Railways Bill

Committee (1st Day)

15:45:00

Scottish and Welsh l egislative c onsent sought.

Relevant document4th report from the Delegated Powers Committee

Clause 1Great British Railways

Amendment 1

Moved by

1: Clause 1, page 1, line 8, at end insert— “(1A) The body corporate must be a company constituted under the Companies Acts.”Member’s explanatory statement This amendment seeks to clarify an ambiguity in this and the following Clause as to the legal character of the body corporate.

Lord Moylan (Con)My Lords, in the course of preparing for this Committee, I have had a number of meetings with the Minister and his officials, and I thank them for making themselves available for those meetings. I say that now because I shall almost certainly forget to say it at more appropriate times later on, but if I do it is not because I do not mean quite seriously how grateful I am for the contribution and effort that they have made.

We are here on the first day of the Committee to create a Soviet-style railway in the United Kingdom and to go back—and we now know explicitly that it is the Government’s and the Prime Minister’s intention—to the warm and fuzzy 1970s. The 1970s are now the paradigm of where our nation should be. Those of us who remember the 1970s—there may be a number of us in the Room—do not have such fond memories of the standard of public services then compared with what we have today. We do not today have bodies unburied, we do not have refuse piled high in the streets as a result of government folly and we have railways that run broadly on time compared to the—I see that the noble Lord, Lord Bradshaw, is not here to be annoyed by this—relative catastrophe of British Rail in its worst days as it trundled towards its final station. Now it is to be resuscitated. We are to get Great British Railways in place of British Rail and we are going to have it on a totally nationalised basis. There are two separate things going on here. First, the Minister makes a case that the railways would operate more efficiently if, as he puts it, track and train were united. That argument can be debated. I do not wholly accept it, but it can be debated, but it is not necessary in order for track and train to be united that they should all be owned by the Government in a single company. We know that because the Williams review, which was warmly welcomed by the Minister when he was chairman of Network Rail and was supported by the Conservative Government at the time, gave an alternative way forward, so the decision to nationalise the whole thing is particularly spiteful. The only explanation for it—because it is not necessary for the purpose of achieving the Government’s stated objectives—is that it has been done to pay off the trades unions that made such generous contributions to Labour’s victory at the polls in 2024.

We know that privatisation has been a huge success on the railways and that passenger numbers increased enormously after privatisation. It would be astonishing if the Government nationalising the railways achieved anything like that increase in passenger numbers. New operators entered the market and competition stimulated improvements.

I have four amendments in this group, but one of them is consequential, so three that I intend to speak to. My Amendment 2 addresses a particularly vicious little clause in the Bill, which says, first of all, that the body designated as Great British Railways has to be owned wholly by the Crown. In other words, a future Minister would have to pass primary legislation to redesignate or designate a different body in the private sector to carry out Great British Railways’ activities. What is the need for that? It is simply to gratify the trades unions. A second part almost seems to impose a penalty of some sort on any Minister who makes even a suggestion that Great British Railways should be transferred to the private sector. My Amendment 2 deletes that part; it does not stop Great British Railways going ahead as a nationalised body but it allows a future Secretary of State without the need for primary legislation to redesignate a different body, not necessarily owned by the Crown, to carry out the role of Great British Railways.

Amendment 1 is addressed at sloppy drafting more than anything else. The Bill talks about a body corporate being designated as Great British Railways, whereas later, in the next clause, it is implicit that the body corporate should be a company constituted under the Companies Act. But the Bill does not actually say that the body corporate has to be constituted under the Companies Act; it only says that it has to be wholly owned by the Crown. Other bodies corporate could be designated, as long as they were wholly owned by the Crown. It is simply sloppy drafting not to say at this point that it is to be a body constituted under the Companies Act.

When I mentioned this to the Minister, he said, “Oh well, everybody knows it’s going to be a company constituted under the Companies Act”. Well, they do not, if they read the Act—it needs to be written into the Act by him that that is what the intention is. It should say quite explicitly that that is what he intends to do. We will come back to this when we discuss amendments later in Committee that relate to the board of this company. There are some from the noble Baroness, Lady Pidgeon, to which I have added my name, about the board of this company and how this corporate structure works, because the Bill is very silent on that. This needs to be done.

Finally, Amendment 8 probes Great British Railways’ organisational structure. To this day we still have no idea at all—and maybe the Minister has no idea at all—how Great British Railways is going to be structured. Let me give a couple of options. It could be that it will be structured geographically, roughly mapping the existing structures, so that one division deals roughly with the south-western main line, one division deals with the east coast main line, and so forth. It could be structured like that, but you could have a totally different structure. There might be an argument for saying that we should have one division that deals with operating the railways, one that deals with managing the major stations, another division that deals with the minor stations and another again for retail. You could have an organisation that was completely functionally based rather than geographically based. These are important questions, which I think Parliament should have a chance to have a say on, yet not only is the Bill silent about them but the Government are silent as well. The effect of Amendment 8 is to require the Government to publish their organisational structure before the Bill can come into effect.

That is enough for the moment—I understand that other noble Lords have things to say. I will just say in advance—and I hope that the noble Baroness will forgive me for pre-empting her—that I have taken note of the amendments in the name of the noble Baroness, Lady Jones of Moulsecoomb. They are not wholly aligned with my view of the role of the private sector and she will not therefore, I think, be surprised if I find myself not able to support them. I beg to move.

Lord Lansley (Con)My Lords, it is a pleasure to join this first group in Committee. I am sitting to the left of the Liberal Democrats because that is where I now find myself; I always want to be sitting behind my noble friend on the Front Bench in Committee to back him up, but I cannot do that because there is no back row in this Room, so I cannot be self-effacing in the back row. Anyway, I look forward to Committee. I do not have the experience of railways that the Minister and my noble friend speaking for the Official Opposition do—I do not pretend to that intimate knowledge of the railways—but I hope to bring something of my interest in how competition should be applied in the delivery of public services to some of the issues that we will be debating.

I turn to this group. There are a number of amendments in my name which are just about trying to find out, as I was going through the Bill, whether it works in the way described or precisely what it means. Rather in line with what my noble friend was just saying, we need to be sure that we understand that the Bill is functionally correct in the way that it works. I have just two amendments in this group. Amendment 3 relates to the question of what must be wholly owned. As my noble friend said, Clause 1 is constructed around the proposition that Great British Railways not only must be wholly owned by the Crown but cannot be anything else. That relates to GBR itself. The purpose of Amendment 3 is to test whether that also applies to GBR companies. We do not encounter GBR companies in Clause 1, but we do subsequently as a means by which GBR will undertake its activities. This is not surprising. As my noble friend said, we do not know how GBR will be corporately structured but, by way of example, we know how Network Rail is structured. It has a significant number of wholly owned subsidiaries and quite a number of joint venture subsidiaries, including through Platform4.

For example—and here I declare my interest as chair of the Cambridgeshire Development Forum and others—Platform4 is a Network Rail subsidiary company that has just recently, happily, entered into an agreement with partners to develop at Cambridge North station as part of the Government’s proposal to develop around stations, with 450 homes around the station. It is a joint venture company; it is not wholly owned by Network Rail. So my starting proposition is that this prohibition on companies not being wholly owned must apply to GBR itself but cannot apply to GBR companies. I want to be sure that that is the case. If it is not absolutely clear in the statute then it ought to be, which would be the purpose of my amendment.

That differentiates the amendment from those in the name of the noble Baroness, Lady Jones of Moulsecoomb, to which we will no doubt turn in a minute, who wants precisely that to be the case. For the reasons I have just explained about the many joint ventures for things such as housing developments and commercial developments around stations through companies such as Platform4, if I may respectfully say so before she has put her case, I do not agree with the noble Baroness that all GBR companies should be—

Baroness Jones of Moulsecoomb (GP)Who does?

Lord Lansley (Con)Recalling Questions earlier, just because we do not agree with the noble Baroness, that does not mean she cannot sometimes be right.

The other amendment in my name is Amendment 4, which relates to shadow directors. Clause 2 tells us that Ministers are not to be construed as shadow directors under the Companies Act when they make decisions. I think it is the case that, when officials act on behalf of Ministers, exactly the same provisions would apply to them. We need to be absolutely sure that this is the case, and that it applies to the officials of Scottish and Welsh Ministers as well as to those of the Secretary of State. I am looking for a bit of reassurance on that.

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There is a certain delicious arrangement of the groupings in that we start with Amendment 1 and, in the same group, consider Amendment 347, also in the name of my noble friend, which is right at the back of the book, just to demonstrate our flexibility. As I understand it, my noble friend is saying in Amendment 347 not to bring all this into force until we see how it is intended to be applied in practice, with a wide range of documents that need to be published. That may or may not be a practical proposition; none the less, I think he makes a very good point, which is that there is a great deal by way of the detail of how this is to work that we do not yet see. Simply the fact that some of these things are published does not mean that we know how it will develop over time, because some of these documents will be published with, as it were, the state of play as it is now. We do not know what decisions GBR will take in the future that will change all these propositions. It is quite a relevant factor, I have to say.

What my noble friend is pointing out—which will be relevant, for example, to our debate on ticketing later, hopefully later today—is that, unless you see the draft of the approved document, you do not know to what extent it properly reflects what is in the ticketing settlement agreement now and is carried forward, or to what extent it proposes to change these things. Simply the fact of having a promise in the legislation that there will be a document is not necessarily sufficient for us to feel confident that the changes that we are implementing in legislation will come through in the way that we intend them to. I support my noble friend in trying to start this off in our amendments, to explore whether the legislation is working as we are told it should.

Baroness Jones of Moulsecoomb (GP)My Lords, with the permission of the Chair, I will do something I have not done in the 13 years I have been here as a Peer. The place name in my title is “Mole Skoomb”, okay? There is a railway station at Moulsecoomb, near Brighton; in fact, it is not in Moulsecoomb but in Bevendean, which is a source of great irritation to people living in Moulsecoomb; Moulsecoomb is a mile up the road. Anyway, it is pronounced “Mole Skoom”. Thank you.

I said in my speech at Second Reading that I welcome the Bill; the Green Party has long argued that our railway should be run as a public service, not for private profit, and that is exactly where my five amendments here are going: they all make basically the same point. It was very kind of the noble Lord, Lord Moylan, to point out that he did not agree with me; in fact, it sort of made me feel slightly better because, worryingly, there are times when I do agree with him, so it is good to get back on our tracks.

Lord Moylan (Con)Tracks?

Baroness Jones of Moulsecoomb (GP)Sorry, I did not mean that.

What I am trying to do with these five amendments is to make sure that public ownership of our railways really means public ownership. The Bill, as it currently stands, could allow companies within Great British Railways to have private shareholders. The Bill is, or should be, about bringing our railways back into public ownership, and we therefore should not be creating a back door that allows private ownership to creep in.

This is the worry that the Association of British Commuters, We Own It and Bring Back British Rail have brought to us. They and the others are asking a very simple question: what exactly do we mean when we say that Great British Railways will be publicly owned? At the moment, the answer is not clear in the Bill. The Government made a welcome commitment that all the shares in the parent company of Great British Railways would be publicly owned, but does that extend to the companies sitting beneath it?

The Bill defines a GBR company as a subsidiary within the meaning of the Companies Act 2006. A subsidiary does not have to be wholly publicly owned; it can be partly owned by private investors, provided that the parent company retains control. We could have a railway where the parent company is entirely publicly owned but where companies carrying out important railway functions have private shareholders. Does that not fundamentally change what public ownership means? The Passenger Railway Services (Public Ownership) Act 2024 used a much clearer definition: a public sector company had to be wholly publicly owned. The Companies Act itself provides the Government with the wording they could have used if they intended to require wholly owned subsidiaries. I think we have to ask this: why was that stronger definition not used here?

This is not helped by the Government not being clear about exactly which functions GBR companies will carry out, as the Bill gives these companies the ability to carry out potentially any GBR function. That could include train operations and infrastructure management, which leaves the door open to a very different railway in the future. In a worst-case scenario, the new definition of GBR companies as subsidiaries could even lead to the part-privatisation of rail infrastructure management—a direction of travel thought impossible in the UK since the days of Railtrack.

Railway privatisation has been a disasterit fragmented the railways, drove up costs and put private profit ahead of passengers. We should not be creating a structure today that would enable a future Government to say, “Well, the legislation already allows private investment and we’re simply making use of the powers that Parliament has already given us”. These amendments would stop that happening. I should also say that I have not yet had the delight of meeting with the Minister, but I am sure that that is in progress.

Lord Harper (Con)My Lords, I will speak to a number of the amendments in this group. First, I strongly support what my noble friend Lord Moylan said at the beginning about ownership. The noble Baroness, Lady Jones, just said that this Bill is about public ownership, but actually it is not. That was the other Bill to which she referred; this Bill is about setting up GBR as the guiding mind, bringing track and train together—however one wants to characterise it. It is not essential to the core purpose of the Bill; the ownership structure is not core to delivering the services. My noble friend Lord Moylan was right to make those points in his opening remarks.

Of the specific amendments, Amendment 2 is very pertinent. My noble friend Lord Moylan focused on the “owned by the Crown” piece, but Clause 1(3) talks about Great British Railways being

“wholly owned by the Crown”.

Even if we accept that GBR should largely be owned by the Minister—in effect, on behalf of the public—who is able to direct things, I am not sure that we should be in favour of it being “wholly owned”. There is a very good argument for having some private capital. It might be that you want to get that capital involved in the company. The noble Baroness, Lady Jones, referred to infrastructure, and we may wish to use it for that and people could have a shareholding. It may be, as my noble friend Lord Lansley said, that we would wish to have some joint ventures. I will give two examples.

One of the countries whose railways people generally admire is Japan. Interestingly, people involved in the railways in Japan largely admire how we do them, as well. There is an enormous amount of cross-fertilisation between experts from both countries. They have very successfully defrayed some of the costs of running their railway by using the value of the property in which the railway system operates—on top of, below or alongside —to generate some effective retail operations and other things that generate a significant amount of money. This keeps down the cost to the taxpayer from running the railway.

Network Rail does some of those sorts of joint ventures already in developing property and that seems perfectly reasonable. Even if we accepted that running the railway piece should be publicly owned—and I do not—it would seem perfectly reasonable if Network Rail, which will now become part of GBR, wished to have some joint ventures with people who develop property and people who help to maximise the returns for the taxpayer on the assets owned by GBR. The state is frankly not very good at doing those things, which are important not just to raise revenue to defray costs but to develop and energise the economy in some of our towns and cities up and down the country. Core railway assets are often where you could develop housing and other things to redevelop areas.

To give a specific example, there was a Written Answer from the Minister recently—forgive me, but I cannot remember whether it was answered yesterday or in the previous few days—about how the Government will develop Euston station. Originally, that was going to be done by HS2, but, when I was Secretary of State, we came to the conclusion that HS2 was probably not going to make a good fist of that. At that time, the Minister was the chairman of the Euston Partnership, which brought together representatives of the Mayor of London, local authorities and private sector companies involved in developing the station. We came to the conclusion that a development-led approach would be better, in order to develop a significant amount of housing for that part of London as well as private sector office and business space, as we had done around King’s Cross and St Pancras, which has had a huge impact on the economy. But that involves working in partnership with the private sector.

I do not know how in the end the Government will structure that approach, but it seems to me that it would be sensible at least to keep open the option that, at the very least, a subsidiary of GBR could potentially own a joint venture or part of the entity involved in delivering the development, either to help to run it or to share in some of the capital gain. You may or may not wish to do that, but ruling out the ability to do that does not seem to me sensible. Therefore, my noble friend Lord Moylan’s amendment, which probes that issue, is sensible and has a lot of merit. On the issue of private shareholders, I will make the argument just briefly, since this Bill is not about nationalisation, about where the noble Baroness, Lady Jones, misunderstands the point about private companies. As my noble friend Lord Moylan said, from the point of view of the consumer and the delivery of services, privatisation was for most of its life a massive success. It brought into the railways an enormous amount of private capital, new rolling stock, new services and a hugely greater number of people using the railways than had been the case under British Rail, under which passenger numbers had, frankly, been declining since the Second World War. It was a huge success.

Now, it is absolutely true that the passenger franchise model had some issues and, in fact, was effectively destroyed by the pandemic. I am not suggesting that we necessarily would have wanted to carry on with that model, but there are other models involving the private sector. For example, the way that TfL operates in London is that TfL specifies the services but, in a number of cases, it contracts with companies to run those. also, as the then Mayor of Greater Manchester, the Prime Minister set up the bus services that he wished to procure, but it was the private sector that delivered those. Those models seem to me perfectly sensible. If you set them up properly, the company makes money only if it delivers services that passengers require. That seems to me a very sensible model. I know that the noble Baroness does not agree with it, but I just wanted to set out how it actually works, as opposed to her characterisation of it.

The last point that I want to make is on Amendment 8, also tabled by my noble friend Lord Moylan, which talks about the organisational structure of GBR. The reason why that is important—I think we will come on to this in some of our later debates—is that it is, in effect, how you set up the organisation and, therefore, how it takes decisions and who takes the decisions within the structure.

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The reason why that is important, which we will see when we get on to talk about ticket retailing, which will probably be today, and on later days when we talk about open access and freight, is that the decisions about who has access to the network and how you balance capacity against different users will be taken in the first instance by GBR under the model that is being set up rather than by the Office of Road and Rail. Therefore, it is quite important for people, both the public and passengers, as well as the companies that want to operate these services, to know how GBR is actually going to operate. Amendment 8, shining a bit of light and transparency on how the company is set up, is very valuable.

In fact, if you follow through the argument that this is a company wholly owned by the Crown and therefore completely publicly owned, the more you should accept that the operation of the company should be as transparent as possible for the public who in the end own the company and are paying all the bills. I strongly support those, and I look forward to hearing what the Minister has to say in response.

Finally, whatever he says about the ownership piece, it would be helpful to know how he envisages GBR operating with the private sector on some of those non-core rail operation activities. I hope he can help the Committee with that when he responds.

Lord Berkeley (Lab)My Lords, I want briefly to reflect on the various amendments that noble Lords have put forward so far this afternoon. Basically, it makes me feel very concerned, because we are lacking information, as the noble Lord said on Amendment 8 but also on many of the other ones, and we do not know what is going to happen. We do not really know who will be running infrastructure or some of the train operators and, if we ever end up with any private sector involvement, I go back to what I experienced when I was on the kind of supervisory board of Railtrack a long time ago. We used to meet every three months with the board, and you could just see that the debt that Railtrack was incurring was getting bigger and bigger. In the end, I said to the chairman, “How long are the Government going to allow you to continue with this debt?” It seemed to increase by 10% or 15% every time we had a meeting. The chairman’s response was, “Well, don’t worry, I had a meeting with the Secretary of State”—none of the former Secretaries of State are here today, so I think I am safe to say this—“and he said it will be all right”. We had a nice meal and it was fine. But the sad thing was that, within a week, not only had he got the sack, but Network Rail was closed down, because the so-called shareholders did not know what they were doing. It was yet one of the many disasters that the infrastructure manager has probably suffered over the last 30 or 40 years.

It would help me and maybe other colleagues to think of some useful criteria as to whether we think all these different elements that we will be discussing in the next seven days will be beneficial or not. What I found rather interesting was a part of a speech by the Secretary of State, Heidi Alexander, on what she saw coming from the nationalisation plan. She that it,

“requires a high performing railway to … support the creation of new jobs and new homes … improve reliability, generate better usage of our trains and reduce public subsidy”.

We can spend a lot of time talking about whether this has happened in the last year or two. If it has not, what has gone wrong? It is much too soon to see what is changing. We should in mind that, in the last three or four years, most of the passenger operators have been effectively controlled by the Department for Transport, even though they are in theory in the private sector. Network Rail, of course, is funded by the Department for Transport anyway. This is something that we need to look at, in going through all the amendments and seeing whether they will meet any of those criteria. Maybe my noble friend, when he responds, will be able to say, “I have got it completely wrong and it is all going to happen anyway”. I look forward to his comments.

Baroness Pidgeon (LD)My Lords, I thank the Minister and his officials for numerous meetings with me and many of my colleagues over the last few months; they have been very helpful for discussing how we can improve the Bill before us. The dislike for this Bill was very apparent in the opening words from the noble Lord, Lord Moylan. The previous Government could have implemented the concession model that has been mentioned several times—it would be our preferred option—but they did not. The picture that we had painted by the noble Lord, Lord Moylan, of the privatised railway does not reflect many passengers’ experience in recent years. I say to the noble Lord, Lord Harper, that I think the service started to decline before the pandemic, but the pandemic accelerated the fact that this model was not working.

The Government have a mandate for public ownership. In fact, two years ago, we debated the Act on it. I hope that we can focus in these seven days on getting the structure right and delivering for passengers, rather than revisiting the ideology behind what the Government are doing.

The amendments in this group are quite technical in some ways, and they are about the structure rather than focused on passengers. But it is important that we hear from the Government exactly why they have chosen the model that they have. The noble Lords, Lord Moylan and Lord Lansley, in their amendments are seeking some clarity on the exact set up of Great British Railways and why this model has been chosen. It is really important to get some clarity over the status of Great British Railways’ companies, set out very clearly by the noble Lord, Lord Lansley, in some of those examples. How will these partnerships work in practice? There is also the point around civil servants and their role. The noble Baroness, Lady Jones, wants clarity on the subsidiaries of Great British Railways and their potential future ownership. Whatever happens in this Bill, there will still be a huge amount of private sector involvement, because the rolling stock will still be owned by private companies and there is no plan to change that. Even if everything else is fully publicly owned, there will still be a huge amount of private sector involvement through the rolling stock.

