenger watchdog will have a new role in the reformed railways which will be different to the role of London TravelWatch. It will go beyond being solely a watchdog and passenger champion. It will have a central role in holding rail operators, including GBR, to account by setting consumer standards for the industry and monitoring operator compliance with them. It would not be appropriate to have two different bodies setting standards, which is why the watchdog will work closely with London TravelWatch to ensure that standards applied across all operators reflect its expertise. That is why London TravelWatch is treated differently in the Bill and why GBR, the Secretary of State and the Office of Rail and Road must consult only the watchdog on certain matters such as the licence, the long-term rail strategy and GBR’s business plan. London TravelWatch is not expected, for example, to have any role on the licence. That said, I can reassure the noble Baroness that I absolutely agree that London TravelWatch must continue to have a voice on matters that impact the London transport network, and indeed the wider scope of London TravelWatch that she referred to. I understand that Transport Focus, the future passenger watchdog and London TravelWatch will update their existing collaboration agreement to reflect changes in roles. I expect this will include additional expectations around consultation and engagement where matters will affect London and the other services which London TravelWatch oversees. For these reasons, I urge her now to withdraw her amendment, though I am happy to discuss this with her further after Committee.
Baroness Pidgeon (LD)
I thank the Committee for this debate; I would say “short debate”, but I spoke quite extensively and maybe comprehensively on this matter. I understand what the Minister is saying, but it would be helpful, even if he has to define it differently, to put London TravelWatch, where appropriate, on the same footing as the Passengers’ Council for certain areas of consultation. A collaboration agreement between two organisations would be between them, but I would like to see something on the statute that makes it clear in which areas we would expect London TravelWatch to have a role. I would be happy to meet the Minister outside to see whether the Government can come up with some wording that would deliver that and ensure London’s voice is not lost in this. On that basis, I am happy at this moment to withdraw my amendment.
Amendment 40 withdrawn.
Amendments 41 to 53 not moved.
Schedule 1 agreed.
Clause 12 agreed.
Amendment 54
Moved by
54: After Clause 12, insert the following new Clause— “Protection of rail funding settlements(1) This section applies where the Secretary of State proposes to make a material change affecting an agreed multi-year funding settlement for the railway (“the settlement”), whether by—(a) reducing the funding provided under the settlement,(b) altering the outputs, or the scope of works, specified under the settlement, or(c) making any other decision, whether or not framed as a change to the settlement, which materially affects the cost or deliverability of the outputs agreed under it.(2) Where subsection (1) applies, the Secretary of State must refer the proposed change to the Office of Rail and Road before it takes effect.(3) Where the proposed change would reduce funding available under the settlement, Great British Railways must set out how the reduction would be accommodated, including which works would be deferred, which activities reduced, and in what sequence.(4) The Office of Rail and Road must assess and publish a report on the proposed change. The report must include— (a) an assessment of the effect on—(i) delivery of the outputs agreed under the settlement,(ii) the supply chain and the skills required to deliver the programme, and(iii) whole-life cost and asset condition,(b) any statement provided by Great British Railways under subsection (3).(5) Where Great British Railways has given the Secretary of State advice on the proposed change, that advice must be published alongside the report under subsection (4).(6) A proposed change to which subsection (1) applies may not take effect until the report under subsection (4) has been published.(7) The function of the Office of Rail and Road under this section is limited to assessment and publication; it does not include determining where reductions should fall, directing the activities of Great British Railways, or the structure or content of the timetable.(8) Nothing in this section prevents the Secretary of State from making a change to a settlement; this section requires only that the change be assessed and published before it takes effect.”Member’s explanatory statement This amendment would require the Secretary of State to refer any material change to an agreed rail funding settlement to the Office of Rail and Road for independent assessment, and to publish that assessment, together with any advice given by Great British Railways, before the change takes effect.
Lord Bradshaw (LD)
The amendment that I am moving is almost self-explanatory. I think that most people in the Room will have witnessed arbitrary cuts in expenditure on the railway. These cuts probably emanate from the Treasury but come through the Department for Transport, which says that it must cut 10% of rail services or cut certain staff—or maybe have a recruitment ban. I am seeking to ameliorate that process somewhat so that if a Government—not necessarily the Minister’s—propose to make an arbitrary cut in the money available to the railway, whether that is the money available now or at some time in future, instead of leaving the railway to make the best of a bad job, a proposal can be made to the regulator. It would give the regulator a real job. The regulator would have already approved the business plan of the railway at some time previously. If an arbitrary cut was made in future, that cut should be referred to the rail regulator and, as it were, deferred for three months, during which time the regulator would have the opportunity, together with the industry, to come forward with better solutions than have been proposed under the arbitrary cuts. For example, it could seek to postpone some work or alter the scope of the work. Instead of having a crude ban on recruitment, it could ensure that it applies only to staff who are not absolutely essential to running the railway. In this amendment, I seek to make a change to the way in which the Treasury and the Department for Transport handle their relations with the industry. That would be a good thing that would give the rail and road regulator a chance to propose an alternative. As its remit also includes roads, it might also consider the terrible amount of money that has been wasted on smart motorways. It might propose that some form of taxation is levied on heavy goods vehicles, which I am sure most people would agree do enormous damage to our roads. I beg to move.
Lord Lansley (Con)
My Lords, I have two amendments in this group: Amendments 65 and 73. Rather than the broader issues of funding, mine are much more nitty-gritty questions about the transparency of the business plan and how the funding processes for Great British Railways are to work. Amendment 65 is to Schedule 2, which is that part of the Bill where Great British Railways shows us in its business plan how its money is received and allocated towards activities. If I remember correctly, we are in that bit where it has to set out various things. We are at line 27 on page 71: “The plan must set out … the activities Great British Railways proposes … the costs of carrying on those activities, and how Great British Railways proposes to meet those costs”. Strictly speaking, all the things that I am asking for in Amendment 65 might be comprised within that. This is an opportunity for us to be clear about what Great British Railways should do. In a separate group I will come to another issue related to the relationship with local government bodies. In this particular instance, there would be important transparency in Great British Railways being required, when setting out its business plan, to show what contributions are received by GBR itself from GBR companies, presumably by way of profits or revenue remitted to GBR for this purpose, and vice versa: how much is being paid out through GBR companies and how much is being received. Amendment 65 is for that purpose: where the activity is carried out by a GBR company, the contributions received from or provided to GBR in relation to those activities. I hope that is a straightforward transparency issue when the business plan is being presented. A good plan would do that anyway; it is just a case of trying to be clear about that now. This affords me the opportunity to say something to my noble friend Lord Moylan. We discussed on Tuesday the question of GBR companies, and he returned to this issue and chastised me, saying that I was inaccurate. I do not think I was as inaccurate as he might imagine.
Lord Moylan (Con)
I never chastised.
Noble Lords
Oh!
Lord Moylan (Con)
I would never dream of doing that. It is inconceivable that I should do that. I drew to my noble friend’s attention an email that I had received that said that he had made a mistake and that the Minister had also made a mistake. I gave no opinion myself on that. It was very well argued, and I shared it with the Minister and the noble Lord. In writing to the noble Lord—I hope he has received that by now—I explicitly said that I did not know whether it was right or wrong, but I wondered whether he wished to make a comment. Of course, the noble Lord, Lord Lansley, may wish to make a comment at any time he chooses, but not a comment, I hope, that is intended to be a rebuttal of any chastisement, or even a mild criticism, suggested by me.
Lord Lansley (Con)
I thank my noble friend for that correction. He has shared the email with me. I think it is worth putting on the record the point, made in that email, that it is important to distinguish between joint ventures on the one hand and corporate activities of companies on the other. However, the point of the debate on Tuesday was that I was seeking to establish under the legislation that GBR companies do not have to be wholly owned. Hansard will show that the noble Baroness, Lady Jones of Moulsecoomb, was seeking to establish that GBR companies are required to be wholly owned. That was the simple debate. As I understand it, Clause 99 of the Bill makes it clear that GBR companies are a subsidiary of GBR, and a subsidiary under the Companies Act does not require to be wholly owned. If the Government had wanted GBR companies to be wholly-owned subsidiaries, they would have said so. So, as far as I am concerned, it is a subsidiary and, as we know, under the Companies Act, a subsidiary is a matter of control, not of complete ownership. As far as I am concerned, I got what I wanted out of that debate, which was my assurance that GBR companies are not required to be wholly owned.
Lord Moylan (Con)
My Lords, we are now redebating what was debated the other day. However, since there was an element of confusion, the noble Lord has accurately characterised the difference in position between himself and the noble Baroness, Lady Jones of Moulsecoomb, but it was in the context of an important debate about whether GBR would be able to carry out partnership—I use the word loosely—arrangements with private sector developers for the development of land in which GBR had a stake, with a view to achieving things like more housing or whatever it might be. Of course a subsidiary does not have to be wholly owned, since it is a question of control, so there can easily come a point where a joint venture company might not be controlled by GBR, and the question then is whether those arrangements would still apply. The fundamental issue in the debate as I saw it—I entirely understand what the noble Lord is saying—is whether the structure proposed by the Government in the Bill inhibits what we would all agree are desirable developments that could take place using GBR assets working with the private sector. I heard the Minister give assurance on that, and of course I accept that, but I was merely advancing this to him because the suggestion was that confusion had arisen about joint ventures, subsidiaries and wholly-owned control in the course of debate, and that the Minister had fallen into that confusion, along with others. Therefore, I was giving him the opportunity to say whether that was in fact the case, although I do not expect him to do so today because he has only just had the email.
Lord Lansley (Con)
I think that was an intervention. I can only speak for myself, but I do not think I am confused now. The Bill does not inhibit this from happening in future and that is a satisfactory position for us to have reached. That is relevant to this debate in that my Amendment 65 is about the relationship between GBR and its companies, and financial transactions—the resources provided to or the resources received from GBR companies—ought to be explicit in the business plan. I turn to Amendment 73. Now we really are in a happy position. It is many years since I was responsible for the public expenditure of a government department. I do not mean as Secretary of State; I mean as the official responsible. Knowing what powers one is using in relation to spending money is important. Amendment 73 is a probing amendment but I have used the structure of saying that the same activity should not be funded out of both the powers in the Bill, where financial assistance can be provided by the Secretary of State to GBR, and Section 6 of the Railways Act 2005, which noble Lords who know these things better than I do will remember is a broad-ranging power to provide financial assistance to GBR. I want to establish at this point—we might return to it at a later stage to see whether it is a satisfactory position—which GBR activities will be in receipt of financial assistance from the Government under the Section 6 power that exists now under the 2005 Act, or the financial assistance to be provided under this legislation. We need to avoid the confusion of two different powers providing financial assistance to the same activity.
