(1 day, 7 hours ago)
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The Chair
We are now sitting in public, and the proceedings are being broadcast. Does anybody have anything to declare? No. We will now hear oral evidence from First Rail, Rail Freight Group and ALLRAIL. We have until 2.40 pm for this panel. Will the witnesses please introduce themselves for the record?
John Thomas: I am John Thomas, policy director of ALLRAIL.
Maggie Simpson: I am Maggie Simpson, director general of Rail Freight Group.
Steve Montgomery: I am Steve Montgomery, managing director of FirstGroup’s rail division.
Jerome Mayhew (Broadland and Fakenham) (Con)
Q
Maggie Simpson: We are really concerned about the scope and definition of the appeals function as proposed in the Bill. We know that Great British Railways wishes rail freight to succeed. There are positive provisions for rail freight at the beginning of the Bill, but GBR will be a vertically integrated, incredibly powerful monopoly that, quite rightly, will be very focused on its own trains. This legislation will last for a long time, and the behaviours and actions of people today may not be mirrored in future Administrations or at future times.
Our members—businesses across the country that rely on the railways for their supply chains—are really concerned about ensuring that, if things go wrong, they have an effective right of appeal. The provisions in the Bill set an incredibly high threshold—judicial review standards—for bringing an appeal. Even if it is met, the actions that can be taken are such a high bar that it is very unlikely that a decision would ever be overturned, and future Secretaries of State can by regulation, through the negative procedure, set out even more steps and fees. We are really concerned that that is weak. It is a backstop provision; we would only need to use it if things went wrong, but if it is not any use, it will deter people from investing.
Jerome Mayhew
Q
Maggie Simpson: On capacity allocation in particular, as well as the points I have just made about the appeals function, we have a conflict between two clauses in the Bill. The capacity duty in clause 63 sets an incredibly powerful requirement in law for GBR to keep capacity for its own trains and any trains it wants to run in the future. We have sought assurance from the Department for Transport on how that duty and clause 60, on the infrastructure capacity plan, work together. The Department has told us that its intention is for the capacity duty to be subservient to the infrastructure capacity plan, where an assessment is made of the best use of the network, but that is not what the law says. We would like to see it clarified that the value-based assessment of what is the right use of capacity on the network is done first, and that GBR is then able to assure the capacity afterwards.
Jerome Mayhew
Q
John Thomas: First, I will say that the policy intent is quite clear. One of the DFT’s supporting documents to the Bill is quite clear that one of the definitions of a duty on GBR is for it to be fair and non-discriminatory in its decision making. Network Rail’s recent access and use policy document also made it clear that GBR would have to be fair and non-discriminatory in its decision making. However, there is nothing on the face of the Bill to suggest that.
It is really important that there is something on the face of the Bill to say that GBR needs to be fair, transparent and non-discriminatory in its decision making. I think that would be in the best interests of customers and communities, and it would give our members confidence to continue to invest, rather than just relying on the taxpayer to make investments.
The reason I say no is that there is no such provision on the face of the Bill. Going back to Maggie’s point about appeals, I think it would really help the appeals process if there were provision for GBR to be non-discriminatory in making decisions; otherwise, what are appeals going to be based on? They will be based on GBR’s own policies, and if it can discriminate against other services, what is there to appeal against?
In addition, the ORR will lose its ability to hear appeals on the basis of taking into account the benefits of competition for users. We think that is wrong. We think that an open access appeal could never be successful if that provision were taken away, so we advocate adding it back in. The ORR should have a duty to take account of the benefits of competition. Clearly, it has to take into account other matters, as it does currently, including the funds available to the Secretary of State, but if it does not have the ability to take account of the benefits of competition, how is an open access operator ever going to be successful in any appeal?
Jerome Mayhew
Q
Steve Montgomery: I agree with everything John and Maggie said. The challenge we see as a private sector operator is how you get anybody to invest in the industry with the lack of clarity in the Bill. As John alluded to, there is reference by the DFT in the memorandum of understanding on the Bill, but nothing in the Bill itself. That makes it very difficult to go to a board and say, “Look, we want to invest in these things.” What certainty do you have for the future?
An awful lot has been made of open access as we have gone through this process. It would take up 1% of overall capacity, but it is held out there, in the commentary, as one of the major plays in the Bill. We think that open access brings the opportunity for competition, which we seem to have lost with some of the wording in the Bill. How do we make sure that there are better services for customers? That is what we all want and what GBR is setting out to do, but how do we make sure that we all have a fair chance when bidding? We have talked about the access situation. GBR can decide not to give access, and the ORR has very limited powers to hear an appeal, so where is the confidence for the private sector investment that the industry continues to cry out for?
The Parliamentary Under-Secretary of State for Transport (Keir Mather)
Q
Maggie Simpson: We have been very clear that we welcome those provisions. We are grateful to the Rail Minister and his team at the DFT, and to your own team, for their commitment to freight. That is really good but, with respect, I have been around a long time and I have seen circumstances in which Secretaries of State and Rail Ministers have not been as keen on freight, or perhaps have been more keen on road freight and less keen on rail freight. We have seen situations arise through different political times and economic circumstances.
When I am looking at the Bill, I am looking at whether it works today, with a Government who are supportive of and promoting freight, and at whether it would it work in the future, with a Government, of whatever colour, who have a different view. We have to look at it through that lens because we legislate for the long term. It is really difficult, because you are saying to people who are trying to help you, “Actually, I don’t like this.” That is an emotional tension—of course it is.
The duties and provisions in the Bill are great— I would not want to be going into GBR without them, and I think they will be powerful—but they are doing a lot of heavy lifting. We are going into a very different cultural environment. GBR will think about its own trains first; it has to for it to succeed—that is kind of the core. We are going into a very different access arrangement and a very different set of parameters, and it is entirely possible that they could go wrong and that we would need the recourse of the appeal function. They might not, but we need to know that it will work if they do. Having a strong appeal function will help it to work, because GBR will know that if things do go wrong we have that recourse in law.
Keir Mather
Q
It is important that we clarify that GBR has to set out what it means by “best use” before we get into questions of the capacity duty. It has to have due regard for freight in the network, open access in the network and the provision of passenger services before the capacity duty is triggered. That means that GBR has to deliver the services it has identified as being necessary to run the railway effectively, but the appeals process is enormously important. Do you think the fact that freight operators would be able to appeal GBR’s interpretation of “best use” in relation to its duties, one of which is to promote the interests of freight, provides a safeguard to ensure that freight is considered when GBR is deciding what constitutes best use of the railway overall?
Maggie Simpson: I think my children would use the phrase “gaslighting”. I have read the Bill many times, and I cannot see in law that the capacity duty is subservient to clause 60 on the infrastructure capacity plan. I understand that that is the intention—I have heard it from the Rail Minister, yourselves and Network Rail, and I get that; there is a lot of work to do on the access and use policy, and we are engaged on that and want it to work—but it is not what the Bill says, and therefore a future Minister or Secretary of State could interpret it very differently and say, “Look, GBR, we don’t like your infrastructure capacity plan, so we’re triggering clause 63—get those freight trains out my way.” I do not expect that from the current Administration, but we need to square off that hole in law, in my opinion. If that is the intention, let us say so.
On how that infrastructure evaluation—that capacity analysis—is taken forward, it is incredibly complex, and I appreciate that most of the detail will be in the access and use policy and not in the Bill. We do not have a problem with the way that clause 60 is worded. We will work with colleagues to try to make sure that that process is effective and those duties matter. Of course, those duties are not relevant in clause 63, because clause 18(4) turns them off. When looking at that capacity duty, a future Secretary of State would not have to have regard to freight, because the Bill explicitly turns it off. That would mean that if we went to an appeal, GBR would be in line with the law in not having thought about freight in using clause 63, because the law would not require it to. We would not be able to prove a judicial review threshold appeal, because the law would say that GBR was okay not to have thought about freight.
Keir Mather
Q
May I ask one final question to Mr Montgomery, as it relates to open access? We have an overall issue with capacity in this country. The Government’s view is that, by running a single, unified approach to the railways, GBR will be able to allocate capacity in a way that is more reasonable, makes more sense and balances those interests around best use. Can you set out briefly how that contrasts with the open access regime as we currently find it? How is capacity on the railways perhaps holding back competitive movements in the open access market as it stands?
Steve Montgomery: The situation with open access and capacity, under the Bill as it is written, is that GBR decides what capacity is available and what capacity it might hold back for future use or performance. As it stands, the railway is not funded in that way, so the opportunity for private sector investment gets lost because, given the way that the Bill is written, people can almost sit on their hands and say, “Well, we’re not going to do anything because we might do something in the future.”
It is for us, in making open access applications, to go and look at where we believe capacity is and then submit an application, as things stand via the regulator—hence our concerns for the future under GBR. If it can turn around and decide, “No, there’s no access” or “We may use that in the future,” why would any future open access application ever get through?
Keir Mather
We can set that out a little later, probably in the evidence that I give, but thank you all very much. I will let other Members ask questions.
Baggy Shanker (Derby South) (Lab/Co-op)
Q
Steve Montgomery: The system at the moment is independent. The regulator evaluates, takes all the different evidence from the applicant and from Network Rail on how much capacity is there. It takes all that evidence and does an abstraction test to make sure that an open access application is not abstracting revenue from the existing operators. That independence is there, and it allows the regulator to evaluate that and make its decision. In the last year, it has granted some applications and refused others.
The system works—maybe not to everyone’s satisfaction, but it does work and it is independent. Under GBR, it will be a huge public sector body with no real regulation. Looking at it at the moment, it is difficult to see where that independent regulation is, looking at the industry and holding GBR to account. Capacity is one of the areas we need to look at, and likewise access charges, where that comes into play.
Baggy Shanker
Q
Steve Montgomery: We can modify it, but we need that comfort that it will be evaluated fairly and not have the constraints of GBR putting everything in front of it, saying, “We might use those paths in the future again”. We cannot have that; we need certainty. As I said earlier, we need the opportunity to allow investment in the railway. If private sector investment is coming in while there are paths sitting there not being used, that means that we are not funding the industry up to the capacity that it may have.
John Thomas: There are no protections in the Bill for open access operators. As Keir said, freight is mentioned at least 100 times and there is a freight growth target that GBR must have regard to, but there is nothing on open access. There is an inherent conflict when you have a body that will be granting access to its competitors. We would rather see the Office of Rail and Road still making those decisions. We accept that that is unlikely, because that is not the direction of travel from the Government, so as a minimum we think that a fair and non-discriminatory provision in relation to GBR decisions will help.
We think, as I said earlier, that the provision for ORR to have regard to the benefits of competition in hearing appeals will help. It will not be as sufficient as today. This is not part of the Bill, but we think that the access and use policy ought to carry on with the not primarily abstractive tests. It is not just because of lack of capacity that decisions have been rejected in the past; as Steve said, it is the revenue abstraction test as well. There is nothing to stop GBR increasing test in terms of the level of abstraction that is allowed before not granting access to open access operators. There is a lot to be worked through in the access and use policy to protect open access operators but, as I say, there is nothing whatsoever in the Bill to protect them at the moment.
Maggie Simpson: We recognise that the current system is not perfect, but my members want to understand two things: first, if they are running a train today that their supply chain relies on, that they can reasonably expect to be running that train in the future. Today, the ORR would have a presumption of continuity—forgive me, this is not in the Bill—so if we came to the end of an access contract they would let the trains go into the next one. The infrastructure capacity plan process is different: it throws everything up in the air. People are really worried that they will commit and invest against a service that their supply chain relies on, and then in future something else will be judged to be better value and they will be taken off the network.
Secondly, when people are looking at investments, whether that is a new port or a new terminal—a new interchange might be a £1 billion investment—they need to have a sense that the capacity for the trains coming out of that interchange will be there when they need to use it. The current system has more capacity for that. That is why clause 63 worries people, because they think that that capacity could be taken away from those trains.
John Thomas: Clause 71 is also a real concern for us, because it allows the Secretary of State to establish regulations to amend or even abolish access rights or access contracts. That seems quite a draconian power to us. We have been assured that that is not the intention, and that the intention is to use that power to amend contracts so that they are operable in the new structure. Our view is that the clause should be limited to enable contracts to be operable in the new structure, and not to give the Secretary of State unilateral powers to amend or abolish access contracts or access rights. Again, that will make private sector operators really nervous about future investment. I agree with Maggie: I get no impression that the current Administration would ever use that clause—but, if you are never going to use it, why have it in there?
Edward Argar (Melton and Syston) (Con)
Q
Maggie Simpson: My members and I are working collaboratively with Network Rail colleagues and DFT colleagues to try to ensure that those policies and plans are going to be written in the right way. It is fair to say there is a lot of work still to be done, particularly on capacity allocation. On track access charges we feel a little more comfortable with the Bill provisions and that we will get there, but on capacity allocation there is a huge amount of work yet to be done.
Some of that work is practical stuff around the interplay between capacity plans on different routes, regions and sections of network, which could be quite big or quite small, and how we wind a freight train through what could be 10 or 20 different infrastructure capacity plans. There is a lot of work to do. There are great people working on this, so let us hope that they get there.
In terms of how GBR is held to account, that is a macro question for this Committee across a lot of different aspects. There are lots of powers in the Bill that you will have seen going in both directions between GBR, the Secretary of State, the regulator and so on. Our focus is on that appeals function, which I have already spoken about.
Edward Argar
Q
Steve Montgomery: I do not think we have much more to add, other than that, given the way the Bill is written at the moment, how can you be comfortable with what is in the Bill when you cannot see what is in the licence conditions that are going to be set out? As it stands, clause 63 at the moment can override everything. We would need to see how, when you word the Bill in a certain way, and then the licence, we can get more comfortable with it when they write it up in the access conditions.
