Railways Bill (Third sitting)
(1 day, 9 hours ago)
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The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Chair
Before we begin, I remind Members to switch electronic devices off or to silent, and that tea and coffee are not allowed during sittings—but I hope you have plenty of water. We will now begin line-by-line consideration of the Bill. The selection list for today’s sittings is available in the room and on the parliamentary website. It shows how the clauses, schedules and selected amendments have been grouped together for debate.
A Member who has put their name to the lead amendment in a group is called first. For debates on clause stand part, the Minister will be called first; other Members are then free to indicate their wish to speak in that debate by bobbing. Please bob on each occasion on which you wish to speak during proceedings. At the end of the debate on a group of amendments and new clauses, I shall call again the Member who moved the lead amendment or new clause. Before they sit down, they will need to indicate whether they wish to withdraw the amendment or new clause, or to seek a decision. If any Member wishes to press to a vote any other amendments in the group, which includes grouped new clauses, that will be at the Chair’s discretion.
My fellow Chairs and I shall use our discretion to decide whether to allow a separate stand part debate on individual clauses, following the debates on relevant amendments. I hope that that explanation is helpful, but you may seek advice when we are not sitting.
Clause 1
Great British Railways
Laurence Turner (Birmingham Northfield) (Lab)
I beg to move amendment 257, in clause 1, page 1, line 8, at end insert—
“(2) A body corporate may be designated under this section only if—
(a) it is limited by shares, and
(b) it is wholly owned by the Crown.
(3) Regulations under subsection (1)—
(a) must specify the time from which the designation has effect, and
(b) must be published by the Secretary of State as soon as reasonably practicable.
(4) The designation of a body corporate terminates—
(a) if the body corporate ceases to be wholly owned by the Crown, or
(b) if the Secretary of State revokes the designation.
(5) Any notice of revocation under subsection (4)(b)—
(a) must specify the time from which the revocation has effect, and
(b) must be published by the Secretary of State as soon as reasonably practicable after the notice is given.
(6) For the purposes of this section a body corporate is wholly owned by the Crown if each share in the body corporate is held by—
(a) a Minister of the Crown,
(b) a company which is wholly owned by the Crown, or
(c) a nominee of a person falling within paragraph (a) or (b).
(7) Great British Railways is exempt from the requirements of the Companies Act 2006 relating to the use of ‘limited’ as part of its name.
(8) In this section—
‘company’ means a company registered under the Companies Act 2006;
‘Minister of the Crown’ has the same meaning as in the Ministers of the Crown Act 1975 (see section 8(1) of that Act).”
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
New clause 24—Great British Railways Board—
“(1) The Secretary of State must appoint a Board to review decisions taken in respect of Great British Railways (‘the Board’).
(2) The Secretary of State must appoint to the Board persons who are employees of, or otherwise represent—
(a) Great British Railways,
(b) open access passenger operators,
(c) freight operators,
(d) The Office for Rail and Road,
(e) The Passengers’ Council, and
(f) an organisation or campaign group representing passengers with accessibility requirements.
(3) The Board must comprise at least six members and no more than half of its membership may be employed by, or otherwise represent, Great British Railways.
(4) Great British Railways must determine the frequency of board meetings in any year.
(5) Any—
(a) decision by the Secretary of State concerning, or
(b) direction given by the Secretary of State to,
Great British Railways must be notified to the Board prior to the making of the decision or issuing of the direction, and such decision or direction may only be made if a majority of the Board approves of it being made.
(6) The Board must publish any decision or direction it considers, and whether it has approved any such decision or direction.
(7) Where the Board has not approved a decision taken by, or direction given by, the Secretary of State to Great British Railways—
(a) the Board must notify the Secretary of State that it has not approved the decision or direction, and its reasons for not doing so;
(b) the Secretary of State may proceed to make any such direction or decision provided that, in their opinion, it is necessary to do so.
(8) Where subsection (7)(b) applies, the Secretary of State must publish a statement setting out reasons for proceeding with the direction or decision.”
This new clause would require the creation of a GBR Board, constituted of relevant internal and external stakeholders and regulatory bodies, which the Secretary of State would have to consult on major decisions and changes.