Lord Harper (Con)
My Lords, I will speak to Amendment 54 in the name of the noble Lord, Lord Bradshaw, and Amendment 55 in the name of my noble friend Lord Moylan. Obviously, I have not heard my noble friend’s exposition of the purpose of his amendment, which I look forward to listening to shortly, but I understand why these amendments have been tabled. I think that they are both intended to make it more difficult to change funding for railways, as opposed to other areas of public expenditure, but I am not sure that that is entirely a good thing. I completely understand why that would be a good thing if you were looking at it through the railway end of the telescope, but if you look at it from the point of view of a taxpayer or a citizen, I am not sure that tying the hands of Ministers in that way is entirely helpful. I will take the two amendments in turn. In terms of background, it is worth saying that, if I have understood the Bill correctly, in part 1 of Schedule 2, “Funding by the Secretary of State”, the structure for setting the budgets in the first place is broadly the position now. The Government set out a plan for funding over a multiyear period, they notify various people of that funding and the funding is set out, as are the things that are expected to be delivered by the funding, so that it is all transparent for us to see what is going on. As far as I understand it, the Bill as drafted requires the Secretary of State purely to notify the ORR if they propose to vary the financial assistance—the Secretary of State has to tell the ORR in various circumstances. It is very clear that only notification is required; there is no requirement for the Minister to await the ORR doing anything before the Minister is able to proceed with the funding change. I am content with that set of circumstances, if I have understood them correctly. My noble friend Lord Moylan’s amendment, which I understand is a probing amendment to test this, would make it very difficult for the Secretary of State to change that funding settlement, except in two cases: if the things they required GBR to do had changed and therefore the funding was different; or there was an emergency in the country at the level of what is set out in the Civil Contingencies Act. We do not have those very often, but there are lots of circumstances in which the Government have to make changes to public expenditure, for all sorts of reasons, without the country being in an emergency situation at the level defined in the Civil Contingencies Act. It is the proper role of Ministers to have that flexibility and the ability to set budgets, make funding decisions and even to choose within the departmental allocation that they have. Even if the Treasury is not changing anything in terms of the money that the department has, it is the job of Ministers to decide how that money is allocated between the different parts of the department’s expenditure, whether it is a—
Lord Bradshaw (LD)
May I just say that three months’ notice is not a long time and any arbitrary cut cannot possibly take place in three months because timetables, trains and rosters have to be altered? Three months is a very short amount of time to give the rail regulator to make decisions. I am not talking about giving the rail regulator lots of extra powers to alter the timetable. I am quite satisfied with where we have got to on that. I am saying that, if any future Government wish to reduce the money, they should have the grace to have the matter properly considered by people who are professionally competent. That does not always include Ministers.
Lord Harper (Con)
I am grateful for the noble Lord’s intervention. I had not yet started dealing with his amendment in detail—I was dealing with my noble friend Lord Moylan’s—but I listened carefully to what he said and will deal with it when I get to his amendment. I am not sure that I agree with my noble friend Lord Moylan, although I understand that his amendment is probing. I would not want to tie the hands of Ministers in the way that he set out. I understand that it is of course desirable not to change funding for any public service once it has been set—one does not do that if one can avoid it—but there are occasions when that is necessary. If we are looking for the appropriate people to make those decisions, they should be Ministers. The problem with ring-fencing certain parts of expenditure to make it more difficult to make changes is that, in effect, you are deciding that any changes to public expenditure have to fall in other areas. Those decisions should properly be taken by Ministers at the time that those changes are made, because they have to balance the consequences of making those expenditure changes and the changes that they will necessitate to public services, and they have to make the case about why they are doing that. Those decisions are properly for Ministers, rather than expenditure being arbitrarily ring-fenced in legislation. The noble Lord, Lord Bradshaw, tabled Amendment 54. I am concerned about this amendment, but I would be very happy if, when I finish my remarks, he comes back to say that I have misunderstood it. He referred to arbitrary changes. “Arbitrary” is a word that people usually use when they do not agree with the changes proposed by somebody else. Ministers may well bring forward changes, and they may be because the overall amount of money available to the Government has had to be changed for some reason or because of some event. It may be that Ministers have decided that expenditure needs to be spent in another area or that the Transport Secretary has decided that there is a higher priority elsewhere. Those are perfectly reasonable decisions that will have to be explained to Parliament, and Ministers will be subject to questioning by Members of both Houses in making those decisions, which are properly for Ministers. I have a slight problem with this because it involves the Office of Rail and Road. I listened very carefully to the noble Lord, Lord Bradshaw, when he was setting it out and he, I think, suggested that that the Office of Rail and Road could come back with alternative propositions. It could come back by suggesting funding decisions balanced between rail and road, starting from his proposition that rail funding is better than road funding. I think the noble Lord was also talking about decisions on taxation or heavy goods vehicles. I humbly suggest that all those decisions are properly for Ministers. I accept that the noble Lord was not suggesting that those decisions should be taken by the Office of Rail and Road, but he was suggesting that that office should take some time, produce a report and then make suggestions to Ministers. However, it is not the role of a regulator to get involved in making qualitative opinions about where public money should be spent. Those are not decisions for regulators; they are properly decisions for Ministers, who are accountable to Parliament. Unless I have misunderstood the noble Lord’s amendment, I do not think that getting regulators to come back, second-guess the decisions of Ministers and make alternative public spending propositions is good for the conduct of public policy. The Bill is currently structured such that Ministers have to notify the ORR if they are going to make funding decisions, so that there are right and proper levels of transparency and people know what is going on. There is quite an important principle to maintain, which is that there are certain things that regulators should do and certain decisions that are properly for Ministers. I do not like to criticise the noble Lord, who I know takes a great interest in this area of policy, but I cannot support his amendment because it has those effects, which I think would be deleterious to public policy-making. In the spirit of balance, the noble Lord will have noticed that I was also not entirely enthusiastic about the amendment tabled by my noble friend Lord Moylan, which I know is a probing amendment. So I think that I have been quite even-handed in my non-approval of both amendments, which have a similar fault: tying the hands of Ministers in making public spending prioritisation decisions.
Baroness Pidgeon (LD)
My Lords, what an absolute pleasure it is to hear from my railway expert noble friend Lord Bradshaw. It is such a delight that he has been able to join us in Committee in person today and to contribute to our debate, particularly after he had a significant birthday yesterday. Funding certainty is absolutely crucial for the railway going forward. Being able to plan investment and work properly, and deliver it in a timely manner, is essential. My noble friend Lord Bradshaw’s amendments try to show the seriousness of changing mid-programme railway investment and putting in additional steps for any material change to an agreed funding settlement by involving the ORR for an independent assessment, which should be published. This would ensure transparency and expert assessment if funding for the railway is changed, particularly mid-year. Amendment 65 in the name of the noble Lord, Lord Lansley, would require more transparency. That is welcome, as was the contribution from the noble Lord, Lord Harper. In fact, it is notable that he has spoken on every group apart from the one with solely my amendments on London TravelWatch. I will not take that personally, but I say, “Once a Secretary of State, always a Secretary of State”. I look forward to the Minister’s response.
Lord Moylan (Con)
My Lords, I have a number of amendments in this group: Amendments 55, 56, 70, 78 and 86. I start with Amendment 78. Paragraph 15 of Schedule 2 states: “Financial assistance given to Great British Railways or a GBR company” primarily to enable it to carry out its infrastructure functions under Clause 3(1)(a)—this is one of the general functions that we discussed on Tuesday—is not to be treated as “a subsidy for the purposes of the Subsidy Control Act 2022”. This is a probing amendment to find out the justification for that. I suspect that the justification is that it is not treated as a subsidy currently and, therefore, the Bill simply carries forward the existing situation. I wonder whether that is appropriate. The Subsidy Control Act 2022 exists for a purpose and requires that public authorities should consider whether subsidies are proportionate and necessary, whether they distort competition or investment, and whether their benefits outweigh their adverse effects. I wonder why the management, renewal and operation of infrastructure on railways should be specifically exempt from those requirements. This exemption does not apply to the other general functions listed in Clause 3, but it applies to this one. I do not want to be hypercritical, because I know that these things are very difficult and there are often excuses, but why should this condition not apply to these functions—particularly when there is a general lack of confidence in these functions being carried out with great efficiency at the moment and when they always seem to be very expensive? Is there a reason other than simple inertia? I do not think that inertia is enough. The Act also requires safeguards on transparency, the scrutiny of particularly significant subsidies by the Competition and Markets Authority, and ultimately the ability to challenge subsidies decisions via the Competition Appeal Tribunal. Noble Lords may say, “All of this is going to happen. It’ll be GBR doing stuff for GBR rail, so how does competition come into this?” But, as noble Lords know, a great deal of maintenance activity on the track is carried out by private companies contracted for that purpose; that may upset the noble Baroness, Lady Jones, but there we are. As far as I know, there is no indication in the Bill that that will change, and so I understand why the provision of subsidies might raise competition concerns. There is an appropriate authority here that can address them. That is my first question. It is a probing amendment, but I would like to know why these potentially very substantial sums should be outside the regular framework. In Amendment 70 I am simply asking for the business plan to be published. I think it is important that people should be able to see it. It is possible the Minister will say that he has every intention of publishing the business plan; TfL publishes its business plan, and most other similar organisations publish their business plans. As far as I can see, there is no statutory obligation in the Bill—I may have missed it—to publish the business plan each year or period to which a new business plan would apply. Amendments 55, 56 and 86 are about building financial discipline, both in the Government and elsewhere. Here, perhaps, I contest the comments made by my noble friend Lord Harper and will say something about the amendments tabled by the noble Lord, Lord Bradshaw. There is a serious issue here and I do not think that the noble Lord has got it right. I do not actually think that my amendments have got it right, but this is the right place for us to talk about the general question of how the Government treat the railways in terms of funding and the provision of funds—not how much they give, but how they do it and what the process is. The reason for that is as follows. I used to be in a local authority and very often we had to set a budget in March but did not know until Christmas—even after Christmas—what the subsidy from government would be. It is extremely difficult to put budgets together at short notice. With the railways, it is even more difficult. The noble Lord, Lord Bradshaw, has already said that significant changes require a great lead-time and planning to be delivered and just as long for them to be reversed. Most of my amendments are trying not to fetter Ministers—I accept the comments from my noble friend Lord Harper that Ministers have to be accountable for public expenditure and that they have to make difficult decisions sometimes—but to build in a notice period. I have suggested two years so that, if changes are to be made, they would be lagged by that period, so that Great British Railways knew where they were going to be. When the noble Lord, Lord Bradshaw, talked about timetables and so forth, he was discussing the operational side of the railway, but there is also the infrastructure investment side of the railway, which may extend to building a completely new railway. One of the problems we have—we all acknowledge this—is that it is impossible to build new infrastructure on a one-year settlement. We give long-term settlements to railway developers so that they know that they will have the money to carry the project through to the end. Should that change in funding not also be subject, if it is necessary, to some sort of notice period? Further down the line from that, we have the supply chain. A colleague of mine recently visited a British train manufacturer. I will not say which one because I cannot remember. Maybe I can, but what I was going to say might be adverse—not about the manufacturer but about its situation—because it is down to using one manufacturing line at the moment, as the orders have effectively dried up. We all know that the ideal situation is that British train manufacturers have access to a steady supply and a steady stream of demand, so that they maintain jobs and do not go from famine to feast. Where is the discipline going to come from, as a result of all these changes, to address that? What sort of lags and notice are necessary? As I said, I do not think I necessarily have the answer in these amendments, although they all point to this debate. We may not get further on this today, but the Government will have to talk seriously about this. When they create a wholly new structure to operate the railways—Great British Railways—funding has to be mentioned. An understanding of the approach to funding, not just for the operations but for the infrastructure, has to be addressed.