John Thomas: The licence is a bit of a worry for me, because of all the indications, as we have been discussing, of ORR’s weakened powers. For example, it will not be able to enforce business performance in future. It will be able to advise the Secretary of State, who can then decide whether to take enforcement action or whatever action she deems necessary. That is a far cry from the current licence, which is a much stronger Network Rail network licence. We have not seen it yet, so we cannot really comment, but all the indications are that it would be a much weaker licence for GBR than under Network Rail.
As Maggie said, there has been good communication with DFT and Network Rail on the access and use policy, for example, but what are the checks and balances on GBR to create something that is fair and non-discriminatory? As one example, the charging framework is really good. It is based on the current framework of cost directly incurred plus a mark-up; it says—this is a point of detail—that if the operator can bear it, it needs to revert back to whether the market can bear it. On the whole, the provisions are good, but there are different ways of calculating charges even based on those principles. My worry is this: what is the incentive on GBR not to increase charges to price people off the network in order to support its own services? As long as there is good engagement and GBR, in the future, and Network Rail and DFT now, listen to us, that is all we can do at this point in time.
Laurence Turner (Birmingham Northfield) (Lab)
Q
Maggie Simpson: It is not my business to talk about the passenger railway. We see two things as important in having a freight growth target: first, it is a statement of Government commitment to growth, which is hugely powerful; secondly, and importantly, the people who are going to be running GBR are going to spring out of bed every morning and say, “It’s my job to make my trains run on time,” and the freight growth target makes them say, over their Weetabix, “Yes, and I must make freight run on time as well.” It is the incentive effect of having a growth target.
We have seen that effect really powerfully with the freight growth target that the Scottish Government and Whitehall have set, in that it changes the dynamic and the culture. I think—perhaps you would say I am biased— that people think about the passenger railway all the time, so I do not see that that incentive effect is as necessary—but in terms of other factors, I leave that to others.
John Thomas: May I add to that? I think a passenger growth target is really important. At the moment, the duties for GBR only include improving performance. You can improve performance, as we saw during covid, by cutting the number of services, but that is not necessarily in the best interest of customers. We think a balance between a performance target and a passenger growth target is really important.
Laurence Turner
Q
Maggie Simpson: There are two parts to that question. Certainly, the provisions in the Bill allow for a core contract to be longer, because it removes the cap in law today. For that contract to be meaningful, though, it needs to have some committed capacity in it, because there is no point having a contract to run if you have no paths. That comes back to the access and use policy, the capacity commitments and how they will work out through those capacity plans. We simply do not have the detail on that yet to know whether we will be able to get meaningful, long-term capacity commitments. That is an open point.
Laurence Turner
Q
Maggie Simpson: We very much welcome that clause; it is a broadening of the provision in the current law, which is quite tightly worded. There are some areas where we think it could be particularly powerful, such as incentivising a greater uptick in use of electric traction, where those units exist, and making sure that people are using them wherever they can. We have just seen the first fleet of digitally enabled wagons arrive in service. That is something that can help to reduce track damage, but it is expensive, so helping the introduction of more digital technology would be another area.
We are looking at novel markets for rail freight—moving new fuels, for example, and supporting green energy. Often, it is quite difficult to get new flows up and running in new markets, so incentivising growth through the uptick of those sectors would be another area.
Laurence Turner
Q
Steve Montgomery: Yes. We believe that the Bill does not give enough power to the Secretary of State to put out contracts and devolved parties—whether that is Greater Manchester, Liverpool, and so on—to give them out. The concession model is something that we have continued to support.
Laurence Turner
Q
Steve Montgomery: Yes, you can put it out.
Joe Robertson (Isle of Wight East) (Con)
Q
John Thomas: It is really difficult. As I said earlier, all we can glean is that, given the reduced powers that ORR will have, it will be a slimmed-down licence; ORR will not have the power that it currently has to enforce business performance. Until we see it, we cannot really comment on it.
I am a bit surprised that we have not seen a draft of the licence yet. We have seen the access and use policy discussion document, but not a draft of the licence. It has been a long time in the making, so I am surprised that we have not seen it yet. I was told that we might not see it for some time. It is a key part of the overall framework, so until we see it, we cannot really comment on that framework. We are having to—we are having to comment on the Bill—but until we see the licence it is difficult to determine what our position will be.
Joe Robertson
Q
John Thomas: As a minimum, we want to be consulted and to help to shape the licence. Our ability to do that will be affected by what will ultimately be in the Act, but we certainly want to be consulted and help to shape the licence.
The Chair
I am afraid that the next question will probably be the last to this set of witnesses. I call Sarah Smith.
Sarah Smith (Hyndburn) (Lab)
Q
Maggie Simpson: The industry is unnerved by the provisions in the Bill—I have members writing letters across Government to set out their concerns—but business goes on. Keith Williams picked up his biro in 2018; you could have raised a child in the time since then, so of course business has to go on. People are making good investments and, as I said at the beginning of the panel, we are pleased with the support of this Government. What we are looking at in the Bill is whether we have a framework that will enable those investments to happen in five, 10 or 15 years’ time, under a different Administration with, potentially, a different mindset, which might be better or worse—we do not know.
That question has different layers. Are we unnerved now? Yes. Is that stopping investment now? Not everywhere, but possibly in some places; other factors are at play too, of course. Will it start to impact investment? Yes, it will. The first time that GBR says to somebody, “Take your freight train off my network because I want to run this service instead”, if we have no or very limited right to appeal, it will absolutely start to spook the market.
Steve Montgomery: I know your question was about freight, but private sector investment, particularly in passenger rolling stock, is an area you have to look at and ask, “Where’s that coming from?”. We have committed to spend £500 million between buying new trains and maintaining them, and that keeps the supply chain going.
We have potential future orders that we want to place, but we are again getting caught up in the mechanics of whether there will be open access, or whether we will lose our rights at any point under clause 71. All those different things are in play at this moment of time, so where do you get that confidence? The Bill is not strong enough in that area, particularly not for passenger service operators.
Sarah Smith
Q
John Thomas: I am fairly new to the role. We are a Brussels-based organisation and we do have lots of European members. I am not familiar with the Finland example, but the European Union is going in completely the opposite direction from us. They are continuing to liberalise, opening up their markets—in the United States, in Australia, in South America—
The Chair
Order. That brings us to the end of the allocated time for the Committee to ask questions, I am afraid. On behalf of the Committee, I thank witnesses for the evidence they have given this afternoon.
Examination of Witnesses
John Davies and Catriona Meehan gave evidence.
The Chair
We will now hear oral evidence from Trainline and Independent Rail Retailers. We have until 3.05 pm for this panel. Could the witnesses please briefly introduce themselves for the record?
Catriona Meehan: Good afternoon. My name is Catriona Meehan. I am the director of public affairs at Omio, here today representing Independent Rail Retailers.
John Davies: My name is John Davies, I am vice president of industry relations at Trainline. I appreciate the opportunity to speak to you today.
Jerome Mayhew
Q
“important to give the right signals from the outset that TPRs will be competing on a level playing field with GBR—to encourage that competition and investment which will benefit passengers directly”.
That is what the CMA says. Mr Davies, do you agree with the position that the CMA has taken? If you do, do you think the Bill as currently drafted gives a level playing field between GBR and independent retailers? If not, why not, and what would you do to fix it?
John Davies: Yes, we agree with the view that the CMA has expressed on giving the right signals from the outset for how the reformed rail industry should work as far as retail is concerned. They also highlighted the risk of this structure giving rise to the actual or perceived risk that GBR will self-preference its own retail operation. There is relatively little about the structure of the reformed rail industry in the Bill, but I think the relevant point is that the creation of GBR will bring together online retailing in a single website and app. This creates a conflict of interest, because GBR will define and operate the future retail market, it will set its economic terms and it will also compete in it.
It is not just the CMA that has recognised these challenges and risks. The Government’s own Railways Bill impact assessment registered this point in terms of the competitiveness of the ticket retailing market—it could be questioned by potential investors who might be concerned that GBR will use its unique position to take actions that put its retail competitors at a disadvantage. However, I should also note that we are encouraged by some of the words of Lord Peter Hendy, who said in a December interview with Simon Calder that there ought to be a level playing field. We look forward to understanding more about how that will be provided, because we have not seen any of the detail on that just yet.
Jerome Mayhew
Q
John Davies: I think it can only be helpful. There is a need to be certain that the retail part of GBR will compete in the market in the same way as everybody else, that it will do so on equality of terms, and that there will be equality of market access on things like fares, features, products, data services and system access, as well as economic parity, so that there is certainty that GBR’s online retail activity will not be loss-making or cross-subsidised, and that there will be transparency of costs and revenues, so that the ORR can hold it to account.
Jerome Mayhew
Q
I have in mind, for example, LNER currently being able to offer a full refund with one click on its website, and that service and facility not being made available to independent retailers even under the current system. Can you elaborate on quite how important that is for the independent sector? I would then like Catriona Meehan to come in with her views, too.
John Davies: When we talk about the need for the right kinds of protections for retailers, we are pointing at something that is not theoretical—these are risks that are with us today. You point at the example of delay repay, where independent retailers are prevented from supporting customers who have purchased their tickets through them by submitting their claims directly. It also occurs with things such as loyalty schemes, retailer inability to offer customers pay-as-you-go fares, and our ability to offer assisted travel. Independent retailers are not permitted to have access to a very significant amount of propositions around rail travel that are a very meaningful part of the market.
Catriona Meehan: I completely echo all of John’s points. For us, it is a concern that there would not be proper separation, which could lead to a degree of self-preferencing. You mentioned SNCF and the separation there, which is an example that we think works well. It is not perfect, of course; there are things that could be improved, but a colleague on the previous panel from ALLRAIL mentioned that EU markets are moving the other way: they are liberalising rather than nationalising.
It is interesting to look at why it has happened and why there is a need for it. FRAND principles were mentioned. We are also seeing that in other markets. Omio operates across 46 markets globally, so we have a lot of experience in other markets. Obviously, the UK is very important through our partnership with Uber trains, but we should also talk about the wider sector of independent rail retailers. Unless we have proper safeguards and assurances in place, we are not sure exactly how GBR will not self-preference. That is not exactly clear to us right now.
Keir Mather
Q
John Davies: Yes, it would represent a streamlining of the system, but that is only true in so far as the GBR online retail function itself is subject to that code of practice equally. It is not clear to us that that is what is intended yet. That is something that we are working through with the Department and the ORR to set out exactly what that means. To the point that was made earlier about the parts of the customer proposition in the rail market that are not available to independent retailers currently, the surety of a code of practice would provide for what we characterise as parity of market access, which is not just fares— “Can we all sell the same fares?”—but features such as delay repay, services such as passenger assistance, and products such as loyalty. We should be able to have all those things on an equal basis across the industry: if they are good for one retailer to offer in support of rail travel, they should be good for everybody. In the work that we are contemplating on the code of practice, we aim to get to a place where no independent retailer or customer of an independent retailer is ever at a disadvantage in comparison with buying a ticket through what will be the future GBR online retail function.
Keir Mather
Q
John Davies: If we are dealing with the legal reality as the backstop to all this, there is a risk that somehow the reform process fails because if all that you are left with, in the way that a market is set up, structured and operates, is that the only protections that independent participants have—whether they are retailers, open access operators or freight operators—are legal ones, then that is ultimately unsatisfactory from a variety of perspectives, because the harm is done by the time you know that you have a potential claim against somebody.
An earlier question mentioned the European model. The German competition authorities found against Deutsche Bahn in 2022 about its conduct in relation to certain discriminatory practices. Tomorrow, there is a third appeal by the German railways against that finding, which was made four years ago. That end-to-end process of using legal tools to provide remedy against the impacts of a vertically integrated state monopolist is now the thick end of 10 years old. Would I say that there needs to be more in the reform process than merely restating legal assurances? Yes, I absolutely would.
Keir Mather
Q
John Davies: Can I add that we would welcome the reassurance? I think that, in different forums at different times, Lord Peter Hendy talked about the assurance that has been provided to the freight sector. I can see, in some of the answers given today, that they do not always feel that assurance, but we would welcome the development of the code of practice as an opportunity to set out how the Government intend those kinds of protections to be provided for. That would be a useful and welcome step to give the kind of signals that the CMA has referred to.
Daniel Francis (Bexleyheath and Crayford) (Lab)
Q
Catriona Meehan: You raise a really good point: having only one retailer offering certain things, such as accessibility information, is a problem. That is why we need several retailers, to have that competition and to work on those products and make better offerings. That is something we do in the third-party retail market.
John Davies: There is always more that can be done in this space, of course. Trainline has been in discussion with the Rail Delivery Group regarding access to its central system, which would enable us to offer passenger assistance to customers and to book the kind of assistance they need at stations or on board trains. That was what I was referring to earlier as one of the features that we have been unable to secure access to. Of course, giving the broadest possible access, in the right way, to customers with additional needs is an extremely important part of what we all do.
Daniel Francis
Q
John Davies: I think it is a bit like there being one central seat reservation system that every train operator uses. Every customer who books a ticket, via whichever operator, accesses the same seat reservation system—there is one definitive record. The same could be true of passenger assistance bookings.
Rail Delivery Group, or its successor, which will be part of the retail industry and management function in the future, could have a system—a definitive record—of all availability of assisted services on offer in the industry. That could be accessed by any retailer, so that customers can book assistance as they need it, for stations or on board trains, and the staff at those stations and on those trains know who to expect and the kind of assistance that is needed. It would all be aggregated in one place, but drawn upon by as many retailers as needed.