There are many ways that you could look at structuring Great British Railways. One could have been a co-operative model. An understanding from the Minister on why this was felt to be the best way to deliver the quality of the railway service that we all want to see would be helpful. I look forward to the Minister’s response and clarification on these structural amendments.

The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab): My Lords, I thank the noble Lords, Lord Moylan and Lord Lansley, and the noble Baroness, Lady Jones of Moulsecoomb, for their amendments, and the noble Lords, Lord Harper and Berkeley, for their contributions.

I will begin with Amendments 1 and 6, which would specify that the company designated as Great British Railways must be established under existing company law. I can reassure the noble Lord, Lord Moylan, that, as is the case with Network Rail and the train operating companies, GBR will be a private limited company under the Companies Act 2006. It will have its own articles of association. The Bill is constructed around this assumption. For example, Clause 3(6) makes it clear that GBR can carry out business activities by virtue of being a limited company under existing company law. If it were not a Companies Act company, this and other provisions of the Bill would not be appropriate. The alternative to a Companies Act company would be something like a royal charter corporation, such as the BBC, or a statutory corporation, such as the Advanced Research and Invention Agency. GBR is clearly neither of these, given that the Bill does not establish it as such. Body corporate is a general term under UK law, meaning an incorporated organisation, which is what GBR will be. Combined with the drafting in Clause 3(6), the Bill is clear that GBR will be a Companies Act company.

I turn to Amendments 2 and 3. Amendment 2 would remove from the Bill the requirement that GBR be wholly owned by the Crown. As the noble Lord will be aware, this Government were elected with a clear mandate to nationalise the railways, and that is exactly what we are doing. We are ensuring that GBR is owned by the British people and run in their interests—not in the interests of private profit. Public ownership is key to creating a more efficient railway and a better passenger experience. It shifts the focus from profit to passengers and freight, and begins to put an end to the fragmentation and waste of the franchising system, allowing the whole industry to work together in the interests of the passenger. This approach will save the taxpayer hundreds of millions of pounds in fees and allow taxpayers’ money to be spent on things that will benefit the passenger instead.

The requirement in the Bill that GBR must be publicly owned will ensure that any future Government wanting to privatise the railways would have to seek the consent of Parliament to do so. This will put the system on exactly the same footing as it was under privatisation since—as I am sure the noble Lord will acknowledge, given that he is trying to repeal it—an Act of Parliament was required to bring passenger rail services back into public hands. The latest YouGov poll shows that 76% of the public think that railways should be in the public sector and only 13% think they should be in the private sector. As the noble Baroness, Lady Pidgeon, put it so well, previous Governments could have done something about it but they did not. The railway is an asset with significant financial, economic and safety implications, so it is right that Parliament scrutinises every major change to it.

Amendment 3 would ensure that GBR’s subsidiaries do not need to be wholly owned by the Crown. I will speak more about the Government’s policy on this in a moment when I address the amendments in this group from the noble Baroness, Lady Jones, but I am pleased to confirm to the noble Lord, Lord Lansley, that the drafting of Clause 1 already facilitates what he seeks to achieve. The requirement to be wholly owned by the Crown applies only to the parent company that is designated as GBR, not to any of its subsidiaries. For clarity, GBR subsidiaries come within the term “GBR companies”, as defined in the Bill. GBR companies are not subject to the “wholly owned” requirement, so I hope the noble Lord will see that his amendment is unnecessary.

Speaking of GBR’s subsidiaries, I will now address Amendments 5, 334, 335, 337 and 345 from the noble Baroness, Lady Jones. She has said that she is a passionate supporter of public ownership, as we are. Her amendments would mean that GBR must wholly own all its subsidiaries for them to be considered GBR companies. As I have said before, we are committed to the private sector continuing to play a key role in the future rail sector, and this includes within GBR where appropriate. After all, the private sector can bring advantages that the public sector cannot, including greater risk appetite and additional investment that reduces the burden on the taxpayer. GBR will therefore leverage the best of both the public and the private sectors, working in close partnership with private companies, from freight and rolling stock to ticket retailing and the rail supply chain, to unlock benefits and drive growth.

The advantages of this approach were referred to by the noble Lord, Lord Harper, and can already be seen in Network Rail’s successful joint ventures with the private sector, including through Platform4, a subsidiary of Network Rail which uses private sector investment to support community regeneration projects and is expected to deliver up to 40,000 new homes in the next decade through public/private joint ventures. For example, Platform4’s joint venture with Bloc Group has already secured 2,000 new rental homes near major city transport links. These types of investment would simply not be possible were I to accept the noble Baroness’s amendments. In addition, the amendments would prevent GBR from pursuing joint ventures with the devolved Governments, which I hope she agrees would not be the right outcome.

However, I can reassure the noble Baroness that, although the existing Companies Act definition of a subsidiary enables these public/private partnerships, importantly, it does not enable private sector control. Any private sector interest in a GBR company must be a minority shareholding, to ensure that the railway remains owned, controlled and operated by the public. The Government are also clear that certain aspects of the Bill, such as GBR’s access decision-making process and its ticket retailer, passenger services and vital cross-industry functions, will all remain part of the wholly publicly owned and controlled part of the business. This recognises that, while private sector investment is a great enabler of infrastructure development opportunities that can support our communities, it is not always suited to railway functions that must be run in the public interest.

Lord Harper (Con)Before the Minister moves on, this might sound a very picky point, but it is quite important. On his point about joint ventures, he talked about the Government always having a majority stake and having control. Is a 50-50 joint venture possible? If you are a private company making an investment, there is a big difference between having a 50-50 equal partnership versus one where you are a minority shareholder. Would that be possible under the model that he set out and which is structured in the Bill?

Lord Hendy of Richmond Hill (Lab)I am grateful to the noble Lord for his intervention. I will write to him on that rather than say something I might regret.

16:30:00

Amendment 4 from the noble Lord, Lord Lansley, relates to shadow directors. For noble Lords who may be less familiar with company law, shadow directors are people not formally appointed as company directors but whose directions the official board is accustomed to following. Even without an official title, they are held legally accountable for certain duties and liabilities related to the company. The Bill already makes it clear that the Secretary of State and Scottish and Welsh Ministers are not shadow directors, which is a standard part of drafting for a Bill that establishes a corporate entity.

The noble Lord’s amendment would extend this provision to cover those acting on behalf of Ministers, but I can reassure him that this is not necessary. Anyone acting on behalf of Ministers will be working under their authority, meaning that accountability ultimately ends with Ministers. That accountability also means it would normally be the Minister who is at risk of becoming a shadow director. For example, the Secretary of State’s direction power, if used, would put her at considerable risk of being a shadow director, which is why she is exempted under the Bill. However, an official who was providing advice, suggestions or support would not be under the same risk.

I also note that the drafting in the Bill is consistent with the current shadow director provisions in the Railways Act 1993, which have been sufficient for over 30 years in protecting those otherwise at risk of being a shadow director, and during which time there has been no instance of allegations relating to shadow director status.

Amendment 8 would require GBR to consult on its proposed organisational structure before exercising its statutory functions. The Government are working hard, quickly and to an already ambitious timeline to transform our fragmented rail sector and deliver the change that we know users of the railway desperately need. Mandating a public consultation on the proposed organisational structure of GBR would add significant delays to reform without necessarily adding any meaningful public input. I am not aware of any other recent consultation on the organisational structure of a new arm’s-length body, and nor has any previous railways Act that has reorganised the railways set out a structure in the way that is suggested.

However, for the benefit of noble Lords this afternoon —I have been very clear on this in a number of places—I can say that GBR will deliver services through locally empowered business units, with a single accountable leader in each unit managing both passenger services and infrastructure. Business units will bring together existing network rail routes and train operators, ensuring that delivery is closer to those who use the railway and that accountability sits at the local level.

Nationally, a central GBR network function will act as the system leader to enable GBR to make whole-system decisions. It will be in charge of determining capacity allocation in the public interest, subject to its duties for even-handedness as set out in the Bill. In line with Ministers’ objectives, the network will set overall railway strategy, standards and policy, ensuring that the network operates as a coherent whole and can deliver wider policy outcomes, including supporting growth, housing and jobs in thriving local communities. This approach will ensure that a consistent joined-up approach can be taken across the railway while keeping day-to-day decisions as close as possible to customers, communities and places through local business units.

For good measure, since there has been some discussion about private sector expenditure on railways, the Government believe that about 60% of GBR’s total expenditure, once established, will feasibly be spent in the private sector on infrastructure and other things.

There will be other and more relevant opportunities for the public and stakeholders to engage on how the railway is accessed, used and experienced, for example through the forthcoming publication of the draft access and use policy, the draft GBR licence and the Office of Rail and Road’s retail code of practice.

Given what I said on all these amendments, I hope that noble Lords will find their way to withdraw them.

Lord Lansley (Con)Before we conclude, and relevant to the point that my noble friend Lord Harper was making, I am sure that the Minister will want to look at the whole structure of Platform4 and its relationship to Great British Railways, but the Mayfield Partnership, which is involved in the regeneration around Manchester Piccadilly, has one-third Network Rail or Platform4 participation in that joint venture. So, at the moment, it is not just 50:50; it can be below 50%. It would be of interest, not least to noble Lords considering the future structure of GBR, to understand precisely how some of these large-scale and really important property development issues are to be managed by GBR. The directing mind for the railways is one thing, but the directing mind for development purposes is not necessarily the same thing.

Lord Hendy of Richmond Hill (Lab)I am grateful to the noble Lord. My experience of Network Rail’s property and Platform 4 is offset by increasing age and failure to remember the details. I will not only write to noble Lords about the 50:50 aspect, but about Mayfield, which I remember vaguely is of a different percentage, partially because much of the land is owned by somebody else rather than the railway. I will write on both those points, because I think they are germane. I appreciate the point that people need to understand how this will work in practice, particularly with those areas of activity of GBR that are not the provision of passenger railway services or the basic railway.

Lord Moylan (Con)My Lords, before I start, may I add to the comment made by my noble friend Lord Lansley? My example is not a Network Rail example, but a TfL one, with which the Minister will be very familiar: the Earl’s Court development. The essential structure is that the initial ownership of the joint venture was based on the value of the land that each party was contributing, but that the TfL structure would fall well below 50% over the course of time, as more investment was added by the private sector partner. Structures such as that would simply not be possible for Great British Railways land under this Bill, because you could not go below the 50%. So, a site such as Earl’s Court, if it were a national Network Rail site— pari passu, mutatis mutandis—would of course remain undeveloped until the Government found the money to develop it. The Government will never find the money to develop these things.

Turning to the debate that we have just had, I must say that, whenever I speak in Committee, I always seem unwittingly and unintentionally to attract the disappointment of the noble Baroness, Lady Pidgeon. I am surprised about this, because the only reference I made to her in the course of my speech was to say something complimentary about amendments that she has tabled, which we will debate later in Committee and to which I have added my name. Obviously, I am at fault in some way, in that I am constantly giving her cause for complaint.

On the question of organisational structure, the Minister has read out some words about how Network Rail will be organised, but they do not provide a level of assurance or satisfaction that people are looking for. They are very woolly, but I will leave that and grant him that for the moment; he can stick with that level of woolliness. However, let us switch focus slightly and think about timing. When I spoke on the then passenger railway services Bill when it was in your Lordships’ House, I said that the Government were embarking on a very long multi-year transformation process. Here we are, two years later, and we still have not completed that. We are at least six months away, I should guess, from seeing the enactment of this necessary legislation. That is two and a half years on.

Transforming an organisation as complex as Network Rail and all the companies being brought into this group is something that is going to take years. So let me change the question: is the Minister able to say, before we conclude this debate, at what time he expects that structure to be in place, which he has described to us even in woolly terms?

Just to develop that a little further, it is said throughout the industry, although it is acknowledged that nobody has written this down, that the intended designation date for Great British Railways is October 2027, which is 12 months from now—say, six months after the enactment of the Bill, if it goes through in its current form, according to its current plans. Is that date valid? Does the Minister believe that the structure that he has described in whatever woolly terms will be in place in time for that designation date, or is it all going to muddle on for years afterwards, being put in place?

Finally, on the second important point that we have discussed in this short debate, I express my gratitude to—I am going to say this correctly now—the noble Baroness, Lady Jones of Moulsecoomb. Kudos! But do not minute that in Hansard . I am very grateful to her because she put her finger on one of the key issues in this group, which is the question of the justification for private ownership. She has said, effectively, that it is party policy, in her case, and she is going to stick to it, for that reason if not for others as well. But we did not get a clear answer from the Minister to my question: what is his justification for wholesale nationalisation for the purpose of achieving his objectives, which could have been achieved by a Williams report approach? It is wholly irrelevant whether the last Government did anything about it, for heaven’s sake—what is the point of making a comment like that? The last Government were all over the place; that is why they lost the election. Is that the standard that the Minister is setting for the Government, that they are just about better than Sunak? Is that it? Is that the point of making that remark?

The Minister has one further opportunity to give us a clear explanation. The only explanation that he has given is that it is in the manifesto. If that is the sole explanation, that is very helpful to us, because knowing that there is no rational basis for the decision makes it very much easier for an incoming Government to advance the argument that the necessary measures should be taken at pace to reverse it.

Lord Hendy of Richmond Hill (Lab)My Lords, first, the operative date for Great British Railways will be sometime in 2027, but of course it depends on the passage of this Bill. Secondly, I can give a very sound explanation for being in favour of public ownership, which is that progressively, as we have taken recent train operating companies into public ownership, we have been able to put both the track and infrastructure and the operations into the management of the same person. That is delivering results that no previous arrangement for over 30 years has been able—

Lord Moylan (Con)Why, if that is such a good thing, are there fewer and fewer services?

Lord Hendy of Richmond Hill (Lab)I shall continue with what I was saying. It has not been possible, in any previous iteration of the railways since the early 1990s, to have both under the same control. There was such an arrangement with South Western Railway in the 2010s, and it collapsed, because the commercial arrangements were incompatible. We are making steady progress in improving the railway in some pretty difficult circumstances, in companies that had not been particularly well managed, as a consequence of being able to manage them together. To my mind, that is a very good reason for public ownership.

Lord in Waiting/Government Whip (Lord Katz) (Lab)My Lords, before we proceed, under the chairmanship now of the noble Lord, Lord Duncan, it probably behoves me to say that this is the first group in the first of seven days in Committee. There were six minutes’ worth of summation, and I point out to all Members of the Committee that the Companion is very clear about brevity being the quality we are looking for when Members who have lead amendments are summing up, whether they are pressing or whatever else. I urge Committee Members to bear that in mind for future groups.

16:45:00

Lord Moylan (Con)My Lords, I am very happy, in so far as that is directed at me, to bear it in mind. Of course, I could be quicker in challenging the Minister when I sum up. I am not summing up, of course; I am actually testing him on his response to the points I made in moving my amendment. I would be a great deal quicker if he had properly addressed them to my satisfaction in the course of his speech. When Ministers do that, I shall of course be briefer. But, if the Minister does not do that, then, with every respect to the noble Lord, I shall take exactly as long as is needed, because we are in Committee and those rules do not apply. I will not be curtailed. After all, thanks to the noble Lord and the Whips, we have five hours, not four, to play with.

The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)It sounds like I have missed the best bit.

Lord Katz (Lab)You really did not.

Lord Moylan (Con)The noble Lord should stop waving his hands around like that.

The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)Does the noble Lord wish to withdraw Amendment 1?

Lord Moylan (Con)I beg your pardon. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendments 2 and 3 not moved.

Clause 1 agreed.

Clause 2Crown status etc

Amendments 4 to 6 not moved.

Clause 2 agreed.

Amendment 7

Moved by

7: Before Clause 3, insert the following new Clause— “Purpose of Great British Railways(1) The purpose of Great British Railways is defined by the following objectives—(a) prioritising the needs of Great British Railways passengers in decision-making,(b) delivering reliable, safe and accessible railway passenger services,(c) providing value for money for passengers and taxpayers, including consideration of the affordability of fare prices,(d) increasing passenger numbers and growing usage of the network year-on-year,(e) expanding and improving the network, including services and connectivity, and restoring or adding routes,(f) modernising working practices and innovating to improve productivity, efficiency, and passenger experience,(g) supporting economic growth and national productivity, and improving connections between towns, cities and employment centres,(h) improving the experience of disabled and vulnerable passengers and ensuring consistent access to assistance, (i) ensuring fair and transparent treatment of open access, freight and devolved operators when allocating access and charges,(j) growing rail freight, including supporting delivery of the national freight growth target,(k) strengthening the financial sustainability of the railways, reducing reliance on operating subsidy over time,(l) integrating track and train, simplifying structures, and avoiding duplication, and(m) supporting multi-modal integration with buses, trams and local transport networks.(2) The Secretary of State and Great British Railways must have regard to the purpose set out in subsection (1) in exercising their functions under this Act.”Member’s explanatory statement This new clause defines Great British Railways’ purpose.

Lord Moylan (Con)My Lords, I rise to speak, with my customary brevity, to Amendment 7 and to open the debate on this second group. I have a large number of amendments in this group, so I shall speak only briefly to each of them because I do not want to provoke any noble Lords to start waving their hands at me again, which is only intended to distract and does not promote debate.

Although Amendment 7 starts the group, I intend to return to it towards the end of my remarks. I will start with Amendment 9, which may appear to be pernickety, but I will explain it to noble Lords, many of whom will know that I have a background in local government. But it is not entirely a local government matter; it applies to legislation more broadly. We are well familiar with the notion of powers. Local government is given powers to do things, and so is the Secretary of State periodically. We are also familiar with the notion of duties—we are clear what the distinction is—which can be placed on local government and, similarly, on the Secretary of State. I do not claim huge experience, but I have never come across the question of functions, and I do not understand what a function is. It is sloppy drafting. Is a function a legal power? We understand what that is. Is it a duty? When does a function slip over into being a duty, and vice versa?

But then I go to a second level of refinement. Clause 3 refers to the “general functions” of Great British Railways. If I am unclear what a function is, I am doubly unclear what a general function is. It could be that this is a fuzzy notion—it is a general thing and we are not quite clear what it is—in which case it is not very satisfactory as a piece of legislation. Or it could seek to set out a hierarchy of functions, where these are the general functions and there are other more minor functions that sit under them but have to conform to, contribute to and be ancillary to the general functions. Is that what “general functions” is meant to mean, or is the word “general” simply redundant? I ask because later the Bill refers to “the functions” of Great British Railways on several occasions and the expression “general functions” never reappears.

I suspect that this is not a very complex issue. I suspect it is just sloppy drafting. But we cannot put up with that—we need to know what is meant by functions, how many duties are being imposed on Great British Railways that we can hold it to account for, how many powers are being given to it by statute that it has to explain and justify using or not, and whether “general” is creating a hierarchy with subordinate functions that must comply or not. I do not think this will necessarily be settled today; it is very likely that we will come back to this so that we really understand what the Bill is doing.

Amendment 13 would exclude rail safety advice and standards from Great British Railways. Under Clause 3(1)(g), Great British Railways will be

“publishing advice and standards on matters related to railways and railway services”.

I really do not know why it is doing this. Publishing advice and standards is normally the function of either a regulator or an independent standards board. I do not know why Great British Railways is doing this. In so far as it is doing it to itself, that is okay. I have no objection to its setting internal standards. However, my Amendment 14 says that it should not be able to create standards and issue advice to non-GBR actors on the Great British Railways network. Internal standards are no problem, but if standards are to be set then they should be set by an independent board, a regulator or the ORR.

Finally on this point, Amendment 13 would exclude safety standards entirely from that scope. I say this because safety on British railways has been at a very high standard and it is a common view that the role of the Office of Rail and Road as safety regulator has been an important contributor to that. I do not want to see its role diluted, and I do not know anybody in the industry who does. The danger here is that the power being given to GBR to set standards implicitly for other people operating on the railways, implicitly including safety standards, creates a tension with the role of the ORR that can be only destructive of and damaging to the effectiveness and reputational safety of Great British Railways.

Amendment 18 relates back to the question of functions. It would remove the Secretary of State’s power to confer additional railway-related functions on Great British Railways. If it requires an Act of Parliament to set up the general functions of Great British Railways, why should we want to give the Secretary of State the undiluted, unrestricted power to create new functions to add to them? I do not think this is the correct way of doing it. If there is a requirement for further functions in future, it should at the very least be done by statutory instrument, if the power is to be granted at all.

I turn to Amendment 80. My noble friend Lord Grayling, with his very considerable experience of the railways from being Transport Secretary, has tabled a number of amendments but unfortunately is unable to be in the House this week. But I have signed Amendment 80 in its support, so I will speak to it. It is slightly out of place in this group, but we will come back to this topic eventually.

The amendment would require that charges imposed by Great British Railways for certain railway services are “reasonable”. Who can object to that? Who would want charges that are not reasonable? But that is not the power given to Great British Railways by the Bill. The power to make these charges is relatively unconstrained— I agree that it may be constrained by competition law—and would, in effect, allow GBR to set charges as it sees fit. That is too much latitude; the power should be constrained by the necessity for charges to be reasonable.

Amendment 81 is, in fact, in my name, but is close to the previous one. It would give to an individual—it might be a company—who is aggrieved by the charge, term or conditions imposed by Great British Railways a right of appeal to the Office of Rail and Road. Again, who would think that this very modest constraint on the absolute discretion of Great British Railways could be anything other than reasonable and necessary? I beg to move.