Amendment 86 addresses the other side of the equation: accountability for money once it has been spent. Amendment 86 would require GBR to publish an annual statement of its financial performance. It may be said that it is going to have to do this: as a company under the Companies Act, it will have to produce an annual report. But one of the issues we should be considering, given the scale of the public money likely to be going into Great British Railways, is whether an annual report, simply produced on a companies law basis, will be enough. Again, we are probing to hear what the Minister has to say about whether he intends to be more open with publishing figures on performance at the end of a financial period, rather than simply confining himself to the loopholes and dodges that are often available for those simply producing company accounts.
Lord Berkeley (Lab)
My Lords, briefly, the amendments from the noble Lord, Lord Moylan, on producing a business plan are absolutely essential because, as he noted, the railways need long-term investment. It is not just trains which need to somehow be ordered 10 or 20 years before they are needed but things such as HS2, which we have no budget for at the moment. We have no real knowledge of how much is going to be spent each year and when it is going to open, so there needs to be much greater discipline on this. I fully support these probing amendments to see what my noble friend is able to tell us.
Lord Hendy of Richmond Hill (Lab)
My Lords, I thank all noble Lords for this debate on group 5 and will echo the noble Baroness, Lady Pidgeon: it is a delight to see the noble Lord, Lord Bradshaw, in his place this afternoon. I am sure that the rest of the Grand Committee wishes him, as I do, a very happy significant birthday for yesterday. I have also read and heard what he has argued carefully and, as he is a man of huge experience in the railway, I will reflect on what he said. The Committee will be relieved to know that I am not going to redebate the status of GBR companies and subsidiaries. I thought I would leave it to the noble Lords, Lord Lansley and Lord Moylan, to fight that out. I think I had the same clarity as the noble Lord, Lord Lansley, at the end of that debate. I think noble Lords’ amendments are, collectively seeking, first, that the Secretary of State considers GBR’s duties, her long-term rail strategy and the wider planning considerations when determining GBR’s funding settlement; secondly, that that funding settlement is transparent; and thirdly, that it is protected. Finally, the noble Lord, Lord Moylan, seeks to ensure that it is in place two years before the next financial period. I start by providing some explanation of the provisions. The Bill already establishes a comprehensive funding framework. Schedule 2 sets out that the Secretary of State must publish a statement of objectives for the railway. In doing so, she is absolutely bound to consider her duties and her own strategy, and she will, of course, consider wider planning and the impact of the network. Following the statement of objectives, the Secretary of State must then publish a statement of funds available, so that GBR can understand its funding parameters and produce a high-quality business plan. Schedule 2 then provides that GBR must produce, publish and keep up to date the five-year integrated business plan across both infrastructure and passenger services. The Office of Rail and Road will advise the Secretary of State on the effectiveness of the business plan, including whether it represents good value for money. If it does, the Secretary of State will then approve the plan and issue a five-year settlement. Under paragraph 7 of Schedule 2, as in the proposal of the noble Lord, Lord Moylan, the Secretary of State is required to publish details of the five-year funding settlement she gives to GBR, including the funds agreed. She will absolutely ensure that that these published details are clear enough to allow stakeholders to understand the settlement, meeting the noble Lord’s request for transparency, while protecting key commercially sensitive information. GBR’s business plan will also contain all its planned activities, costs and how it plans to meet those costs. This plan will be updated and published annually after the initial settlement. A clear summary of ORR’s advice through the funding process will also be published, as set out in paragraph 4(6), which means that the desires of the noble Lord for an annual report on GBR’s financial performance will be delivered. Other further reporting requirements are duplicative and unnecessary, and all this amendment would do is increase the time GBR spends on bureaucracy instead of getting on with its job of delivering. On protecting the funding settlement, which the noble Lords, Lord Bradshaw and Lord Moylan, spoke about, I agree that when maintaining and renewing long-term railway assets, certainty of funding is critical. It provides a stable basis of planning, supports efficient delivery and helps build investor confidence throughout the supply chain. I repeat that the intention behind setting a five-year settlement is that it should endure for the full five-year period. On the amendment of the noble Lord, Lord Moylan, I can assure him that the Secretary of State must publish any updates to the settlement that are likely to have a material impact. If she wishes to make a material change to the settlement, she must also notify the ORR, which will advise on the likely impact on the railway, and that is one of its important and critical roles. This will ensure that there is transparency around any funding changes and that there will be scrutiny if material changes are proposed that will not support an effective railway. On Amendment 55 from the noble Lord, Lord Moylan, I do not agree that the Secretary of State should be restricted to changing the funding settlement only in emergencies. As the noble Lord, Lord Harper, says, the Government have a lot of priorities to deliver across healthcare, housing, transport and public safety, which all require funding. While, of course, in my mind, the railway is absolutely the most important of those priorities, I recognise that the Government and Ministers need to be able to move money in response to changing circumstances, because choices about funding priorities are ultimately for the Government of the day. On the details of Amendments 74 to 77 from the noble Lord, Lord Bradshaw, the first key point is the question of which funding changes the ORR should get involved in. The Bill already requires that the ORR is notified when changes to the funding settlement are material enough to affect delivery, but not in every circumstance. This approach is proportionate. There may well be some smaller accounting-type changes to funding needed, which will not affect delivery and do not require a true statutory formal change process. This could, for example, include GBR offering to return small underspends back to the Government where efficiencies have been found but, of course, material changes, as I have said, should be notified to the ORR. This process ensures that they will be. The Bill currently requires that the Secretary of State notifies ORR before a material funding reduction is made to the five-year infrastructure settlement. This allows ORR to exercise its independent and expert judgement when it receives notice of a potential change. I can reassure noble Lords that the ORR would absolutely act if significant funding were taken out of the railways, including by advising the Secretary of State and publishing that advice. This approach is most practical, rather than requiring ORR to respond to each change in funding in a set way. To summarise this point, certainty is crucial for the railways, the Government and the wider supply chain, but it must be proportionate and balanced against the ability of Ministers to allocate public resources. The noble Lord, Lord Moylan, raised the question of rolling stock manufacturers and the Government’s answer to this is to construct and publish in due course a rolling stock and infrastructure strategy, the first for more than 30 years, in order to give that part of this market the long-term certainty it craves and which will keep the production facilities and jobs going. Finally, I agree that, given the amount of investment on the line, it is important that funding is in place in good time to allow GBR and industry to prepare for the next settlement. Although I do not think this should be in primary legislation, because requiring funding levels to be confirmed two years before the start of a funding period would reduce flexibility and risk settlements becoming outdated before they can even take effect, I reassure the noble Lord that details of the timing will be managed by the ORR, as they have been in successive control periods, to ensure that the financial settlement is never at risk. Schedule 2 sets out that the statement of funds available must be published early in the process and created to timelines determined by the ORR. I can confirm that in practice, as seen under the periodic review process, this information will be published significantly in advance and has to be more than a year ahead of the final settlement to work. I understand that the ORR will ensure that the process concludes fully with time for industry to prepare. I hope this is a reassurance. I reassure the noble Lord, Lord Bradshaw, that the Bill leaves flexibility to fund more of GBR’s activity through the five-year settlement, once this becomes once this becomes practical and Ministers are more comfortable funding an integrated entity. If Ministers fund passenger services through the five-year settlement using the route in the Bill, all the protections we just discussed would already apply. Turning to a related issue, on Amendment 65, I reassure the noble Lord, Lord Lansley, that we are in agreement, and the outcome of Amendment 65 is already achieved by the Bill’s provisions. Under paragraph 4(3) of Schedule 2, GBR will be required through its business plan to set out its activities, the costs of those activities, and how it proposes that those costs are met. In practice, this means that the business plan must cover everything that GBR does, through its subsidiaries as well as the parent company, and must cover its revenue sources across all its subsidiaries. I turn to Amendment 70—and once again I confirm for the Committee that the Bill already requires the full business plan to be published and kept up to date, in paragraph 4(7), and there is a commitment to update it in paragraph 5(3) of Schedule 2. However, the Bill contains slightly more discretion for GBR to redact sections of the business plan than this amendment proposes. This is because it is important that all types of sensitive data, not just commercially sensitive, are able to be protected. Personal data, security-sensitive information about stations and public places, or anything legally privileged are all examples of content which may need redaction from the final plan, and a flexible requirement can be better used to navigate these nuances. That flexibility is important, but I should be clear that GBR cannot withhold information simply to avoid scrutiny. The ORR will assess and advise the Secretary of State on the unredacted version of the business plan, and GBR’s public law duties and wider accountabilities framework will ensure that GBR will not be able to hide important information relevant to public scrutiny. I understand that the intention of Amendment 73 is to prevent the Secretary of State circumventing the process as set out through the Bill, by restricting access to the broader funding powers in the Railways Act 2005. The purpose of paragraph 6(7) is to make it clear to Parliament that the Secretary of State can use her other funding power in the 2005 Act. This will be necessary when funding activity outside the five-year settlement, such as individual enhancement projects or one-off funding packages, are needed following a natural disaster, for example. I assure the noble Lord that this does not reduce transparency over GBR’s funded activities. GBR’s business plan, covering all GBR’s activity, will be costed, updated and published as GBR’s outputs change. The business plan will include enhancement projects and will show clearly where the funding for them has come from, therefore transparently identifying the use of the 2005 power for Parliament and others to scrutinise. I therefore hope that the noble Lord can see that the inclusion of paragraph 6(7), to allow the Secretary of State to use other funding powers, is purely practical. Finally, I thank the noble Lord, Lord Moylan, for Amendment 78. For clarity, relevant subsidy control law does not apply to infrastructure funding. However, it applies in full to passenger services funding, as we discussed in the ticket retailing debate on Tuesday. Railway infrastructure being exempted from subsidy control rules is something that happens on the current railway; railway infrastructure funding provided to Network Rail today is not subject to subsidy control law. The Bill does not change this principle but simply enshrines it for clarity and transparency. Over many years, funding provided for the operation and management of the main national railway infrastructure has not been treated as subsidy as this market has been effectively closed for competition, because there are not multiple infrastructure managers operating on the same infrastructure. That position has underpinned the funding arrangements for Network Rail and continues to be appropriate for GBR as its successor. Removing this provision would not change the way that the railway is subsidised; it would just mean continuing to rely on previous legal interpretations, rather than the additional transparency provided by this clause. Part 3 in Schedule 2 therefore provides clarity and legal certainty, and it makes sense for this stance to continue as there is no competitive market for the railway infrastructure that GBR will be responsible for, so there is no need to waste resources administering this funding as if there is. I therefore urge noble Lords not to press their amendments.