Laurence Turner
Q
One of the things that becomes problematic is this. Thinking about something like the centralised seat reservation system, which is a piece of industry architecture, we are currently able to draw on it at a very granular level. We take a very base level of data and are able to use it in different ways, as are other retailers, to design good customer experiences. For example, a 28-day view of the availability of cheap fares for any given journey is not that straightforward if you are only able to access information that has previously been filtered—let us say by a future GBR—which has decided that all you are going to have available are five single and return journeys for the date on which you have made the inquiry.
Laurence Turner
Q
John Davies: Potentially. There are already moves within the industry to restrict those data flows. Again, if it goes to the point that this is not entirely a theoretical risk, then yes, we would—
Laurence Turner
Q
John Davies: It does not. It comes from the Rail Delivery Group, through its provision of RAAS, which is the rail availability and reservation service.
Laurence Turner
Q
John Davies: No I am not, because the benchmarking is done by Trainline’s board, consistent with the processes that it has published.
Laurence Turner
So that is privileged information.
John Davies: It is certainly information that I do not have access to.
The Chair
Thank you. As there are no further questions from Members, I thank the witnesses for their evidence. We move to the next panel.
Examination of Witnesses
Bill Reeve and Peter McDonald gave evidence.
The Chair
We will now hear oral evidence from Transport Scotland and the Welsh Government. We have until 3.30 pm for this panel. Will the witnesses please briefly introduce themselves for the record?
Bill Reeve: Good afternoon. I am Bill Reeve, director of rail reform for Transport Scotland and the Scottish Government.
Peter McDonald: Good afternoon. My name is Peter McDonald. I am director of transport for the Welsh Government.
Jerome Mayhew
Q
Bill Reeve: There has to be a balance, because we are trying to secure the ability of our Ministers to have a proper accountability mechanism and proper direction for implementation of our strategies and of our very substantial funding of the infrastructure. Equally, our network is not an island; clearly, if a direction in Scotland were to have a material impact on matters south of the border, which would not be the intention, that provision is there; I can understand that. There were constructive discussions between our Ministers and officials about how we strike that balance so, broadly, we are content with the arrangements, noting that an MOU is also required by the Bill to flesh out a little more how that will work in practice.
Jerome Mayhew
Q
Bill Reeve: We are working with colleagues in DFT on the heads of terms for that and on what the principles will be. Since the Bill submission last year, that has clearly been a key priority for us. Again, we have had good constructive discussions, working through in detail, as we should. Thus far, we are pleased with those discussions.
Jerome Mayhew
Q
Bill Reeve: I do not imagine that the guidance will be used then. Ordinarily, I would imagine that we would start with the use of our strategies, our statement of objectives and our normal means of engagement. It is important to remember that, whereas currently we spend £1 billion a year on Network Rail in Scotland, and it is for the ORR to enforce its delivery obligations under the delivery plan to the current funding arrangement, that role is being removed from the ORR.
What you see reflected in the Bill is something to address what would otherwise be a complete accountability gap. We would welcome the fact that we will have stronger accountability mechanisms under these provisions than we have had hitherto, given the very substantial amount of funding that we fund the railway infrastructure in Scotland with.
Jerome Mayhew
Q
Bill Reeve: I think that would be a matter of convention and expectation. It is not the sort of thing you would rush to do when there are other ordinary means of engagement to be used first.
Jerome Mayhew
Q
Peter McDonald: Yes I do, in terms of the legislation. However, I do not think we can come to a full judgment on this. This may also pre-judge your second question, because we do not have the full memorandum of understanding in front of us. It is only when we see that full package that we can make a judgment about whether the degree of consultation and partnership is sufficient for Wales.
Jerome Mayhew
Q
Peter McDonald: In the case of Wales, the heads of terms for the MOU were published in December. We are now working closely with Department for Transport officials on the detail. We are optimistic that we can jointly publish a full draft in early March. It is important for us to do that, because, similar to the Scottish Government, we have a pre-election period ahead of the devolved elections, and we would not want that to lose momentum in this important process.
Keir Mather
Q
“the way that the Bill has been discussed with Scottish Government partners is the exemplar that other Government Departments in Whitehall may wish to follow”.—[Official Report, 9 December 2025; Vol. 777, c. 210.]
That is impressive, isn’t it? Do you have any reflections on how this process has been worked out in consultation with yourself and the Scottish Government and whether it might provide instructive lessons for how GBR might seek to engage on a four-nations basis once it is established?
Bill Reeve: It would be churlish of me to disagree with that quote, frankly. In all seriousness, the level of engagement both between officials, and between our Cabinet Secretary, the Secretary of State and the Rail Minister, has been, in my experience, the best I have ever known when it comes to inter-Government exchange. It has been a constructive discussion and a sometimes forthright debate, which is reflected in where we have come to agreement now.
You will be aware that it is the Scottish Government’s position to support the Bill as it goes through the legislative consent motion process in the Scottish Parliament—pending any amendments that might change that; I do not want to fetter the will of our parliamentarians. We have been encouraged by the level of constructive engagement.
Keir Mather
Q
My second question relates to the issue raised by the Opposition spokesperson about the publishing of documents, consultations and memorandums of understanding relating to this Bill. Mr Reeve and Mr McDonald, you are storeyed in your working on the railway and deal with these issues on a daily basis. What do you think the requisite trade-offs are when designing a railway fit to serve four nations and 67 million people through legislation that is hermetically sealed, as opposed to working in consultation to develop the documents over time, in an iterative process throughout the Bill's passage?
The Government have been in power for about 18 months now and are seeking to progress this work at pace. Is this usually how the process of engagement happens with railway stakeholders when you are trying to achieve macro change in a short amount of time?
Bill Reeve: If you will permit me to say this, without wanting to undermine any positivity it, of course, remains our preference that the railways in Scotland should be fully devolved. However, we understand and accept that that is not on the table at the minute. So we get to the complicated challenge of devising something that reflects the fact that in Scotland about 95% of all trains are run by Scottish Ministers—the services and passenger trains. We fund more than 90% of the costs of the infrastructure, but to date we have not had the level of accountability around that substantial expenditure in Scotland.
That takes us to the need to work out how to strike the right balance, in the absence of full devolution, that will allow us to run the railways in Scotland in accordance with our published strategies and with due accountability for the substantial funding we provide— while facilitating cross-border traffic, which is in the interests, of course, of all the nations.
Peter McDonald: I have been part of a large number of intergovernmental processes. The work that is happening, which could only really have begun once the Bill was published, is at the more intensive end of the intergovernmental spectrum, as opposed to the slower end. You want to get this right, but I think the early March deadline is important for the Welsh Government to maintain momentum.
Keir Mather
Absolutely. Lord Hendy mentioned in his testimony to the Transport Committee that upcoming elections in Scotland and at the Senedd in May will focus minds as those discussions progress. I also think that is a very healthy basis on which to drive the conversation forward on these really important matters of detail. For the moment, I have no further questions.
Olly Glover (Didcot and Wantage) (LD)
Q
Peter McDonald: It certainly does not take us further away, if I can put it that way. In technical terms, I would say that the Bill is neutral for the devolution settlement. It does not adjust the fundamental constitutional arrangement in Wales, just as it does not change the fundamental constitutional arrangement of Scotland.
I think the Bill makes the current settlement more operable and better; I will not comment on the Scottish case—I will leave that for Bill. Certainly, the Welsh Government support track-train integration. I appreciate that I came at your question from a negative direction, but the Bill definitely advances us in terms of making the settlement more operable and efficient.
Andrew Ranger (Wrexham) (Lab)
Q
Peter McDonald: It is very reasonable for there to be a conditioning adjective in the clause, certainly for the purposes of primary legislation. In practice, hundreds of operational decisions will be happening every day that—certainly in the case of Wales and England—affect the border. I certainly would not want each of them to have to go through a duty to consult.
The Welsh Government view is that “significantly affect” is reasonable. It could be further codified and defined in a memorandum of understanding, which provides a more flexible, non-legislative route to get into when consultation matters and when this can be done at working level more informally, without legislative backing.
Bill Reeve: We would agree. I might have a professional interest in the signalling of the Newquay branch in Cornwall, but I am not sure I need to be consulted on it. We are a small team in proportion to the size of the network that we are responsible for: we would be overwhelmed if we had to be consulted about everything on a precautionary basis. As Peter said, the working of the MOU will be important and people’s behaviours will always matter. But the drafting is fine from our perspective.
Andrew Ranger
Q
Peter McDonald: The Welsh Government view is that the primary legislation is taking a reasonable approach. There are a couple of extra, non-legislative layers to reflect on. The first is the provisions of the memorandum of understanding, which I will keep coming back to. That is really important for cross-border partnership.
Then there is the culture of effective partnership. Currently, a large number of Transport for Wales and Network Rail officials and employees work together collaboratively; we want that to continue and think that can improve. We think there are lessons from the alliance model in Scotland.
This is almost leaving the constitution at the door; it is more about a proper culture of partnership between the two organisations. We think that can be best led by an empowered and distinct Wales and borders business unit. That is not necessarily a matter for primary legislation, but it is really important for how this will operate on the ground.
Andrew Ranger
Q
Bill Reeve: My Welsh colleague’s point about the importance of culture and behaviours and how that is given effect through the MOU will be the real test. As drafted the primary legislation seems fine, and there is indeed an obligation to consult on services that cross the border both ways. However, I have no doubt from my experience that how we put this into effect will matter more than the words.
The Chair
If there are no further questions, I thank our witnesses, Mr McDonald and Mr Reeve, for their evidence today. We move on to the next panel.
Examination of Witnesses
Malcolm Brown, Darren Caplan and Rob Morris gave evidence.
The Chair
Q
Malcolm Brown: I am Malcolm Brown, the CEO of Angel Trains.
Rob Morris: Good afternoon. I am Rob Morris, the joint CEO of Siemens Mobility, a manufacturer of trains and the supplier of rail systems here in the UK, for the UK.
Darren Caplan: I am Darren Caplan, chief executive of the Railway Industry Association, a trade association representing rail suppliers throughout the UK.
Jerome Mayhew
Q
Malcolm Brown: Yes, by all means. Angel Trains is a ROSCO—a rolling stock operating company. We own circa 4,000 passenger vehicles in the UK, and we provide the bridge between private sector finance and the actual rail industry. In the last 10 years, we have invested about £1.9 billion in new rolling stock in the UK, and we invest about £80 million a year in refurbishing and maintaining trains across the network.
Jerome Mayhew
Q
Malcolm Brown: As has been covered in other panel sessions, the Bill as it stands does not provide a long-term view. It relies on the building blocks that it refers to—we talked about this in other panel sessions—where you have a long-term rail strategy and there is also a promise of a long-term rolling stock and infrastructure strategy. It is those documents that we would look to to provide a long-term view on what is coming up in the industry.
Our assets last circa 30 to 35 years, as does the infrastructure, and it is that long-term view that we require, not necessarily to give us certainty, but to give us a clear look-through that allows us to decide whether to invest and the level of investment we will make. In answer to your direct question, we will be looking to the railway strategy, which we presume will come first, and then to the long-term rolling stock and infrastructure strategy.
Jerome Mayhew
Q
Malcolm Brown: As a general rule, a 10-year horizon is something that we can work with. With the nature of infrastructure—not just rail, actually, but other infrastructures too—for this type of asset, that, while it is not whole life, gives a clear look forward. When you extend that, clearly the level of accuracy, if not certainty, gets less. That is perfectly okay; we are used to dealing with that. That is how infrastructure actually works. We do not need to have 100% knowledge of something that is going to happen in 35 or 40 years, but what you want to have for look-through is, “Okay, we know what is going to happen in 10 years, and therefore, on a probability basis, this is what we will assume to do in 30, 35 or 40 years.”
Jerome Mayhew
Q
Malcolm Brown: No, I am not. I am suggesting that the strategy should give various date points—10 years, 15 years, 30 years. I do not think we should exclude it saying, “Here is a vision for what we wish our rail industry to look like in 30 years,” while accepting that that will actually change. It has to change; it has to morph and adapt to the market.
Jerome Mayhew
Q
Malcolm Brown: I think the references to the building blocks of the long-term rail strategy and the rolling stock and infrastructure strategy are key components that will actually help give greater colour to the Bill. At this point, a number of us are looking at this and trusting in the fact that they will come, and will come in a timely manner, and that that will allow us to get on and invest. This is not just investing for investing’s sake; this is taking Rob’s plant in Goole and actually pouring work in there that will employ people in the local area. It is that type of thing that will break the log jam that we have just now, and let us get on with things.
Jerome Mayhew
Q
Rob Morris: Certainty is very important. We have invested something like £340 million, and we are currently investing in a new Goole facility for rail and train manufacture and a train command and control systems R&D and manufacturing facility at Chippenham. To continue with investment not just in facilities, but in skills and rolling stock for the future, we need certainty about the financing or funding over the control periods. It is not just about renewals, which are currently included, and which are there to stop the infrastructure from falling over; it must also be about enhancements and rolling stock and the maintenance of that.
From our perspective, we would echo what Malcolm said about the 30-year long-term strategy. For all those elements I have talked about, we must recognise that strategies have to be reviewed. I would suggest that that be done every five years for all of those and that funding is made available on a five-year basis, so that the supply chain has absolute clarity on where it can invest and how it can support GBR. GBR spend will be 50%-plus, we expect, within the supply chain, so what it does not want is for the supply chain and the investors to fall over.
Jerome Mayhew
Q
Rob Morris: Absolutely. Although we are based in the UK, we are a global company. If there is uncertainty here in the UK, we will cut off investments because we are in competition with a global market.
Jerome Mayhew
Q
Darren Caplan: We represent rail suppliers in the UK—all around the country, large and small. They can be companies like Siemens and Angel, and they can be SMEs—60% of the supply chain are SMEs and they are our members. There are about 640,000 jobs in the UK rail industry, and about half of those work in the supply chain, so it is quite a lot of jobs.