New clause 38—Ministerial statements on functioning of Great British Railways—
“(1) Once every three months beginning on the day on which this Act is passed, the Secretary of State must make a written ministerial statement in each House of Parliament summarising progress towards Great British Railways becoming fully operational.
(2) Should any day on which the Secretary of State must make a written statement be on a day when either House of Parliament is not sitting, the Secretary of State must publish a statement in similar terms.”
This new clause requires the Secretary of State to report to Parliament quarterly on progress in establishing Great British Railways.
Laurence Turner
It is a pleasure to serve under your chairship, Mrs Hobhouse. At the outset, I wish to declare that I am a member of Unite.
It is a privilege to speak at the start of these proceedings. I do so as a believer in public ownership of the railways not as an end, but as the best means of realising greater economies for taxpayers and improvements for all those who rely on the railways for livelihood and leisure. I am conscious that the Committee has much work ahead of it, so I will keep my explanation of the amendment brief.
Public ownership is the ballast of the Bill, but its clauses make only limited reference to ownership, although the drafting logic for that may be good—the Bill must, after all, be read alongside the previous enabling legislation passed by Parliament, the Passenger Railway Services (Public Ownership) Act 2024 and the now much amended Railways Act 1993. In 2024, Parliament’s decision and intent were clear: passenger services are to come under public ownership as franchises expire. I must admit, however, that I start our proceedings under the shadow of a doubt. On my reading, there is a risk that the requirements of public ownership that sit outside this Bill may be time-bound, designed for the specific circumstances of transition, and dependent on definitions in statutory instruments that are themselves at risk of amendment or repeal without full parliamentary scrutiny.
I freely acknowledge that some members of the Committee may take a different view of the merits of the ownership question, and I am sure that we will have good and respectful debate on the Bill’s provisions in the weeks ahead, but surely we can all agree on one point: such an important decision as public or private ownership should be taken only through primary legislation. To put it another way, were a future Government to seek to return to a privatised model, they should be obliged to seek majority consent in the full House. That is what the amendment seeks to achieve.
The amendment would require Great British Railways to be a wholly and nationally owned public sector entity. Indeed, it would cease to be GBR if it were sold in whole or in part. The amendment would also, I think, prevent a future Secretary of State from taking the extremely perverse step of removing GBR’s designation as a public sector body and transferring it to a private or semi-private entity.
If the wording of the amendment seems familiar to hon. Members, it will be because they have been paying close attention to other legislation. Clause 1 of the Bill is effectively identical to section 1(1) of the Great British Energy Act 2025. The amendment is a near carbon copy—I am sorry to all members of the Committee, but we are only at the start of our descent; I cannot promise that the puns will improve as we go on—of the subsections that follow in section 1 of that Act. I note that in the equivalent Committee debate for that Act, the sponsoring Minister, the hon. Member for Rutherglen (Michael Shanks), said:
“The clause protects the principle of public ownership by making explicit that the company would terminate if it ceased to be wholly owned by the Crown.”––[Official Report, Great British Energy Public Bill Committee, 10 October 2024; c. 91.]
I accept that we are seeking to build on a complex body of legislation; the railways are the accumulation of two centuries of history, and so are the laws that govern them. If—I emphasise that word—a drafting issue has been identified, we also need to identify the right solution for this specific legislation. I am grateful to the Minister in the Commons and to the Minister of State, the noble Lord Hendy, for their thoughtful conversations on this matter. I am also grateful to the officials who have worked hard to prepare this commendable Bill. My motivation in tabling the amendment is to establish beyond doubt that the Bill will achieve its aim: that Great British Railways will be run by and for the nation. If we can assure ourselves of that, I believe that this legislation will set out a permanent way for reform. I will listen carefully when the Minister responds.
Jerome Mayhew (Broadland and Fakenham) (Con)
It is very nice to have you in the Chair, Mrs Hobhouse. I think this a conversation among Labour Members, and I do not want to get in the way of a private dispute. I might just sit down and listen to what the Minister has to say.
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse. I want to speak in favour of new clause 24, which I will press to a vote when the time comes, because, as I have said in other forums where the Minister has been present, one of the Liberal Democrats’ big concerns is the Secretary of State’s power over GBR as specified in the Bill. I have given many examples previously of past poor state-led decisions, and fear I will do so again during the Committee’s discussions. Of course, there are lots of problems with private sector railways, but there have also been lots of public sector problems, too, whether with fares, rolling stock or infrastructure.