Lord Bradshaw (LD)
I start by saying how much I disagree with the remarks of the noble Lord, Lord Harper. His idea that parliamentary scrutiny is carried out properly in the House of Commons is absolutely false, because the whipping system there does not permit a full and frank discussion such as we are having now. He is yesterday’s man in respect of his remarks. I am quite content to leave my amendment in the hands of the Minister. I reiterate that I am not asking for much. I know that the ORR will be consulted about a lot of things but, in the event of what I call an arbitrary cut, I believe that three months’ notice would not affect the eventual savings and that better savings would result from further scrutiny by the ORR together with the players in the industry. With that, I am prepared to withdraw my amendment, and I look forward to it appearing on Report.
Amendment 54 withdrawn.
Amendments 55 not moved.
Schedule 2: Funding Great British Railways
Amendment 56 not moved.
Amendment 57
Moved by
57: Schedule 2, page 70, line 15, after “services” insert “, including passenger services,” Member’s explanatory statement This amendment and two others to Schedule 2 in the name of Baroness Pidgeon would align funding of designated passenger train services with the five-year funding cycle for infrastructure.
Baroness Pidgeon (LD)
My Amendments 57, 58 and 61 are about aligning the funding of designated passenger train services with the five-year funding cycle for infrastructure. There is absolutely no point in bringing track and train together if their funding cycles are over different periods of time. For this new organisation to succeed and run the joined-up railway that we are seeking, funding—both capital and revenue—the investment side and passenger services must be provided for in a five-year funding cycle. Critical elements of the running of the railway are included in passenger services funding—for example, staffing at stations and rolling stock maintenance depots, and of course train crew, such as drivers, guards and conductors, as well as driver and staff training, which we know is a huge issue. If you do not get this bit right alongside the infrastructure, you will not benefit from what Great British Railways is supposed to deliver. So I hope the Minister can explain how this can be addressed, and I look forward to his response to my amendments. Other amendments in this group probe aspects of the business plan, but most striking are the amendments of the noble Lord, Lord Moylan, about ending or reducing taxpayer funding for the railway. As I said on day one of Committee, the railway will continue to need investment and subsidy, and I just do not think it is right for such clauses to be in the Bill. We heard about political direction, and it is for the Government of the day to deal with the budget as they see fit. But I hope we can look forward to having joined-up funding in five-year periods to make sure that Great British Railways is a success. I look forward to the Minister’s response.
Lord Lansley (Con)
My Lords, I will speak on my two amendments in this group, Amendments 67 and 72. Amendment 67 is simply another opportunity, as there was in the last group, to explore and, I hope, again extract assurance from the Minister that the business plan and GBR’s statements in it will be sufficiently transparent such that we can see the financial relationship not only—as we said in the last group— between GBR and its companies but between GBR and any arrangement that it enters into with any local government bodies. So we should see what money is being paid to GBR for these purposes and how it is attributed to those activities. I hope the Minister will say that that will definitely form part of the business plan. If he does, I would accept it, as it does not all need to be specified. In an earlier debate, my noble friend Lord Harper quite correctly referred to the dangers of specificity, which can come whenever one gets any kind of list. If there is no list at all, we all agitate as we do not know what will be in the business plan; if we try to specify too much, we start to create a statutory prohibition—or “inhibition” may be the more correct word—on what is put into the business plan. I have explained that amendment. Amendment 72 is more interesting, in the sense that—in parentheses—I think the Minister slightly missed the point of my amendment in the last group. I was not saying that there should not be flexibility to provide for activities to be funded from different powers, in reference to Section 6 of the 2005 Act. My point is that the same activity should not be funded from two different statutory powers. There would be a particular problem if that were to occur. Section 6 of the 2005 Act is very broad: “The Secretary of State may provide, or agree to provide, financial assistance to any person … for the purpose of securing the provision, improvement or development of railway services or railway assets; or … for any other purpose relating to a railway or to railway services”. While removing part of Section 6, the Government have kept the wider meaning of railway from this section, which is a pretty broad-based power. It is interesting to contrast that power in the 2005 Act with paragraph 6 of Schedule 2 to this Bill. The power to provide financial assistance is “for the purpose of activities … carried on in exercise of Great British Railways’ function under section 3(1)(a)”. We recall that Clause 3(1)(a) is on the provision of infrastructure. Paragraph (b) is on the provision of railway passenger services and (c) is on determining fares, but I think we can probably ignore that, since the financial assistance is not to provide the fares but to determine them. However, I was quite interested because paragraph (f), on research and development and innovation, was also excluded. This is a probing amendment, but I want to be clear: is it the Government’s intention with this Bill to provide financial assistance only for infrastructure and that there will be no financial assistance for the provision of passenger railway services and no money for research, development and innovation? Will all that be funded by the fare structure? The Government have given themselves a power in the Bill, through regulation, to add additional purposes for which financial assistance could be provided but, at the moment, it is just for infrastructure. If, at the moment, money needs to be provided to GBR for the provision of railway passenger services, that would have to come from the 2005 Act. I am just trying to follow the money. Where will it come from? If the Minister can tell us that it is only for infrastructure, I will stand down. At the very least, a specific power for the Government to support GBR for research, development and innovation is a power that we ought to retain.
Lord Berkeley (Lab)
In response to the point made by the noble Lord, Lord Lansley, about the subsidy, the consequence of what he is suggesting could happen is that GBR could subsidise a passenger service that was on the same route as, and in competition with, a private sector operator. To me, that would be quite difficult.
Lord Lansley (Con)
I am not sure if that is a question to me, but let us assume it is. I am not sure that I am saying that. I am saying that, as things stand under this Bill, the Secretary of State is not providing money to GBR for the purpose of providing railway passenger services. The Secretary of State has the power to do it under the 2005 Act. Nothing I am saying determines how that money is to be used.
Lord Young of Cookham (Con)
My Lords, Amendment 314 in my name, supported by my noble friend Lord Moylan, enters the arcane world of Treasury theology—what is and what is not public expenditure. It would require the Secretary of State to report on the impact of the Bill on public finances. This is important because the Government constantly emphasise, rightly, their commitment to the fiscal rules to contain borrowing, build market confidence and reduce upward pressure on interest rates and taxes. One of the fiscal rules is the investment rule: public sector net financial liabilities— sometimes known as PSNFL—which is a broad measure of national debt, must be falling as a share of the total economy by 2029-30. Another is the stability rule: the Government must forecast a surplus on day-to-day spending by 2029-30, meaning that regular public services are funded entirely through tax revenues rather than borrowing. Clearly what GBR spends is public expenditure, but expenditure or borrowing by private companies can be classified as public expenditure if certain qualifications are met. Decisions on that are taken not by the Government but by the Office for National Statistics, and it operates according to international definitions. It does not allow for consideration of political or commercial significance when making its classification decisions; they are essentially statisticians. The Minister may not have read “UK Economic Statistics Sector and Transaction Classifications: The Classification Process”—he may not even have heard of it—but it is relevant to Amendment 314. I shall summarise: the difference between the public and private sectors is determined by where control over the organisation lies rather than by “ownership” or whether the entity is financed from public funds. Control is the ability to determine general corporate policy. I will come on in a moment to the relevance of this to the rolling stock companies where, under the new scenario, GBR will be the principal customer, but there are two relevant instances where attempts by government to circumvent these rules have come unstuck, with consequences for the balance sheet. One that will be familiar to the Minister was Network Rail. Network Rail was set up in 2002 as a private company limited by guarantee, primarily to keep its massive debt off the Government’s balance sheet. By structuring Network Rail as a private company limited by guarantee without shareholders, the Government could then borrow large sums of money for infrastructure upgrades without adding those billions to the official national public debt. However, in 2014, ONS reclassified Network Rail as a central government body in the public sector, and this resulted in roughly £30 billion of debt moving on to the Government’s balance sheet. The Minister will have had direct experience of the consequences of that at Network Rail. We know because we have the Hendy report, which sets out the consequences for Network Rail of this reclassification. Debt was controlled, capital was rationed, assets were sold off and upgrades were postponed. I think the last thing the Minister wants to do is to write another Hendy report, mark 2, when rolling stock is classified as Network Rail is.
The other example is housing associations, which were previously in the private sector with the ability to borrow without it affecting the PSBR. In 2016, the ONS reclassified housing associations from private non-financial corporations to public non-financial corporations. This change was decided following legislative and regulatory changes brought about by the Housing and Regeneration Act 2008. The Government then had to legislate through the Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017 to get them reclassified. The Explanatory Memorandum for that SI explicitly stated that the regulations were
“aimed at reducing public sector control over private registered providers to enable the Office for National Statistics (ONS) to reconsider the classification of private registered providers”,
which is what it did.
I come to the railways. In 2020, the ONS reclassified train operating companies that entered into EMAs—emergency measure agreements—with the UK and Scottish Governments during the Covid-19 pandemic as public sector organisations, because nearly all the risk and revenue under those arrangements rested with the Government. As a result of this Bill, all passenger services operated under contract with DfT will be expected to be transferred to public ownership by the end of 2027. But what about the rolling stock companies? Investment there is running at an average of £800 million a year, and between now and 2050, it is estimated that some £26 billion will be invested.
The main customer will be GBR. The industry will be dependent on what economists call a monopsony—a monopsony is when there is only one buyer; a monopoly is when there is only one seller. GBR will specify exactly what the rolling stock companies will build, and when, and, of course, will undertake to pay for it, probably through a lease. The question raised by this amendment is: will this bring the industry, in the eyes of the ONS, into the warm embrace of the public sector, with a hit on government borrowing?