Around £40 billion of GVA is rail, and half of that is from the supply sector. Around £14 billion of Treasury revenue comes in from our sector, and half of that is from the supply sector, so it is a really important sector, covering building, maintaining, reviewing, infrastructure, rolling stock, signalling and so on—it is the full gamut of the rail industry.
The point you picked up on, Mr Mayhew, is really important, and I am happy to expand on that. I have in front of me the Bill’s clauses and provisions. Schedule 2 is the one we are concerned about, and it is really significant. It says:
“The Secretary of State must provide the ORR and Great British Railways with a statement, in relation to a funding period, indicating the amount of financial assistance that the Secretary of State reasonably considers may be made available to Great British Railways by the Secretary of State…for the purpose of funding the activities of Great British Railways during the funding period.”
That period is five years. It says, “must provide”. Then, three pages later, on page 64, it says:
“If the Secretary of State proposes to vary the financial assistance to be provided…the Secretary of State must notify Great British Railways of the proposed variation…The Secretary of State must notify the ORR if…the Secretary of State considers that the proposed postponement, withdrawal or reduction is likely to have a material impact on the ability of Great British Railways to carry on the activities specified”.
That is “provide” versus “notified”. It says they must “provide” the budget for a five-year period, but later it says they just have to “notify” if they want to change what they do. That is hugely significant, because it means that you can set up a five-year budget and decide that you want to change it once in that control period, or every month if you want to. That is highly political, because a future Secretary of State can decide what they want to do coming into a new control period. The future is less certain under the Bill than it is currently. We have had control periods for the last 30 to 35 years— we are now in CP7. Under the Bill, the future version of funding assistance for rail will be less certain than it is now.
The Bill also only talks about postponing, withdrawing or reducing, and not increasing. At no point does it talk about funding going up; it is all about reducing it. For my fellow witnesses, when they are looking at where they are going to invest, they will say that there might be £45 billion invested over five years, but that could come down—if you do not know for certain, why should you do it?
My final point is that rail is a very certain industry: you know what you need to spend in five years—you know the renewals you need to do, and you know the rolling stock you need to get, maintain or refurbish—so why can you not commit to a five-year spending envelope? It is very simple.
Jerome Mayhew
Q
Darren Caplan: Yes, absolutely—
Jerome Mayhew
Q
Rob Morris: That is absolutely correct.
Malcolm Brown: It is fundamental economics.
Keir Mather
Q
Duties for GBR also exist in the Bill. One of those duties is
“to enable persons providing railway services to plan the future of their business with a reasonable degree of assurance”.
In a five-year business plan you may have fluctuations in spending to reflect fiscal reality, but would you say that through those building blocks, long-term certainty is offered to the industry, and GBR has to reflect industry needs and build a railway that is coherent in serving their interests over the long term?
Rob Morris: The short answer to that is yes, absolutely. The other elements that we have just discussed—on enhancements, and on rolling stock and the maintenance and funding thereof—are absolutely fundamental to that. I also think that the ambitions for the railway need to be included in that. Witnesses on previous panels have talked about freight and the target there. What we seem to be missing in the Bill at the moment is the ambition for passenger growth, how that will improve the railway and the levels of investment that need to go with it.
A good example of that is last week’s announcement on Northern Powerhouse Rail, where rail and investment in it will create opportunity for increased productivity— I think £40 billion per annum was mentioned. It seems to me that there needs to be a connection in the Bill between what the Bill seeks to achieve, and generating that ambition, not just for freight growth, but for passenger growth.
Keir Mather
Q
Mr Brown, you point to those building blocks, which are really important. On the one hand, you have the obligation for the Government to provide industry with certainty, but on the other, there is the point about not being overly prescriptive or deterministic in driving the outcomes of the private competitive basis on which a lot of these services are procured. Do you think the Bill strikes the right balance between offering that certainty through the building blocks and not freezing in aspic any perceptions of the railway today that might be outdated in, say, 30 years’ time?
Malcolm Brown: It is very hard to comment on a building block that I have not seen, so forgive me for that. I can understand the concept of using these building blocks and I can see how it fits together. We keep referring to certainty in 30 years. If members of the panel can give me certainty in 30 years, I will take that bet. I do not think any of us can—that is a heck of an ask. What we are asking for is a vision or direction of travel—whichever buzzword you want to use—that says, to use Rob’s term, “This is our ambition for rail in 30 years, and setting out these stepping stones will get us to it.” That would give us the flex to deal with something like a pandemic, where we had to move and change.
There are new technologies and we are innovating all the time. As the private sector, we are always looking for what we can come up with that will actually improve things not just for the passengers but for the operation of the railway. I hate using the word “framework”, but if we have that framework, we can work within it as the private sector and develop ideas to bring to market. Some will work and some will not, but that is what we take on our shoulders. We can implement those for the greater good of the railway and the passengers.
Keir Mather
Q
Malcolm Brown: You had a lot of ifs in there, if you do not mind me saying—“if it aligns” or “if it does that.” Yes, if that were all to happen, I could understand that there is harmony there.
Keir Mather
Q
Malcolm Brown: My understanding is that the legal duty is to produce it, but not what is in it. I could have a legal duty to produce a strategy. I do not have a legal duty to say specifically what is in it. Forgive me for pointing that out. I understand your point that there are legal duties, which is good, but as yet, I do not know what is in that strategy.
Olly Glover
Q
Darren Caplan: I think the question was about whether it is suboptimal at the moment. Yes, it is. We have a control period that lasts for five years and looks at operations, maintenance and renewal. That does not include enhancements. That was taken out in 2018, 2019, so enhancements have been reduced. It did not include major projects; we are very supportive of the announcements on East West Rail and Northern Powerhouse Rail, but that is not part of the overall plan. There is no rolling stock pipeline or strategy—we have called for that, but we are still waiting to hear back. There is nothing about decarbonising the network, or having an electrified network—when you have that, it is stop-start and boom-or-bust.
This is an opportunity to get it together. Back in 2024, we called for a long-term strategy for rail, and we are positive that it is in the GBR plans, so we support the long-term strategy and reviews. I totally agree with these guys that we need to bring more than just ORR work into that pipeline and have a 30-year purview. However, there is quite a lot of work to do on it, and the Bill does not quite capture that yet, but it is a start.
Rob Morris: From my perspective, I totally agree that it is currently sub-optimal. Decisions have been made in the past where things have been switched on and then switched off—electrification is a good example. With GBR, we now have a great opportunity to look at the whole system as a fully integrated system, so that we can manage the risks and the performance all together. That suggests that there will now be an opportunity for greater clarity of thinking, reduction in costs and much more efficient execution of the whole system.
The important thing is that we have a review of the long-term strategy in regular periods to make it transparent—perhaps every five years, so that the supply chain can set itself up for the next five years. What has happened in the past is that, when there has been a change of approach, it has not been communicated and it has created a vacuum. When there is a vacuum, there is uncertainty and we will not invest in those sorts of things. Then, when we restart things such as an electrification programme, it costs significantly more than if you had a steady-state approach to it.
Malcolm Brown: I agree that it has been sub-optimal. I think the clue is in the title; it is a rail system, and therefore a system has a number of components that we require to work as one. For example, I will invest £1 billion in new trains that we have made in Derby, and then those trains are getting maintained. These are state-of-the-art trains—they are absolutely brand new—but they are being maintained in sheds that were built in the Victorian era. That is not how I would like to look after my assets. I would like a holistic, full-system approach that takes these things into account. It cannot be perfect, but there is a lot more that we can do. The one word of caution I would give is this: be careful we don’t try to boil the ocean. We cannot have answers to everything, and nor should we expect the long-term rail strategy to have them.
Lastly, it is a long-term rolling stock and infrastructure strategy, and if it comes through, that is a major step forward. There is no point in devising electric trains with pantographs and batteries if we do not have the infrastructure to support that, either in maintenance or passenger service. Those two combined are utterly critical, and it is certainly in the title.
Rob Morris: May I add one comment to what Malcolm said? That old-system thinking with GBR opens up opportunities for the supply chain—ROSCOs and OEMs like ourselves. We can provide the optimum infrastructural rolling stock solution that also does the best in net zero outcomes for carbon, such as the battery bi-mode trains and discontinuous electrification of new technology that manufacturers like ourselves provide.
Baggy Shanker
Q
Malcolm Brown: To cut to the chase, yes. Our hope has to be that with GBR—we have talked in this room about the missing building blocks, but our hope is that they all align—we will end up in a better place than we have been, certainly for the past six or seven years.
You referenced GBRX. It is a limb of GBR that does all the very high-tech and signalling aspects. That seems to be working very well. We work closely with it, and we are investing in new technology—for example, on the east coast main line. We have been installing that on trains. It is very much future forward—we are looking into the future. We know that that will not be an immediate change, but we can see in the future that this is—to go back to this point—the direction of travel. It is not a no-regrets bid, but it is something that we have a degree of confidence in.
Rob Morris: To add to that, yes, again the funding ambition and the need that it generates is the fuel for innovation. The one thing I would say, though, is that I am a little concerned about the Bill’s requirement for GBR to do R&D. R&D is a good thing, and we would expect it, but the thing that GBR should not do, perhaps, is to crowd out the R&D that suppliers like ourselves and many others do, both locally here in the UK and globally, because we will potentially end up reinventing the wheel. While we as global suppliers, and our competitors, have wheels to put out all around the world—the wheels are an analogy, of course—they all have functional spokes, and what we do not want to do is to reinvent the shape of that wheel for the UK. That would be abortive, it would cost, it would take time and it would be the taxpayer who pays for it. The provision in the Bill should be about harmonising with the supply chain on what is done within R&D for the benefit of the passenger, the taxpayer and the freight user.
Darren Caplan: We are very concerned. We think that GBR is heading in the right direction, but Members might not be aware of how difficult it is in the supply chain supply sector at the moment. Through Savanta, we conducted a poll at the end of last year, between October and December, of rail business leaders: 64% of them said that the market is going to contract this year, which is up from 48% last year, and last year had been our record low; 62% are freezing or reducing headcount at the moment, with 34% actively laying off staff; and 85% expect a hiatus this year, which is partly because of the time it has taken for GBR to be set up, which is often cited as a reason why there is lack of confidence in the market at the moment. That is in contrast to the international situation: UNIFE, the European trade association, does a global market study, which shows that around the world, rail has grown between 3% and 6% every year.
I know lots of products are out there and things feel positive, but actually our members in the supply sector are feeling that they are in a very difficult place at the moment. We need certainty, and any measures that can help with that. We have already mentioned schedule 2, which does not help at all—it has to be changed, because it makes things less certain—but clause 72 also has potential to deter private investment. That is the regulation to make changes to non-GBR infrastructure facilities and services. It gives the Government the powers to make future changes to legislation by regulation outside a parliamentary vote—so-called Henry VIII powers. That weakens the power of MPs. It will mean that the Government can rewrite the rules about non-GBR networks and how those integrate with the GBR network, including setting conditions of access and charges.
That is for any network, station or track not operated by GBR, which could be High Speed 1, freight terminals, depots—we heard from freight earlier—ports and airports, telecoms and energy assets. They all integrate with the GBR network, and there is a lack of certainty about how they will integrate in the future, which will deter private and third-party investment. One global logistics company would strongly like to see such sites excluded because of the effect that it will have on investing in those assets. If you get rid of schedule 2 and amend clause 72, you can help to create a better situation when it comes to investment.
I have a prop here, which is a chart showing the current investment for renewals in the UK over the past 30 years—you can see that it goes up and down. The situation that we are talking about with GBR makes it less certain. I have another chart here that shows electrification—
The Chair
Order. Sorry, Mr Caplan, but props are not allowed.
Darren Caplan: My apologies. The charts show how uncertain the current situation is, and these measures would make it less certain. If we can have the positives for GBR going forward, and get these issues addressed, that will be better for the supply chain.
Jerome Mayhew
Q
Darren Caplan: To 2029.
Jerome Mayhew
Q
Darren Caplan: Operations, maintenance and renewals.
Jerome Mayhew
I am going to put words into your mouth, but please correct me if I am being unfair. In each control period, you get a bell curve of activity. You start with a low level of activity, because people did not know that there was certainty of funding, and then in years 2 and 3 it gears up and you get peak activity in year 2.5, roughly. Then, as you get towards the end of the control period where the medium term funding dries up or is uncertain, you get a drawdown of activity. That is the point that you were trying to make—is that correct?
Darren Caplan: It can happen between control periods as well, but the basic point is that over those five years, that money is the same. It can vary a bit between years—you can carry some over—but in that time you spend that money. Our concern about schedule 2 is that you can reduce the amount of money in that period.
Jerome Mayhew
Q
Darren Caplan: Absolutely. If you do the work that you need to do on rail when you need to do it, it is much cheaper than doing it at a later date. It is 30% cheaper to do a renewal when you are supposed to be doing it than at a later date. That is better for the taxpayer, because you can aggregate it. It is also better in terms of passenger experience, because the asset is being maintained when it needs to be.
Jerome Mayhew
Q
Darren Caplan: These guys can talk to that specifically, but I assume so, because you are planning out your workforces, your investment in partner machinery, your overall business plan, the apprentices you are going to take on and innovation—all these things can be planned in advance. If you know, you will get a better cost.
Jerome Mayhew
Q
Rob Morris: Yes—electrification and signalling are both part of the renewals process. The five-year cycle that we currently have—which is often referred to as the boom-and-bust cycle, because that is what it is like for us—adds, let us call it, a subjective cost increase of about 30%, as Darren mentioned.
Jerome Mayhew
Q
Rob Morris: The overall figure is normally about £40 billion, in terms of renewals and operations maintenance.
Jerome Mayhew
Q
Rob Morris: Subjectively, yes. I think there will be more accurate figures around that, but it is an inefficient process.
Jerome Mayhew
That is amazing.