Lord Davies of Brixton (Lab)I am keen not to be seen as a support act to the noble Lord, Lord Moylan, although some of my remarks might echo points that he made in the previous group.

Amendment 15 would place on Great British Railways a duty to act as a single employer for the staff transferring into it from Network Rail and the train operating companies, as they move into public ownership. The starting point is that the Bill is silent on this question. It creates Great British Railways and sets out its functions, and it deals in some detail with the machinery of transfer, but says nothing about who will employ the people who run the railway. There are well over 100,000 people involved: more than 40,000 are directly employed by Network Rail and there are more than 60,000 across the train operating companies. They are no clearer today about who their employer will be than they were before the Bill was published.

This matters more than it might appear. The operators are coming into public ownership on a staggered basis, contract by contract, over several years. The uncertainty is therefore not settled by a single moment of transition; it is spread out and repeated. Staff in one company would inevitably draw conclusions from what happens in another. In the absence of a stated employment model, people will assume the least favourable one: that subsidiary companies will be retained, terms and conditions will diverge and the integrated railway will turn out to be a holding company with much of the same fragmentation underneath it. I hope that this is not what the Government plan.

The founding document here is Getting Britain Moving . Those interested in the reason for putting the railways into public ownership would find their time well served by consulting that document, which addresses the issues in contention today. That document was explicit that Great British Railways would be “a new, single employer” and that the workforce would be treated

“as an asset to be nurtured rather than a cost to be cut”.

That was a clear commitment, and these amendments asked for it to be put in the Bill or, failing that, restated from the Dispatch Box.

17:00:00

The case is not only about reassurance for our valued employees, though that would be worth having on its own account; there is also a productivity argument, and it is in some ways the stronger of the two. A report commissioned by the RMT from Dr Nina Jörden at Cambridge University, which has been shared with the Government, puts it in measured terms. The key argument is that a workforce that is spread across multiple employers faces barriers to the stability, mobility and shared learning on which a successful railway will depend. When staff work under different structures, incentives and planning horizons, it becomes harder to build the relationships and operational knowledge that a tightly coupled system requires. The report is careful not to overclaim, and I will not overclaim on its behalf: it does not say a single employer is always the better model—what it says is that employment structure belongs inside the productivity question rather than alongside it. That is a proposition the Government have not so far engaged with, and it ought to be tested before the structure is settled, before rather than after we proceed.

The practical consequences are concrete enough. A single employer removes duplicated management structures and the costs that arise whenever one company must contract with another to do something that could be done internally. It makes the movement of staff between routes easier, and it makes movement through an integrated career structure built into the system. That is what produces flexibility in the useful sense: being able to move people and knowledge to where they are needed. A structure that retains or proliferates subsidiary companies does the opposite: it reproduces inside the public sector the boundaries that privatisation created, with the transaction costs and demarcation arguments that go with them. Having gone to the trouble of ending fragmentation in the ownership of the railway, it would be an odd result to preserve it in the employment of the people who operate it.

I should be clear about what the amendment does not do. It is limited to the transfers set out in the Bill: staff coming from Network Rail and from the operators contracted by the department. It does not deal with the operators in Scotland and Wales; I could have tackled those but, to keep the issue clear, I left them out at this stage. In any event, these are matters for the devolved Governments. It also does not touch open access or freight. The second amendment, Amendment 330, which is associated, does no more than ensure that TUPE applies to any such transfer. From my own account, I feel that it probably applies in any event, but it would be good to provide some level of reassurance; it should, in any event, be uncontroversial, and it seems appropriate to put it in the Bill.

These amendments were tabled in the Commons and debated in Committee there, but the issue was not addressed directly in the Minister’s reply. Members of the RMT’s parliamentary group wrote asking for a meeting on this and related matters, and that meeting has not taken place. The question I ask my noble friend Minister is a straightforward one: are the Government able to end the uncertainty facing rail workers and to confirm that it remains their intention, as set out in Labour’s plan for rail, that Great British Railways will be a new single employer? If that confirmation cannot be given today, will the Minister agree to meet to discuss the matter before Report?

Lord Lansley (Con)My Lords, I will principally refer to my Amendment 19 in this group. I apologise to the noble Lord, Lord Davies of Brixton, that I am not really in a position to comment on the points he makes, but I think the discussion we had previously about the corporate and organisational structure of Great British Railways gives force to his points about how the employment of the railways will be structured in future, so I look forward to hearing the Minister’s response on that.

I want to make a quick point on the amendment from my noble friend Lord Moylan about creating a purpose clause for the Bill. Generally speaking, I am in favour of purpose clauses where we are not principally legislating in order to change existing legislation where the purposes are already set out. This Bill will effectively get rid of the purpose set out at the front of the Railways Act 1993 and therefore I think it is a pity that there is no purpose clause at the front of this legislation to tell us what we are trying to achieve. In my view, that is distinct, as I think my noble friend was saying, from simply a description of what Great British Railways is going to do and what it should think about.

Paragraph 13 of the Explanatory Notes sets out the view that the purpose can be defined simply by what the functions of Great British Railways are and what it must have regard to under the general duties. But functions and duties are not in themselves sufficient to constitute purpose. For my money, I would have been in favour of drafting a purpose clause up front as Clause 1 that would have told us what we are trying to achieve. I think that makes for rather good drafting these days.

I will get down into the nitty-gritty now with Amendment 19 in my name. It relates to Clause 3 where, just as the functions have been set out for Great British Railways, there is an interesting moment where the functions are replaced by a little subsection that tells us what the “statutory functions” are to be. These are all the functions that we have just been told about and the ones that the Secretary of State might give Great British Railways at any time in the future, but not anything relating to service facilities or the supply of services under the 2016 regulations. That sent me off to look at the 2016 regulations to see what the service facilities and the supply of services are. I will minimise it for the purposes of this debate; essentially, on the one hand it is provision of access to freight and international traffic by an infrastructure manager under the access rights, and then supply of service facilities is essentially service providers giving, again, freight, other railway undertakings and international access to services—things from stations, depots and so on.

Interestingly, as far as I can see, those bits relating to access to the infrastructure and the provision of services in the 2016 regulations are intended to be substantially replaced by the access policies set out in Clause 59. But Regulations 5 and 6 and Schedule 2, I think, of the 2016 regulations are not to be repealed. The interesting thing is that Great British Railways will be expressly taken out of the definition of an infrastructure manager, so it will not have the requirements to provide access to infrastructure or to provide services implied by Regulations 5 and 6, even though they remain in place.

In a sense, this is a probing issue. Who will take the responsibility for the provision of infrastructure to freight and international if it is not Great British Railways? With supply of services, for things such as stations and depots, if it is not Great British Railways which has a responsibility for providing those services and the minimum access package specified in Regulation 6 of the 2016 regulations, whose responsibility is it? It is not set out in this Bill. All we know from this Bill, as a result of Clause 70, is that it is not Great British Railways. Then who is it? Who will do those things?

Lord Redwood (Con)My Lords, I welcome these probing amendments and look forward to the Minister’s response to some very important general issues. It is right that the staff in all the operating companies that will be affected by this should have an early idea from the Government about what is planned for their future employment.

I am one of those who welcome the idea that we want a well-paid profession serving on the railways, but for the sake of taxpayers, who are putting in substantial grant in aid and capital money, and of fare-paying passengers, who often have to pay very high fares, we need a system for negotiation between staff and Great British Railways which is more likely to achieve the increase in productivity that could justify the higher pay for staff without imposing an ever-higher charge on the taxpayer and fare-paying passengers. This is more than a detail that can be left open; we need to know who the employer will be, what the status of the current contracts is and how they will be put into transition to new contracts for the staff when their employment changes.

Is there anything the Government can tell us about how they might—they hope—have better relations with the unions in future so that we can look forward to a better experience in getting that balance of better pay for better delivery, smarter working, adopting work practices and being willing to operate new capital investment in a way that delivers higher productivity and higher quality of service?

I also welcome my noble friend Lord Moylan’s draft of what the purposes should and could be, which may not entirely match all the Government’s aims. It would be interesting to hear from the Government which of his suggestions are intended or implied in the current legislation, so that we can have some early indication of what the mission statement of the new railway might be.

I think taxpayers and railway users are expecting more services, not fewer. That has not been the early experience of the last two years. They are expecting better punctuality and timeliness, which would also be welcome. What the new railway will definitely require is more feel for where more passenger movements are required or possible. As in the early days of privatisation, surely the early days of full nationalisation might want to achieve a trend of rising passenger numbers, which privatisation achieved very well, and the ability of companies to develop timetables and services more suited to modern travel needs and therefore fuel the continuing progress of providing more growth in passengers and revenue.

If a new railway management—the controlling mind of GBR—knows how to do that, it will make everything a lot easier if the background of the completion of these arrangements is rising passenger use, rising revenues, greater flexibility over timetables and thinking about growth rather than cost cutting and the elimination of less profitable routes. That can easily get you into a spiral of downturn, as with the nationalised railway experience for most of its time post war, until privatisation reversed those difficult trends.

I hope that the Minister will not rule out one of the modest successes of recent years, which is the ability to have a competitive challenge to the monopolist. There are times when people outside will see ways of harnessing people, talent and capital to provide additional and better service using the existing track, and for that they will clearly need fair terms for access, and that will provide an innovative stimulus to the nationalised monopoly. However, I fear that the Government will not want to do that, and so I think they will find it that much more difficult to innovate and improve the timetables without that stimulus or spur from others generating such ideas and providing such a challenge and opportunity for the growth of the railway.

17:15:00

Lord Berkeley (Lab)My Lords, I will speak to Amendment 305 in this group. Noble Lords may think that Amendment 305 is a long way away from where we started in this group, but it is here. My amendment refers to Clause 87, which provides for a charge for removing road vehicles from railway property—let us call it that before going into too much detail. It seemed to me that, if the Government thought this was a good idea, they should extend it to dealing financially with the very many lorries these days which hit bridges and cause endless delays not just to road traffic but to passengers and freight.

Network Rail’s website on what it calls “bridge bashing” says that, in the year from April 2024 to March 2025, there were 1,666 bridge strikes. Over five years, there were 8,300. Of course, some bridges get it all the time and others do not. Network Rail says that it costs it £23 million to repair every year. That seems quite cheap, but that is not really the point. Who pays? One other statistic is that it causes the equivalent of 120 days’ delay for rail passengers or freight.

It occurs to me that either the driver or owner of the lorry or truck—it is usually a truck or bus—should be required to fund not just the cost of remedial work but some compensation for delay to the rail and road traffic. This has been going on for years, and I suppose I and many others have been saying to Network Rail that it has to do something about this. It is putting up all kinds of barriers, warning signs and everything, and it is doing a great job of it.

However, I think this amendment would be very helpful. The Government want to charge people for parking on railway property. I think it says in the Bill that a road vehicle includes a “bicycle or other conveyance”. If they are even going to charge me for parking my bicycle at the station, they can surely charge the lorries or the buses which do a great deal of damage. My noble friend will probably say that the wording in my amendment needs improvement, and I am very happy to look at improving it, but it seems to me that something needs to be done to make the status of the relationship between road vehicles and trains a bit more equitable.

Lord Harper (Con)My Lords, I will start by referring to the amendment that the noble Lord, Lord Berkeley, talked to, because it just so happened that, as I was travelling to London yesterday, a car struck a bridge at Burnham. I see that the noble Lord, Lord Faulkner, is nodding; perhaps he was on the same train. The reason why it is important is that, although there was, I think, no significant damage to the bridge, the train was significantly late, which meant that every single person on it was entitled under the Delay Repay scheme to a significant refund of their fare. It was not the only train affected; lots of trains were. The cost to the taxpayer of that single incident was probably very significant, and it does not seem unreasonable that the insurance company of the person who struck the bridge should have to reimburse the taxpayer for the cost of that significant damage. Having had that experience yesterday, I am instinctively supportive of that amendment.

Before I talk about the other amendments in this group, I will make a teensy defence of the Sunak Administration, given what my noble friend Lord Moylan said, and since I was a member of it; I will not make an extensive one because that is not the purpose for which we are here. On this specific issue, we got the Williams review, which my noble friend referred to, and then we set in train the work that has, in effect, come to fruition with this Bill, in starting the process of setting up GBR. A lot of the preparatory work took place when we were in government, and there is a lot of agreement, I think, between how we would have done it and how the Minister is doing it today. The big difference, of course, is on the ownership of the companies but, in terms of bringing together a guiding mind—however one wishes to describe it—and a more seamless operation of track and train, that is certainly something that we intended to do and we started the process. That is my bit of a defence of what we did when we were in government.

Let me now address the amendments, starting with Amendment 7, and Clause 3. The problem with purpose clauses and a list of functions is the danger of what parliamentary draftsmen call undue specificity: as soon as you have a list, you then have a question about whether you are allowed to do the things that are not on the list. In his list, my noble friend Lord Moylan has things that are not in the Government’s list of functions, such as

“providing value for money for passengers and taxpayers”.

But in neither of the lists is what we have talked aboutthe work that Network Rail currently does, and GBR will continue to do, not just on operating passenger services or facilitating freight services but on maximising the benefit of its property portfolio—not only to generate revenue to offset the cost of providing rail services but to generate a significant amount of economic development and growth in significant parts of the country, as my noble friend Lord Lansley mentioned. The Government are woefully behind their housebuilding targets, but one of their priorities is developing housing around railway stations, and some of that land will be owned by Network Rail and, in due course, GBR. In relation to the amendment, I ask the Minister whether the functions set out in the Bill are sufficiently extensive to give GBR the powers it needs to do its work. I also want to speak to Amendment 12, and the linked Amendments 80 and 81, on fair and non-discriminatory decisions, which it is important to put in the legislation. GBR will now make important decisions about access for private freight companies to the network, open access operators and—I will not labour this point here, because we will come to it in the next group—ticketing. Unlike the ORR, which did not have any skin in the game, GBR will be making decisions on, for example, freight access or open access, so it will be both a decision-maker and a provider of services, which are in competition. That is also true for ticket retailing. When it makes those decisions, it should have a legal duty to do so in a fair and non-discriminatory way, which is why I support the amendment. It would have two effects: it would govern how GBR operates and it would provide the opportunity for others to challenge it if it does not behave in that way.

Amendments 80 and 81 are linked, because they are about the charges that GBR can make for services where it is a monopoly supplier and, therefore, people do not have any choices. Amendment 81 would provide an appeal mechanism if it charges in a way that people do not think is reasonable. Both amendments would be very sensible to ensure that it behaves in a reasonable way.

There are two other amendments I want to comment on. Amendment 15, which the noble Lord, Lord Davies of Brixton, set out, sounds sensible on the face of it, but I will just flag three issues with it. First, when you move employers, there are potentially pension implications. I understand that the company that provides pensions to rail workers has flagged the time that will be required to do the pensions transition in a sensible way. We have seen in other areas of the public sector that, if you get that wrong, it can cause significant issues.

The second issue is one that we have seen, as the noble Lord, Lord Davies, touched on in his remarks. I suspect that, at the moment, because these are all separate companies, there will be a range of pay structures. We have already seen this—as have the Government, to their own cost—in what they are doing with NHS England. They originally said that they wanted to bring NHS England and all its staff into the Department of Health and Social Care. As they set out on that process, because people in NHS England are in many cases paid significantly more than people in the Department of Health and Social Care, they have discovered either that they cannot do it or that doing it would be very expensive or require the Secretary of State or the Chief Secretary to the Treasury to sign off the move of every single employee above a certain pay band. They have discovered that it is all very complicated, and they are effectively having to do the NHS England/DHSC change in a different way. If you stick everyone in a single company and you have to equalise all their pay and conditions, my concern is that if you do it in a downwards direction, it would clearly not be advantageous to those employees who lose out, but if you do it in an upwards direction then it is clearly damaging for the taxpayer, who has to pay all this increased cost without getting any productivity.

I want to flag one final thing, but will not go into it at length because we have a later group some way down where we will cover it in more detail. The noble Lord, Lord Davies of Brixton, slightly gave the game away when he referred to a letter from the RMT’s parliamentary group: the point of this is to have a single national rail employer so that the trade unions can increase their power and once again be able to deliver national rail strikes, closing down the entire railway network, which they have not been able to do with different rail operating companies, as you could not have a strike in one of them in response to a dispute at another. People should be very clear: if there is a single employer—I have some amendments to test this—we will be back in the days where we have national rail strikes and increase the bargaining power of those trade unions. The experience over history is that that power is not used for the benefit of the passenger and customer but to extract money from the taxpayer. That would be a very damaging thing. I flag that now, but will not go into it in any more detail as I will come back to it later.

Finally, very briefly, I am attracted to Amendment 20 from the noble Baroness, Lady Pidgeon. The only point I would make to her, as I think I said at Second Reading, is that the reason why, when I was Secretary of State, I set up a freight target—there is reference to a freight target in the Bill—was to try to balance the fact that all the conversations we have about railways are always about passengers. The reason for the freight target was to slightly rebalance the conversation and have more of a level playing field. My worry is that, if you put the passenger target in the Bill, you reweight it back towards being all about passengers again. I absolutely agree with her that we want to increase the number of passengers and reduce the taxpayer subsidy, but the reason for having the freight target was to slightly rebalance and have more of a level playing field.

Baroness Pidgeon (LD)My Lords, my Amendments 20 and 110 would require Great British Railways to increase passengers on the railways and to set a passenger target, rather like the freight target, which has just been referred to. One could easily argue that this is not necessary, as any Government will want the railway to grow and passengers and freight to increase. Yet that is not necessarily the case. The Bill currently does not create a clear statutory duty to grow passenger use or to set measurable targets. The reform of the railway should not simply be to stabilise the current system as it is; it should be to actively grow demand and ensure access to the network to support the shift to sustainable modes of transport.

17:30:00

Clause 17 provides a clear rail freight target, as we have discussed. However, Clause 18 states that

“‘railway service performance’ includes, in particular, performance in securing each of the following in relation to railway services … reliability (including punctuality), and … the avoidance or mitigation of passenger overcrowding”.

This all sounds fine if you approach it from the point of view of many of us in this Room, who want to grow the railways and see more people using them with better onboard conditions. However, another way to reduce overcrowding and make services more reliable is to run far fewer trains and to increase prices—to price people off the railways. Then trains would not be as crowded, and they would be more reliable if you run fewer of them. So you would meet the requirements set out in the legislation, but that is not what we want and it is not what I think the Government intend in this Bill.

My amendments would ensure that there is a passenger growth target so that we can make sure that passengers as well as freight are considered and we do not have that perverse incentive in what is actually written in the Bill. I hope the Government will consider this carefully, as I believe it has support on all sides of the House, and it certainly did in the Commons.

I turn to other amendments in this group. I agree with much in Amendment 7 from the noble Lord, Lord Moylan, about the purpose of the Bill. It is reflected in some of my other amendments that we will discuss throughout Committee. However, although the theme of reducing subsidy and taxpayers’ contribution to the railway is of concern, our railways will always need some form of public subsidy, and that should not be written in the Bill.

There are some important points of clarity in other amendments in this group, including that from the noble Lord, Lord Davies of Brixton, on staff transferring to a single employer—something I recall my noble friend Baroness Randerson raising in debate on the public ownership of the railways legislation some two years ago. So many different terms and conditions exist, so an understanding for all rail staff would be welcome. But there are some serious worries. In particular, the noble Lord, Lord Harper, set out the example of NHS England, which is very relevant here. Many Members across the House have commented that I am covering both health and railways. There are many similarities between both Bills, and that is just one of them. I just have to switch “passengers” and “patients” around.

The amendment from the noble Lord, Lord Berkeley, raises a really important point, because lorries and other vehicles are damaging infrastructure and there is a huge cost not just to repair the infrastructure but for the wider network and compensation. It will be interesting to hear how the Government respond to that. Amendment 114, which would require a private sector growth target, goes against the whole of this legislation. This structure is about enabling a publicly owned railway, supplemented by open access operations in part and a thriving railway freight sector.

I look forward to the Minister’s response and his consideration in particular of my amendments around the passenger growth target to make sure that we can all support what is written in this Bill.

Lord Hendy of Richmond Hill (Lab)My Lords, I thank noble Lords for these amendments and the noble Lords, Lord Redwood and Lord Harper, for their contributions.

I start with Amendment 7, which would introduce a purpose for GBR into the Bill. The Bill already provides a purpose for GBR, just as we promised the Liberal Democrats it would during the passage of the public ownership Act. The Bill’s purpose is set out through its functions and duties. The functions tell us what GBR must do, and the duties tell us what GBR must consider and achieve while doing it. Much like the noble Lord’s amendment, the duties provide a list of objectives for GBR, which it must bear in mind when undertaking every decision and its railway activity. I hope the noble Lord can see that the duties are in fact similar to the breadth of outcomes his amendment is seeking. The duties already require GBR to prioritise the needs of passengers and disabled passengers; to consider value for money, high standards of performance including reliability, social and economic benefits, and the environment; to grow freight; and to advance the public interest. We do not need a new purpose clause to provide GBR with these objectives: the Bill already does so.

Unlike the proposed purpose clause, the functions and duties are supported by the Secretary of State’s long-term rail strategy, which will also provide clear long-term objectives. That strategy is how Ministers will communicate to GBR what it should consider while planning, expanding and improving the network over the next 30 years, and GBR will develop its own pipeline of projects in response to that. Rather than a static requirement in the Bill which is not set in the context of wider priorities or funding expectations, we have a system that might actually work better to make our railway better. Instead of setting out a clear purpose, the proposed new clause duplicates many of the provisions already in the Bill, making outcomes less clear and, overall, less likely to be deliverable.