The ONS has stated that it expects to conduct an assessment of the railway industry if the Railways Bill receives Royal Assent. In particular, it intends to review the classification of rolling stock leases. I had to read this several times before I understood it, but it summarises its view as follows:
“A statistically important question relates to the rolling stock leases. The statistical framework maintains a distinction between operating and finance leases. Rolling stock leases have been historically considered operating leases, for statistical purposes. This means that the rolling stock assets and the associated imputed loan liability were not reported on the public sector balance sheet in fiscal statistics. We expect to review the treatment of rolling stock leases as part of the wider review of the rail sector”.
My amendment says that, within six months, the Secretary of State should consult the ONS on this and then publish a report setting out the fiscal impact of the Bill on the public finances. This might sound like an abstruse matter, but if there is a reclassification, the consequences could have a severe impact on the department’s budget. I will listen carefully to the Minister’s reply, which I expect will follow very closely the script prepared by his officials.
Lord Moylan (Con)
My Lords, it is difficult to follow my noble friend Lord Young of Cookham because his expositions of difficult issues are always so clear and compelling. There is a movement on the left wing of the Labour Party—which is well represented in your Lordships’ House—to nationalise the roscos so that we can have a full sweep of nationalisation. To date, nationalisation of the railways has cost the Government nothing because, of course, they already owned nearly everything. All it has done is allowed certain franchises to expire at no cost to the taxpayer. But the cost to the taxpayer of nationalising the roscos would be absolutely enormous, which is one of the reasons why the Government have resisted pressure from the more Corbynite wing of their party to proceed on that basis. My noble friend Lord Young of Cookham is suggesting that, at the stroke of some scribal pen in the Office for National Statistics, at least the financial consequences, if not the legal consequences, of nationalising the roscos would land on the Government’s plate as a result of the Bill—in other words, as a result of eliminating the relative multiplicity of buyers of rolling stock that exists at the moment and replacing it with a single buyer: a state-owned entity. As I understand it, that is the gravamen of what my noble friend is saying. The amendment is almost too gentle for the circumstances because this is something that we would need to know in advance of the passage of the Bill. It is dilatory of the Office for National Statistics to say that it would review this matter only after the Bill has passed because it is of such consequence that legislators should know before they pass the Bill whether it will ensue as a consequence of their doing so. This is a matter of considerable importance. I do not know whether the officials advising the Minister perceived the full complexity of the noble Lord’s amendment in advance. They may not have given him a full response to the points made by my noble friend—although they may have done so, of course—so he may wish to follow up in writing. That may be acceptable to my noble friend—I do not know—but this is an extremely important matter that we really need to know about. I do not propose to comment on the other amendments in this group so I turn to my own amendments, which were slightly mocked by the noble Baroness, Lady Pidgeon. We have been told—I accept that this is probably the case—that, should the Bill pass into law, it is likely to set a framework that will last for many years. People say that it is often 20 or 30 years before you get round to restructuring the railways; that is roughly the cycle on which it happens. I think, therefore, that it is very disappointing that the Government are seeking to restrict the debate to very narrow issues around the structure of the railway, which is the main basis of the Bill, when noble Lords want to debate other matters. For example, in our debate on the previous group, the noble Lord, Lord Bradshaw, who is sadly not in his place any more, wanted to discuss the whole structure of funding the railways—not the amounts of funding but the mechanism by which it is done—in order to avoid crashing from one decision to another and to make it possible for both the railway and suppliers to plan what they will do with some knowledge that the funding will continue for at least a period into the future. Essentially, the Government want to escape having that debate and say, “Everything’s fine as it is so we’ll carry on as before”. Through my amendments here, I want to have what I think is a very important political discussion about the Government’s vision for the level of subsidy that should go to the railway and for the balance between fares and taxpayer funding to support it. We have in this country a particular balance that is different from what exists in many European countries, and we have held on to it, but where do we want to go with it? The noble Baroness says that the railways will always require funding but, for their first 100 years, they did not require any public subsidy at all, and they provided the most comprehensive, intense and innovative transport system you could imagine, reaching to nearly all parts of the country. Further, they did so at a time when there were practically no roads, and there was certainly no air travel. Yet they did this without subsidy. We really only talk of subsidies to the railways when you get to the 1920s and 1930s, when money started leaking out of government and into the railways. That was before we had the full subsidy regime that came in with the Second World War and what followed. So it is possible to think about it. I am not saying that it is particularly realistic to think about it, because I accept what the noble Baroness says: there is likely to be an element of subsidy all the way through. But what is the Government’s plan and what is the direction of travel on this? Would the Government not like to set out their policy and vision? If they do not want to do so today, then where in this process is it going to appear? Is the noble Lord going to tell us that it will all be in the long-term rail strategy, so that we can have a debate then about what is the appropriate level between taxpayer and fare payer? Remember that only 10% of the population makes regular use of the railways; the rest of the population is expected to subsidise it through their taxes, but only 10% actually use it. Is that a fair and sensible balance in an allocation of subsidies? These are important issues. Amendment 112 is closely related but not quite the same. It asks for the railways to publish annual savings targets. Why should they not have such targets? There are great inefficiencies in every organisation. I do not say “in every public sector organisation”, although that is true, because there are inefficiencies in private sector organisations as well. When I was deputy chairman of Transport for London, we had a process for trying to reduce, with an annual savings target of 3% per annum. We took out that amount of cost year after year, bringing it down because we could find those efficiencies. I had learned from local government officers that they could do exactly that, because they knew where the inefficiencies were. In fact, they built them in a little, to give themselves some fat, but if they were required to reduce them under pressure, they could do it. Why should Great British Railways not have a similar discipline imposed on it? Where is the sense of financial discipline that we are looking for? These are times when the Government have very little money; I think we know that. The tax burden is higher than ever, yet public expenditure is under huge pressure. Choices about defence and so forth cannot be made sensibly because of commitments elsewhere. I am not disagreeing with or criticising the noble Baroness. It is all very well to say that railways will always require subsidies, but the fact of the matter is—I believe this firmly, and I am a believer in the railways—that a railway that relies consistently and heavily on subsidy, in the current and foreseeable fiscal circumstances of this country, is a railway that will come under huge pressure and will be cut. It is not sustainable unless it can show that it is contributing from its own efficiencies and through generating higher fare income, which does not necessarily mean through higher fares but can be a combination of fares and passenger numbers. It needs a plan to show that it is doing that. These amendments ask the Government to set out that plan or tell us when they are going to do so, in the interests of Great British Railways itself.
Lord Hendy of Richmond Hill (Lab)
My Lords, Amendments 57, 58 and 61 are about the funding of passenger services. In principle, I support the intentions of these amendments and acknowledge the benefits to business planning that aligning the funding cycles could bring. However, the reality of passenger services funding is that it is inextricably tied to passenger revenue, which changes in response to a number of factors that are difficult to predict, particularly over longer time spans. Certain factors, such as wider economic conditions and the weather, are outside both GBR and government’s control, so it is quite difficult for any Government to commit passenger services funding in fixed five-year periods, given the revenue-forecasting challenges. It will, however, be a goal to work towards, and in particular it cannot be achieved before GBR’s funding settlement processes have bedded in and Ministers have confidence in how the settlements operate. I recognise how important it is that GBR has the confidence to plan across track and train to make the most of integration. That is why it will be required to produce and publish a business plan covering all its activity, including on passenger services, and this plan will span the duration of the five-year funding period, regardless of changes to passenger funding. In addition, once Ministers have more experience of funding an integrated body and GBR has demonstrated that it is fiscally responsible, the Bill will provide a route to include passenger services in the five-year funding settlement in future, via statutory instrument. That will allow passenger services funding to join the five-year settlement. I hope the noble Baroness sees that we are as aligned as we can be on this amendment and that she can therefore support the Bill as drafted.
On Amendment 72 from the noble Lord, Lord Lansley, where research relates to infrastructure funding, this will continue to be allocated to the five-year infrastructure budget, similar to Network Rail today. However, research and development schemes that are not related to infrastructure activities tend to be funded by the Government on a shorter-term basis according to need. One example of this is the First of a Kind competition, which aims to address persistent issues on the railway, such as safety concerns, service reliability or anti-social behaviour. This year, applicants will put forward ideas to help deliver major projects on time and to budget, improve the passenger service performance and reduce the industry’s impact on the environment, with previous winners applauded for creating tech-led solutions. This kind of scheme is suited to one-off timescales which can move quickly to secure outside investment and ensure innovation, and avoid funds like this being allocated in the same way as essential operational funding, which is clearly different. It would not work well to force this type of research and development into set funding periods.
I should start with a point of agreement on Amendments 63, 68, 69 and 112: GBR needs to run a more efficient railway than the one we have today, and I absolutely agree that the taxpayer has not always received value for money from the railways. This is precisely why we are creating GBR through the Bill. After all, the main obstacle to an efficient, financially sustainable railway—a lack of integrated decision-making delivery—is being handled by this Bill. Because I agree that we must get the most out of the railway for the taxpayer, the Secretary of State is already under a duty in Clause 18 to consider the efficient use of funds when taking all decisions on the railway, including her decision to issue the statement of objectives. This duty is imperative, as it is one of the main ways that the Bill incentivises GBR to maximise the value available to passengers while reducing, where possible, the overall taxpayer subsidy.
In my view, however, the Bill’s current duties are well balanced, and the need to consider the efficient use of public funds achieves the same intention better than the straight direction to minimise costs. Minimising costs could push the duties out of balance, such that pure cost-cutting rather than more efficient working is preferred, which could lead to the wrong outcomes. For example, one of the simplest ways that GBR could reduce costs is to cut services to the lesser used but equally relied on parts of the network. If that sounds familiar, it is because it is that kind of thinking that led to the Beeching cuts, but I know that noble Lords will agree with me that that would not be the right answer.
Further, GBR’s business plan is where GBR will set out how much it will be able to deliver for the country with the funding that the Government can provide. We absolutely expect those plans to demonstrate how it is meeting its duty to use public money efficiently. To meet that duty, I would expect to see GBR planning to make rail services more attractive to passengers, planning to attract outside investment, planning to make good use of devolved authority funding and achievable cost savings, and taking other measures to reduce taxpayer subsidy. Following that, the ORR will review the plan and advise the Secretary of State on whether it represents good value for money while also being bound by a duty to make efficient use of public funds. Finally, the Secretary of State will approve the plan with her own duty to consider the efficient use of public funds in mind. I therefore think that the intent is delivered by the Bill as drafted.
On the statement of objectives specifically, I should reassure noble Lords that the Secretary of State could absolutely include improvements in efficiency and productivity within her objectives, and I am sure that she will. That is because paragraph 2(2) of Schedule 2 is indicative and not limiting. Provision allows the Secretary of State to include objectives about the standards that she wants GBR to achieve with its funding, and she can include topics such as efficiency and productivity as well as other standards that she may wish to set.