Rob Morris: One thing I would say to support the figures that Darren mentioned earlier is that we have had a particularly sluggish start to this control period, which is actually prolonging that and impacting on skills and capabilities in the industry, which might add additional costs to remobilise.
Jerome Mayhew
Q
Rob Morris: Your words are correct.
Darren Caplan: Yes.
Malcolm Brown: I am not in that space, so I could not comment.
Jerome Mayhew
Q
I am going to move to Siemens now. Historically, during the period of privatisation, rolling stock improvements have been inextricably linked with franchise bids. As franchises have come up for renewal, different operating companies have been in a bidding process, through competition, to make the most attractive proposal to the Department for Transport. Some of that would be in cheques to the Treasury, but a lot of it has been in improving rolling stock infrastructure. My own operating company, Greater Anglia, entirely renewed its rolling stock right across its area as part of its franchise bid.
That impetus for improvement of rolling stock is being removed entirely and replaced by GBR, a nationalised bidder. It has various duties. I look at clause 18(3), which we discussed a little earlier, under which it has a duty to improve “railway service performance”, but that is defined as being, in the main, reliability and passenger overcrowding. There is no reference to improved customer experience, to quality of rolling stock and to improved services that would come with new rolling stock. For Siemens, are you concerned that moving to GBR will lead to a reduction in the pace of improvement in rolling stock?
Rob Morris: Again, it is about understanding what the ambition is specifically with rolling stock and the funding thereof. My belief is that there is a need for a passenger growth target, which would further fuel the need to make sure that there is a clear approach to modern, carbon-neutral, efficient rolling stock to match a similar infrastructure for the betterment of GBR.
Jerome Mayhew
Q
Rob Morris: Yes.
Malcolm Brown: If I may, there is a natural life cycle. There is a beat rate to replacing, renewing and then retiring rolling stock. It is lumpy, because you do not replace trains one at a time; it tends to be in fleets. There is not a great deal we can do about that. What would concern me is if we reverted to everything being planned and done by a central organisation. We have tried that before. I refer the Committee to the 2014 National Audit Office report on the DFT procuring IEP. It did not go well, the National Audit Office says. There is a natural tension there just now—the commercial tension of trying to improve rolling stock and always trying to have the next best thing.
You talk about Greater Anglia. Apologies, but it is Alstom’s trains that we bought in there. They are a step change that was there before, but we cannot keep replacing every single train every time. We need to refurbish trains. We invested £125 million in the Pendolino fleet on the west coast. That created 100 jobs at Widnes and its own infrastructure there. That was completed on time and on budget. Nobody ever really talks about that, but we can do it. We have given the passenger an environment that is as new. That is a lot more cost-effective than simply going, “We must buy a new train every time we feel like it.”
Jerome Mayhew
Q
Malcolm Brown: I cannot comment. I presume it is going to be in one of the building blocks. My concern is that we have a group of people who are trying to design trains for a hobby, when we have manufacturers such as Siemens in the UK, which have global platforms for trains. Yes, we adapt and customise them for the UK, but we get all the benefits of the manufacturing experience of a global manufacturer with the economies of scale that that provides as well. We do not need bespoke custom-built trains in the UK.
Keir Mather
Q
Malcolm Brown: To my mind, there is the potential there—there is no question of it—but without having visibility, at the risk of repeating my previous answers. You talk about consulting with the industry; there is a vast amount of experience in the UK rail industry. I am totally agnostic about whether that is in the private or public sector. I would compel GBR to use that experience to inform the decisions and the forward planning.
I have an organisation that is not as large as Siemens. It is about 170 people and I think about 60% of them are qualified engineers. We have more than 30 years’ experience of acquiring rolling stock and structuring it. I think we are reasonably good at it. I would say utilise the experience and expertise that is there. I am not saying private or public; I am saying use the experience that is there to, frankly, avoid reinventing the wheel.
Keir Mather
Q
Rob Morris: To add to that, there should be a duty on GBR to engage with the supply chain around its decisions and intentions, because essentially we will be more than 50% of the spend for GBR and it would be wholly inappropriate for decisions to be made that are outside the capability or the investment profiles of the supply chain. They need to work in harmony, rather than in silos.
Keir Mather
Q
Rob Morris: I think it needs to be explicit. The ultimate aim is to do the right thing by the passenger, the freight user and the taxpayer.
Keir Mather
Absolutely. Thank you.
Darren Caplan: My final point, to wrap this up, is that the Competition and Markets Authority civil engineering market study was published just last month. It said:
“Funding settlements and infrastructure pipelines are often short-term and volatile, reducing the opportunities and incentives for public authorities and the supply chain to plan and invest.”
This is not public or private. For both GBR and our members to invest, we will need that longer-term certainty.
The Chair
If there are no further questions from Members, I thank the witnesses for their evidence this afternoon. Mr Caplan, if you would like to submit your props or diagrams, the Committee would be very grateful to receive them in written form.
Examination of Witnesses
Jason Prince, Andy Burnham and Tracy Brabin gave evidence.
The Chair
Q
Andy Burnham: Good afternoon, everybody. I am Andy Burnham. I have been the Mayor of Greater Manchester for coming up on nine years. I was previously the Member of Parliament for Leigh for 16 years.
Jason Prince: Good afternoon. My name is Jason Prince, and I am the director of the Urban Transport Group, which represents transport authorities and mayoral strategic authorities across the UK.
Jerome Mayhew
Q
I will start with the Bee Network up in Greater Manchester, which you have organised on the basis of concessions let by you, the mayoralty. The benefit of that is that the fare box is kept locally and it is operated privately. It does not have to be; you could run those concessions through a wholly owned subsidiary. I accept that. That approach of keeping the fare box local does not work with GBR because the fare box stays with GBR. Even if you have a greater level of devolvement, it feels a bit like it is going to be GBR in Greater Manchester, just painted yellow. Is that what you wanted from the Bill, or did you have aspirations for a bit more control?
Andy Burnham: Thank you very much for the question. I agree with the way that you have presented it. There is a tension to be resolved, but I believe it can be resolved. It is really important that you have mentioned the Bee Network, because I am responsible for running the tram and bus systems, so the backbone of the public transport system is under our control. We have to move to a world where the railway emerges from its railway silo and sees the bigger picture—the integration of public transport across all modes. I would encourage the Committee to think about that, because that change is coming. You will know, Ms Barker, that Liverpool city region will also soon embark on putting buses under public control, and I think the model we are creating will become something of a norm around the country.
I think it is possible to go further, as you say, and my evidence for that is TfL Overground: an arrangement was reached between the Government, the railways and TfL on an integrated, fair offer. I believe that is entirely achievable in Greater Manchester, where the railways come into the capped system. Actually, the rest of the Bee Network adds value to the railway, because no longer will it be the case that you buy a ticket in somewhere like Buxton or Glossop and your travel runs out at Manchester Piccadilly; in a capped system, people can have their onward travel all included under that daily cap. That is what operates in London, and I see no reason why it cannot operate in Greater Manchester—indeed, we will insist that we get the same.
Isn’t it all about revenue sharing, hopefully in relation to passenger growth? We have a plan to bring eight rail lines into the Bee Network, starting with two this year, and it is a plan that has been agreed with the rail industry. This is potentially a win-win for everybody, because the arrival of the capped Bee Network system gives people more reason to use the railways, so we think that we can increase patronage on those rail lines.
It has to be a real partnership with the railway, which is why we are encouraging the Committee to go beyond the idea that we are just consultees who can be listened to or not. Meaningful partnership is what will build the right railway and the right public transport solution in our city. It is much more than painting the trains yellow, although I do want to see yellow trains all over Greater Manchester with bees on them.
Jerome Mayhew
Welcome to the Committee, Ms Brabin; I am sorry that we started before you managed to get in.
Tracy Brabin: My apologies for being late.
Jerome Mayhew
Q
Andy Burnham: I do not think it can be justified any more that there is one transport arrangement for London, but that arrangement is not available to everywhere else—[Interruption.]
The Chair
Q
Tracy Brabin: Thank you so much. It is an absolute privilege and a pleasure to be in front of this Committee on something as important as the Railways Bill. In West Yorkshire, we are a region of 2.4 million people, with seven universities and hundreds of thousands of businesses, but, as part of my local growth plan, transport is the key, so it is really important that we get this right. Thank you for the invitation.
The Chair
Thank you. The shadow Minister is whipping at present, so for the time being, until he rejoins us, I will move on to the Minister, Keir Mather.
Keir Mather
Q
I want to start with a more thematic question about the overall purpose of the Bill, and the DFT’s approach to transport more broadly. We unashamedly stand behind the view that our transport network is not just something to get people from A to B; it is an important catalyst for this Government’s missions, particularly around economic growth and delivering the housing that people need to live in dignity and flourish as individuals.
On that basis, the Railways Bill lets us take on lots of devolved work with mayoral strategic authorities, because we believe that is the right size of unit of devolved power and economic focus to drive those priorities. I know, Mayor Brabin and Mayor Burnham, that those priorities are also crucial to your local plans, so how do you feel they marry up, using this Bill as a catalyst to achieve some of those shared ambitions?
Tracy Brabin: I mentioned our local growth and local transport plans. The Bill is timely because of the changes that we see across the country through devolution. As the Prime Minister says, it is the devolution revolution. The opportunity with the statutory responsibilities for mayors to be at the heart of that decision making is a once-in-a-lifetime chance. I value this chance to feed back, because it is important that GBR is an agile body working closely with mayors who are seen as partners, not just stakeholders to be included when and where. We have skin in this game: I see myself as the passenger-in-chief for the public of West Yorkshire.
Like in Greater Manchester, with the work that has been led brilliantly by Andy on the Bee Network, in West Yorkshire the Weaver network will encompass bus, rail, tram, and electric bikes and active travel. We will not be able to deliver that potential for growth in our communities unless we have a meaningful relationship with GBR. It is not just about West Yorkshire, because we are a region at the heart of the UK. A lot of traffic goes through our region. It is not self-contained; we have opportunities—for example, Ilkley to Leeds or the five towns—would definitively be part of our Weaver network.
While we have ambitions to bring the network into the Weaver umbrella, it is also about integrated ticketing. That is important because while we have the MCard, one of the most sophisticated multimodal ticketing apps outside of London, we want the ability that I heard Mayor Burnham talking about when I arrived, to travel across the whole of Yorkshire—from Leeds to Sheffield and Leeds to York—with that integrated ticketing opportunity. Both mayors, and mayors across the country, share the ambitions of the Mayor of London. Frankly, if it is good for London, it is good for all of us.
Enabling mayors to have greater powers to support decision making around services is important. This is my final point. Let me bring it alive with an example: we want to build a station for Leeds Bradford airport. We want to invest and we have an appetite for risk, but if we do not get any revenue—or do not have some ability to get revenue as part of that agreement—what is the point? That is also true if we do not have any opportunity to help decide services. We can build a station, but if we have no responsibility or skin in the game for services, how can we make the economic case for jobs, growth and investment in our region?
Keir Mather
Q
Tracy Brabin: And what a great choice for them.
Keir Mather
Indeed, and many of them have similar aspirations around connectivity and growth. Mayor Burnham, was there anything you wanted to add before I hand back to Jerome?
Andy Burnham: A little, thank you. I echo everything that Tracy said. I strongly welcome this Government’s rail reform journey; it is going in a positive direction. Anything we say today is just making it that little bit better—or perfection. This is really positive from our point of view.
We are beginning to invest in rail from our own resources in Greater Manchester, with £210 million over the next four years. As rail comes into the Bee Network, we are going to be improving stations, working with the rail industry. Under the plans, there is the possibility that we may start putting local revenue into new rail services, with additional services where there is capacity to take them. We would both say that real partnership is what we want. It goes back to the shadow Minister’s point at the start. Making us more than consultees is what we are asking for.
In relation to wider investment, perhaps the Bill could require GBR to align rail investment with local transport plans, and to consider integrated transport all the time. How does somebody get off a train and easily on to a tram? There could be a joined-up approach to thinking about place-making, with wider housing investment. That is why the partnership matters. Railways serve places. With our councils, we are responsible for those places. The more that it is all thought through, the better the future for the railways, because they will be easier and more attractive to use, and housing regeneration will follow because the railway is in the right place, with the right levels of accessibility.
I think that the question of accessibility to the railway for all our residents is one that I ask the Committee to address. Some of the funding, as I have mentioned, is to be spent on making our stations step free in terms of access, and the idea that we are going to carry on with a railway that basically excludes our disabled and older residents is just not tenable. What we can do is accelerate that change, working through closer partnership. As we have been told at the Rail North Committee, which I chair, if things carry on at the same pace, we will have step-free access stations across the north by 2080. That, honestly, is not good enough, so let us get in closer partnership, accelerate those changes, and bring in investment to the railway from wider planning developments. That all points to a closer, deeper and more meaningful partnership between combined authorities and GBR.
Tracy Brabin: To bring Access for All alive, 65% of stations in West Yorkshire are not accessible, and we were allocated not a penny in the last round of Access for All, because there was an assumption that the TransPennine upgrade covered it. It does not. There are MPs across all of West Yorkshire who are desperate for that investment. I want to do it, but Access for All has to help us. If we do not have responsibility for that money, we are back to the begging-bowl culture that I know this Government want to move away from.
Keir Mather
Thank you both. I hope you feel that GBR having a legal duty to promote the interests of passengers, especially those with disabilities, is a signal that we want accessibility to be hardwired into the Bill, and not something that comes after the operational decisions about the railway have been taken. I have more questions, but I am conscious that we should hand over to the shadow Minister.
The Chair
Before I bring the shadow Minister back in, I make colleagues aware that the session will run until 5.15 pm.