Our proposal would increase the transparency and accountability of the Secretary of State’s decisions. It would not prevent any of those decisions, but it would create a vehicle for them to be properly discussed. We propose creating a Great British Railways board. If the Secretary of State went against the advice of that board, the reasons for that would need to be communicated. The people serving on the board would represent GBR, but also other key stakeholders in the running of the railway: open access passenger operators, freight operators, the Office of Rail and Road, the passengers’ council and organisations that represent passengers with accessibility requirements. The board would comprise at least six members. To make sure that there is a voice for the other stakeholders that GBR needs to work with and serve, no more than half the board’s membership would be employed by, or otherwise represent, GBR.
It would be for GBR to determine the frequency of board meetings in any year. Any decision or direction from the Secretary of State concerning GBR would be notified to the board prior to being made, and should be made only if a majority of the GBR board approved it. The board would need to publish any decision or direction it considered, and whether it had approved any such decision or direction. If the board did not agree with the Secretary of State, the Secretary of State would be free to go ahead with whatever they decided to do against the views of the GBR board, which we hope would be made up of experts from both GBR and elsewhere, but would need to publish a statement setting out their reasons for that.
That is a summary of our proposal. I look forward to hearing the Minister’s comments.
Jerome Mayhew
I do. I apologise to the Committee; I erroneously thought that we were dealing with amendment 257 in isolation.
There is huge interest in this Bill, which will directly affect lots of people. It will affect the employees, of course, as well as Network Rail, the train operating companies, the remaining franchisees and those already in the public sector, freight and open access operators, the mayoral combined authorities, Transport for London, High Speed 1, the huge supply sector, the trade unions and many others—and that is before we even start to consider passengers. This is a generational change in the organisation of the railways, and it is crucial that the Government do not mess it up.
One of the key themes that will run through a lot of our conversations over the coming four weeks is accountability, and new clause 38 would address just one small part of that issue by requiring a ministerial statement, once a quarter, on the progress of the setting up of GBR and its becoming fully operational. There is huge public interest in the Bill, which must be successful, so it would be sensible for the Minister to come to the House and make a statement. That would increase transparency, maintain focus and prevent drift.
Mrs Hobhouse, can you give me some guidance? Are we going to talk about the clause more widely later, or should I deal with that now?
Jerome Mayhew
Thank you.
We have this generational change in the organisation of the railways; the Government, with their majority, have taken a political decision to nationalise the sector. We know that nationalisation of the railways has been tried before. They were nationalised in 1950 or 1951—
Jerome Mayhew
The hon. Gentleman is quite right. From 1950, we had the high point of post-war passenger numbers on the railways—about 1 billion passengers. From that period of nationalisation, the number of passengers choosing—I use that word advisedly—to use the railways started a long and seemingly unstoppable decline. It went from 1 billion in the early 1950s all the way down to about 735 million in the period of privatisation—1993. It seemed like that was due to the public changing the way in which they chose to live their lives. The Under-Secretary of State for Transport, the hon. Member for Nottingham South, suggested from her seat on Second Reading that it was obvious that people did not want to use the train so much, even during a period of increasing population, because they were increasingly affluent and they bought more cars. That is a possible explanation.
But then something very odd happened. In 1993, the then Conservative Government legislated to privatise the railways. Now, we can debate—and I am sure we will multiple times over the coming days—whether that was a good or a bad thing in principle and whether the way the privatisation was done, through the Railways Act 1993, and subsequently amended was perfect or whether it could have been improved upon, but if we consider that the primary objective of a railway—leaving freight to one side for a moment—is to carry passengers, the data shows that the privatisation of the railways in the United Kingdom was an unqualified success. The seemingly inevitable decline in passenger numbers changed direction immediately. It was not just a slow bottoming out; that long-term decline immediately turned in the other direction, and then continued to grow until covid meant that all bets were off from 2019. Those numbers did not just grow to recover all the lost work of the previous 40 years—they did not go back up to 1 billion customers; they increased to 1.75 billion. That was a period of increased affluence, when the number of cars available to passengers increased enormously. The only explanation for the absolute reversal in passenger numbers is the decisions taken through privatisation—the profit motive and the incentive to focus on passengers rather than on the organisation.