On Amendments 85 and 88, I have already said that I recognise the need to get the most out of the railway for the taxpayer. That said, it would be unrealistic to set up GBR with a statutory goal to eliminate all subsidy. The reality is that taxpayer funding will always be needed for some issues and we can see this through comparative railway networks worldwide. Railways are a long-term capital-intensive endeavour that deliver economic growth, jobs and housing, and social benefits greater than the sum of their parts. It is essential for the functioning of our largest cities and country, and taxpayer funding is necessary to ensure investment in infrastructure maintenance and service delivery over the long run.
It is, of course, about striking the right balance. GBR needs to be efficient and incentivised to chase revenue growth through its financial framework, but there will always be some routes and regions in which rail travel is extensively relied on but will not make an operating profit. I am sure that noble Lords would agree that we should not be shutting off access to the railway for these communities. Therefore, although GBR will always be incentivised and encouraged to make a profit, there will be social and economic conditions where it may be unavoidable for GBR to run at a loss. There could, for example, be the need to maintain a high standard of services during a temporary economic downturn, and setting up GBR to break the law in those circumstances would create an inflexible system that does not drive the right behaviours as a whole.
In turning to Amendment 67 from the noble Lord, Lord Lansley, about transparency, I confirm to him that the Bill already requires that GBR’s business plan covers all of its activities, costs and how those costs will be met. Therefore, where a cost is being met by devolved funding, that will already be clear through the business plan. I hope this reassures him that the Bill already provides for this intent, but I am not sure that I agree with both the noble Lords, Lord Lansey and Lord Harper, on the dangers of too great a specificity.
Amendment 89, tabled by my noble friend Lord Berkeley is also about financial transparency. I am pleased to offer him reassurances that this information is already available or that there are proportionate arrangements in place to assure that it will become available. The Bill’s impact assessment sets out the estimated cost savings when establishing GBR and estimates that rail reform will generate more than £1 billion-worth of savings and efficiencies by the end of this debate. On costs incurred, I assure my noble friend that GBR’s forecast cost of operation will be contained within its published business plan. The Bill ensures this and requires that GBR’s plan covers all its planned activities in the five-year funding period. Revenue will also be included in the business plan as it is part of the requirement in the Bill for GBR to set out how it proposes to meet its costs. Naturally, some commercially sensitive information is likely to be redacted, as any business would do, but otherwise the Bill achieves what this amendment proposes.
Similarly, on Amendment 314, I assure the noble Lord, Lord Young, that there are already processes to account for, scrutinise and publish the kinds of information that the amendment seeks a report on. For example, the impacts on the Government’s balance sheet will be considered as part of the Office for National Statistics’ classification assessment, and GBR’s income, expenditure and liabilities will be included within its annual accounts required under the Companies Act. Information related to passenger revenue and government subsidy will be made available through the ORR’s regular publications such as its annual release on rail financing, as they are today.
The noble Lord recounted some other examples, including of course bringing Network Rail on to the public balance sheet in 2015. He quotes £30 billion, but my recollection is £54 billion, actually. Of course, there were some consequences of that. One he did not mention is that Network Rail was henceforth required to consider efficiency much more carefully afterwards than it had done for many years previously. The consequence of that has been a significant reduction in the costs of some of the things that it does, as I can attest, since I chaired it for nine years until 2024.
In response to the noble Lord, I note that the Secretary of State will work with both the Office for National Statistics and His Majesty’s Treasury. This will no doubt contrast with the recent past, where the Government have in effect, for a considerable time, specified rolling stock for individual train operators, some of which have been in public ownership for nearly 10 years. Given everything I have set out, I hope that noble Lords feel able not to press their amendments.
Lord Moylan (Con)
Is the noble Lord’s position that one of the consequences of this Bill, if enacted—we will not know for some months until after it is enacted—is that roughly £25 billion-worth of rolling stock could be added to government debt? I do not want to argue about the figure, but I believe that is roughly right. We are going into this in the dark, not knowing whether that will be the case. What soundings has the Minister taken with Treasury colleagues about this interesting possibility?
Lord Hendy of Richmond Hill (Lab)
Since it is independent, nobody can predict the consequences of an Office for National Statistics examination until it concludes one. I said that the Secretary of State will work with it, because it will also need to consider the recent past. The Bill is in Parliament because it has cross-government agreement from all the departments of government. We cannot contemplate what the future might hold in respect of the decisions of the ONS.
Lord Moylan (Con)
I am sorry to press the noble Lord. I agree that if the ONS is independent he cannot say what its decision will be, but he could secure that decision before the passage of the legislation. That cannot be too difficult. Given the consequence, it must be possible to secure the decision first. Nobody, I think, is suggesting that you would try to manipulate the decision; that is not my objective. Could the Government not take that approach? These are very significant sums, and to hold one’s nose and just jump into the dark seems reckless.
Lord Hendy of Richmond Hill (Lab)
I already said that one thing the Secretary of State will do is to help the ONS with its understanding of both the recent past and what will happen as a consequence of the Bill. In the recent past, the Government have specified, to the most extraordinarily detailed degree, all the rolling stock used in all franchises for probably the past 10 or 12 years. They have also determined how long it runs for and how long it lasts. In those circumstances, we are very content to wait for the ONS to do its work when it chooses to do it.
Lord Lansley (Con)
I have a question pursuant to the debate about the powers to fund the GBR business plan. I understand from the Minister’s reply, and it is a reasonable proposition, that the Secretary of State should provide financial assistance in relation to activities set out by GBR in its business plan. Indeed, paragraph 3 says that the Secretary of State should do exactly that and say what financial assistance is expected to be provided. But would it not be logical, therefore, that the powers to provide financial assistance that are specified subsequently should extend to those activities within the business plan, rather than having only infrastructure being capable of being funded by the Secretary of State using the powers? We would end up with something much more visible: specific powers to provide financial assistance in relation to the business plan over this funding period.
Lord Hendy of Richmond Hill (Lab)
I thank the noble Lord. Since I managed in the end to have to correct myself after the last session on Tuesday, I would rather take some advice and write to him about this. I understand his point, but I am not sure I am capable of expressing an answer in language that will be clear enough for him, so I will drop him a line, if I may.
Baroness Pidgeon (LD)
My Lords, I thank the Minister for his response and the fact that, in principle, he supports my amendments in this group as a goal to work towards. It is reassuring that he pointed out—if I understood him—that, within this legislation, there is the potential for a statutory instrument to include passenger services in the future within the five-year settlement. I welcome that and, on that basis, I withdraw my amendment.
Amendment 57 withdrawn.
Amendment 58 not moved.
Amendment 59
Moved by
59: Schedule 2, page 70, line 18, leave out “may” and insert “must” Member's explanatory statement This amendment would require the Secretary of State’s statement of objectives to include objectives as to the standards to be achieved in relation to railway services.
Lord Lansley (Con)
My Lords, I have two amendments in this group. Amendment 59 looks at the statement of objectives that the Secretary of State sets out for GBR and what is intended to be achieved over the funding period. The objectives, as we can see in paragraph 2(2), “may include objectives as to standards to be achieved when carrying on activities” that are to be set out in the business plan. It is a simple proposition and one of those happy subjects that we always discuss in Committee: should the word be “may” or should it be “must”? The implication of “may” is that it may not be, and we are considering whether it would be acceptable for the statement of objectives not to include reference to the standards that are to be achieved in relation to these activities. One of these lists about which we are not supposed to be too specific follows, but standards to be achieved are not set out as such in that subsequent list. They tend to be objectives relating to other things. However, my other amendment is intended to see how these things interact. Separately, in Clause 65, Great British Railways has the responsibility to consider whether it should have a performance scheme, which, as I understand it, is essentially about minimising disruption to the network and to passengers. The question is: where are the objectives in relation to minimising disruption to passengers? I do not see them in paragraph 2(3). You could argue that they arise from the carriage of passengers and goods, but I do not think it is sufficiently explicit. I am not sure whether it is included in objectives as to standards. Are those the same standards as in a performance scheme? I see the two amendments being linked. We are looking to ensure that the objectives set out standards and are clear about what is required in terms of avoiding disruption and enabling passengers to be confident about the availability of services according to the timetable. I beg to move.
Lord Moylan (Con)
My Lords, it may be helpful to the Committee, since I have such a large number of amendments in the group and no one else who is present has any, if I speak now, and then it will be easier for the noble Baroness to comment on the amendments I have moved. I shall start with Amendment 63A. I have tabled it because in the last 24 hours I have been contemplating the wipe-out of 10% of the global population by artificial intelligence, which a whistleblower at Anthropic has said is a very likely prospect some time in the next 10 years. It is possible that these claims are somewhat overblown—I do not know—but it is astonishing that we have a Bill whose measures in all likelihood, as I say, will stay in place for 30 years but we are not having any debate about digital, artificial intelligence or the innovative future of the railway.
Lord Lansley (Con)
May I just interrupt my noble friend? I think he has moved on to the next group. We are on the group led by Amendment 59, to which I just spoke.
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
And today’s Committee is due to conclude with Amendment 63.
Lord Moylan (Con)
I beg the Committee’s pardon. May I subside?
Lord Hendy (Lab)
AI might have helped there.
Lord Moylan (Con)
It would, yes.
Baroness Pidgeon (LD)
I will speak to my Amendment 82 in this group, to which the noble Lord, Lord Moylan, has added his name. It would create a new board of Great British Railways, and it provides detail of the composition of this board. The board would increase the transparency and accountability of the Secretary of State’s decisions, as it would create a vehicle for these to be properly discussed and would ensure that a wide range of expertise were at the table. If the Secretary of State decided to make a decision that was against the advice of the board, the reasons for that would need to be set out clearly and publicly. The membership of the board would represent Great British Railways and other key stakeholders in the running of the railway, such as open access operators, freight operators, the Office of Rail and Road, the Passengers’ Council and organisations that represent passengers with accessibility requirements. It would comprise of at least six members. To make sure that there is a voice for other stakeholders, no more than half of the board’s membership would be employed by or otherwise represent Great British Railways. This amendment would allow for any decision or direction from the Secretary of State concerning Great British Railways to be notified to the board prior to its being made. The board would then need to publish any decision or direction it had considered and whether it had approved it. If the board did not agree with the Secretary of State, it would still be free to go ahead with the decision, but it would need to publish a statement setting out its reasons for that. For us, this is a way to ensure that the Secretary of State uses the powers in this Bill wisely, with a proper sounding board for feedback from experts with different viewpoints in the field. I hope that the Minister will consider this proposal seriously. The other amendments in this group are around clear objectives for Great British Railways. Amendment 64A from the noble Lord, Lord Moylan, would require consultation with the supply chain and railway service providers when preparing objectives for a funding period. That would appear to be a sensible way to ensure industry buy-in and prioritisation. Other amendments seek different ways to try to measure and assess the performance of Great British Railways. I hope that the Minister will be able to provide details of how the Secretary of State and Parliament will assess this going forward, and I look forward to his response.