Amendment 9 is seeking clarification of what “general” means. A general function is an umbrella term for an activity which a body can undertake by doing lots of different things. For example, running passenger services involves a large number of intermediate actions such as procuring and operating rolling stock, employing train drivers and other staff, and selling tickets. The Bill requires GBR to run passenger services as a general function, and it therefore does not prescribe exactly what actions it should take in which order to do that.

In comparison, a specific function would be an individual action that the Bill requires GBR to do at a certain point or in a certain way. An example of this would be the requirement on GBR to draft and issue the access and use policy in Clause 59. This is a specific requirement to kick off the access process and not a general function.

The term “general” is therefore helpful in distinguishing between a specific activity that GBR is required to perform and the continuing business of GBR in running the railways. I assure the noble Lord that functions are a standard drafting approach, used also, for example, in the Communications Act 2009, the Climate Change Act and others. I hope that this explanation provides the clarity that the noble Lord seeks and that he can withdraw his amendment.

Lord Moylan (Con)My Lords, if the Minister would be so good, this really is very important. I did not think he would adopt that approach, but it is one of the two approaches I offered him, and he has chosen to adopt that which says that this is essentially hierarchical, so that the general functions set out in the Bill subsume a whole load of subsidiary and ancillary functions. I am still not clear whether these functions are powers or duties. Does GBR have some choice over whether to carry out these functions—in which case, they would be akin to powers—or is it obliged to do so? My key question, now that we have established that, is this: to carry out a general function, there are a whole load of subsidiary and ancillary functions you may have to carry out. I understand that completely, and the Minister did not have to give examples, but he did very helpfully. Is the functionality, so to speak, of Great British Railways therefore limited to the functions set out in this clause? In other words, can it do anything else or is it limited to doing the things that are general functions here? Does it have the power to carry out any other activity? These are really important questions, which may end up being tested in court. I know he has quoted some examples but, because generally unfamiliar language is being used, it is unclear to me whether we are talking about the general functions being the full scope of GBR’s activities or not.

Lord Hendy of Richmond Hill (Lab)I thank the noble Lord for that. I am at least clear about this. The functions are more like powers; the duties are the things that GBR must do when doing the functions, but it is not limited to those general functions. Indeed, we have already discussed quite extensively what it might do, for example, in property development and with third parties, which, because it is a Companies Act company, it can do. I think that is reasonably clear. I would be happy to discuss this with the noble Lord in more detail, because I think we are getting tied up in nomenclature. I think it is reasonably clear what GBR’s functions are, which are described in Clause 3; it describes running the railways. It is also clear that, in the process of running the railway and because of its activity, it is able to do a number of other things.

Let me carry on to Amendment 12, if I may. Amendment 12 would require GBR’s functions to facilitate the provision and use of railway services to be carried out in a fair and non-discriminatory manner. I absolutely agree that GBR should act fairly; however, the duties in the Bill already require GBR to act in the interest of the public, taxpayers, passengers and freight customers. GBR will act fairly in accordance with its duties, not only when exercising this function but across the full range of its statutory functions. We will no doubt discuss this more when we discuss ticket retailing and access. For now, suffice it to say, there are already protections in the Bill—and indeed in wider statutes, such as public law principles and the Competition Act, which applies in full to Great British Railways—that will require GBR to act in a manner that is fair, non-discriminatory and not anti-competitive. This additional requirement would duplicate only the Competition Act requirements, adding uncertainty and administrative burden without increasing protection for non-GBR operators.

Amendments 13 and 14 relate to the publishing of advice and standards for the railways. I thank the noble Lord for this probing amendment, and I reassure him that the ORR is the sole safety regulator for the railway. The Bill does not transfer the ORR’s safety regulatory functions to GBR, nor does it change the current railway safety regime at all. The ORR will continue to exercise its independent safety, regulatory and enforcement functions, including its ability to ensure that GBR and other operators comply fully with all safety legislation requirements. Comparatively, GBR’s function to publish standards is a reference to technical standards, which GBR would publish and share with industry as a method of promoting best practice. This is similar to today; at present, Network Rail and the train operating companies develop and publish technical standards covering many aspects of their operation. These standards include operation and maintenance protocols, design specifications and engineering guidelines. This does not in any way prevent it adhering to the ORR’s safety regime, which it is required by law to comply with. This also does not give GBR any remit over safety regulation. The standards are non-binding and designed simply to support shared learning across the industry.

Lord Berkeley (Lab)My Lords, my noble friend is talking about standards created by GBR. Can he explain the relationship between what GBR does and the Rail Safety and Standards Board?

Lord Hendy of Richmond Hill (Lab)I thank my noble friend. I think I can. The RSSB, the Rail Safety and Standards Board, creates standards applicable across the railway generally on some subjects, whereas there are a number of more technical standards—for example, for pieces of machinery, trains and railway infrastructure—which GBR, as a successor to Network Rail, would publish. These are not subject to discussion at the RSSB. Train operating companies also do this with specific fleets of trains, so I think there is a difference. My noble friend is right to draw attention to the RSSB’s function to do that as well, but that does not exclude the current activities of Network Rail and train operating companies, which will translate into Great British Railways.

These standards include operation and maintenance protocols, design specifications and engineering guidelines. This does not in any way prevent it adhering to the ORR safety regime, which it is required by law to comply with. It also does not give GBR any remit over safety regulation. The standards are non-binding and designed simply to support shared learning across the industry.

17:45:00

Amendment 14 would limit the same function so that it applied only to services managed by GBR. However, as I hope I have explained, this function does not allow GBR to set binding standards on other operators. There is no need to limit the application of the standards to GBR services alone. Other operators can ignore them if they wish to but, equally, allowing standards to be shared promotes best practice and supports a high-performing, safe railway. I cannot see the issue with this, so I hope that the noble Lord will not press his amendment.

Amendments 15 and 330 would add the function for GBR to be a single employer and would mandate a related transfer scheme. As plans progress for the establishment of GBR, we are giving careful consideration to the structure and legal character of the new organisation to ensure that it delivers not only for passengers and the taxpayer but for railway staff. I recognise the huge contribution of the workforce who keep our railways running every day. Whether in stations, on trains, in signalling, in maintenance, in the back office or in management, they make a huge contribution. While I am determined that GBR works for our staff, the Bill is drafted deliberately to give GBR the flexibility to arrange its business as it sees fit. What GBR looks like on day one is not necessarily what it will look like for ever. Given the need to transfer train companies and DfTO on TUPE principles, which we acknowledge will apply wherever relevant, it would be impossible for GBR to be a single employer from day one. It is right that the Bill allows GBR to structure its business in response to future changes rather than fixing it in enduring statute. This amendment would prejudice the continuing process of designing GBR and reduce the flexibility for GBR to have a phased implementation or to restructure in the future.

I recognise that railway workers affected by the transition to GBR and their trade unions are looking for clarity. We have passed a crucial point for many staff, which is that they are now working for a company that is publicly owned, and that ownership will endure. The Government will continue to keep trade union leaders updated through the Rail Engagement Group, which is the regular forum of engagement between the Government and the unions. While for those reasons I cannot accept this amendment, I would be happy to meet my noble friend to discuss the transition to GBR and what that means for rail staff in more detail if that would be helpful.

Amendment 19, tabled by the noble Lord, Lord Lansley, would amend the definition of GBR’s functions in relation to service facilities. The Bill exempts the provision of service facilities for use by other train operators from GBR’s new access regime. These facilities will be things such as maintenance depots, freight terminals and sidings. They are provided in a wider market in which other suppliers may also participate. For that reason, access to these service facilities will continue to be governed by the existing ORR access regime rather than GBR’s new one so that GBR and other providers operate on a level playing field and third parties can gain fair access to these facilities. Consistent with that principle, Clause 3 makes it clear that the provision of these service facilities is not a statutory function of GBR. The Bill therefore already provides the parity of treatment that I believe this amendment is trying to achieve. However, I would be happy to meet the noble Lord if that would be helpful on this subject.

Lord Lansley (Con)That just begs the question of why in Clause 70—perhaps we can discuss it before we arrive at that point—Great British Railways has been taken out of the definition of being an infrastructure manager for the purposes of access rights under the 2000 regulations.

While I have the Committee’s attention for a moment, my noble friend was asking what functions Great British Railways can undertake. The clause makes it clear that the statutory functions are distinct from those things that Great British Railways can do as a company. Some of the things that we are discussing, such as property development, are things that it is doing as a company. However, we have to bear in mind, and the Minister will tell me if I am wrong about this, that we go on to hear about the Secretary of State giving directions and guidance to Great British Railways. That is in relation to its statutory functions, so, by definition, it will not extend to the actions that GBR undertakes as a company. We need to be aware that there is that territory called being a company, which is outside the scope of the Secretary of State’s directions and guidance.

Lord Berkeley (Lab)It is not very well drafted at all, is it?

Lord Hendy of Richmond Hill (Lab)I refute that comment, for the avoidance of doubt and for the record.

The noble Lord is correct. It is an important distinction. As I said, let me meet him on that. He referred to Clause 70. I am not equipped to go into that just now, as he will appreciate, so I will talk to him further about it.

Amendment 18 removes the delegated power to add to the list of functions for GBR. While the functions listed in Clause 3 cover the breadth of activities that we expect GBR to undertake as the directing mind for the railways, it is sensible to provide the flexibility to add functions should the railways change significantly enough to warrant a new function being added—for example, due to technological development, such as in the artificial intelligence space.

This power is not expected to be used frequently, if at all, but it future-proofs the Bill in the event that new activities need to be brought within the scope of the functions. Bringing an activity within the functions in the Bill has several benefits, including that the function then becomes subject to GBR’s duties and ORR’s monitoring. This legislation is expected to govern the railways for a long time, as the 1993 Act did, so this is a responsible and sensible power. This power was also reviewed by the Delegated Powers Committee, which deemed it acceptable and did not draw it to the attention of the House in its report on the Bill—I welcome the report and look forward to responding to it formally in due course. The power cannot be used to change or remove functions and is subject to the affirmative resolution. It is also not unprecedented: the National Health Service Act 2006 allows functions to be added to special health authorities via regulations. I therefore hope that the noble Lord will feel able not to press this amendment.

Amendments 20 and 110 from the noble Baroness, Lady Pidgeon, relate to passenger growth. I very much agree with her that growing passenger numbers on the railways is vital. It supports economic growth, jobs and homes, encourages modal shift and can reduce the level of taxpayer subsidy required for the railways. However, GBR’s general duties in Clause 18 already include a duty to promote not only the interests of passengers but potential passengers. This already requires GBR to consider how best to encourage new users on to the railways. GBR’s business plan will also reflect the Government’s ambitions for passenger growth, including measurable outcomes against which GBR can be held to account. GBR’s other duties, including promoting high performance, such as reliability and punctuality, will also contribute to making the railways more appealing to passengers. Transport Focus recently found reliability to be the single most important issue for passengers. GBR will be able to improve reliability by making better, whole-system decisions on issues such as the choreography of maintenance works.

As a commercially minded organisation, GBR will also be naturally incentivised to attract more people to travel by rail, because increasing passenger numbers will increase its own revenue. By contrast, there is no intrinsic motivation for GBR to increase rail freight when there is limited network capacity and freight services are in the clear minority of services. That is why the Bill already includes a freight duty and a freight target, to ensure that freight is given equal weight to passengers in a system where passengers may have naturally taken priority otherwise. A stronger or additional passenger equivalent duty or target could actually undermine our ambitions on freight. I therefore hope that the noble Baroness will agree that that would not be the right outcome.

Baroness Pidgeon (LD)Before the noble Lord moves on, he has not really addressed the point that I made, which is that in Clause 18 there is a perverse incentive that somebody coming in with a different mindset from many of us in this Room could reduce the frequency of trains and hike up fares and still meet what is in this legislation. Even if the noble Lord does not agree with my amendment about a passenger target, and I accept the debate on that, can the Government agree to look at whether some other wording could be put in to strengthen this and make sure that this legislation does what we all want, which is to see more passengers on the railway?

Lord Hendy of Richmond Hill (Lab)The obligations placed on GBR by the long-term rail strategy, and the consequent approval by the Secretary of State of the business plan, should adequately deter Great British Railways from seeking to achieve that by diminishing services. Indeed, there was an example in the franchising era of the Government being loose with their definition of train services, only to discover that the franchisee had, remarkably, reduced the subsidy by withdrawing a number of services on rural branch lines. That clearly would not be possible with a decent long-term rail strategy and a consequent business plan to which a Government should agree.

Amendments 80 and 81 relate to the Clause 13 provision allowing GBR to charge for its functions. I agree that GBR must act reasonably while setting charges, and I assure the noble Lord that there are already safeguards in the Bill to ensure that charges are reasonable. GBR has a duty to ensure that railway service providers, such as other operators, can plan, invest and make decisions about their own businesses, so GBR must set charges that are consistent with this and do not undermine other people’s ability to run viable and successful businesses.

Competition law will apply to GBR, ensuring that charges it sets are not anti-competitive. In this context, an additional reasonableness test is duplicative without delivering any material additional protection. It is also important that GBR can recover appropriate costs from those who access and benefit from the services it provides. If it were prevented from doing so, the burden would ultimately fall on the taxpayer and passengers.

Amendment 81 would provide an appeal route. All I say to the noble Lord is that an appeal route to the ORR across every possible charge that GBR could levy is disproportionate. I have already mentioned the safeguards in existing law to ensure that those charges are fair.

On the private sector growth target referred to in Amendment 114, nothing in the Bill seeks to exclude or marginalise the contribution of the private sector, but I do not agree that a statutory target is the right approach. The Bill is absolutely an opportunity for the supply chain, but in that case, we have to let the market determine its contribution.

On Amendment 305 from my noble friend Lord Berkeley, I assure him that existing legal rules already allow railway operators to seek recovery of costs and other losses through civil law. A substantial amount of cost recovery is achieved already, and the limit to it is to do not with legal powers but with the identification of perpetrators who drive off. Given what I have set out, I encourage noble Lords and noble Baronesses not to press their amendments.

Lord Moylan (Con)My Lords, I begin with a craven apology to my noble friend Lord Harper for my comments about the Sunak Government. For the avoidance of doubt, had the last general election been fought solely on the question of his conduct of the office of Secretary of State for Transport, I am sure the result would have been very different and more favourable to the Conservative cause.

I will not refer here at any length to the question of functions, except to say that it is a mess. At the end of this debate, everybody in the Room who has thought about it can probably see that it is a mess. However, the Minister kindly offered me a meeting to discuss this, and I think my noble friend Lord Lansley is now very much included in that invitation, and possibly other noble Lords. I ask that that meeting takes place reasonably promptly as these issues will return at later stages in Committee rather than being left to the end of Committee and rushed through just ahead of Report. A sensible meeting on that could be very valuable.

I will comment about the noble Lord, Lord Davies of Brixton. I do not agree that there should be a single employer as such, although I think there will be one because I think the unions will get their way. My noble friend Lord Harper explained the danger to the public of going down that route. I fully expected—and was disappointed—that the noble Lord, given his background, would refer to the difficulty with pensions, particularly the fact that all these organisations currently have individual pension schemes within the Railway Pensions Scheme. Is the Minister satisfied that it will be possible, in the timescale he is working towards—namely, the designation of GBR in the second half of next year—for the Railway Pension Scheme trustees and Railpen to achieve a smooth and lawful transition of pension arrangements in that time? He may not be able to answer that question now, but we must find some way of coming back and discussing this because pensions are a very important aspect of the remuneration of the employees.

18:00:00

Finally, the Minister gave me what I was looking for on the question of safety, and that is an unambiguous assurance, as I understood it from the Dispatch Box, that the Office of Rail and Road remains the sole safety standard setter. That is what I was hoping to hear him say; that is what I think he did say. Given the confusion generated by the wording in Clause 3, the Bill would be improved if it spelled out what standards he was referring to to ensure they could not be taken as being safety standards. His comments here today in Committee, though deathless in one sense because they are in Hansard , may be forgotten by others because of the squalid circumstances in which this meeting is being held. I beg leave to withdraw the amendment.

Amendment 7 withdrawn.

Amendment 8 not moved.

Clause 3Functions

Amendment 9 not moved.

Amendment 10

Moved by

10: Clause 3, page 2, line 28, at end insert “by promoting a thriving competitive market in the retail ticketing market”

Baroness Harding of Winscombe (Con)My Lords, I rise quite nervously as I am definitely not a rail expert, this group of amendments is not really about the railways and the room is full of people who are huge rail enthusiasts. There are quite a lot of amendments in this group and they all, I think, aim to do the same thing, which is to make sure that in creating Great British Railways we do not adversely affect the current competitive market for online retail ticketing services. I will speak to a series of amendments in my name, Amendments 10, 52, 53, 136 and 139, and will also speak to amendments in the name of my noble friend Lord Young, to whose Amendments 48, 117, and 211 I have added my name. I will also support some other amendments that I was just not organised enough to put my name to: Amendments 11, 31, 49, 50, 180, 181, 182, 212, and 328.

If noble Lords will humour me, I will start by trying to set a bit of context for the whole group to try to explain why I think we should be worried about this and why noble Lords not as interested in digital as I am should care about the importance of this group. First, the Competition and Markets Authority has said it is worried. In April 2025, its response to the Government’s consultation on the future of the railways was very clear that this is a problem. It is concerned that the risks of actual and perceived self-preferencing are likely to be greater the more closely ticketing is integrated with GBR’s core activities. In the Bill, ticketing is very closely integrated into GBR’s activities. The CMA was very clear that it is important to send the right signals to independent retailers and investors that this would remain an open, competitive market. The CMA is worried.

Secondly, experience in other networked markets shows that we should all be worried. My experience is, as I said at Second Reading, from the telecoms market, where we know that BT’s ownership of Openreach led to very clear self-preferencing for BT retail and a long consumer campaign to separate out Openreach to force clarity and transparency. Actually, retail competition in telecoms has been hugely helpful, while at the same time acknowledging the need for that single Openreach infrastructure organisation. That happened only because of very clear competition regulation overseen by Ofcom. We know that if you do not have that, you get bad behaviour from the integrated virtual network monopoly.

Thirdly, the other reason why we should be worried is that this is already happening. Anyone who is used to having to use Delay Repay will notice that it has only very recently been integrated, and only partially, into the Trainline app. That is because the train operating companies refused to do it, because they wanted to keep control. Only in the last two months, GWR and Transport for Wales have both announced new ticket products that cannot be sold by third-party retailers. This is not in principle—they are much cleverer than that—but in practice. There are technical reasons why those products cannot be sold by other retailers; it is because the systems integration is not quite there or the data is not gathered. In one case, it is because the independent retailers do not capture date of birth. This is not by accident. This is what vertically integrated monopolies do: they design products that are very hard for their competitors to replicate. We should worry about this as we debate the Bill, even if we are not that interested in digital retailing.

I thank the Minister for his time on this. We had a very constructive meeting yesterday, and I know that he and his team have had constructive meetings with other noble Lords. I came away from my meeting with him, as I did from his speech at Second Reading, with the impression that he agrees that competition in retail ticketing is a good thing. I think we would all welcome him putting that firmly and clearly on the record today. The question is whether there are sufficient safeguards and signals in the Bill to make that the case. I do not think that there are. Just to try to decode this quite large and complex group, I think there are three areas that the amendments are seeking to get clarity on, without which there is a real risk that what is genuine consensus—that we do not want to nationalise ticketing but to have an open, competitive market—will not happen.

The first area is getting clarity in the Bill that GBR will be required to compete on the same economic terms as independent retailers. I do not think that that is currently clear, and there are a number of amendments attempting to make that clear in this group. The second area is getting clarity that the ORR will have a competition duty as it relates to enforcing the retail code of practice, so that there are real ex ante safeguards to prevent anti-competitive behaviour from GBR. The third area is that independent retailers will be able to appeal the decisions of the ORR as it relates to the retail code of conduct. If you think about it, those are the three layers of the onion. First, is GBR required to create a level playing field? Secondly, has the ORR got an obligation to oversee that level playing field? Thirdly, have independent retailers got a means of appealing if it goes wrong?

Let us take each of those in turn, starting with whether there is a level playing field. My experience from telecoms is that by far the best way to do this is functional separation of the network from the competitive retail market. Having spent a decade trying to make that happen in telecoms, I am pretty certain that it is better than trying to design the regulations. I have considerable sympathy with Amendment 182 by my noble friend Lord Holmes, who is beside me, and, if you read in detail the CMA’s response to the consultation last year, I think it does too. But I appreciate that the Government and the Minister have consistently rejected that organisational solution. If the Government are going to reject that solution, we really do need hard and fast guarantees that the obvious risk of abuse of that vertically integrated power can be mitigated. Their refusal of functional separation makes it all the more important that we get into the Bill the requirements on GBR to create economic parity. As the CMA said, the less functionally separate they are, the more important it is that these rules are clear.

A number of amendments in this group—Amendments 10, 11, 31, 48, 49, 50, 117 and 181—all separately try to achieve this. I accept that we do not need all those amendments; it is a function of the strength of feeling across the Committee that we have so many competing amendments attempting to do the same thing. If I had to choose, Amendment 48 in the name of my noble friend Lord Young is the most important and strongest, which would put it very clearly into GBR’s licence. However, I very much hope that we can have a constructive debate with the Minister on how we do this.