Jerome Mayhew
Q
It was rather frustrating, Mr Burnham —the Division bell went when you were about to deliver a hammer blow against the Government on your disappointment about what is not in the Bill and what should be in it. You used to say that you wanted more autonomy for the Bee Network. I have heard your answers—it is clear that your position on that has not changed. You want to have more autonomy, but the Bill does not provide it at the moment. You have a duty to consult, which is okay so far as it goes, from GBR, and then thereafter, once it has consulted with the mayoralties, it only has a duty to have regard to what it is that you have said or requested. In your combined evidence, what would be a better form of words more accurately to reflect the relationship that you think should exist between the national and the regional? Mr Burnham, because we were halfway through a conversation, perhaps we could start with you, then move on to Tracy.
Andy Burnham: Thank you. I do not know about coming back, but what I do know is that in my 16 years here, there were enough Tory MPs around that there was no double-jobbing, I do not think, from my memory. We will move on.
I think that it is about a meaningful role. I do not think autonomy is actually what we are asking for here today, any of us.
Tracy Brabin: No.
Andy Burnham: What we are saying is that we want a meaningful partnership, which is about more than just being consulted and then ignored—which, if we are honest, does happen to us as mayors with the rail industry. Even though I am chair of the Rail North Committee, we sometimes have to work very hard to make the railways listen to what democratically elected mayors and leaders say. It is a different relationship, and I would say that I strongly feel the railways need culture change. We need to get back to a railway that serves people and places, not a quite adversarial section of transactional arrangements that can be very complex. It feels to us sometimes that the railways have lost sight of that.
Jerome Mayhew
Q
Andy Burnham: Yes, I think if you end up with a very top-down railway, it is a bit like the phrase I used to hear in the Department of Health: “You can hit the target and miss the point.” Is that not that the risk with the railways, if they become too much like monolithic structures? It has to be a bit of both. If you go back to the old British Rail days, I remember a thing called Regional Railways, which was very separate to InterCity, so that split has always been there in the railways.
What we are arguing for in front of the Committee today is to think of the railways in a more place-based context. Railways serve growth in local areas, and there are things that we can bring to the table to support the health and growth of the railways in the future. It points to a different partnership, but it is a partnership. We want the right to specify timetables, as it is legitimate for us to make those requests, and we want a stronger role over station access. Actually, we think there should be a presumption in favour of devolution. Rather than a right to request, the onus should be the other way around; there should be the right to refuse, which presumes that it should be devolved, if that is possible, but there is still a callback if it cannot be devolved.
There is a relevant recent example: the Access for All funding. The Rail North Committee has asked the Department to devolve the Access for All funding, so we do not get the situation that Tracy described a moment ago. Currently, that is not being supported by the Department. We submit lists of stations to the Department as part of our Access for All bid on a regular basis, but we have often had the experience that it comes back with a different prioritisation to the one we sent in. This is really granular, local stuff, and it is mind-boggling to us that you have an infrastructure programme for the railways, and then an Access for All programme at the highest level that is dealing with very local schemes at stations. It is a meaningful partnership, and we are calling for a devolved role, where there can be one.
Tracy Brabin: I totally agree with what Andy has said; it is about accountability. I do not think you could expect the Secretary of State to be accountable for the whole of the network. How on earth would they understand the challenges? At Denby Dale, all they need is a ramp, and those sorts of decisions should be made locally.
We are building three stations in the next year. Why are they so expensive? In Germany, I think it is £5 million a station, but here they are £50 million. In the ’80s, it was £500,000 a station in today’s money. Surely, if we are working together as a collective for the good of the nation, we could find a way that makes it easier—one where we are more agile in building stations, and where we are part of that conversation around services. Also, it is about where we get then get the revenue from, so that we have a circular pound—the one that goes into the washing machine and comes back out again on the other side—and can build more accessibility on more stations.
Keir Mather
Q
Keir Mather
No, mine did not either—it is important that we also get to hear your perspective, Jason. One of the things I want to hit on is accountability. One of the benefits of the Bill that Lord Hendy stressed in his evidence to the Transport Committee is that by having a unified, guiding mind for the railway, you will have hard-working people at GBR who will wake up every day and know that they are responsible for making sure that the railway runs in the interests of the British public, in partnership with people like yourselves. Could you take us through the current challenges in engaging with an array of different private sector operators and DFTO-managed train companies? What does it look like for the people you represent who are trying to navigate this bewildering system, and for you guys who are trying to drive high standards, passenger satisfaction and, ultimately, better economic opportunity for your local areas?
Tracy Brabin: It has been very difficult to navigate who is responsible for what. There is a lot of finger pointing with, “It’s them,” or “It’s them,” and trying to get a decision about who actually owns a project has been difficult. That is why I really welcome the leadership that Lord Hendy has shown in bringing together track and train and having that simplicity.
In West Yorkshire, the partnership piece of work was published last week. We have been seen as an exemplar in our strategic place partnership, where we brought together Network Rail, DFT, the TOCs, the shadow GBR, ourselves and all the partners to identify how we can cut through roadblocks. It has been incredibly effective. When the Mayor of South Yorkshire, the Mayor of York and North Yorkshire and I were working with David Blunkett on the White Rose rail plan, it was helpful to look together at how we could phase the delivery of the plan, how we could make it affordable and what was the structure of delivery. You can do that only when you are all in the room and all have skin in the game, and you are not blaming each other. I want to reflect on the relationship held locally by our organisations and myself. I think that is the way forward.
We also need resources, and I speak for other mayoral strategic authorities as well. I am blessed to have some very talented people—some of them are sat behind me—who help me with our rail plan, but not every MSA has that talent. Although people might be waking up to deliver better outcomes, they are not all sat in the regions. Having people with timetabling and infrastructure experience actually in the regions would also be a huge benefit.
Andy Burnham: The job of getting the railway to be more accountable has been the devil’s own job in my time as mayor. I am not talking so much about recent times, but certainly in the early days when we had the 2018 timetable collapse. It was only Transport for the North and the Rail North Committee that got underneath what was going on inside Northern and TransPennine. If we had not been there, I do not think the travelling public would have seen the change.
We were the ones who challenged Northern, when it was run by Arriva, to keep guards on the trains. We were the ones who fought to keep ticket offices open—the railway would have closed them if it had not heard our voice. We had to challenge Avanti West Coast when it was collapsing and cutting the timetable between Manchester and London—two major cities in this country—damaging our growth. It just took that decision without any reference to us. Recently, the Office of Rail and Road has done something relating to a ghost train. We constantly have to challenge these things. Without us, I do not think we would have a railway that has moved towards more public ownership and more accountability.
I think major culture change is needed. I come back to this point. My observation is that it is still not responsive enough to what local areas need. As people may know, I support Everton. I go to Everton’s new ground on a regular basis. So many more people are travelling there by train, but to the railways, it is like it has not happened. It is as though they are oblivious to it. They are not in the place with us, managing it and putting extra people on. The railway seems to be too dislocated from what happens on the ground. For example, Sunday services are not put on during the Manchester Christmas markets. That is the thing: you need a railway that is knitted in to supporting growth.
Finally, look at the evidence where we have more locally accountable railways. Transport for Wales is a strong operator, in my experience—it serves Greater Manchester as well. Merseyrail is accountable to the Mayor of Liverpool. It has higher levels of performance, I believe, although all railways have their issues. That is evidence that if you have more local accountability, you generally have a higher performing railway that is more responsive to what people are saying.
Tracy Brabin: Andy and the Rail North Committee have been holding operators’ feet to the fire not just for northern transport but also for the east coast main line where it goes through other mayoralties. So on accountability, I think coming from a mayoral strategic authority or a mayoral combined authority where all mayors across the country can hold rail to account—you are doing a brilliant job, Andy, but currently where else in the country is there that group that will hold operators to account? At the moment, it is only the Rail North Committee, but surely that has to be across the whole country.
Keir Mather
Q
Jason Prince: I will probably approach this session from more of a technical point of view than a thematic one. Fundamentally, the Bill is strong as it is written and I think we have to acknowledge that. The journey to GBR started under the last Government and it is good that we have got to a position where we are on the precipice of something where there is a once in a generation change.
On the accountability point, it is great to have the aspiration of accountability, but the only way you will embed it is if you build GBR on the back of strong mayoral partnerships. To do that, the Bill needs strengthening around how you ensure that GBR reflects what is happening at the local level. How do you ensure that rather than having regard to—which pulls on the shadow Minister’s point—you have a stronger recognition of what happens at a local level, which the mayors are responsible for in terms of local transport plans and local growth plans? It is one thing to say, “Accountability—the good people go into GBR every day and that will be their focus,” but for my members, who are transport authorities, thousands of people are going in every day to design transport networks that shine. In this Bill there is a once in a generation opportunity to make rail shine as part of a bigger place-based offer. To do that, the Bill needs strengthening so that accountability is built in through the legislation, rather than just accepting that GBR will act in such a way.
Keir Mather
Thank you. That is a really important point, which I am sure we will come back to, but I am conscious that other Members have questions, so I will sneak in at the end if I can.
Olly Glover
Q
Jason Prince: I think the Bill needs strengthening in the relationship between MSAs; I will put that on record. We are working very positively with officials to see how we can strengthen the Bill to ensure that it reflects that. We are on a journey of devolution where local government reform is making sure that mayors will be the conduit, broadly, across the UK. The Bill does set a framework for how that engagement will take place.
From a technical point of view, I think what would be beneficial, which is not necessarily something you will cover in line-by-line scrutiny but which needs to be looked at in the guidance issued, is to look at how will this work in practice—your specific question—when you look at how railway under a national structure will work between different areas. When you look at areas like the West Midlands, for example, and the West Midlands Rail Executive, their geography is bigger than an MSA. At the minute the Bill does not acknowledge things like that, so I think there is something that needs to be looked at. Guidance accompanying what is in the legislation would probably give some clarity, and there is an opportunity to bring that through that process.
Olly Glover
Q
Andy Burnham: This is a really important point. Giving city regions the ability, either individually or together, to manage events better with the railways, and a role over that, is really important. The Everton stadium example is probably most relevant with rugby league, where England played Australia. There was just an utter meltdown of the TransPennine timetable, and chaos at stations. That affects the country’s reputation when it is a major event.
We have the Euros coming in 2028. Manchester and Liverpool will be hosting games. You just want to have a grip on the system. At the moment, we do not feel that we have that with rail, but we do with trams and buses. We have a control room for Transport for Greater Manchester. We manage these things really closely. Oasis played in the summer—you may have noticed that—and we handled major numbers coming through the city on five consecutive nights really well. Obviously, there were some issues, but really well.
The railway does not quite live in that world with us, and that is an issue. It is reputational for the country. The railway has been living in its own world a bit too much. That has got to change. I realise some of that is culture change rather than the structures that we lay out in the Bill, but the railway does have to come through this re-emerging as a public service again—people putting a bit more into the railway than they are required to, because they care, and we all care about the reputation of our places and our country.
It feels to me like that has been lost, as I look at where the railway has got to in recent times. We need to use this Bill to get it back. It is not a trivial point to say that the bee on the side of trains creates a sense of civic pride again. This is about us and the places where we live. It is a softer point perhaps, but it should not be missed.
Tracy Brabin: On events, we have seen a 10% uplift in passenger numbers on rail. There is still a feeling post covid that rail passengers are in decline, because of the change in the 9 to 5, Monday to Friday and so on. Actually, we are seeing an uplift in passenger numbers. Particularly Sundays are rammed.
I can give one example of the lack of connectivity. I was a participant in the Abbey Dash in Leeds. There were thousands of people coming into Leeds, then there was a signal failure and the whole of Leeds station closed down. On Trainline on your phone, the app was suggesting the trains were all running. I enquired and they said, “Well, that is a private company. They are not connected to us, so they don’t know.” People were coming to the station assuming that the trains were still running. We have to have that local accountability and the connected nature of the ebbs and flows of the network.
If you build it, they will come. If we have more carriages—more than two on CrossCountry—you will get more passengers because people will enjoy the journey and feel it is value for money, rather than being rammed in like cattle. Standing at London Bridge station, you see Southern trains with 13 carriages. I dream about 13 carriages. We have trains that are two and three carriages that are absolutely rammed because we have such an uplift in footfall.
Olly Glover
You may enjoy a ten-minute rule Bill speech that I am making tomorrow.
Tracy Brabin: I shall set my timer to make sure I watch it.
The Chair
I have a lot of colleagues indicating that they want to speak and I do not believe we will get everyone in. If we could have shorter questions, and perhaps shorter answers, to try and get as many people as possible in, that would be really helpful.
Lloyd Hatton (South Dorset) (Lab)
Q
How do we make sure that GBR is able to be as responsive as possible to those very local, very small-scale but otherwise very important improvements to stations and the wider rail infrastructure?
Andy Burnham: If we think about it this way, mayoral combined authorities and the transport authorities that Tracy and I lead will be able to add value to the railway by bringing resource to invest in our stations and adding more passengers to the railway, because the Bee Network cap covering all modes will encourage more people to travel by train. We have something to add to the railway to make it serve people and places better, and to make access improvements more quickly, so that passengers do not walk away from the railways because they see a problem that never gets fixed. That is the way to look at it.
However, if we are going to put our own resources and effort into improving the railway, we have to be a meaningful partner. We cannot have rail as a silo that may or may not listen to us—that would not be the right arrangement. We should have a Bill that really cements the partnership and requires joint decision making, as opposed to us being consulted but maybe not listened to. It is possible to do that.
We like everything that is here, the direction of travel is right and we support what the Government are trying to achieve, but if we always have in our heads that railways serve places rather than themselves, it follows that a properly balanced partnership between the two is needed. Sometimes it feels like the railway just serves its own purposes, and does not have enough regard for places. The Bill should leave no doubt that railways are there to serve places and the people who live in them.