The Chair
I advise Members that any clauses or amendments that I announce in a grouping are debated at that point, although some of the decisions—that is, the votes—might come not at that point, but later. We will decide on amendment 257 and clause 1 after this debate; we are also discussing new clauses 24 and 38, but the decisions on those will come later. I hope that that is helpful and that it will help Members with other groupings we debate.
Edward Argar (Melton and Syston) (Con)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse. My hon. Friend the Member for Broadland and Fakenham has already addressed clause 1 in broad terms, so I do not propose to repeat what he said, other than to express my agreement with his concerns about the unintended consequences and potential impact of nationalisation on passengers. I recognise that that is the Government’s decision and that, with their majority, they will be able to carry it—unless they have a huge rebellion on a scale we have not seen before, which is highly unlikely.
Let me address my hon. Friend’s new clause 38. As a Government Minister, I saw that the easy bit was coming up with a strategy and pushing some legislation through the House; the hard bit—and the bit that makes the difference as to whether something works for our electorate and for the great British public—is the implementation and delivery of the intent behind the strategy or legislation. There can be no doubt that this legislation is complex and represents a significant change to a service and industry that is relied on by many, day by day, up and down this country.
The Minister knows I have a lot of respect for him. He has risen up through the ranks rapidly but justifiably through his abilities and talents. I have seen in the past his willingness to listen and reflect on different perspectives, so I gently encourage him to look at new clause 38 with an approving eye. It is not onerous. It is a written ministerial statement that my hon. Friend the Member for Broadland and Fakenham proposes, which is not a challenging thing to produce in a Government Department and then lay before the House. Although on occasions such scrutiny might test the Minister’s patience, I have to say with the benefit of hindsight that the scrutiny that comes through that publication and having to go through the process of summarising where we have got to in implementing a policy can often lead to that policy being kept on track and to course corrections as it is implemented, and can genuinely improve outcomes and delivery for the public.
I conclude by gently commending my hon. Friend’s proposed new clause to the Minister. I hope he will look at it with an approving eye or at least an open mind.
The Chair
We now look forward to the Minister responding on amendment 257, and on new clauses 24 and 38, although he might be relieved to hear that he does not have to make a decision on those today.
The Parliamentary Under-Secretary of State for Transport (Keir Mather)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse. May I begin by saying how much I look forward to working with all members of the Committee as we advance the priorities in the Bill and hopefully have a robust debate as we do so?
First, I turn to amendment 257 tabled by my hon. Friend the Member for Birmingham Northfield. I also want to reciprocate his warm words about the conversations he has been able to have with me and the Rail Minister Lord Hendy on this provision. Let me reassure him that public ownership of our railways is what the Government are delivering, as set out in our manifesto, and that we are steadfast in our commitment to it. We are already seeing the benefits of bringing train operators into public ownership, with passengers being put back at the heart of the rail network. Passengers can now use their tickets on another public sector operator at no extra cost during disruption.
Through working with Network Rail, Southeastern increased capacity to popular seaside spots in the summer months. Since moving into public ownership, South Western Railway has more than quadrupled the number of new Arterio trains in service, directly benefiting passengers. Public ownership sits at the heart of the Bill, as my hon. Friend notes is the case in other legislation passed by this Government, to ensure that we gradually take our railways back into public ownership in the interests of passengers. However, I take his point that it is important to safeguard the legacy of these essential reforms for generations to come. I will take that thought away. In the meantime I encourage him to withdraw his amendment.
New clause 24 would require the Secretary of State to appoint a Great British Railways board to advise the Secretary of State on decisions taken in respect of Great British Railways, with representation from various industry groups. I feel that is unnecessary and would distort the clear accountability framework established in the Bill. To be clear, a highly skilled board that can hold to account the executive of Great British Railways will be crucial to delivering an improved railway. The GBR board will be made up of experienced people with diverse backgrounds who can be the voice of railway users. Where the Secretary of State is concerned about the performance of GBR, she will be able to raise these matters with the chair of the board. The chair will be able to advise both the Secretary of State and GBR’s chief executive officer on options for resolution and will be expected to ensure they are acted on, all without the need for a direction.