I would like to ask him a few questions about this. I fear he will say that we do not need to do this because it will all be set out in the retail code of conduct, but as that has not been published, even in draft form, it is impossible to be sure. Can he confirm when the draft code of conduct will be published? Can he confirm that it will state clearly that GBR’s retail ticketing operation will be subject to the Subsidy Control Act? Can he confirm that GBR will be required to publish separate accounts for its retail operations? I understand that he has indicated it will not, but I am flabbergasted by that because, just to manage the retail operations well, GBR will surely need to know whether it is making money. Those accounts should exist; it is just a question of whether it is willing to be transparent about it.

In confirming that the retail code of conduct will state clearly that GBR’s retail ticketing operation will be subject to the Subsidy Control Act, can he explain why it is better not to be clear that Parliament’s clear intention is that GBR should not adversely affect competition in retail ticketing? I cannot understand why the Government would not put one of these amendments into the Bill if—as I am sure the Minister would agree—we want to have a competitive market. In other digital areas, we have learned to our cost—we have learned it very recently in online safety—that, even when there is real cross-party support for a position, if we do not get it in the Bill, the regulator is capable of misinterpreting it. As the Minister has said himself, this is a once-in-a-generation piece of legislation. It is really important that we get the structure of this market right.

That is the first point; I promise I will be quicker on the second two. The second set of amendments within this group, Amendments 136 and 139 in my name, aims to make sure that we are clear about the role of the ORR. They would make it clear that the ORR’s competition duty should apply to the enforcement of GBR’s licence condition as it relates to the retail code of practice and when the ORR assesses GBR’s performance to the extent that it concerns retail ticketing. I know the Government will say that this is not necessary, it will all be set out in the code of conduct and it is already clear that this is the ORR’s job. In that case, let us make it clear in the Bill. There are a number of reasons why we really need to be clear about this. This not the ORR’s job at the moment. It does not have the skills and experience needed in retail ticketing, and it will need encouragement to build them, especially when there is so much for it to do in its core area of expertise of running the railways.

I am sure that it has the best possible intentions, but we know that running these regulators is really quite hard. We need to make sure that, as we create one of the country’s largest quangos in GBR, the ORR knows that one of its jobs is to keep GBR honest. If we do not have this in the Bill, I worry that, as the retail code of conduct is amended in five, 10 or 15 years, it will gently soften the amount of focus that the ORR needs to have on this. Before we know it, we will have another monopoly market where consumers are the ones who pay the price. It seems unnecessarily risky not to make these quite simple changes.

18:15:00

That takes us to the third group. Let us assume that, with the best possible intentions, even though we have it in the Bill, the ORR does not get regulation right. Regulation is hard, particularly when it is new. Amendments 52 and 53 in my name provide for a merits-based appeal of ORR’s decisions. As currently drafted, there are two means for independent retailers to appeal anti-competitive actions in this market. They can use judicial review to appeal the process by which the ORR has come to its decisions, or they can follow the standard Competition Act ex-post complaints procedures and complain to the CMA. The problem with the latter is that it is incredibly costly and all the harm is done before you get any redress, and the problem with the former is that this is new and it is entirely possible that it is not the process that the ORR gets wrong but the detailed technical solution.

I almost get a sort of PTSD when I think about this from my telecoms days, because we used to spend hours arguing with Ofcom and DCMS about merits-based appeal versus judicial review. The risks of merits-based appeal is that, when you have big tech with completely unlimited legal budgets fighting against minnows, a merits-based appeal can really slow down the work of a regulator. We do not have that in this case, as I sincerely hope that GBR is not going to have enormous legal budgets funded by the taxpayer to fight competition cases, and the independent retailers we are talking about are not of the scale of the tech titans. I therefore do not think that merits-based appeal is dangerous, and my experience from telecoms is that, in the beginning of a new regime, merits-based appeal can make the difference between the small independents surviving and them being killed while they win the argument in the courts. With that, I know I have used every second of my time. I promise I will sit down after moving my amendment. I beg to move.

Lord Young of Cookham (Con)My Lords, I have added my name to five amendments in this group. I am the lead name on Amendment 31, which would require the Secretary of State to issue directions to promote fair competition, and on Amendment 48, to which my noble friend referred. It has the same objective as the other amendments, particularly those ably moved by my noble friend, but it does so by making it a condition of GBR’s licence that GBR does not distort the market in ticket sales. The advantage of that amendment is that it is upstream—it is proactive—in that GBR would not get its licence until it had satisfied not just Amendment 48 but, in conjunction with Amendment 47, the CMA had signed off the necessary precautions and provisions that my noble friend has just referred to to make sure that any competition is fair. The other amendments would place a duty on GBR to compete fairly, but they would bite only if it was alleged that it was not doing that. The advantage of Amendment 48, in conjunction with Amendments 47 and 49, is that it is upstream and hopes to avoid the problem.

I am grateful to the Minister for the meeting he held on 3 September when he confirmed that he wanted a fair and open market when it came to retailing. There was some good news at that meeting in that the Minister confirmed that GBR will not be selling tickets that only GBR can sell—a practice to which my noble friend referred. He confirmed that anything that GBR sells will be available to online retailers, and it would be helpful if we could have that on the record. The ORR has already done a review of the benefits of an active retail market, and this is what it said in 2015:

“Third party retailers play a key role in improving ticketing for passengers. They offer different ways to access information about rail fares and journeys and provide more choice in where and how to buy tickets. They also play a role in expanding the rail market (to the benefit of TOCs and taxpayers) and in putting competitive pressure on TOCs to improve their offering, including by innovating”.

A recent review by a firm called Teneo estimated that third-party retailers added an extra £450 million per year in additional revenue for the rail industry by attracting new customers, reducing friction in the rail journey and supporting revenue protection. The independent sector pioneered digital ticketing. It paid 70% of the £30 million upgrade to the new barcode infrastructure. Those benefits can carry through to GBR, but only if there is fair and open competition.

The independent retailers are used to competing with train operating companies. At the moment, they are prevented from unconstrained subsidy of their retailing by the public service obligations in transport. They are happy to continue to compete with GBR, but they are anxious that there should be a level playing field, as my noble friend has just explained. She quoted from the CMA; the following sentence adds force to her argument. About the risks, it said:

“In a more closely integrated model, additional safeguards are likely to be required in order to achieve the government’s aim to ensure the sector benefits from the effects of fair and open competition between GBR and TPRs”.

Those additional safeguards are the subject of all these amendments.

One possible solution would have been to adopt the model of SNCF, a publicly owned French railway company whose website is a separately owned company. However, the Minister has made it absolutely clear that he does not want that option; he wants an integrated GBR, so I will not pursue it in that particular form. But insisting on an integrated model does not mean that the cost of online retailing should not be identified—a point made by my noble friend. Separate and transparent financial accounting should be a cornerstone of the safeguards that the CMA and ORR want. My noble friend referred to British Telecom; there is a parallel here. Both GBR and British Telecom owned the network but sold services using that network in competition with others. As my noble friend said, the solution insisted on by the regulators was clear separation.

May I draw on my experience as a former Treasury Minister and Transport Secretary to outline the risks that I see ahead? In the next few years, there will be enormous pressure on the Department for Transport. It is an unprotected department, and the IFS has estimated that it will have to cut its budget by 3 percentage points between now and 2029. It will get a letter from the Treasury asking it to identify savings of between 5% and 10%, in cash terms, in order to keep the Government within their fiscal target. The Secretary of State will reply by thanking the Treasury in courteous terms and saying that it can meet that target only by either cutting investment, cutting the rolling stock programme, which impacts on growth, putting up ticket prices, which impacts on the CPI, or cutting branch lines that run through a whole lot of ministerial constituencies.

The Treasury will then go through the department’s budget line by line and suggest savings. It will ask why so much has been spent on first-class travel and why it has so many press officers. In relation to this debate, it will say to the GBR, “Why are you paying £200 million in commission to independent retailers when GBR has its own website?” It will suggest to the Department for Transport that it cuts the commission from 4.5% to 2%. It will say that, historically, it was 10%, but it was cut, and it was cut again by the RDG to 4.5% in 2021, I think. The Treasury will argue that the pain should be shared not just by the Department for Transport but by independent retailers, and that with AI and by seeking new markets and doing more advertising, it can reduce its costs. The online retailers will say, “This totally destroys our business model. There is no way we can survive on 2%. It will drive us out of business”. There will then be no pressure to innovate and no consumer choice, and we will be left with a GBR monopoly with no pressure to innovate or improve passenger standards. They may actually go further and say that the website that should be taken down is actually GBR’s. They will say that there is no way that GBR could survive on 2% and may well allege that the website costs far too much to set up, that it is overstaffed and that the costs of the premises that the website occupies are not accurately reflected. I do not take sides in that great debate, but the only way that the ORR or CMA will resolve it is with some facts and figures that identify exactly what costs are involved in GBR’s exercise.

The Minister may argue that these amendments are not needed because GBR would already be bound by competition law—and it is—and there is already a statutory obligation to do what I have said, so what we are doing would simply duplicate that obligation. But how would that competition law be enforced if we do not have the data?

He may also argue that GBR is an integral entity quite different from an online retailer, that online retailing is lumped together with the ticket offices and call centres, that it is quite impractical for GBR to identify one means of selling its tickets from the others, and that it makes no sense to regulate online retailing separately from them. The Bill wants to lump it all together so that GBR’s online harm—online arm; I am sorry—can hide inside the wider retail function. That argument sits uneasily with a commitment to fair and open competition. The station ticket offices and call centres do not compete with the online market. The website does; online retailing does. Treating all retailing as one function allows GBR to claim that its online arm is merely part of a broader retail activity, enabling it to argue that competition duties do not apply to its online parts. Crucially, it allows the cross-subsidy from infrastructure budgets to be buried inside retailing and enables GBR to avoid the cost of sale parity by hiding online costs.

I noticed that these amendments are signed not just by Conservatives but by Liberal Democrats and Labour Members. So there is a real imperative on the Minister to indicate some flexibility on this matter, and some willingness to have further discussions and, crucially, to table some of the amendments or variations on them with the assurances that all those who have signed these amendments are after.

Baroness Alexander of Cleveden (Lab)My Lords, I apologise to your Lordships for not being here at the start of proceedings. Noble Lords put me on to the Economic Affairs Committee yesterday; it had its inaugural meeting this afternoon and it demanded my presence. I am so sorry to have missed the first two groupings, but I am here for this one.

I will speak to the two amendments to which I have added my name—Amendment 117, to which the noble Lord, Lord Young, just referred, and Amendment 136, in the name of the noble Baroness, Lady Harding. My reasons for supporting them closely parallel the arguments that we have heard. I do not have the distinguished history of having been a Rail Minister, as the noble Lord, Lord Young, was—at least not in Westminster—but I had that role in the Scottish Parliament and I understand the risks of unprotected departments. Therefore, we have a duty in the Bill to consider how to protect the incredible digital innovation that we have seen in the provision of retailing services that have been widely welcomed by passengers across the country. The noble Baroness, Lady Harding, and I share a common interest in the whole area of digital regulation, as she said. The risk of leaving ambiguity surrounding the role of regulator and not putting obligations in the Bill may lead to unintended consequences down the line.

I thank the Minister and officials for the recent engagement they had with noble Lords around the intent in these areas of rail retailing. I appreciate that the retail code of practice will be published prior to Report; it will go some way to allow all parties to assess whether the code meets the Government’s stated objective of fair competition in retailing.

18:30:00

In the time available to me, I will touch on just three specific areas of concern that these amendments speak to. First, there is the effective route of appeal where people feel that self-preferencing has happened. As is recognised in the Bill, the rail retail market will be a new area for the ORR. I suggest to the Minister that he might think again about whether an appeal to the ORR should be not just on the basis of process but on the merits of the case and how the decision is taken—not least because the evidence from the CMA and indeed from Europe is that there is a material risk of a state-based entity engaging in self-preferencing. Therefore, if our objective is to uphold our route of appeal, perhaps an entirely ex post process, as we have heard, is not the most effective approach to market regulation. In a case where there was any distorting market competition, a remedy of that kind could perhaps take years, and that may merit further consideration.

Secondly, there is a debate to be had about who subsidises retailing. What is the way in which we will establish the issue or otherwise of subsidy? Will it be via the subsidy Act? There is concern that we have now in GBR a very different body from that which has existed for the last 30 years. It is a single vertically integrated entity and so, understandably, there is a desire for the appropriate safeguards to ensure that GBR’s own online retailing will not have more advantageous terms than other retailers.

Thirdly, as others have suggested, to demonstrate competition, it would be helpful to have transparent and separate accounting. In making that request, I recognise that that is now standard practice in a range of other sectors, including telecoms, the BBC and energy. The request for separate accounting is not necessarily a bureaucratic one but one that builds confidence in the basis of competition and perhaps addresses the CMA’s conclusion that the risks of self-preferencing are real in retail and additional safeguards may be required.

That said, I am very grateful for the collaborative spirit that the Minister has brought to the consideration of this Bill. I welcome that the code is to be forthcoming before Report. I look forward to the Minister considering the balance of what appears in the code and what might appear in the Bill to provide a solution in an area where I think there is a common commitment to fair competition and to continue innovation as we move forward.

Lord Holmes of Richmond (Con)My Lords, it is a pleasure to take part in day one of Committee. I declare my technology interests, as set out in the register, as adviser to the Crown Estate and Simmons and Simmons LLP and as non-executive director of Avalanche Foundation and Avalanche BVI Inc.

What a group to be part of. For anybody who thought that competition is not a good idea, the arrival of a second ex-Secretary of State for Transport has demonstrated clearly that competition is the way forward, as I am sure we will see in a moment when I sit down. Fundamentally, what is there left for me to say after my noble friend Lady Harding’s forensic introduction, which took apart all of the reasons for the current construction of these sections in the Bill, followed by my noble friend Lord Young’s intervention?

In many ways, my noble friend Lord Young inadvertently, but highly accurately, summed this up when he said “harm” rather than “arm”, because that is where we are at. He looked forward into the future and into, as he said, how this may develop, but I would go further. There is no crystal ball gazing going on here. This is not a potential, as he set out. This is an inevitability; this will happen.

How can we know this will happen? Because it has already happened in other departments in very recent history. We do not need to go into the details but, last year, there was a case in point where, when the growth pressure came along, a particular government department saw a piece of work it was involved in where, for years, it had worked collaboratively with the private sector to build particular solutions, but then it saw that there was a potential wedge that it could throw into the pot to put into its departmental contribution. Suddenly, a screeching change of direction was taken and a monopoly play was deployed. This is inevitable if we progress with the Bill as currently constructed.

What is the Minister’s response? The CMA knows competition—it does it every day—and its submission was conclusive. Why would the Government want to construct something so clearly and monstrously problematic at this stage, which will only cause them pain within such a short space of time, when it is so avoidable, either through functional separation, as I suggested, or through the eminently sensible alternatives offered by my noble friends? Why would the Government choose such a problematic path forward at this stage, when it is more than reasonably foreseeable that the problems will come? In fact, as I said, it is inevitable.

Competition is absolutely critical, and the other element within competition is innovation. This will not lead to optimal innovation. Let us imagine not just the potential plurality of ticket retail sellers but the kind of products that they could bring on stream. We could see tokenised tickets that could transform the passenger experience; they could contain so many details that there would not be a need for passengers to explain, for example, their needs, whatever they may be. They would all be contained in a tokenised ticket. That would be truly transformational, but it would require a level playing field, a crowding in of competition and, through that, a crowding in of innovation. I move on to my second amendment, going broader and looking at the huge array of data already available to GBR. We have always had a huge volume of data across transport, not least in the railways, and it has never had the opportunity to truly drive the transformation that it could. We have talked tickets, but take the example of the rolling stock itself: imagine what innovation third-party, crowded-in businesses could bring if they had those data at their fingertips. The great news is that neither GBR nor this Committee has to imagine what that innovation could be; all that has to be done is to put those data out there on a level playing field, equally available through the technologies that exist. The innovation, transformation and improvement would simply flow.

For reasons of competition, innovation and taking all the advantage of these new technologies, I constantly mention the problematic nature of the Government flatly refusing to pass a cross-sector and cross-economy AI regulation Bill. We see it here and in the cyber Bill, for those who have been in Committee on that Bill. That could lay out a framework that could work in this rail context as it would in all other sections of our economy and society. If that will not be in place, how will the advantages of these technologies be felt by passengers, rail workers and everybody involved in the GBR entity coming into being? We need to see these changes if we are to feel, and be availed of, that transformational potential and the economic benefits that will flow. The Government would benefit from adopting changes set out in this suite of amendments. I look forward to the Minister’s response.

Lord Berkeley (Lab)My Lords, this has been a fascinating debate and I fully support comments made by the noble Baroness, Lady Harding, from her experience in telecom. I have suffered a bit myself from them, and what she told the Committee is no surprise.

The noble Lord, Lord Holmes, is also absolutely right that we need a level playing field. The noble Lord, Lord Young of Cookham, probably hit the nail on the head when he said that the sooner we do this, the better, so I definitely support his Amendment 48.

It is worth reminding ourselves that there is not just one big private sector retailer and all the ones that retail for the TOCs at the moment, but there are lots of smaller ones as well. The ORR will have to look at making sure that the fair competition between the big ones and the little ones is kept in line with competition policy and that we do not have one of them running away with everything else. It would be no good having one private sector company becoming a private sector monopoly—you might as well have a GBR monopoly—but we do not want monopolies. That is my message.

One noble Lord who spoke was concerned about the workload that may be coming to the ORR. I have had many experiences with the ORR over the years and it tries very hard, but it needs to be prepared for an extension to its scope. However, one thing I know is that it is capable of doing it and will be interested in doing it. I am sure many noble Lords have talked to it in the last few months. I think the ORR is also quite relaxed about the involvement of the CMA, because the CMA needs to be there as well, possibly as a second line of defence. It will just not work unless the level playing fields are separated from the great work that GBR will do in running trains and making sure the infrastructure works and things like that. Having a separation, including the accounts, as some noble Lords have said, is really important. I hope my noble friend will come back with some positive views on competition, and we maybe will even have to have a meeting or two before Report.

Baroness Leaman (LD)My Lords, I speak to Amendments 208 and 339 in my name in this group. I set out the case for automatic Delay Repay at Second Reading, so I will not repeat that ground today save to say that I doubt I am alone in having abandoned a claim because the process took longer than the journey was delayed. Instead, I will use this stage to explain what these two amendments would do.

Amendment 208 would place a duty on GBR and open access operators to pay Delay Repay compensation automatically, wherever they hold enough information to identify that a passenger’s journey was delayed by 15 minutes or more and have the means to pay them. Where an operator does not hold that information, it would still have to take reasonable steps to let the passenger know they are entitled to claim, so the burden of finding out does not fall on the passenger alone. No one would receive less under the automatic route than under operators’ existing schemes, and payment would default to digital means to reflect the way that most fares are already bought and refunded today. None of this asks GBR to invent a new right. It asks operators to use data that they already have to give effect to a right that passengers already have. I am open to a different mechanism if the Minister has one in mind but the underlying case is straightforward. Whether a passenger gets money back that they are owed should not depend on which operator runs their line or on their persistence with a claim form. A right that exists on paper but which is rarely exercised in practice is not really much of a right at all.

My proposed new clause would also leave the Secretary of State flexibility to set timescales, notification methods and exceptions by regulation. Amendment 339 follows from that. As drafted, those regulations would be subject only to the negative procedure, taking effect unless the House objected. Amendment 339 would instead require debate and approval by both Houses under the affirmative procedure. Given how much of this scheme’s substance would sit in regulations rather than in the Bill, Parliament should scrutinise and approve them properly, not simply have the chance to object afterwards.

18:45:00

I am grateful to the Minister and his officials for the time he gave me before the summer to discuss these amendments and for the care he took in explaining the Government’s thinking. He told me then that he wanted to ensure consistency of approach on Delay Repay, which I took as recognition that operators today handle compensation very differently. Some do it well and some do it considerably less well. I share that objective entirely but, on the Government’s own timetable, all operators will be absorbed into GBR next year and consolidation alone does not guarantee consistent practice. Legacy systems and habits can persist inside a single organisation unless something requires otherwise. I have not found that requirement in the Bill or the Explanatory Notes, so I would welcome the Minister’s help in understanding whether he intends consistency to be secured in law through GBR’s licence conditions or through a mechanism of the kind proposed in Amendment 208. I remain glad to work with him and his officials on getting the details right and I look forward to his response.

Lord Hampton (CB)My Lords, I added my name rather belatedly to Amendment 208 from the noble Baroness, Lady Leaman. She has put it so well that I will not detain your Lordships at all, except to say that I added my name. I am astonished that nobody else did, because it seems like such an extraordinarily good idea that I do not know why it has not been done before.

Lord Beith (LD)My Lords, I did not add my name, but there is a limit to the number of names you can add. Many of us feel very supportive of the recommendations from my noble friend Lady Leaman in those two amendments.

I simply want to give some context to the reasons for the amendments such as those from the noble Lord, Lord Young, to be considered for the Bill, or something based on them being considered, to secure a genuinely fair and free market in the retail sales of train tickets. It is worth remembering how much difference the private operators made to the price you had to pay for many kinds of journey. We have been discussing it in theoretical terms, but there was a time when, if you wanted to travel from Edinburgh to Penzance on the cross-country train which made that journey, the cost was enormous. What changed it? It was split ticket operators demonstrating that they could get four or five different tickets—including, when I did it on one occasion, a West Yorkshire rover ticket that carried me one small piece of the journey—and that this accumulation of a handful of tickets would give you a price less than half the cost that you would have been quoted originally for that journey.