Tracy Brabin: I concur with Andy. It is about accountability, and it is also about revenue, so that if you have built this great station and the toilets are not working, you have skin in the game, because you want it to work. Who actually owns that responsibility: Network Rail, GBR, or the mayor who knows the need and can get on and deliver?
Joe Robertson
Q
Andy Burnham: It is important to say that we are doing that without the Bill at the moment. Again, we thank the Department for coming with us on the Bee Network journey. We will bring the first two rail lines into that this year; and over the next three years, eight rail lines will come into the Bee Network system. It is complex, because some of the lines begin outside of our borders, such as in Glossop and Buxton in Derbyshire, or in Southport in the Liverpool city region, but because those lines are GM commuter lines, so are not going to Liverpool, it is right for them to be in the Bee Network. We have made that argument and the Government have supported us.
We have already created an integrated ticketing system for tram and bus travel in Greater Manchester: you can tap in on both now, and there is a London-style cap. We want to add rail to that as soon as possible. When the first lines come into the Bee Network in December, people will be able to buy a paper ticket that covers tram, train and bus, but in time we want that to be integrated.
There is absolutely no reason at all why you could not have that over train and ferry travel—I know that the Mayor of Liverpool wants Mersey Ferries to be a part of his integrated system. It is complicated, but it is absolutely possible. The Department has already shown a willingness to do it, and is putting the technology into the rail industry to support that.
Joe Robertson
Q
Andy Burnham: I think there should be a presumption in favour of integration; you are absolutely right. Other countries, such as the Netherlands, have had that as their guiding star, but we went down a fragmentation route in public transport, and have suffered as a country as a result. Integration is the way to think. People are not just loyal to one mode; they want to use transport in as convenient a way as possible. The railways have not had an imperative to think that way for a long time, but you are absolutely right to think of integration as the watchword.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
Q
Tracy Brabin: As Andy says, we are already doing it. We are sharing with the bus operators in our integrated Weaver network, where we have, for example, brought in the “mayor’s fare”. I think it is the only one in the country, and it is a day saver. It is capped and can be used on any bus, anywhere, for any number of journeys and on any operator. We work with the operators to divvy up the checks and balances of the passengers. I think you can see that it is possible.
To the previous point, devolution means that every region is different, so you do not always have to have one size fits all; you can have whatever works for you and your community. There are definitely ways to do it. Certainly, if it is done in London, that should give you comfort that it can be done elsewhere.
Jayne Kirkham
Q
Tracy Brabin: I will say timetabling, because I have witnessed a bus arriving as the train is pulling away. Having that localised regional mind that considers what the public and businesses need, and where the buses need to go to deliver the passengers to the trains, is challenging, but are you not going to get a mayor soon?
Jayne Kirkham
Oh, there is a fraught question. I think anyone in the rest of the country who you ask will be having issues about devolution.
Tracy Brabin: Fair enough. But it is about that oversight of the buses feeding the train timetable.
Rebecca Smith (South West Devon) (Con)
Q
The application of the term “devolution and local leadership” to this Bill is quite distracting, because ultimately, unless you are a mayoral combined authority, you do not get any of these powers. I think that was what Jayne was alluding to. To my mind, GBR is an increasingly two-tier system: you have the devolved local authorities and everywhere else. I am concerned about what that is going to mean for accountability to local areas. That was more of a statement than a question—apologies.
You keep saying that you want a meaningful relationship with GBR. The question that has kept coming to my mind is: what does “meaningful” actually look like? Can you unpack what you mean by “meaningful”?
Andy Burnham: On your statement, I think we have to get our heads in the space of an all-devolved England. I know it can be difficult, but sometimes people have to see the bigger picture of the area where people live and travel. People go across those borders every day; they do not think about borders as much as politicians.
Rebecca Smith
It is more the fact that there are not going to be any more in certain parts of the country for this Parliament.
Andy Burnham: For us, though, we are moving to a situation where Cheshire and Warrington are going to have a mayor soon, and I believe Lancashire will too—hopefully, Sarah. That would mean an all-devolved north-west. I think we would start to collaborate very differently with each other in that world, and it would work. I do not see why it cannot go everywhere; I suggest that it should.
On “meaningful”, the answer is that it is joint decision making. Let us get away from the idea that we just mandate the railways. That would not be realistic, because running a railway is complicated. It is about joint decisions. We are already doing it, to be honest with you. We are working like that. We have a Greater Manchester rail board and all the partners come to it. It has moved on a lot in the last 12 months. Going back a year or so, it was a little fractious, but it is not so much any more. People are clicking into a new way of thinking and working. Culture change takes time, but it is happening. It is about jointly agreeing ways forward.
I will give you an example. We had four different rail fares from Manchester airport to Piccadilly in the city centre. We said, “That’s just ridiculous; it’s confusing for visitors.” Picking up on what Jayne was saying, we have now agreed a fare simplification, which came in in December, as a sort of precursor to the cap system. That has just been jointly agreed. We have also agreed with TransPennine that there will be services through the night from Manchester airport. This joint decision making is beginning to happen in a meaningful way, and that is the meaningful bit.
Rebecca Smith
Q
Andy Burnham: Jointly.
Rebecca Smith
Or at least make them jointly. Is that what you are after—that joint decision making?
Andy Burnham: Yes, I think that would be what we would want. The risk would be that GBR is too remote and not responsive—everything that Lloyd was saying about slow decision making. That is not what we would want. From our point of view, we would want a Bee Network business unit within GBR, with joint decision making and a very place-based focus. That would be meaningful.
Sarah Smith
Q
Andy Burnham: We have no plans to annex you yet, but I will let you know if that changes!
Sarah Smith
The Reform county council is trying to delay our progression towards a mayor, which is deeply frustrating because of all of the things you have outlined, and much broader things as well, about the benefits of devolution. What benefits might Hyndburn get, without being part of a mayoral authority, as the Bill currently stands? What more might we be able to do to benefit areas that are dependent on that progress before they can be talking in the way that you are today, Tracy and Andy?
Andy Burnham: Obviously, from Hyndburn, people will travel to Manchester, but also to Liverpool, Preston and other places. Once you see the emergence of more integrated systems in which Hyndburn is included, travel will become more convenient and cheaper. In effect, there will come a point where your constituents, Sarah, will be able to tap into the Bee Network cap and come into Manchester and then use our trams and buses at a much lower cost than might otherwise have been the case. I think that is the way to think about it: as this spreads out, in the end, it will make travel more convenient and more affordable for people everywhere. It is really just within the city region boundaries at the moment, but it will grow beyond that, and I believe that your constituents will feel the benefit in three to five years, possibly, but maybe not as immediately as others.
Jason Prince: We also have to remember that the reason we are here now is that the railway system did not work. What GBR will do, through the legislation that the Government have brought forward, is bring a much stronger focus. We will have a structure and a body that, almost as a minimum, seeks to deliver a good passenger journey and good access, whether that is for freight or whatever.
We are starting from a stronger base and probably with greater clarity, but we have to acknowledge that different areas, such as Greater Manchester and West Yorkshire, have been given powers and funding, and with that comes greater responsibility. They are all prepared to take that on and, conversely, with that they should have greater strengthening and probably deeper partnerships. I think that needs to be written into the Bill, to better define it. There are 20,000 words in the Bill, and the addition of probably only 500—about 2% of the overall text of the Bill—would make that relationship much stronger. I know that is quite geeky and very technical, but that is broadly where I think we need to land in terms of strengthening. GBR will set a framework that we have not had before, which should benefit every part of the country. I think that is what the Bill will do.
The Chair
Order. That brings us to the end of the time allocated for the Committee to ask questions of these witnesses. On behalf of the Committee, I thank you for giving evidence this afternoon. I am sorry to colleagues who were unable to ask questions.
Examination of Witness
Richard Bowker gave evidence.
The Chair
Q
Richard Bowker: I am Richard Bowker. I am the former chair of the Strategic Rail Authority. I now co-present a podcast about the railways called “Green Signals”.
Jerome Mayhew
Q
I am going to focus on a couple of things. On access and capacity, we have heard a lot of evidence today; I do not know how much you have heard, but it has replicated, in essence, what was put before the Transport Committee a few weeks ago. There is a huge amount of concern in the sector about whether the Bill provides a level playing field between GBR and open access, freight and the like, coupled with a very weak—those are my words—appeals process, which is so narrowly constrained that it only deals with errors of law as opposed to disagreements on the merits. Is it right that there is a real problem with the future of competition in our railways? If you agree with that broad statement, perhaps you could expand on your reasons why.
Richard Bowker: I will probably say more about certainty and confidence for investors than competition per se. If I think about my experience at the Strategic Rail Authority, it was a significant frustration that elements of planning in terms of timetable and service were split apart in the way that they were. I think the Government are right to want to create a directing mind—I say directing mind rather than guiding mind. We have a capacity-constrained railway. In places, that is very severe, and someone needs to say, “Right. This is how we think we should allocate capacity.”
Having said that, there is a possibility that the pendulum has swung a little far. Probably the biggest issue with that would be rail freight. If you are a rail freight operator, at the moment you have certainty; if you are unhappy with the way that you are treated, you can go to the ORR. As an independent regulator, the ORR can make the final access decision.
What is contemplated is a perfectly logical process, starting with an access and use policy, capacity plans and capacity decisions. The problem is that railway timetables are not really like that; they are more dynamic. These things change. We looked at doing exactly this at the SRA, and it is very difficult to do. It changes constantly, so it has to be very agile. Under the Bill as drafted, while the process could work perfectly adequately, the capacity duty in clause 63—and potentially clause 18(4)—seems to say, to me at least, “Yes, GBR has all these duties, but they are subject to the capacity duty.” I can see why that causes tension and concern among freight operators, for example. I am not saying that it cannot work, but until we actually see it work, there is a risk that third-party operators will be concerned.
Jerome Mayhew
Q
Richard Bowker: The ’93 Act was not set up that way; it was set up so that the Strategic Rail Authority was responsible for setting an overall strategic plan for the railways and for managing the award and management of franchises, but Railtrack plc, and then Network Rail, was under the regulation of an independent economic regulator. The two worlds were apart. Whereas the regulator had to have regard to our strategies, it did not have to comply with them, so we always had that tension. It was not really for me to change it. That is why I think that, overall, this is a good approach.
Jerome Mayhew
Q
Richard Bowker: It is not for me to say whether she is overreacting, but I absolutely understand the concern, because rail freight in particular involves a lot of private capital. You have to have a degree of confidence and assurance that if you have access rights, you will be able to maintain them, so I understand that. I think the Government are right to create a directing mind. We have seen too many examples of timetabling processes that have gone wrong for precisely that reason—it is about balance.
Jerome Mayhew
Q
Richard Bowker: On the first point, yes, I recognise the concern. Secondly, personally I would look at clause 18(4) and ask whether we really need to have the capacity duty able to override other duties. As far as the appeals process is concerned, I can see why being able to look at a case on the merits rather than on a strictly legal basis would help enormously. If GBR believes that its access and use policy, its capacity planning and its final decisions constitute a good process, it should not fear that.
Keir Mather
Q
I was pleased to hear that you agree with the concept of a guiding mind for the railway—a unified body able to direct services in the interests of passengers. I want to point to the specific provisions in the Bill that relate specifically to passenger experience. One of GBR’s duties is to promote the interests of users and potential users of the railway, including those with disabilities, and clause 18(3) talks about having reliable services, and the avoidance and mitigation of passenger overcrowding. Does what is contained within the legally binding duties on GBR reflect the overall aspiration to have a unified railway with the passenger at its heart?
Richard Bowker: Yes, I think it does. There is a danger in being overly prescriptive about how you do those things, but the duties are fairly widely drafted, and they probably do do that. Much of this will depend not so much on what the Bill says GBR’s duties are; they are pretty clear and comprehensive. It is about how it is then structured to go on and do these things. Previous panel members talked about culture and behaviour, and those are really important. So, yes, I think the duties are broadly fine.
Keir Mather
Q
Richard Bowker: No, I think there is a danger of being too prescriptive. Having a long-term rail strategy is an extremely good thing, but there is a danger, to take that as an example, of being too prescriptive. In terms of it being 10, 15 or 20 years, I was running the Strategic Rail Authority 20 years ago. We had no social media; it did not exist—I am jolly glad it did not, in terms of decision making—and AI was also not a concept. So there is a serious danger of being overly prescriptive in these things.
Setting out a clear strategy, and having clear policy and direction, is exactly what the railway needs more than anything else. It does not need to be tied down in too much of a straitjacket. What is absolutely crucial in all this is the relationship between the Department for Transport and GBR, and with mayoral combined authorities and local authorities as well, as we heard from previous panel members. That relationship between the DFT—between how Government sets their policy—and how GBR then delivers will be one of the most defining things in terms of whether these proposals will be a success. If we get it right, this could be transformational; if we get it wrong, it could be yet more micromanaging and meddling, which would be a disaster.
Keir Mather
Q
Richard Bowker: I have two answers to that. First, I do not think we should judge what has happened in the last few years too harshly. So much of the way train companies have been able to behave has been highly prescribed by the national rail contracts they have with the DFT. Many, many rail leaders are looking forward to being liberated and empowered to serve customers better as a result of the end of that process. That is the first thing.
The second thing is that there has to be a balance, and I genuinely think the Bill has got it broadly right. If I were the chair of GBR, I would take very seriously a duty to have regard to a mayor’s transport plan. That is not a thing to be trifled with. You do not go, “I am just going to ignore that”—you do not. The problem we have, if you take the west coast main line in Manchester, is that the corridor between Manchester Piccadilly and Stockport and then further south is used by an awful lot of freight operators, intercity services and west coast—all the services Mayor Burnham is keen to see grow. Capacity is constrained and limited, so in the end somebody has to be able to say, “I’ve listened to everybody. My duties are to take account of everything, weigh it all up and work in partnership,” which is crucial. It is important that somebody has to be able to make a decision.