Lord Moylan (Con)
I beg the Committee’s pardon: I got slightly muddled because of changes to the groupings. I come to my Amendments 60, 64A, 83, 84, 87, 94, 124, 125 and 291. The central issue running through these amendments is accountability. We are creating an enormous, new, publicly owned organisation that will, in all likelihood, receive billions of pounds of taxpayers’ money and exercise extraordinary control over the railway. It therefore needs clear objectives, measurable performance indicators and consequences for when it fails to deliver. Amendment 60 addresses the funding objectives. As drafted, the Bill says that the Secretary of State “may include” the specified objectives. My amendment would change that to “must include”. Amendment 64A would require consultation with railway service providers and the rail supply chain when those funding objectives are prepared. GBR will continue to rely enormously on the private rail supply chain. These businesses invest in skills, equipment and capacity on the basis of decisions taken by the Government and GBR, so it is sensible that those decisions are informed by their expertise and knowledge, as well as the consequences for employment and profits in the private sector that would arise from those decisions being made. They should be consulted. The remainder of my amendments address what might be called the problem of the missing key performance indicators. We have repeatedly been told that GBR will be held to robust performance measures, but what does “robust” actually mean? Amendment 124 would answer that question by establishing a proper, statutory KPI framework covering the things that passengers and taxpayers actually care about: reliability, safety, passenger experience, affordability and value for money, passenger growth, financial sustainability, productivity and efficiency, and freight performance. Of course, one can argue about what should be on the list; I would be willing to enter into discussions with the Minister about putting in something else or maybe adjusting something that I have proposed. However, we need to know what performance indicators are in the Bill—otherwise, we will be allowing GBR far too much unconstrained power and latitude, with little accountability. Amendment 94 would ensure that the long-term rail strategy is geared towards enabling GBR to meet these KPIs. The Government may say that a long-term rail strategy should not be dictated by short-term measures, but we have to get from the short term to the long term. A 30-year aspiration is of little value if there is no way of measuring whether GBR is moving towards it year by year. Amendment 125 would, therefore, require annual reporting and quarterly updates against those KPIs. Even I admit that quarterly updates might be a little onerous so, if the Minister objects, I will meet him half way and say, “Let’s have semi-annual updates”—I am a reasonable person and am open to suggestions—but something is needed if we are going to succeed. It is no good saying, as we did the other day, that the target is to achieve 75% growth in freight by 2050. Only the day before yesterday, the Government produced a statement saying that they have set an interim target. So they appreciate what I am saying, which is that there should be interim targets. However, the interim target is that freight should achieve 40% growth by 2040. None of us will be here. Nobody is asking, “What is the 2030 target?” There is no 2030 target; there is merely a 2040 target. That is not good enough. It is playing with achieving targets and would be simply laughable in the private sector. We need these targets; as I say, quarterly updates may be too onerous, but an update every decade or 15 years is just not good enough. Amendment 291 would give the ORR the important, independent job of assessing whether GBR is actually achieving its targets. Surely GBR cannot be allowed to mark its own homework. Amendment 84 would apply the same principle during the transition. This is a generational restructuring of the railways, involving employees, operators, freight, open access, local authorities, the supply chain and millions of passengers. A quarterly ministerial Statement—or even one once every six months—on progress towards GBR becoming fully operational would increase transparency, maintain focus and, importantly, prevent drift. Lastly, Amendment 87 concerns consequences. When I have asked the Minister privately how the Secretary of State will exercise control over GBR, he has said—he said this in a meeting for all Peers the other day, so I think I can repeat it—“Of course, she can always sack the chairman”. I suppose she can, because she is the sole shareholder in the business, but there was nothing about sacking the chief executive. Of course, it is not the Secretary of State’s job, as I understand it—we are not vouchsafed of these arrangements—to appoint or sack the chief executive; that would be a decision for the board. I am trying to introduce some accountability for the chief executive. We are giving the Secretary of State the power—not a duty, obviously—to dismiss the executive head of GBR when the organisation is failing against the KPIs and has also failed to act on guidance issued by the Secretary of State. It is not enough just to sack the chairman. You will not get anybody of any quality applying for the job if they are the only person whose head can roll; the chief executive needs to have their neck on the block as well. My noble friend Lord Lansley’s Amendment 59 is obviously sound. The Secretary of State may “include objectives as to the standards to be achieved in relation to railway services”, but that “may” ought to be a “must”. My noble friend Lord Grayling’s Amendment 66, to which I have added my name, would require GBR’s business plan to contain measurable performance indicators for its statutory duties. This is simply basic accountability. If Parliament gives GBR duties, its business plan should explain how its performance against them will actually be measured.
Lord Hendy of Richmond Hill (Lab)
My Lords, let me turn to Amendments 94, 124, 125 and 291. I am pleased to say that I agree with many of the performance indicators set out in the noble Lord’s amendments, which will be important in GBR delivering the service the public expect. I also agree with the concept of an annual report. I reassure the Committee that, on both counts, such a thing already exists. The Bill requires GBR to produce an annual business plan and we have already confirmed that this will include meaningful KPIs around performance. For example, the business plan will clearly have to include GBR’s progress towards reaching its statutory freight growth target and I happily confirm today that it will. The 2050 target is a long way out, but progress against it should be measured in the business plan in 2040 and in 2050. By keeping these KPIs in the business plan, we ensure that a reflection of GBR’s activities, the cost of those activities and its performance against those activities and costs are always transparent and available for scrutiny. GBR will publish annual updates to this plan which can, and should be, scrutinised by Parliament in the usual way. GBR will need to consult with the ORR and the passenger watchdog when creating these updates, ensuring expert and independent advice. As the noble Lord, Lord Moylan, proposes, the ORR will monitor GBR’s performance against the KPIs in its business plan as part of its monitoring function. An important distinction, however, is that the ORR’s role under the Bill as drafted is not confined to looking backwards at whether a target has been met. The ORR can also recommend to the Secretary of State whether GBR’s commitment and performance measures are realistic and measurable—something not factored in to the amendment. Linking KPIs to the long-term rail strategy, rather than the business plan, would undermine the purpose of the strategy. The rail strategy is designed to provide ministerial direction on the long-term trends that will affect the railways and, at a high level, what they expect GBR to do about them. But GBR must be independent enough to respond to the rail strategy with a self-developed, proactive and detailed activity plan covering the next five—
Lord Lansley (Con)
Forgive me for interrupting. I cannot find where it is required that there be an annual business plan. I can see there is a provision for the business plan to be kept up to date, but nothing that says this has to be done at any specific time or on an annual basis.
Lord Hendy of Richmond Hill (Lab)
Let me come to that point. I believe that there is a provision, but before I say so, let me check. The long-term rail strategy is designed to provide ministerial direction on the long-term trends that will affect the railways and, at a high level, what they expect GBR to do about them. The business plan is clearly the right place for short and medium-term targets to be included, which GBR should set for itself and which the ORR should review and comment on.
Lord Moylan (Con)
Can I be absolutely clear about that? The Minister is saying that GBR should set its own KPIs. The ORR may look at them and comment but, having heard the comments, GBR will set its own KPIs and amend them, or not, as it sees fit. That is the plan.
Lord Hendy of Richmond Hill (Lab)
The long-term rail strategy will set out the Secretary of State’s expectations. The business plan will set out what GBR believes it can achieve to move towards the long-term rail strategy. The business plan has to be agreed with the Secretary of State, who might well disagree with some of its targets. In the end, GBR has to satisfy the Secretary of State about the progress that it proposes to make. I do not think that is much different, as the noble Lord will recall, to the Transport for London business plan, which translated the mayor’s transport strategy into targets related to the budget of the organisation and which were agreed by the mayor.
Lord Lansley (Con)
Surely there is, between the long-term rail strategy and the business plan, the statement of objectives. Surely the question, which I think my noble friend through his amendments has explored quite positively, is that the statement of objectives needs to be quite specific. Some of them need to be performance indicators in themselves, because the business plan is GBR explaining how it is proposing, through its activities and funding, to meet, or to contribute to meeting, what is set out in the statement of objectives.
Lord Hendy of Richmond Hill (Lab)
I have to say to the noble Lord that I do not see the difference, in the sense that the long-term rail strategy must express the Secretary of State’s desire, for example, for a reliable railway in terms that enable the business plan to set out the measures that would be used to decide whether it is reliable. Indeed, in the recent past, one of the things that has had to be done since this Government took office was to agree, for the first time, what the measurements are and what the target should be for expressing the performance of the railway. I do not see that conflict in the way that the noble Lord does.
Lord Lansley (Con)
Forgive me, but I do not see it as a conflict at all. I am expressing, as I think the Minister has done on a previous occasion, that there is a difference between what is long term and what needs to happen this year, next year and indeed, for the purposes of the funding period, in the next five years. The statement of objectives is specifically about the next five years. The long-term rail strategy is on a different timeframe.
Lord Hendy of Richmond Hill (Lab)
The noble Lord is right, actually: I am beginning to confuse myself about this. There is a danger of getting into too great a specificity. He is right that the statement of objectives will include specific standards, but that translates into the business plan.
Lord Berkeley (Lab)
My Lords, before the noble Lord sits down, referring to the discussion we have had on KPIs, it occurs to me that there needs to be some differentiation between the list—whether it is the list produced by the noble Lord, Lord Moylan, the list in the Bill or another one—of issues which are basically in the total control of Great British Railways and those which are not. The noble Lord, Lord Moylan, mentioned freight. Freight is not in the control of GBR, in respect of how many trains run and how much money GBR makes from them directly. Of course it can fiddle around with the access, the signalling and everything else, but it is dependent upon many other people delivering the KPI, which I think is supposed to be the KPI of Great British Railways. It would be interesting to hear from my noble friend how the two different criteria are set when coming up with the calculation of who does the KPI and what it covers.