Not only did that cheapen tickets for a lot of people making difficult journeys, but it also changed the attitude of many of the operating companies. Certainly when I go to the station to buy a ticket, I am now always asked whether I want a cheaper ticket by getting the next train or the one before it. There is an alertness to the customer’s need to know what the options are for a reasonably priced ticket, which has been brought into the system by the private operators. I do not advocate these amendments because competition is a good Liberal value, but because experience has proved that to be the case.

All this has to exist in a world in which very rapid change will take place. At the moment, operators issue their own tickets. The result is that there is an invisible interaction between the person selling the ticket, the retailer, and the revenue protection officer on the train whose decision it is whether that ticket will be valid on that train. If you have missed one and are getting the next one, it may well not be; if you have chosen to change your journey pattern, it may well not be. The Minister may fondly believe—we have talked about this in a very helpful discussion—that all this will fall away, because when GBR is the only one providing the trains, there will not be these difficulties. I am not convinced of that; I think that old habits will die hard. If we are not very careful, we will still have a situation where the retailer gives you the impression that he is retailing a piece of paper or an email that will enable you to travel on one of several trains, when you are actually buying something limited by the policies and practice of the operator. It may be one operator in principle, but there will still be different regions under different regional management, so we need to have methods of ensuring that. I hope to return to that second point later in Committee, but we should understand the context and value of what we are discussing.

Lord Lansley (Con)My Lords, I do not have my name on these amendments, but I thoroughly agree with pretty much everything that has been said. I especially support what my noble friend Lady Harding said in introducing this group and am entirely in agreement with my noble friend Lord Young of Cookham. I do not want to get into the question of appeals, because we will come on to how the appeal process should be structured later.

Amendment 47 in the name of my noble friend about the approved document is particularly important. I assume that the code of practice that we are promised, which the noble Baroness, Lady Alexander, was talking about, is the equivalent of the approved document or some part of it. At the moment, we have this ticketing and settlement agreement. We have to know how this is going to work in future. If we do not, we should expect—indeed, we should call for—the Competition and Markets Authority to step in. As things stand, the relevant aspects of the ticketing and settlement agreement constitute part of a block exemption against a Chapter 1 prohibition under the Competition Act. It is, on the face of it, potentially an anti-competitive agreement, but the block exemption exists. The question is whether the agreement satisfies the requirements of the block exemption. We have to look at the agreement to know whether that is the case, which is why Amendment 47 is right. We have to ask the Competition and Markets Authority whether the code of practice or the approved document under the Bill satisfies the requirements of the block exemption.

The fact is that GBR will be in a dominant position. Under the Competition Act, in addition to the prohibition on anti-competitive agreements there is a prohibition on abuse of a dominant position. Much of this debate is saying that, given that we know that GBR will be in a dominant position, we should be actively looking for the Office of Rail and Road, by way of market investigations in this area if necessary, or the Competition and Markets Authority to step in, as the current jurisdiction enables it to do, to counter any abuse. We know from Clause 2(1) that Great British Railways has no Crown immunity. Under Section 73 of the Competition Act, there is a Crown immunity from the constraints, remedies and directions of the Competition and Markets Authority, so GBR does not want to be in a position where the Competition and Markets Authority comes after it to prevent its abuse of a dominant position. For all those reasons, the Government would be well advised to put into the legislation measures that will prevent GBR being tempted to abuse its dominant position and to ensure that the approved document will satisfy the CMA’s requirements for a block exemption.

Lord Harper (Con)I thank my noble friend Lady Harding of Winscombe for her excellent opening of this group, the comprehensive way in which she did it and—I think this is a powerful point—her real experience of a similar process and what actually happens in practice. One of the values of this House is having not just theoretical debates but Members who have experience of how these things work in practice. It is no good just legislating for what we think might happen; it is about what will happen. That was particularly valuable.

In this area, unlike some of the areas in the Bill, there is broad consistency among everybody who has spoken so far. At Second Reading, in other fora and in writing, the Minister set out that the Government want a competitive retail landscape and recognise the benefits of that. So what we are debating here is not the principle but how best to achieve that shared goal in practice. I will try to add to this debate.

Practically, the suggestion in my noble friend Lord Holmes’s Amendment 182 of a functional separation —which the noble Baroness, Lady Harding, also raised—is the cleanest and most sensible solution. That means that GBR is not in a position where it is tempted to abuse a dominant market position. It has a separate retailing arm, the rules can operate in a transparent way, you avoid a lot of trouble and you do not have to set up a complicated mechanism to deal with that abuse. I understand that the Government have set their face against that, but I reinforce that that would be the best solution and would solve a lot of these problems.

If the Government do not want to do that, for whatever reason, we absolutely need to make sure, first, that there is transparency. If all this is hidden away, it is very difficult for whatever mechanisms are put in place, whether it is the CMA, the ORR or whatever legal processes the independent retailers have to do. As the noble Baroness, Lady Harding, said, they are not huge companies with bottomless pits of money to be able to do this. If you do not have transparency, people do not know what is going on.

I will make a slightly different argument, bringing in our friends from the Treasury, than the one my noble friend Lord Young of Cookham made. This is one where the Treasury should be on our side. One of the important things that the Treasury wants to achieve is to reduce the subsidy paid to the rail network because, post Covid, the rail network does not send money to the Treasury; it sucks money away from the Treasury. The only way that will change on the operating side is if there is innovation and more passengers use the rail network. The ticketing retailers are one of the ways, in the innovative way they retail tickets. Importantly, if leisure travel is to be a growth area, the partnerships that they strike with providers of leisure opportunities can then be combined with travel to produce innovative packages. If you are going to do all that, you need that thriving, competitive retailing operation, so the Treasury should want that to be successful.

The other thing the Treasury should want is that the operating cost of GBR’s own ticketing operation should be as low as possible. On the cost of running that operation, I challenge what my noble friend Lord Young said. We know what the third-party retailers get because we know what the percentage commission is. If GBR’s retailing operation is not able to run its services for less money than that, it should not be in business, frankly, because it is adding no value at all and should not be running it. My hunch is it that it will not be able to, which is why, when I was Secretary of State, I said it should not really get involved in this business at all because there were lots of competing providers that were much better at it and, frankly, it should just get those to do it.

However, for reasons I do not quite understand, Ministers want GBR to be involved in this process. So, it is critical that the accounting—I declare my interest here as a chartered accountant—should be absolutely transparent so that we can see what it costs. From the Treasury’s point of view, as I said, it wants to be sure that no subsidy is going into the ticketing operation from the rest of the thing, given that there are competitive operators that can deliver this, I suspect, more cost effectively. That is an argument for the Treasury supporting some of these amendments.

On the subsidy point, I believe there is a question that is not resolved, which the independent retailers are concerned about. I understand that, in written correspondence with the Independent Rail Retailers, the department has asserted that GBR’s online retailer will not be subject to the Subsidy Control Act 2022, arguing instead that it will be governed solely by the Public Service Obligations in Transport Regulations 2023. That approach is inconsistent with the legal framework and assurances given by Ministers during the passage of the Bill so far that GBR will remain subject to public law, competition and subsidy control requirements.

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The Bill apparently confirms that distinction. Part 3 of Schedule 2 excludes only GBR’s infrastructure function from the Subsidy Control Act, leaving ticket retailing fully subject to it. Given that confusion—in the view, at least, of the Independent Rail Retailers—it would be helpful if the Minister could clear that up in his response and make it clear that GBR’s retailing operation is absolutely subject to the Subsidy Control Act. If it is, for anybody to enforce that, we need transparent accounting data to show that that subsidy is not taking place. If the operation is buried within GBR’s overall activities and there is no transparent data, nobody will be able to tell whether it is being subsidised or not.

Listening to this debate, it has been clear that there is cross-party support from Conservative, Labour, Cross-Bench and Liberal Democrat Peers about this issue, and an extraordinary amount of unanimity. I finish with a point that I hope is helpful to the Minister. As my noble friend Lady Harding said in her comprehensive introduction, a range of solutions is provided in these amendments. I have set out the one that I think is best—operational separation—but apart from that, there is a range of ways of delivering the competition, the enforcement and the appeal mechanisms. We are not wedded to a particular solution, but I think there is common agreement that the Bill as drafted will not guarantee and deliver a competitive landscape and a level playing field for the private sector operators, which, as my noble friend Lord Holmes said, have invested a significant amount of money, have innovated and have delivered better services to passengers.

That is the key point we should all focus on. What regime will deliver the best outcome for passengers—not just today, with today’s technology, but by delivering investment in new technology as it comes along to continue developing that fantastic passenger and customer experience? I want to make sure that we guarantee that. I know that is what the Minister wants to deliver, so this is an argument about how best to do it rather than an argument about principle. I look forward to what I hope will be a thoughtful and constructive response from the Minister that at least shows that he is open to thinking about some of the ways of delivering on the concerns raised by the Committee.

Baroness Pidgeon (LD)My Lords, this has been a strong debate on an important issue. It is about ensuring that passengers have a wide range of retailers from which to buy their tickets and other associated services, whether for leisure or onward travel and so on, and that there is a level playing field between Great British Railways’ retail arm and the third sector providers. At the start of the discussion on this group, the noble Baroness, Lady Harding, and the noble Lord, Lord Young, made a clear case about the issues, which are uniting members from across the Committee.

Throughout the discussions on all the amendments in these groups there has been a desire for genuine and fair choice for passengers. We want to promote a competitive retail market and equal access to systems, data and products so that they can be used by start-ups and others as well as established practitioners in this area. The latter point is important. It is part of Amendment 211 in the name of the noble Lord, Lord Young of Cookham, and is supported by a number of other Members, including my noble friend Lord Dixon of Jericho. I want to spell out why these issues are so important.

I was really interested to hear about the recent product launched in Wales earlier, which not all third-party retailers were able to promote. In the last week, South Western Railway has had a special discount, some kind of flash sale, on rail tickets on its services. I was not able to find these on my usual app—Trainline, though others are available—but only on the South Western Railway website, which is what I had to use to purchase these super-discounted tickets. It may well be my technological limitations failing me, but, if I had not seen an email from South Western Railway, I would not have known about these special tickets and would have ended up paying three to four times the amount for my travel. There has to be a genuine level playing field where all retailers can sell the same tickets and discounted tickets and use their skills and innovations to drive more traffic through their sites and apps. Different people read data and information in different ways, and that is why we have such a range of apps; we all look at things differently and have different ways we want to purchase tickets. It is important that this can thrive, with the jobs and innovation that this creates.

Members from different parties are in the same area on this issue, but some go further. Amendment 17 from the noble Lord, Lord Moylan, wishes to prevent Great British Railways having any retail website or application until Parliament has had a say over its full-life cost. This sounds a little bit like what the noble Lord, Lord Harper, was talking about—when he was in the department saying, “Why is Great British Railways getting into this space at all?”

As we have already heard, if you look internationally, SNCF has a retail arm in France, but it is kept separate from the main SNCF network, so there is no conflict. In some ways, that is a bit like the regeneration and planning functions of a local authority. They are a part of the same body, but they have to be kept separate because of their distinct functions. Amendment 182 from the noble Lord, Lord Holmes of Richmond, suggests a way to do this, which may help with this concern.

My noble friend Lord Dixon of Jericho spoke eloquently at Second Reading about this area. I know he has held several meetings with officials to discuss his concerns not just about the existing third-party retailers but the ease for new entrants—start-ups—to come into this marketplace and offer the quality services that passengers desire.

Finally, I want to pick up on Amendments 208 and 339, tabled by my noble friend Lady Leaman. This is so important for passengers. It would ensure automatic Delay Repay compensation, whichever retailer you have bought your tickets with. It is about putting the passenger front and centre so that, if something does go wrong, they are compensated without having to jump through hoop after hoop. It is a basic right if we are to transform our railways into the modern, passenger-focused service that we all desire.

I look forward to the Minister’s response on this really strong debate; I hope that it is far more than simply saying that the retail code of practice, as an approved document, will deal with all these issues. I think the Minister will have heard loudly and clearly—and not just from the transport enthusiasts, though many of us are here in this Room—that noble Lords are rightly concerned about this area, and we must get this right.

Lord Moylan (Con)My Lords, I have a number of amendments in this group, but I will not speak to them because right at the outset my noble friend Lady Harding said that there were quite a lot of amendments in this group which offered different means of achieving the same thing, and it was hard to say which were the better ones. I am not claiming that mine are better than others, and I think my noble friend Lord Harper said something along the same lines. We have put them down because we feel strongly about a very important issue, we want it debated, we want the Government to take note and to do something about it before we get to Report. Whether they do what my amendment or somebody else’s amendment says is something we might have a chance to debate and discuss privately before we get to that point—I do not know—but I am not wedded to my particular solutions and therefore will not speak directly to them.

I will say that we on our side support everything that has been said, in that we are curious about why GBR is doing this. I will come back to this point; I will make the Minister’s case for him in a moment, rather against my own interests. We are curious as to why the Minister wants to do this in the first place but, if he is going to do it, there has to be a level playing field for those who are already in the field and other new entrants, because they have demonstrated the advantages they can bring to passengers. The difficulty here—it will arise in the next group—is that GBR is effectively a huge bear sitting in your front room. That bear is both a competitor and a regulator, and its slightest twitch, even unintentionally, could do serious damage to your business. There are a lot of private sector businesses, not just in ticket retailing but those who want to have access to freight and for other purposes, which we will come to later—open access and so forth —which are very worried about what is being created.

The only assurance we are getting from the Minister is essentially, “We are decent professional people; we will do this well”. That is fine. The noble Lord is a decent and professional person. Having worked with him for many years, I am happy if it is of any value to him to give him that endorsement. However, he lacks the quality of immortality. It is necessary to give at least 30 years’ guarantee, if this is going to be the legislative background for 30 years.

Lord Holmes of Richmond (Con)He could do that.

Lord Moylan (Con)He may do that. He lacks the ability in himself to give us the level of assurance that we and various aspects of the industry—not just retail—want.

I am grateful to the noble Lord for having held a meeting, which was open to all interested Peers, last week. I will say something that I raised then. I have to say that I had to slip out briefly during my noble friend Lord Holmes’s speech. He may have said something along these lines. I know he spoke about data.

Lord Holmes of Richmond (Con)It was very good.

Lord Moylan (Con)It was a very good speech that I will read several times in Hansard before tomorrow is out. I just wanted to address what I would do if I were in the Minister’s position—and he and I have been in a similar position together when we were responsible for Transport for London. One of the interests you have as a business in operation is that you want the direct contact with your customers. You want direct customer contact, partly because you want the data. The noble Lord has said this—we have had some conversations, both privately and in that meeting. You want their data. This is perfectly obvious. In my pocket now, I have a Nectar card and a BP card. I am carrying these things around, not really for my benefit but for the benefit of the companies, which want lots of data and information about me. GBR will be in no different position. Therefore, in one sense, it wants to be, like TfL, a monopoly supplier of its own tickets. The temptation to be a monopoly supplier of its own tickets will be huge, quite apart from any pressure that might come from the Treasury or anywhere else, because it wants that data.

Yet the position of the noble Lord seems to me slightly incoherent. He could step forth boldly and say, “We want that data. We need to be a monopoly supplier, and all these private companies, whatever they do, have to go, because they are getting in the way of what we want. You cannot buy your groceries from Sainsbury’s through a third-party retailer—you can only buy them from Sainsbury’s”. He could say that. That would be a coherent position, although not a politically very easy one in current circumstances, I have to say. Or he could say that he is happy to have a large amount of competition, which is what he seems to be saying.

I can be corrected if I am wrong—I have heard this figure without absolute certainty in it—but I understand that close to 90% of tickets are currently sold by third-party retailers on the railways, so when the noble Lord starts, he will be starting from a very low base. To get any useful data at all on his customers, he will have to build up a huge customer base from a very low start. Is that his intention? Does he regard that as a business goal, and if so, what does it say about his strategy for dealing with the private sector?

I do not know what the answers to these questions are. It is difficult. It is right to look at this, as noble Lords have, from the point of view of the benefits of the customer. However, it is also worth thinking about the commercial imperatives that GBR will have and whether it should be allowed to pursue those commercial imperatives, or whether it should be constrained in order to benefit a competitive field.

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These are the sorts of questions that the noble Lord has not, so far, given compelling answers to. Perhaps he has not been asked these questions until now, so that would be a good reason for him not having given those answers. This is what I really want to hear because it will affect the entire direction of where GBR goes as a business. The whole question of data, from ticketing to sales, is very much at the heart of this.

Lord Hendy of Richmond Hill (Lab)My Lords, this has been a very powerful debate. I am grateful to all noble Lords who tabled amendments and for the contributions of noble Baroness, Lady Alexander, and the noble Lord, Lord Beith. About the only thing that I disagree with the noble Baroness, Lady Harding, on is that this is not railway related. I think it is, it is about selling railway travel, but I have huge respect for her experience of other markets, as I have for the noble Lord, Lord Holmes.

I reassure noble Lords that we are absolutely aligned with the intentions of these amendments. We want an open and competitive retail market, and we completely support the benefits that independent retailers can bring. I may not have time to answer the points that the noble Lord, Lord Moylan, has just made, but if I do not do so now, I will later because there are other ways in which the railway can derive data about its customers. I do not think the acquisition of data is sufficient justification for only the railway to sell its product, but I must have a railway that is able to sell its own product because I want its staff, managers and directors to care about its income and its passengers.

Once GBR is established, it will have a retail function, as provided for by Clause 3. Crucially, this will be accessible via all channels—through station ticket offices, ticket vending machines, onboard trains, access through gates, ticket inspectors and online—ensuring that it serves passengers however they buy their tickets. GBR’s future online retailer, its website and app will operate in a fair, open and competitive market. To be clear, independent retailers help drive innovation, improve passenger experience and increase choice for customers purchasing rail tickets.

We realise that the dual role as a retailer and the provider of certain cross-industry systems and services could create potential conflict of interest risks. That is why we have announced a robust package of safeguards specifically designed to address these concerns. In response to the CMA report in 2025, mentioned by noble Lords in the debate, we are proposing an industry retail code of practice owned by the Office of Rail and Road and backed with the force of a GBR licence condition ensuring that the ORR will enforce GBR’s compliance with it. For the record, paragraph 5 of Schedule 1 is the place where the ORR is required to create the code and enforce it.

I can confirm today that the draft code will require GBR to adhere to a range of principles. These include ensuring access to products, providing services and data on fair, transparent and non-discriminatory terms and supporting new market entrants. We are determined that all retailers can sell all tickets. The draft code will also require safeguards around our decision to separate decision-making between GBR’s retail activity and its cross-industry systems and services, supported by appropriate information protections. This provides more protection for third-party retailers than exist today when competing with myriad train operators.

If GBR does not comply with the code, the ORR can employ enforcement measures up to and including a legally binding mandatory order for GBR to change its actions. These enforcement measures can be employed in response to a third party raising an issue with the regulator or where ORR identifies an issue through its routine monitoring. The full draft code will be published when the ORR launches its consultation before the end the next recess. This follows extensive engagement it has already undertaken with industry. It will consider feedback from the consultation informing the final draft of the code of practice in 2027. In answer to the noble Lord, Lord Lansley, we are expecting the CMA to respond to the consultation that the ORR will launch.

As noble Lords have suggested, we want the ORR to be adequately resourced to carry out these functions. Noble Lords who came to the session we had last week, referred to by the noble Lord, Lord Young, will have heard reassurance from the senior leadership of the ORR that they intend to do this and are prepared to do so.

I should also be clear that GBR will be required to comply with competition law. The ORR and the Competition and Markets Authority will continue to oversee the market, and both already have powers to act where anti-competitive behaviour is identified. Alongside that existing framework, the code will create a framework that represents a more extensive form of regulatory assurance than is currently found in most comparable European rail markets. The Government therefore believe that the objectives of these amendments are already being delivered. The code will provide meaningful protection for independent retailers and can adapt as the market develops.

Amendments 49 and 181 were tabled by the noble Lord, Lord Moylan, and concern cross-subsidisation—

Baroness Harding of Winscombe (Con)I am sorry to interrupt the noble Lord. Before he moves on, I may have misunderstood, but I do not think he addressed whether GBR would be subject to the Subsidy Control Act.

Lord Hendy of Richmond Hill (Lab)I have not got there yet.

Baroness Harding of Winscombe (Con)We wait with bated breath.

Lord Hendy of Richmond Hill (Lab)I am about to get there. In turning to Amendments 49 and 181 concerning cross-subsidisation and subsidy control, I can offer further reassurance. The advantage of interventions is that you make your point; the disadvantage is that you stop hearing. As a public body, GBR is required to comply with Managing Public Money principles and relevant subsidy control legislation. The Public Service Obligations in Transport Regulations is the relevant subsidy control legislation that applies to retail specifically.

GBR’s passenger services business will therefore operate within a clear financial framework, ensuring that public funding is used appropriately and fairly. GBR will be required through its business plan to set out its activities, such as its broad retailing function, the costs of these activities and how it proposes that these costs are met. The business plan must cover everything that GBR does, so there should be no concern about transparency.