Olly Glover
Q
Richard Bowker: There were tensions, some of which were actually quite healthy in a way, because if somebody is basically in charge of everything and has no checks and balances, I am not sure that is a good thing. What is described here, and the way the Bill works, is a far better set of circumstances than I had to deal with 20 years ago. Why? Because, as I said in answer to another question, the SRA was responsible for strategy and for franchising, while the rail regulator was responsible for the network, regulating Network Rail and who could go on the network, ultimately. Those two things did not interface well at times. They did in many ways, and we got a lot done, but it was not perfect.
I think the Bill helps significantly in terms of providing clarity and a directing mind. What is key to all this, though, is not necessarily what is written here; it is about how it is then implemented in practice. You have some good building blocks, but the real test will be when real people try to make this work.
Jayne Kirkham
Q
Richard Bowker: Well, there is a target of 75% growth by 2050, and there is a duty to take it into account and to support the carriage of goods and services by rail. That is all great stuff. The rail freight businesses are in the private sector, and they are commercial and very agile. They will follow business. If business is there to be brought on to rail, I genuinely believe they are out looking for it all the time, and if they can make it happen, they will. I do not think GBR will necessarily have to try to find freight flows; the freight operators are extremely able at doing that. GBR has to make sure there are no blockages to being able to get those flows on.
The discounting process for track access is a very good thing in the Bill, and I think that will really help. The most important thing is that the freight team inside GBR is able to have its appropriate share of voice inside GBR when it comes to the passenger business as well. If GBR genuinely takes account of all its duties, I think it will work, because the freight companies will go and find the business. GBR just has to enable it to happen.
The Chair
That brings us to the end of the time allocated for this witness. On behalf of the Committee, I thank you, Mr Bowker, for giving evidence.
Examination of Witnesses
Keir Mather and Lilian Greenwood gave evidence.
The Chair
We will now hear oral evidence from the Department for Transport. We have until 5.55 pm for this panel. Ministers, you have both participated in today’s sitting, but could you please briefly introduce yourselves for the record?
Keir Mather: My name is Keir Mather. I am the Minister for Maritime, Aviation and Decarbonisation at the Department for Transport and the lead Minister for the Bill.
Lilian Greenwood: My name is Lillian Greenwood. I am the Minister for Local Transport, and I am assisting as a Minister on the Bill.
Jerome Mayhew
Q
We have heard lots of evidence, and some clear, consistent themes have risen out of it. If you have read the Transport Committee’s report on this issue from a few weeks ago, as I am sure you have, you will know that the sector is giving the Government a few messages very loud and clear. We will discuss those a little bit, but the secret question is: So what? What are you going to do about it? That is what I hope you will come back to.
A level playing field is fair and without discrimination. There is a structural conflict of interest between GBR as the holder of the ring and GBR as an operator—for example, in the relationship with open access, with freight and with independent retailers. Each one of those—they are sectors, not individual organisations—has profound concerns about a structural conflict of interest that has been deliberately built into the Bill.
Combined with that, there is an appeals process that is not worthy of the name. We can say that it is robust, but we all know that it is not. It is very, very tightly defined. It relates only to areas of law; there is no appeal on the merits at all. GBR is judge, jury and gamekeeper, as well as participant—that is a slightly mixed metaphor, but you get the point.
With the defenestration of the Office of Rail and Road as an economic regulator, the independent arbiter of the relationship with GBR is now gone. You have heard the evidence. What are you going to do about it?
Keir Mather: It is a very good question, Mr Mayhew. It goes to the core of the differing ideological perspectives that underlie the debate we have had today on the Bill. Although you see the state seeking to take too much control and giving itself an unfair advantage, our perspective on why this legislation is so important is that passengers—who are ultimately both people who pay for services on the railway and taxpayers who end up funding those services more often than not under this broken rail system, and will do once GBR is established—deserve a good service. We believe that having a unified service with a single guiding mind to bring track and train, passenger services and infrastructure together under one roof, with one point of accountability, is the best way to achieve those aims.
You asked me what we are going to do about the concerns raised today. It is my obligation as a Government Minister to address them, to explore ways in which we can allay them further and to progress the work the Department is already taking on through its stakeholder engagement, whether that be on the freight target or the rolling stock and infrastructure strategy, to make sure that stakeholder concerns are heard.
On the principle of fairness and transparency as it relates to ticketing and third-party access, it is worth making the point that GBR is, by public law principles, obligated to have regard to fair and transparent processes as part of how the system works. On access and appeals, that is a real point of contention, which we will explore throughout Committee, but I heard the concerns raised by freight stakeholders and others.
I want to take this opportunity to be really clear that the Department’s very firm view is that clauses 60 and 63 are not in contention with each other and that Great British Rail has the ability to decide what constitutes best use of the railway, in a way that not only meets its duties, but balances opportunities for GBR services, rail freight and open access alongside one another. The clauses provide an opportunity to appeal on the basis of whether that has been followed, through the ORR, but also a robust process, once that allocation has been determined, to figure out whether GBR has been compliant with the law, as of course we always expect it will be.
Overall, this is a point of ideological difference that exists between our two parties. Labour believes fundamentally that you need one point of accountability and that the Government need to take a more proactive role in fixing this broken rail system. I am really pleased that this piece of legislation seeks to achieve what I think are very noble aspirations.
Jerome Mayhew
Q
The Bill has designed in a structural conflict of interest, as we have heard many times from all sorts of different people. Given that the Government have taken that decision, my question has nothing to do with ideology—it is practicality. What are the Government planning to do to reassure that 60% that they will not be steamrollered by a GBR that says, “We are the masters now. We can do what we like and there’s no effective right of appeal, so suck it up.”?
Keir Mather: I would point to the extremely robust suite of accountability measures that sit within the Bill as it stands. If you look at the legally binding duties GBR has in how it undertakes its work, one of those, which came out in our discussion with the ROSCOs, is to ensure that those who provide railway services can plan the future of their business with a reasonable degree of assurance. GBR is bound to meet a freight target set by the Secretary of State; it is legally bound to meet its duty to promote the interests of freight and, in clause 60, through the design of the best use of the railway as GBR sees it, it must give equal regard to users of the railway. Open access operators and freight are included as part of that mix.
However, we also need to think about what this legislation does in the future and how that contrasts with the situation now. The ORR had to turn down a number of open access applications on the west coast because we had insufficient capacity in our rail network. I do not understand how that constitutes fairness or competitive advantage for open access operators—it means that they are locked out of providing services and turning a profit by a rail system that is failing.
GBR having the capacity to manage, within one centralised function, capacity on the railway overall allows us to unlock those benefits, in partnership with mayoral combined authorities, but with a robust set of accountability measures to ensure that it is compliant with the law, compliant with its duties, and compliant with the aspirations of the Secretary of State, irrespective of their ideological predilections. Hopefully, that is an adequate answer to your question.
Jerome Mayhew
Q
Keir Mather: Absolutely. It is fundamental that that investment continues, both on the—[Interruption.] Sorry— I will just say this very briefly and then let you come back. On the rail freight point, where we have a target in place allowing us to boost the amount of goods moved by train, it might create more capacity for open access to work on the network, but the infrastructure delivery and the long-term rolling stock strategy that accompany this legislative piece of work also offer the private sector a real opportunity to play in the future of our railway, as I see it.
Jerome Mayhew
Q
Whether it is the access in use concerns, the failure of the appeals process to be anything worthy of the name, or the fact that the proposed powers for the Secretary of State to change without notice access in use, taken in combination, the evidence from multiple witnesses today was that the Bill does not make it easier. Are you going to listen to them, or are the Government going to pursue their dogged insistence that everyone else is wrong and they are right?
Keir Mather: If you take something like the rolling stock and infrastructure strategy, the consultations are undertaken in close partnership with the private sector. If you are asking me whether it is going to be easier in the long term, with GBR created, for private sector operators to engage with a level playing field, I think that it will be. I think that it creates a very clear structure of accountability measures, clear metrics by which decisions are taken and robust accountability, if GBR does not meet its obligations under the access regime, to make sure that it does things correctly, especially on the matter of access.
I think it is important that we dig into this further, because it came out consistently with the freight operators. GBR has to decide how it meets its capacity duty once it has decided what best use of the railway constitutes. That is a really important safeguard that is built into the Bill. The Secretary of State gives GBR its funding envelope through the business plan, and needs to ensure that GBR will deliver the services that it has said it will. It is therefore very important to have that capacity duty in place, but that is after GBR has made a determination, while balancing its existing duties and its need to promote freight and service providers on the railway, on whether or not those services stack up.
I think that the accountability process and appeals process are very clear, and give private operators multiple points to raise concerns, and robust enforcement measures for the ORR to substitute decisions and ask GBR to think again. The point about thinking again is very important, because we want GBR to improve as an organisation, and to become more agile and more responsive to the needs of the private sector, and the appeals process facilitates that.
Olly Glover
Q
Keir Mather: That is a really important point. I hope that you feel that the human side of the equation, in terms of furthering the interests of passengers through the duties, is embedded in clause 18, but I take your point about the funding envelope, and the way that passenger services are funded via the spending review period set by the Secretary of State, as opposed to infrastructure more broadly. The reason for that in the immediate term is that the procurement and delivery of passenger services is a far more complex and changeable process to work through than the delivery of long-term infrastructure, or other functions that sit under GBR.
In the future, we can certainly get into a debate about whether passenger services should be funded in a similar way to other aspects of GBR’s operation, but for the moment, and after GBR is stood up, which let us remember is in quite short order after the passage of the Bill, in around 12 months’ time, the Secretary of State needs to be able to determine that passenger services offer value for money. It is therefore right that she retains more control over the funding envelope for those services at that stage. We can certainly take the debate on how that should change in the future forward as part of this Committee. I would be very keen to explore it further.
Laurence Turner
Q
I want to raise devolution, and specifically clause 5. There is a lot of history to the clause, and a line of continuity with the old section 20 of Barbara Castle’s Transport Act 1968. A lot of great things were accomplished under that legislation, including the creation of a cross-city line in Birmingham, but then privatisation came along. There was an attempt to do something similar under section 13 of the Railways Act 2005, which frankly did not work; there was never a single agreement signed. What lessons have been learned about what went right in the past and what went wrong with the 2005 legislation, when it comes to clause 5 of the Bill?
Keir Mather: I suppose that, in the 2005 Act, section 13 was not only really narrow in scope, in that it covered only franchised services, but represented a significant watering down of relationships between the rail industry and passenger transport executives. The difference with clause 5 of the Bill is that it is significantly wider in scope, to ensure that partnerships under GBR cover the full rail offer, rather than focusing only on services.
There is an important point around corporate structure. It is right that the corporate structure is not laid out in the Bill—no piece of rail legislation in 113 years has done that—but what has come out quite consistently in the testimony of the mayors, and in the broader points made around devolution, is that, whether it be on the MCA basis or on the local authority basis more generally, people want GBR’s structure to be flat, and responsive to dynamic changes both in demographics around housing and your ability to get to Everton stadium when the rugby league is on, which is of personal interest to me.
I think the point is very well made, and it is certainly taken by me as the Minister, that democratic accountability means that the operational reality of GBR should be diffuse wherever possible. People do not want to see a replication of a centralised model of the past.
Laurence Turner
Q
Keir Mather: I think we have been really clear, and the provisions in the Bill support this, that GBR needs to be organised locally so that it can work really collaboratively with local leaders, and it is through the business units that it has to devolve that responsibility to as close to decision-makers as possible. MCAs are the right level, in terms of being a catalyst for economic and housing growth, but you are right that the challenges around rail infrastructure and service provision, even though the solution to a lot of them may be set by MCAs, are inherently cross-border. I would expect GBR to be able to fulfil a role in facilitating the ironing out of those differences, for the good of everyone, on a cross-border basis.
Edward Argar
Q
Keir Mather: Yes.
Edward Argar
Q
Keir Mather: We think there are benefits from consolidation in terms of building a more efficient railway, which we are confident will be able to build a more efficient system for passengers. We hope that that will reduce costs. The Secretary of State also has power through the Bill to set guardrails on fares, which are a really important part of the system. Unfortunately, I have not brought my crystal ball with me today on the exact time when fares may increase or decrease.
Edward Argar
Q
Keir Mather: It is my understanding that GBR’s functions and operational work when it comes to ticketing will be subject to the code of practice, yes.
Andrew Ranger
Q
Keir Mather: The Bill requires the Secretary of State to obtain the consent of Scottish and Welsh Ministers before they issue a direction that directly affects passenger services. That means that there is a robust ability for the devolved Administrations to play their role in thinking about how we have joined-up services. In Wrexham and across north Wales that is incredibly important, as we go through into north-west England.
It is also important that GBR is able to carry out work across the four nations that does not conflict with the aspirations of the devolved Administrations to pursue their own rail ambitions. For example, the Scottish Government have stated very clearly that they want to pursue a vertically integrated railway. GBR needs to complement the aspirations of the devolved Administrations and create close bases on which we work.
I am really pleased to say that it seems that, from a Scottish Government perspective, they are happy with the balances and accountability measures in the Bill. They think—I would not want to put words in their mouth, but they can correct me if I am wrong—that it forms a strong bedrock upon which we can start to take these conversations forward.
Andrew Ranger
Q
Keir Mather: That is a very good question. The answer eludes me at this moment, but I am happy to either let you know or inform the Committee in writing.
The Chair
Order. That brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank the Ministers for their evidence. Apologies to colleagues who did not get in, but there will be lots more opportunities for colleagues to ask questions of the Ministers.
Ordered, That further consideration be now adjourned. —(Nesil Caliskan.)