Lord Hendy of Richmond Hill (Lab)
My noble friend is right that some of these KPIs relate to wider economic circumstances than the railway currently has, but we discussed on the first day in Committee the fact that the need for a long-term freight target is so that GBR focuses on its own part in growing freight. Clearly, it is much subject to what shippers want to send, how they want to send it, where they want to send it and so forth, but I do not see any conflict in GBR having a long-term freight target. It may have to take different action if the economy or the things which are transported by rail change over time. There has been no greater case of that than the case of coal and steel, which were once a significant part of railway freight but which today are virtually nothing. On the other hand, intermodal traffic and construction materials have vastly increased, and there is no doubt in my mind that the railway could contribute more than perhaps it has done in the recent past to growing those particular categories if it were minded to do so, and the freight target is designed to make it think about how it could do it. I do not see any contradiction in that; it will be like running any other business. The noble Lord, Lord Moylan, referred to his experience at Transport for London and it is, of course, exactly the same. It is a large organisation which is contributing to, but to some extent dependent on, the economy of London; that will be true of the railways as a whole. I agree with noble Lords that there should be KPIs for GBR, and it should be held to account for meeting them. The reason we are discussing these now is because there is no doubt that, in the end, they should be in its business plan, set next to the costs that they incur and the revenue it will derive from them. I should go back to what the noble Lord, Lord Lansley, said. Paragraph 5(1) of Schedule 2 says that GBR must keep the business plan up to date. We are pretty clear that that means annually; it could be more often if circumstances change. It is not unknown for businesses of this scale to have to change their business plan if the economic circumstances dictate, but I think annual is reasonable. I would not expect the Secretary of State or the board of GBR to tolerate any circumstances where it did not propose an annual business plan. If I may, I will try to find my place regarding Amendment 66. I am glad that the noble Lord agrees that GBR’s business plan is where its KPIs should sit. However, these need to evolve over time while, by contrast, GBR’s duties are unchanging—a core list of ambitions guiding GBR over the next decades. While GBR’s business plan is where it will show both how it will discharge its duties and set out its KPIs, there is an important distinction between them. Duties and KPIs are not the same thing. KPIs need to be driven by the specific, often numerical, outcomes sought by the Government, whereas duties are behavioural expectations. Some of the duties would be impractical to even turn into measurable KPIs. How would GBR measure whether it has provided businesses with certainty or acted in the public interest? I believe it is right that the two should not be statutorily linked. Amendment 87 proposes action about the chief executive. I hope the noble Lord understands that, primarily, the powers of the Secretary of State rest with the right, in the end, to dismiss the chair if that chair fails to do the job that the Secretary of State expects of the chair and the board. That might well be the case if the Secretary of State believed that the chair failed to challenge the executive and chief executive effectively. The Secretary of State will also have the right, as we discussed this afternoon, to issue legally binding directions to GBR, and those could be where remedial action is required. The Secretary of State could also remove accounting officer status from the CEO, effectively taking financial management of the company into the department.
Lord Moylan (Con)
Where does it say the CEO is the accounting officer?
Lord Hendy of Richmond Hill (Lab)
What I would say to the noble Lord about all these things is that we are setting this organisation up and, conventionally, it is the chair and the board that support, hire and fire the chief executive. I do not believe that his amendment is the right way of doing this. It should be done through the chair and the board, and the expectations of the Secretary of State should be conveyed to them. Whatever action might be necessary regarding the chief executive should be taken as a consequence of that relationship. On Amendment 83, the Bill already does what the noble Lord is trying to achieve. Much of the substance of this amendment is already enabled by the process created by Schedule 2. GBR is already required to produce a business plan containing all its activity and how its costs will be met, which will be reviewed annually, as we have discussed, to ensure it is up to date. The plan will be published, which will allow Parliament and the public to hold GBR to account. The ORR will monitor GBR’s delivery of its business plan. I agree with the noble Lord that transparency is important, but we do not need to hardwire in excessive bureaucracy, as this amendment would. On Amendments 59, 60, 62 and 64A, I can understand the desire to codify the contents of the statement of objectives, but this legislation needs to be drafted to last as long as the last Railways Act has and therefore needs to be open to future Governments to suggest their own objectives for the funding period. The Bill provides a suggested list of what could be included, setting a strong precedent for future government but leaving options open for Secretaries of State. This is a tried and tested method, being the same approach that underpins the periodic review of funding today. The periodic review is widely considered one of the most successful parts of the current regime, which is why the Bill replicates the five-year length of it. Similarly, the statement has to be capable of accommodating different approaches based on wider environmental and socioeconomic circumstances. That is why the current list of potential topics to be covered by the statement serves as a guide for future drafters but does not constrain the Government.
Amendment 62, I am afraid, confuses the funding settlement with the access framework. In reality, the expertise about what specific incentives should be set for different operators on different routes is within the railway industry. GBR, in collaboration with industry, should create the performance scheme, not the Secretary of State.
On consulting industry on the statement of objectives, as in Amendment 64A, the Bill proposes, and I agree, that the better place for industry engagement is on GBR’s business plan. I absolutely expect both GBR and the Office of Rail and Road to engage with industry on the development of the business plan. This allows industry’s view to be fed into the product that is produced in response to the Secretary of State’s objectives.
Lord Moylan (Con)
My Lords, the Bill should be amended to say that the business plan is annual, especially as that is the Government’s clear intention. The Minister has just said the business plan is going to be annual and it was precisely to get stakeholder engagement with business away from the annual cycle that the amendment was tabled. Can the Minister take account of that? It is not good enough to turn up once a year and have a word with the industry about what your plans are. That is what we are trying to get away from.
Lord Hendy of Richmond Hill (Lab)
I think I understand what the noble Lord is saying. I am expecting an organisation, as GBR will be, to be constantly in discussion with the wider railway industry and the supply industry, and indeed its customers, simply because, as we have discussed, the market will change over time. I do not see that there is any confusion between an annual exercise of producing a business plan and the sort of engagement over a prolonged period that will confirm and vary industry’s advice over time about what should be in it. That is a perfectly natural way of doing business. If I refer, as I probably do too often, to Transport for London, that is precisely the way in which Transport for London did it. The business planning cycle was an annual cycle, but the engagement with those parties who had an interest in both the inputs and results was an activity throughout the year.
Lord Moylan (Con)
The Minister has just changed the story. A moment ago, he was saying that engagement with business stakeholders would be through the business plan. Now he is saying that it is not actually through the business plan once a year—because anyway, we do not know it is going to be once a year, but it is likely to be once a year—but it will be a continuous process. Of course, it can in a sense be both, and other things, but that is not giving us the level of assurance and precision that I think noble Lords are looking for. This is one of our big opportunities to speak up in Committee for the interests of the supply chain—there may be other opportunities coming in later groups. This is the chance for the Government to nail down our interests. We are interested in passengers and freight, but we are also interested in the supply chain, and trying to secure for it a degree of visibility about the future is important. What we are getting is not very clear, I am afraid.
Lord Hendy of Richmond Hill (Lab)
I agree with the noble Lord that the supply chain is crucial. Actually, for much of the supply chain, what really makes a difference is the five-year periodic settlement. That highlights the need for this engagement to go on, both at the time when the five-year plan is formed and the rest of the time. I do not see any contradiction in those two things happening. The five-year settlement for infrastructure could not possibly be done properly without the involvement of the supply chain, but they do not go away for the next four years until the next one. The dialogue with them is constant—and so it should be. I had better make progress, if I may. I turn to Amendment 82, tabled by the noble Baroness, Lady Pidgeon. I do not often completely disagree with the noble Baroness, but I do here, I am afraid, because her amendment would fundamentally blur accountability for the railway system and undermine the clear responsibilities in the Bill. I do not think that interposing another board between the Secretary of State and the board of GBR would be right. However, the Bill contains a number of provisions such that both the Office of Rail and Road and the passenger watchdog will have many opportunities to provide the Secretary of State with advice before she takes decisions. The reality is that she will most likely have taken advice from either, or both, of them before any performance matters should escalate to the point of requiring a direction. On Amendment 84, as we discussed in earlier groups, the Government are dedicated to providing a steady drum beat of publications that will inform the House—and, indeed, this Committee—on progress in establishing GBR. I encourage the noble Lord, Lord Moylan, to look at the Government’s policy publication timetable on GOV.UK; indeed, I have just written to noble Lords about the publication of the draft access and use policy by Network Rail. Given the ambitious timeline that we are working to on this, it would not seem to make much sense to divert resources away from the business of establishing GBR in order to write progress reports that would largely duplicate existing information that the Government are already making available. Given what I have said, I encourage noble Lords and the noble Baroness not to press their amendments.
Lord Lansley (Con)
My Lords, I thank all noble Lords who took part in this interesting debate. To my mind, we established one or two rather important propositions. The first is that, when the Government are setting out their statement of objectives, in relation to which GBR writes its business plan, it would be helpful if it were as specific as possible about the performance indicators that are to be included in that; my noble friend made a lot of good points where that is concerned. I made, in effect, only one point: I accept that, on Amendment 62, relating it directly to the performance scheme may not be the way to do this, but, as with the question of how many trains arrive within 15 minutes of the timetable, there are standards that need to be included, and it is important that we have those standards in the statement of objectives. The other thing that we have established is an interesting reflection on the relationship between the business plan and the funding arrangements. I draw noble Lords’ attention to paragraph 1 of Schedule 2 on funding. The ORR is setting a timetable, and we have four components to this. I do not envy the Office of Rail and Road’s process of trying to establish in precisely what relationship these four dates are, because it has to say to the Secretary of State, “You’ve got to tell us what your statement of objectives is”. Then it has to say to the Secretary of State, “You have to tell us what funding is available”, which is an interesting question because the answer might be “not much”. Thirdly, Great British Railways has to go off on a third element and give us the business plan. Lastly, the Secretary of State tells GBR and the ORR how much financial assistance is going to be provided. I have two points to make. I am not at all sure why the fourth of those components is there in that form. There is nothing in the schedule saying that there is a requirement on the Secretary of State to provide such a notice. There is no notification requirement; it is simply that the power to provide financial assistance is there. So I would have thought that the Secretary of State might give notification of how much financial assistance there is, but looking across the whole funding period and having to notify them of what financial assistance is available seems a curious requirement to me.
Lord Hendy of Richmond Hill (Lab)
If I may intervene on the noble Lord, for once, I say to him: welcome to the five-year funding periods. We are now in control period 7, I think. The process that was described is complex, but it works remarkably well, which is why the industry and the Government are wholly aligned in wanting to carry on with it. I could discuss with him in more detail how it works, but it has generally been very effective. It relies on a lot of collaboration between the parties, which is why it has been successful.
Lord Lansley (Con)
I take that point, but, of course, that is if the financial assistance under this is restricted to infrastructure, which we debated a short while ago. If there is a requirement to notify of the financial assistance, I do not see it at the moment. The Minister might have a look at whether such a notification is required. That being the case, I have made my points. Finally, I apologise in advance that I will not be here on Wednesday for the next day in Committee. I will endeavour to leave notes with colleagues about any amendments that are my responsibility; I will have the benefit of reading what is said. We might have the benefit of the presence of my noble friend Lord Grayling to speak to his amendments. With that, I beg leave to withdraw Amendment 59.
Amendment 59 withdrawn.
Amendments 60 to 63 not moved.
Committee adjourned at 4.11 pm.
Source: UK Parliament Hansard API. Debate ID: 5404705.