It is important to note that GBR will be operating a transport service of which retailing is a part. It will have to use all available channels to serve passengers, however they buy their tickets. If it is allocated more funding for retail than would be needed for a simple online retail platform, it is simply because it also has an obligation to provide physical ticket sales—I listed those activities before—including for people who pay cash. They are far more costly to provide, and other retailers are most unlikely to provide them. In answer to the noble Lord, Lord Young, it will not be possible for GBR to subsidise retail from infrastructure budgets, for example, as ticket offices are not classed as infrastructure. GBR will not be overcompensated to deliver retail functions in a way that distorts the market. Funding will be allocated based on the costs of delivering those services to passengers.

It will also be subject to the oversight of the ORR as the sector specialist competition regulator, alongside the Competition and Markets Authority. In that role, the ORR will be able to take enforcement steps against GBR, should it suspect that GBR is using public funds to act in an anti-competitive way.

Lord Harper (Con)Before the Minister moves on, can I press him on two of the things that he has said? In his opening summary, he set out the Government’s view. The problem is that if the retailers do not buy it—they do not, at the moment—whatever he thinks, they are not going to be investing, innovating and developing because they will not be able to justify that to their shareholders. Part of the problem is the need to take some steps to persuade retailers that they will be treated fairly.

Secondly, I think the Minister inadvertently made this point about accounting. I know about the ticketing and settlement agreement to my cost and about some of the ways that retailing has to be done. If GBR is, in effect, doing different things—if it has an online operation but has to do all this other stuff—it will be even more important that there is clear accounting and transparency about where the money is going. Otherwise, it will be impossible to work out whether it is subsidising its online operations, which are competing with third party retailers, by bringing in more money for its other services.

Frankly, it is really important for the taxpayer that we know how much it costs to retail through ticket offices and how cost effective that is because, at some point, Ministers will have to grasp the issue—I started to grasp it but had to ungrasp in the end—that providing things through ticket offices when hardly anyone buys tickets that way will have to change at some point in the future. There has to be some clear and transparent cost information to enable the right decisions to be taken.

Lord Hendy of Richmond Hill (Lab)I simply say to the noble Lord, first, that there will have to be 100% transparency because, apart from anything else, GBR will have to put all the costs into its business plan. My other point about his first point is that there has been a lot of investment already, with very little protection. Part of what we are doing is to give greater protection for retailers in the future, which they need because they have invested. That is a valid point.

Amendments 47, 51, 52, 53, 136 and 139 concern oversight. The retail code of practice will, as I said, be administered and enforced by the ORR. It is the appropriate body to assess complaints and determine whether GBR has complied with its obligations, but GBR will also be fully subject to competition law, alongside the existing oversight of the Competition and Markets Authority. Nothing in the Bill prevents the CMA from acting on competition challenges in rail, and nothing prevents retailers from referring issues to the CMA—either competition issues relating to the code of practice or wider competition issues. So a second opinion is always available and, of course, if they wanted to appeal to the courts, they could judicially review those decisions further.

Currently, at least, additional approval requirements and further statutory appeal routes simply duplicate the existing regulatory arrangements without providing meaningful additional protections, and transparency, as I have referred to, is already baked into this framework. It is a core regulatory principle for the ORR, which has historically publicised the launching, and formal outcome, of railway licence investigations, and I would expect it to continue to do so. The Bill retains the requirement for the ORR to give notice for any decision not to issue an enforcement order following a licence breach, providing a legislative backstop for this transparency.

I move to Amendments 136 and 139. It would not be appropriate for the ORR’s general duty to promote competition to apply to rail retailing wholesale. If it did, the competition duty would conflict with the ORR’s role in fairly and objectively enforcing the safeguards that the Government have charged it to deliver via the code. Enforcement of the code should be fair and evidence-based, determined simply by whether GBR has complied with the code of practice or not. It should not be subject to other goals, which might cause the ORR to judge operators’ compliance unfairly. This is usual practice for enforcement provisions.

However, I reassure the noble Baroness, Lady Harding, that the competition duty will absolutely apply to the ORR when it is writing the code of practice, so the code itself will have competition principles embedded within it. My officials wrote to her on that subject. The noble Baroness put to the Committee a number of clear propositions that I will consider carefully as a consequence of what she said. I believe I have answered many of them, but I will look at what she said further, and of course the publication of the draft code of practice will help considerably. I will also consider what the noble Lord, Lord Young, the noble Baroness, Lady Alexander, and other noble Lords said. As I said, we expect the CMA to respond to the consultation, so we will see what it says.

On Amendment 17, the Government fully agree that appropriate oversight and scrutiny of public spending is important. However, the amendment is unnecessary. The government policy has long been that GBR will retail tickets online through a high-quality website and app, as the train operating companies do now and have done for many years, without fees to passengers.

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The programme to deliver this is already under way and, like all major government projects, subject to extensive business case approval, assurance and spending control to ensure value for money and compliance with M anaging P ublic M oney principles. We are working closely with industry as the proposition is developing and the procurement preparations progress. In fact, there is clearly an opportunity here for people in this market already to sell their back offices to GBR. Much of the detail will necessarily be commercially sensitive at this stage as procurement bids are negotiated and funding will be provided through existing programme budgets. However, once the information is available, it will be published in the usual way. The noble Lord, Lord Moylan, raised some questions about data. Currently, 70% of online tickets are sold by third parties and 30% by train operating companies.

Finally, on Amendments 208 and 339, I welcome the noble Baroness, Lady Leaman, to the contemplation of the Railways Act. Good luck with that. In particular, she raised automatic Delay Repay compensation. We share the objective of making compensation as simple and accessible as possible for passengers. The scheme is one of the most generous in Europe. We have already made progress to improve the ease with which passengers can claim Delay Repay, with the majority of operators now offering automated one-click compensation.

I also confirm for the noble Baroness that the Government have recently announced plans to consolidate all existing Delay Repay systems into one under Great British Railways, making it more straightforward for passengers to claim Delay Repay. As a result of this change, as I think the Committee has already heard, passengers will also be able to claim Delay Repay through independent retailers, which they could not do before. This is another step towards a fair and open competitive market. No matter where the ticket is bought, it will be much quicker and easier to access compensation than it is today. Given the progress already being made, I hope that the noble Baroness will see that we are already aligned on shared outcomes here and that that provides her with enough reassurance that she will not press her amendment.

Baroness Harding of Winscombe (Con)My Lords, I thank everyone who has contributed to this meaty debate. They included multiple ex-Secretaries of State and Members with private sector, regional and devolved experience. I think there was real unanimity of intent. I also thank the Minister. There was an awful lot in his response, which I suspect we will all need to read carefully to understand properly. I take at face value his opening statement of being in line with the intentions of all these amendments. However, there is a lot of work to do between now and Report. It is encouraging to know that we will see the draft code before the end of Recess. I think it will require a lot of detailed thought and discussion.

I shall close by highlighting what my noble friends on the left and right of me have just said. My noble friend Lord Moylan set out exactly why I still think we are going to need to put more in the Bill, and my noble friend Lord Young of Cookham said the same thing: Governments in the future will want to protect the monopoly of the vertically integrated GBR. A good friend of mine in the tech world once told me that monopolies are like children: until you have one of your own, you do not realise how valuable they are, but once you have one, you will protect it with your life. I therefore think we need to hear the wisdom of everyone in this debate today. Without clear guardrails in the Bill and signals to investors and independent retailers that we really mean it, and that this will live beyond the current Government, I fear that the Minister’s great intent will not turn into reality. I beg leave to withdraw my amendment, but I expect that there will be much debate and discussion between now and Report.

Amendment 10 withdrawn.

Amendments 11 to 15 not moved.

Amendment 16

Moved by

16: Clause 3, page 2, line 37, leave out from “plans” to end of line 40 and insert— “(2A) Decisions about access to, and use of, railway infrastructure for the operation of trains will be made by the Office of Rail and Road.”Member’s explanatory statement This amendment seeks to ensure that the Office of Rail and Road continue to make decisions about access.

Lord Moylan (Con)My Lords, there are two amendments in this group. I have extracted them because, if we thought that the last group dealt with private sector concerns of some significance, this group deals with much larger private sector concerns. One of the biggest fears of the private sector, particularly those who operate trains, is the question of access to the rails—access to the track. The current system is that an independent body, the Office of Rail and Road, decides on applications for access to the track. Network Rail decides what should be paid for that, but that is also supervised and approved by the Office of Rail and Road. So there is an independent balancing authority in place that makes these crucial decisions.

Who are we talking about? About 75% of the train movements on Network Rail’s track will be GBR movements. The other 25% are people who need access to that track. They need an independent body; they value an independent body deciding whether they can have that access. They are freight operators; they are what I will call regional operators, such as Transport for London with the London Overground network and Merseyrail; and they are the open access operators. Here, I also have to mention, although it will be debated separately, the heritage railway sector, which has made representations to us and no doubt to other noble Lords about its need for access to the track.

I said on the last group that Great British Railways was like a huge bear—though a friendly bear, in the shape of the noble Lord—sitting in your front room, and the slightest twitch could wipe out your business, even inadvertently. The fact is that this bear will be a regulator making regulatory decisions about access and will be a direct competitor for use of some of those tracks. I say “some” because there will be some tracks where there is sufficient capacity and everyone can have a go so there will be no problem, but a lot of the network is congested. GBR will have a powerful incentive to allocate to itself tracks that it needs for its growing passenger service. When it is not doing that, however, it will be held up by the fact that it also has an objective to increase freight. There is a number attached to that; I cannot remember the number just now, but it requires freight to be increased fairly consistently over a period in order to hit that target. Its second thought, if it is considering who is to have access to congested track, will be, “If it’s not us at GBR, perhaps we’re going to give it to freight”. But that will not be always; not all the freight people will get what they want. Then it will only be further down the line that it will be thinking about the other players that I mentioned.

Amendment 16 is straightforward. It would leave the current situation as it is and those decisions would be made by the Office of Rail and Road. Everybody would understand what was happening. Amendment 221 offers a fallback position. It says that, if the Government are going ahead with this, there must be a right of appeal to the ORR. At the moment, amazingly, having created this huge insensitivity, the Bill says that you can appeal to the ORR but its decisions will not be binding. They will, in effect, be advisory to Great British Railways. This amendment states that the process would be binding and that it would be done not simply on judicial review grounds—that is, whether GBR followed the right process—but on the merits of the case. That, I think, would be a good fallback. The Minister, in writing a very lengthy and helpful letter to noble Lords after Second Reading, said that, if we were to have an independent appeal body, it would create what he called a second directing mind, and he is not willing to have a second directing mind.

I just want to dwell on that for a second because I think it shows the difficulties that we are all going to have with this problem. It is true that you could say that the ORR in that capacity would be a second directing mind, but there are many other second directing minds. The structure being created by the Minister will not have a single directing mind; after all, the courts could make decisions about matters subject to judicial review that will be binding on the Minister. But the Minister does not say, “I wish to be excused supervision by the courts because that would be a second directing mind”. Again, of course, the Secretary of State has huge powers of direction over GBR built into the Bill, but the Minister does not say that that is impermissible because the Secretary of State would be a second directing mind. So to say that a regulator is a second directing mind—and to some extent all regulators are, where they exist—is not a defence to the claim that there must be somebody capable of giving the assurances to the open-access operators, regional government operators and freight operators that their case will be considered fairly and that the charges when set will be fair.

Then we come to another point. The Bill requires GBR to set a scale of charges for access to the track but then gives GBR the power to decide to set a higher charge for access to the tracks if it believes that an economically efficient operator can bear it. Of course, deciding what is an economically efficient operator requires a whole set of experts doing nothing but that. If you go to somewhere such as the Civil Aviation Authority, which has to make decisions about whether something is economically efficient, there is a whole suite of people working there who make these decisions. It is their expertise; they are economic utility regulators. The same thing happens with other utilities. There is no mention in the Bill, however, or anywhere else, that GBR is going to recruit that capacity, but none the less it is going to set itself up to make the decision about whether somebody is or is not an economically efficient operator and what they can bear. It will be able to set higher charges limited only by that consideration. None of this washes with the private, municipal or freight sectors. They simply do not accept this any more than the retail sector accepts what the Government are offering to it.

As with the retail sector, the private sector operating on the railway—it is very sad that the noble Baroness, Lady Jones of Moulsecoomb, is not here to disagree with me about this—has added huge amounts. The whole of the freight sector is privately owned, and nobody is suggesting that there is going to be any change to that. Open-access operators using white track spaces offer benefits. The heritage sector brings in a modest, but none the less very useful, income to this country. It is part of our tourism industry and very useful in that regard. It gives jobs, entertainment and value to people who live in the communities served by the heritage railways.

The purpose of these two amendments is to open up a debate on this very important issue, where the Government have been obdurate, despite all the representations made to them, but which I think will have to be addressed by this House. I do not think this Bill can leave this House with this structure in place. I beg to move.

19:45:00

Lord Berkeley (Lab)My Lords, I am grateful to the noble Lord, Lord Moylan, for putting down these two amendments. I too have had many representations from all kinds of people and companies who already operate trains or would like to. We are not talking about the branch lines, which are on the whole private and are not covered here anyway; there are an awful lot of what some people might call excursion trains, dining trains or whatever—there is the Jacobite train going to Mallaig which, I am told, is highly successful—as well as freight, which all need access to the network. Even at the moment, there are stories of people applying to get on the network, for a pass somewhere, to be told that it is already full; then they go back to what is Network Rail at the moment and say, “Well, if you did this and that, you could get an extra train or two on”. It also covers the issue of the risks and the penalties if something goes wrong, because Network Rail at the moment will think, “We do not want this because it could muck up the service and cause delays elsewhere”.

On having the independent ORR being what you might call an appeal body, I do not look upon it as a secondary directing mind, because the first directing mind is quite often a monopoly. We spent a lot of time this afternoon talking about monopolies and how we do not want them, and the Minister said he does not like monopolies either. This kind of catch-all amendment covering all the different types of train that might want to use the network, and with an appeal body in the ORR, would be a very sensible solution. I fully support it.

Lord Young of Cookham (Con)My Lords, I intervene briefly to support my noble friend Lord Moylan’s amendments on this. In many ways, this debate is similar in its nature to the one we have just had, in that it relates to how the GBR relates to an independent sector. In the previous debate, it was independent retailers; in this case, it is the independent operators using open access. Again, the terms of trade are being changed. If one looks at the consultation document on this, it says that:

“GBR will become the decision maker for key decisions on access terms that are currently led by the ORR: the duration and form of access rights, developing and setting the access charges framework and the design of performance incentive regimes contained in track access regimes”.

It goes on to say that:

“For GBR to have the space and authority to take access decisions on the best use of its network, the ORR’s current role must change”.

At the moment, the ORR has the last word on an open access application, and the department cannot overrule it; that is going to change. We have had representations from the open access operators. I have had also representations about the Elizabeth line and Heathrow Express, which are both anxious that they could be adversely affected by this change in responsibility.

The noble Lord may remember a debate we had in the Moses Room about 18 months ago on this particular subject, which I introduced. At that point, I referred to another debate in the other place, where there was a lot of support from Labour MPs for the principle of open access: their constituents had benefited from it, and they were concerned that it might be curtailed. My noble friend Lord Moylan referred to access charges and how changing the access charge could make it uneconomic.

I want to approach this from a slightly different point of view, which concerns the criteria that the ORR uses to decide whether to grant open access. If there is no capacity on the rail network, it is clear that the application should be refused. If there is capacity, the ORR refers to the NPA—not primarily abstractive—rate. That means that if you want to open a new service, you must add at least 30p of new revenue for every £1 you abstract from the existing ones. In other words, any new service must not rely on more than 70% of its revenue to justify its application. There is concern that that abstraction rate might be changed. One assurance that the Minister could give, which would reassure the operators of open access, is that GBR will not change the abstraction rate. The rate has been in operation for some time. It balances, on one hand, the cost to the taxpayer and, on the other, the benefit to the traveller in terms of improved connectivity and, in many cases, lower fares.

We know that the concern is justified from the letter that the Secretary of State, Heidi Alexander, wrote to the ORR back in January. The ORR is already mindful of the cost to the taxpayer—that is reflected in the abstraction rate—but the letter reminded it of that cost. There was a clear implication that not enough attention was being paid to that factor, hence the concern. I hope the Minister will be able to give assurances that, apart from the issue of the access charges addressed by my noble friend, the abstraction rate will not be altered either.

Baroness Pidgeon (LD)My Lords, these amendments look to ensure a fairness between Great British Railways operations and open access and freight operators in terms of charges and access to the track, and concern the change to the current role of the Office of Rail and Road. Since the publication of the Bill, there has been a big debate in the sector about this over the past 18 months or more. Amendment 16 in the name of the noble Lord, Lord Moylan, seeks to change Great British Railways’ functions so that decisions about access to and the use of railway infrastructure would instead be carried out by the Office of Rail and Road, as is the case now, as he said. On the other hand, Amendment 221 approaches this differently, with a subsequent right of appeal to the ORR after going through the dispute resolution process set out in the Bill. It would leave the function with GBR but bring in more of an appeals function.

The Bill is a real change to open access operations on the railway and it is right that we scrutinise how it will work in practice. As we have heard, a number of innovative open access operators are running good services with competitive fares. With the vast majority of passenger services being in public ownership, there needs to be confidence that Great British Railways is operating in a clear and transparent way, with an appropriate mechanism for challenge set at the right bar. There is concern that removing the current function of the Office of Rail and Road with regards to access will mean that Great British Railways will always prioritise its own services and may choose to not continue open access operations in the future—some of which are very successful, but there is a fear out there.

We have some concerns over this shift in power between the Secretary of State and the Office of Rail and Road. We want to see the publication of decisions and any evidence that has supported decisions, as well as real engagement with passengers and representative bodies as timetables are developed and services are changed. Of course, freight comes in here too. Freight will be critical to help move lorries off our roads and grow our regional economies, so freight access is equally important. We need transparency and openness between Great British Railways and the other parties in this space in terms of track charges and access. I hope that the Minister will provide the assurance that industry would like to hear on this important change in legislation.

Lord Hendy of Richmond Hill (Lab)My Lords, I thank the noble Lord, Lord Moylan, for Amendment 16 and for this short debate. In the groupings for Committee, there are some very substantial numbers of amendments about access in groups 26 to 31, so I will answer these amendments very briefly because I am sure we will have very detailed debate subsequently. Indeed, I will leave some of the points that noble Lords have made this evening in order to come back to them when we get to groups 26 and 31.

I want to be very clear that the existing access framework is, in our view, not fit for purpose. It is built on 30 years of complex legislation, regulations, contracts and codes. It requires Network Rail and the ORR to take decisions using inconsistent criteria, based on differing duties and objectives, with no common vision. Fundamentally, no single party is responsible for planning the best overall use of the network and ensuring that access decisions deliver that plan. The current system has too often been characterised by fragmentation and delay, and it is clear that nobody is in overall charge. That has led to inefficient use of capacity and decisions that serve neither passengers nor freight well.

There are clear examples of the consequences. The May 2018 timetable failure—the original catalyst for rail reform—saw punctuality and reliability plummet across large parts of the network. Keith Williams’ review highlighted how this was the result of a complex, fragmented system with no single person in charge. Timetables are often built by trying to piece together layers of past decisions and contractual rights. On the east coast main line, the current system resulted in years of decision-making paralysis, with neither Network Rail, the ORR or operators able to agree a timetable. Service improvements that were supposed to result from £4 billion-worth of taxpayers’ investment were delayed by several years. The only way this could be resolved in the end was by me, as Rail Minister, stepping in to make the decision that no one else wanted to, which is clearly not an acceptable outcome at all.

Noble Lords will recall last December, when the ORR ruled that the 0700 from Manchester Piccadilly to Euston would have to run fully staffed but with no passengers on it, against the wishes of both the operator and the network provider, which agreed that it should run. The ORR itself acknowledged that it did not have all the facts when it took that decision.

The current system has failed to unlock meaningful freight growth. Too often, the needs of freight operators and their customers have been put to the back of the queue. Paths labelled as “strategic freight” are not strategically planned at all and may not even join up, as they are often just a mixed bag of surrendered paths and leftovers.

In the current system there is no overarching strategy—no overall plan for how to make best use of the network—and where no single body has end-to-end authority, critical information can be missed, escalation is unclear and blurred accountability leads to capacity being used in ways that increase disruption, letting down both passengers and freight customers.

An integrated railway under GBR’s leadership is the only way to fix this. As the single directing mind for the railway, GBR will proactively plan how to make best use of the network. It will be empowered to ensure that access decisions take proper account of that plan, implementing an achievable and reliable timetable that makes the very best use of the limited capacity available. Better co-ordination of the timetable will minimise delays, improve reliability and reduce costs—and may well open space for new routes and services. For freight operators, the new system will provide much greater certainty about the capacity available for them to grow their services, with GBR enabled and empowered to protect that capacity. The truth is that, if we leave it as it is, the system will never change. I will deal with the crucial distinction between Clause 60 and 63 when we get to the detailed debates, but in the meantime I do not accept Amendment 16, which would fundamentally undermine the purpose of these reforms. It is unacceptable and I urge the noble Lord to withdraw it.

Amendment 221 would require the access and use policy to set out not only a process for dealing with disputes but a right of appeal. Of course I agree that GBR’s strong leadership under the new system must be accompanied by strong accountability. That is why the ORR will act as a robust and independent appeals body for access, capacity allocation and charging decisions made by GBR on its network. The ORR’s appeals function will provide a clear, credible and accessible route to challenge those decisions.

20:00:00

The Bill also requires GBR to

“set out a procedure for resolving disputes relating to the working timetable”

in its access and use policy. The mechanism will enable parties to address and resolve disagreements before matters are escalated to the ORR. Many of the issues that the industry refers to are relatively small conflicts between individual train paths, and the right way of resolving them is to have a mechanism by which the parties discuss and agree individual and very small changes with GBR and timetabling.

I am sure that noble Lords can agree that it makes sense for GBR and operators to try to come to an agreement in the first instance. But to be clear, if such dispute resolution fails, the Bill already provides a further route of appeal to the ORR in disputes concerning the working timetable. The amendment would therefore duplicate an existing appeals route, creating the potential for unnecessary complexity, bureaucracy and confusion. I hope noble Lords agree that the right of appeal to the independent regulator already set out in the Bill is sufficient. Given that the Bill clearly already has achieved the noble Lord’s aims, I urge him not to move this amendment. We look forward to substantive discussion about access when we get to Clauses 26 to 31.

Lord Young of Cookham (Con)I understand that we will be having a separate debate on this, but is the Minister able to give the assurance that I asked for that the abstraction rates will not be changed?

Lord Hendy of Richmond Hill (Lab)I thank the noble Lord for his question. I will not give it now but will come back to that in the debate. I should also say for the benefit of the Committee that Network Rail is publishing the access and use policy consultation tomorrow, which will apparently address the noble Lord’s questions on abstraction. I am sure we can debate his points further when we get to the detailed debate.

Lord Moylan (Con)My Lords, it will not wash. The noble Lord did not give any explanation of why there should be an appeals system which cannot look at the merits of the case and cannot bind GBR. He says that we are going to come back and discuss this again. I am sure we will and I hope we will. We should be discussing it several times in Committee, and we will certainly be discussing it on Report. At the moment, I beg to withdraw my amendment, but I am absolutely clear that this will not wash.

Amendment 16 withdrawn.

Amendments 17 to 20 not moved.

Clause 3 agreed.

Clause 4Exercise of functions of Scottish and Welsh Ministers

Amendment 21

Moved by

21: Clause 4, page 3, line 26, at end insert— “(e) such other body corporate as they see fit.”Member’s explanatory statement This amendment seeks to explore why the Bill places limitations on Scottish and Welsh ministers as to the manner of their exercising their functions relating to the railways or railway services.

Lord Moylan (Con)My Lords, Clause 4 deals with relations with the devolved authorities in Scotland and Wales. I have a number of amendments here—five, in fact. They all appear in a sense to be relatively minor but they go to the heart of the devolution settlement. They raise the question of whether the Bill is in line with the new Prime Minister’s policy—I know he has not been elected to anything but he is the new Prime Minister—of making devolution a reality. I will run through the amendments fairly straightforwardly and leave it to others to debate them and the Minister to respond.

One of the things that can be done is that any combined authority or devolved authority has a right to request. I always find this slightly offensive, because we are a free country—everyone has a right to request something from the Minister—but apparently, this valued “right to request” is going to be given. You can go along and ask GBR if it will run a service local to you, which might even be branded your way, to which you might contribute some of the costs. That is the general idea. I can understand that in relation to English combined authorities but not the devolved Administrations.

For example, I do not understand at all why Scotland should be confined by statute to running that service using Great British Railways. If the path is available and the service can be run, why should Scotland not make its own choice about who the operator of that service should be? As I understand it, that would not be possible under the Bill; it would have to be a GBR service. I think that is a bit insulting to Scottish devolution. The same applies to Wales. My Amendment 21 would correct that and allow them to exercise railway functions through a body corporate other than Great British Railways.

Amendment 145 goes hand in hand with Amendment 146, because they relate to Scotland and Wales. They relate to the fact that, under the Bill, there will have to be a memorandum of understanding between Great British Railways and the Scottish and Welsh Governments. There is a great deal of reliance on memoranda of understanding in the Bill, but we never see them and have no entitlement to do so. I am not saying that they will not be published, but I am not sure that the Government are under an obligation to publish them. They are so much a part of this Bill, but their substance is being concealed from us in Parliament and wrapped up in documents that are ancillary to the main agreement. My Amendments 145 and 146 would require those memoranda to be laid before Parliament before they could come into effect.

Finally, I have the paired Amendments 294 and 295. Again, one relates to Scotland and one to Wales. Amendment 294 relates to Clause 82. There is something fantastically cheeky in Clause 82, which reads:

“Great British Railways must consult the Scottish Ministers before making a decision within subsection (2)”—

which would be a decision about cross-border services and additions to a part of the railway network operated by Great British Railways that is situated in Scotland—

“if it appears to Great British Railways that the decision will significantly affect the interests of Scotland’s economy or of persons living in, working in or visiting”

the area. I come back to a similar question I asked in the last group: what economic capacity would Great British Railways be employing to make disinterested decisions about whether something would have a significant effect on the interests of Scotland’s economy? Secondly, is it not more likely that the Scottish Government would be the appropriate body to make a decision about whether something will have a significant effect on the interests of the Scottish economy? My amendment would put that right by reversing it. Amendment 295 would do something similar for Wales.

There is a certain arrogance in the Bill, certainly with regard to local government in England, but the arrogance towards the Scottish and Welsh Governments is beyond the pale, given what the Prime Minister has been saying and what those Governments would accept. I hope that, when the Minister replies, he will say that the matters to which I have drawn attention are slips in the drafting that he will be happy to correct, either through my amendments or amendments that he will draft and submit to us on Report. I beg to move.

Lord Lansley (Con)My Lords, I want to talk to my Amendment 22 in this group. Before I do that, I might just say so to my noble friend that I see the point he is driving at with Amendment 21, but I think it is a little more complicated. It seems to me that this is about the circumstances that apply where the Scottish or Welsh Ministers wish to use Great British Railways or a company jointly owned by themselves and Great British Railways. In effect, they are not subsidiaries of Great British Railways: we can already see in the Bill this distinction between GBR companies and a company that is jointly owned by Scottish and Welsh Ministers and GBR.

They can use that to provide services but, as far as I can see, they are not prevented from doing the following. If you look at subsequent clauses, we have seen the whole process of designation of passenger services, which those of us who did the public ownership Bill will remember. They have to designate passenger services with a public sector company, but the definition of a public sector company in a later clause is not the same. It could be a company wholly owned by Scottish Ministers or by Welsh Ministers; they are not required to use Great British Railways. They could even do the same thing that the Secretary of State can, which is exempt services from designation, and then do the same as the Secretary of State does with TfL but in Glasgow, Cardiff and so on. So I think it is a little more complicated.

In particular, I think putting “other body corporate” in here is not necessary. More to the point, if I may say so to my noble friend, is to re-enter the question of the scope of who might provide designated services, which I know he will do with further amendments at a later stage.

Amendment 22, on my part, is just to see whether there is really a problem. At the point at which Scottish and Welsh Ministers look to change arrangements that they have made with Great British Railways to provide some services, they are required to consult with the Secretary of State and Great British Railways. However, those arrangements will necessarily lead to issues that need to be governed by the regulatory functions of the Office of Rail and Road and relate to the licensing of those operators through the ORR. It seems to me perfectly reasonable to require that Scottish and Welsh Ministers, at the point of making or changing those arrangements, should also consult the Office of Rail and Road in order to ensure that there is not a difficulty associated with what they are asking GBR to do on their behalf. The purpose of Amendment 22 is to put in that consultation with the ORR.

Lord Berkeley (Lab)My Lords, these are interesting amendments. I have had several representations from the rail sector in Wales and Scotland, and they are clearly quite concerned.

The first question I probably need answering is on who will be owning and operating the infrastructure in Wales and Scotland. At the moment, in Scotland, it is done by Transport Scotland, and in Wales, I cannot remember but think it is different. Of course, both those organisations may, and do, operate passenger train services. Given the scope of the Bill, which we have been discussing at length today, will Transport Scotland and the Welsh Assembly be able to let their own contracts with GBR or an independent operator to run trains? Who will be responsible for managing the infrastructure if it goes wrong or needs maintenance, and for the issue in the amendment, which is about co-ordinating with the rest of the UK? To me, it is not clear at the moment, and I would be grateful if my noble friend could clarify. I am probably being stupid, but there we are.

Lord Harper (Con)My Lords, I just want to speak briefly about three groups of amendments within this group. Amendment 145 in the name of my noble friend Lord Moylan has quite a lot to recommend it. The Bill, as set out, sensibly says that the UK Government and the Scottish Government should have a memorandum of understanding about how cross-border rail services should work. That is very sensible, but it seems to me that you would want to have the documents published at the same time; you want them on the same timeline because you want a GB rail strategy to be produced, given the way the rail network works. The whole point about GBR bringing together track and train and having some consistency means it seems very sensible that, if you are to have this memorandum of understanding between UK Ministers and Scottish and Welsh Ministers, you want them on the same timeline. Then what you publish is, in effect, a GB rail strategy with a level of consistency.

20:15:00

If the Department for Transport and the Secretary of State publish her rail strategy first and then at some point in the future you end up negotiating a memorandum of understanding and publishing that, it does not really give a very clear sense about what the joined-up strategy is. Having things published at the same time will drive a level of consistency in working between the Governments. They will have to think about what their individual rail strategies look like and how they all fit together. That would be a very sensible thing to do and will promote a sensible level of working across borders.

A question that arises from Amendment 146, which I had not thought of until I read the amendment from my noble friend Lord Moylan, is how you split ticket revenue where services cross a border. I must confess that I do not know quite exactly how it is done at the moment—I probably should know, but I do not—but this comes back to the conversation we were having about how the retail operations work and transparency. This is another area where Welsh Ministers and the Welsh Government will clearly have a view about how that revenue is allocated and shown because it will absolutely go to the operators that they run and manage.

My final point is on Amendments 294 and 295. I strongly agree with my noble friend Lord Moylan. While it is probably possible, with the number of economics analysts in the Department for Transport, that the department and therefore GBR would be perfectly capable of doing economic analysis that would produce the impact of changes to rail services on both the Welsh and the Scottish economies, that is not really the question. The question is a judgment call about what you do as a result of that economic analysis and, frankly, that decision should properly be taken by democratically elected Ministers who are accountable to the Scottish Parliament and the Welsh Senedd rather than by GBR. If the decision was going to be taken by anyone other than Welsh and Scottish Ministers, it should be taken by the UK Minister. That decision should be taken by a Minister, not by GBR. My noble friend’s amendment raises a very good point and, if the Minister is not able to give a clear answer today, I think it is worth him taking that away and having a think, particularly in light of the fact that the new Prime Minister has set out that an increased focus on devolution is one of the key objectives of his Government.

Baroness Pidgeon (LD)My Lords, these amendments rightly question the impact of this legislation on Scotland and Wales and the role of Scottish and Welsh Ministers in decisions, including cross-border ones. The discussion we have had is about what devolution really means in this context and the democratic accountability. I look forward to hearing what the Minister has to say on these important points raised by noble Lords.

Lord Hendy of Richmond Hill (Lab)My Lords, the first thing I should say about this group is that the Scottish and Welsh Governments have been intensely involved in drafting the Bill, and both Governments are very supportive of it.

I turn to Amendment 21. Clause 4 enables Scottish and Welsh Ministers to make arrangements for their functions to be exercised by GBR, a GBR subsidiary or a company jointly owned. The noble Lord, Lord Lansley, spotted that correctly; he is absolutely right. It is an enabling power designed to support integration where that is considered beneficial. It does not prevent devolved Ministers from continuing to exercise their functions themselves, nor is it intended to provide a general power to delegate functions to any body corporate.

Indeed, under Clause 27, Welsh Ministers will continue to designate Wales-only services and Welsh components of cross-border services. Under Clause 31, Welsh Ministers may either provide those services themselves or secure their provision through the award of public service contracts. Similar powers exist for Scottish Ministers under Clauses 26 and 31. Of course, Scottish Ministers can decide to run their services through GBR or through their own operator. The Government therefore believe that the Bill strikes an appropriate balance between preserving devolved responsibilities and enabling closer integration with GBR, where that is desired by Scottish or Welsh Ministers.

Amendment 22 in the name of the noble Lord, Lord Lansley, would require the ORR to be consulted. Clause 4 already requires consultation with both the Secretary of State and GBR before such arrangements are made, varied or revoked. That is because GBR is the body that may be responsible for carrying out the function, while the Secretary of State has an interest in the wider operation and integration of the railway system, and because GBR will be operating devolved functions alongside reserved ones. They are therefore the parties best placed to provide input on these arrangements. Although the ORR plays an important role as the railway’s independent regulator, these arrangements concern the exercise of devolved functions and national versus devolved governance, rather than regulatory matters. We therefore do not consider an additional statutory consultation requirement to be necessary.

On Amendments 145 and 146, the Government fully support transparency and effective parliamentary scrutiny. That is precisely why we have already published the agreed memorandum of understanding with Welsh Ministers and a framework for the memorandum of understanding with Scottish Ministers. That has enabled Parliament to consider the proposed arrangements alongside the Bill. The memoranda of understanding are intended to provide a basis for joint working between UK Ministers and Scottish and Welsh Ministers on matters relating to rail services and funding. They are not legislative instruments but practical agreements to support effective intergovernmental working. The amendments would require the MoUs to be published at the same time as the rail strategy and would impose a two-month period before they could come into force. However, the rail strategy and the MoUs serve distinct and seperate purposes. The rail strategy sets out long-term priorities and objectives for the railway, while the MoU supports collaborative working between the UK and Welsh or Scottish Governments. Requiring the two documents to be published at the same time would create unnecessary friction and delay. Similarly, requiring a two-month waiting period before an MoU could take effect would add process without materially improving oversight or outcomes.

Lord Harper (Con)Can I just check that the rail strategy that the Secretary of State will produce will be a strategy for Great Britain, and that the memorandum of understanding will be about how that interacts? If the Secretary of State’s rail strategy is for England only, that does not make sense. What the Minister just said implies that the Secretary of State will produce a rail strategy for Great Britain, in which case there would not be any friction from ensuring that those documents were published together.

Lord Lansley (Con)Before the Minister responds to that point, I add that I am slightly confused because Clause 15, “Rail strategy”, says that the Secretary of State “may not” include provision relating to the functions of the Scottish Ministers, so it may be a rail strategy for Great Britain, but it cannot deal with the functions of the Scottish Ministers.

Lord Hendy of Richmond Hill (Lab)I say in response to noble Lords that the long-term rail strategy is for the whole railway. The Scottish and Welsh Governments are being consulted, but Scotland will also have a strategy covering its own functions because that is the meaning of devolution. I hope that is clear.

Lord Harper (Con)I do not want to overly labour this point, but that is not very clear. The way it works at the moment is that the Scottish Ministers have a role in helping to shape—

20:25:00

Sitting suspended for a Division in the House.

20:35:00

Lord Harper (Con)As I was just saying before we resumed, the advantage of a break is that I had a chance to slightly firm up my question. Before we broke for the Division, I was saying that I thought that not synchronising the rail strategy publication and the memorandum of understanding potentially meant not having a clear, joined-up strategy for Great Britain. I was asking the Minister whether the strategy that the Secretary of State had to produce was for Great Britain and, if so, whether it would not make sense to synchronise that with the memorandum of understanding.

Having had a chance to look at Clause 15, it is indeed the case that the Secretary of State is producing a strategy for the rail network in Great Britain—that includes Wales and Scotland—but it specifically must not contain provisions about functions of the Scottish Ministers, because that is clearly what the memorandum of understanding is going to do. In this case, I think the amendments tabled by my noble friend Lord Moylan are very sensible. Otherwise, you will publish a rail strategy for Great Britain that has quite important functions for Scottish Ministers because they make the call on what Network Rail does on infrastructure in Scotland, for example. It does not make sense to not have that joined up.

I am very happy for the Minister take this away, because it will obviously have consequences, but synchronising those two events will drive very sensible and good behaviour in the way the department interacts with the Scottish and Welsh Governments and will be an improvement in having a better rail strategy for the whole of Great Britain.

Lord Hendy of Richmond Hill (Lab)My Lords, I am grateful to the noble Lord, and I, too, have done a little bit of homework while we had the Division. The important thing he draws our attention to is Clause 15(3). Because

“The rail strategy may not contain provision about functions of the Scottish Ministers”,

in effect, it is the rail strategy for England and Wales. Because the rail strategy for Scotland is the function of Scottish Ministers, they will publish a strategy to cover Scotland. It will reflect the devolution funding arrangements and the responsibility for the railway in each country. We are working very closely with Scotland, and GBR will have to work very closely with Scotland, as will the Secretary of State, to ensure that the strategies make sense and, therefore, that the GBR business plan makes sense.

Having said all that, I am still not sure that I can see the connection between the MoUs and the strategies. Indeed, we have been able to strike a memorandum of understanding and publish it with Welsh Ministers—and we have a framework for that in Scotland—without a long-term rail strategy. They are intended to provide a basis for joint working between UK Ministers and Scottish and Welsh Ministers on matters related to rail services and funding, but they are not the same as a strategy, which sets out what the intentions of those Governments are and will form the basis on which GBR will write a business plan.

I think my contention is the same. The rail strategy sets out long-term priorities and objectives for the railway, and the MoUs support collaborative working between the respective UK and Welsh and Scottish Governments. I see the difference between those two instruments—the strategies and the MoUs—but I do not see the need for a waiting period between them taking effect or for them to be co-ordinated. As I have said, we have published the MoU with Wales already and the outline of that for Scotland too.

Lord Harper (Con)Here is my final point—as the Minister will be pleased to know. He has just, perhaps inadvertently, flagged that the drafting of the Bill in Clause 15 is not correct. The Secretary of State will not be producing a long-term strategy for the development and use of the rail network in Great Britain and the railway services that she wishes to see in Great Britain. She will be doing those things for England and Wales. The Bill should really reflect that because it is inaccurate. Again, I am happy for him to take it away, but I think he has let on at the Dispatch Box that the Bill is not correctly drafted.

Lord Hendy of Richmond Hill (Lab)The noble Lord draws my attention to something which, having read it to him, I concluded myself. This is the purpose of Committee, of course: to discover things that you have not thought about. I am as willing as the next Minister, perhaps, to decide what to do. We will take that away, and I am grateful to the noble Lord. For the avoidance of doubt, I still do not accept the contention about the connections between the MoU and the strategies, but I accept the points that the respective boundaries of the strategies could be much better placed than they are.

Amendment 146 from the noble Lord, Lord Moylan, goes further on the provisions on the allocation of ticket revenue from cross-border services operated by Transport for Wales. We do not think that is appropriate. Such operational and commercial matters are more appropriately dealt with through established industry arrangements such as public service contracts and the Wales and borders agreements rather than through an intergovernmental co-operation agreement, which is fundamentally about the governance of GBR, so I urge the noble Lord not to press the amendment.

I turn to Amendments 294 and 295 on consultation. The Government fully recognise the importance of ensuring that Scottish and Welsh Ministers are consulted on decisions that have a significant impact on their nations. That is precisely why the Bill already places a duty on GBR to consult them before making such decisions. The amendment would go further by requiring devolved Ministers to determine whether consultation was required. That would add significant delay for no practical benefit, as Scottish and Welsh Ministers would be required to review decisions that would often be irrelevant to them before steps can be taken. The approach could create uncertainty about when decisions can proceed and risk shifting the focus from effective engagement to procedural questions about whether consultation is required. Scottish and Welsh Ministers will also continue to have important mechanisms through which they can influence the railway, including their respective rail and transport strategies, their powers, which are strong, and guidance. The Government therefore consider these amendments unnecessary.

Finally, Amendment 296 from the noble Lord, Lord Berkeley, specifies that GBR should consult on access decisions where they impact Welsh Ministers. Clause 82 already requires that GBR consults Wales on issues affecting it. That requirement would also extend to access decisions. Therefore, I can reassure the noble Lord that his intent has already been achieved by the Bill but, bearing in mind what he said in support of his amendment, I will write to him, and copy it to other noble Lords, about the ownership and control of infrastructure in Scotland and Wales now and in the future so that he and other noble Lords—though I see the noble Lord is not in his place—can be clear about the present and future arrangements, since I think what he said expressed a degree of confusion about them. I finish by saying again, as I started with, that Scotland and Wales have been intensely involved in the drafting of the Bill and that both Governments are very supportive of it. Therefore, I urge the noble Lord to withdraw his amendment.

Lord Moylan (Con)My Lords, we see a pattern—there is always an argument as to why the bear in the front room should be able to make the decisions without constraint, and here we go with Scotland and Wales. If the Minister tells me that Scottish and Welsh Ministers are happy that Great British Railways, a largely unaccountable body that is largely concerned with English railways, should make a determination as to what is of economic significance to Scotland and Wales, and that they have had that question put to them, considered it squarely and come back and said “Yes”, then of course that is what the Bill should say. It strikes me as odd and not consistent with the general approach that the Scottish and Welsh Governments would take to these things. Beyond that, I congratulate my noble friend Lord Harper on drawing out various points. I feel a swathe of government amendments coming on Report.

Lord Hendy of Richmond Hill (Lab)Only one.

Lord Moylan (Con)I think there will have to be others as well. None the less, for the moment, I have done my best to defend the devolution settlement, keep up the policy of the Prime Minister and give Scotland and Wales a say over the future of their own economies in so far as they are affected by public transport. Having done that, I will subside and beg leave to withdraw my amendment.

Amendment 21 withdrawn.

Amendment 22 not moved.

Clause 4 agreed.

Committee adjourned at 8.45 pm.