Jerome Mayhew
I am grateful to the Minister for giving way. I recognise that improvements are needed for the drafting of the board were it to go ahead. He makes reference, however, to the board of GBR and that it will have a number of directors on it. In normal circumstances that would include a number of non-executive directors outside the main organisation. Will the Minister confirm that that is the intention for this board? If it is the case that external non-executive directors are anticipated for that board, could he go down the list in new clause 24(2)(a) to (f) and describe whether those are the kinds of organisations that might be represented in a non-executive capacity on the GBR board?
Keir Mather
It is my understanding that the process of appointing non-executive directors on GBR’s board will be followed in the normal way. I expect departmental processes to find a range of candidates with experience of both the private sector and public institutions, to ensure that GBR is an agile organisation that provides value for money for those who fund the railway and, most importantly, accountability through the Secretary of State, as well as having a mind to furthering the interests of both open access operators and the freight sector within the operation of GBR.
Rebecca Smith (South West Devon) (Con)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse.
I completely appreciate what the Minister is saying. However, I suppose that the outstanding question is this: how will the general public come to understand what GBR is going to mean for them if it is not going to be established for 12 months and if there is not a fixed timetable for reporting back to MPs on how it is going? There has already been a fanfare about delivery; I am sure that there is going to be another fanfare from the Government once the Bill is passed. However, if we are going to take passengers on this journey, so to speak, we must ensure that there is an opportunity for us, as Members of Parliament, to be able to report back, even if it on an issue relating to our own constituency. I think the new clause tabled by my hon. Friend the Member for Broadland and Fakenham is actually quite sensible.
Keir Mather
May I draw the hon. Member’s attention to the fact that so far I have not made a single rail pun in the course of this debate—and I intend to keep it that way?
The hon. Member made a really important point about both parliamentary accountability and the general public being able to understand more about how GBR works and what it constitutes. Throughout the establishment of GBR, there are concurrent process that will allow the Secretary to State to outline more properly the long-term future of the railway and GBR’s role in it, including the long-term rail strategy, as well as work that we are already advancing on the accessibility road map and the rolling stock and infrastructure strategy.
Existing parliamentary structures in our Westminster democracy provide ample room for us to hold Government Ministers and the Secretary of State to account on the establishment of GBR. We have oral questions for Transport, as well as the ability to ask urgent questions on GBR’s establishment. Through both Lord Hendy in the other place and Ministers in this House, we have a real ambition to explain GBR’s provisions and ways of working to the general public, because we are confident in its ability to revolutionise how the railway runs on behalf of passengers, but I take the hon. Lady’s point.
Establishing GBR is the primary purpose of the Bill, and clause 1 provides the Secretary of State with the power, by regulations, to designate a body corporate as GBR. The clause enables wider provisions in the Bill relating to GBR to apply to a body corporate, such as the statutory functions and general duties set out in it. Following Royal Assent, a company will be designated as GBR, and it will consolidate Network Rail Infrastructure Ltd, DfT Operator, train operators and parts of the Rail Delivery Group into one organisation to ensure that GBR can be mobilised as quickly as is practicable.
The clause is essential for the Government to deliver our manifesto commitment to reform the railways by establishing GBR as the directing mind, bringing track and train together. I commend clause 1 to the Committee.
Laurence Turner
I must start by slightly disagreeing with the Minister on his approach to railway puns. The shadow Minister referred to the discussion on amendment 257 as a dispute; I reassure him that this is not a case of pistons at dawn—[Laughter.] It is going to get so much worse. Before I come to the Minister’s substantive response, I will briefly respond to a few other comments that have been made in the debate.
The shadow Minister spoke about changes in passenger numbers over the years, which is a good illustration of why it is important to look across a whole time series, and to bear in mind the old maxim that correlation is not causation. After all, passenger numbers were already falling by the time that we got to vesting day in 1948. The railways were exhausted after years of war—indeed, passenger numbers halved between 1920 and 1947. In fact, the actual nadir in passenger numbers was not in the early 1990s but in 1983. I thought that Opposition Members might have wanted to take pride in the successful sectorisation experiment under the Thatcher Government, perhaps aided by some benign neglect from that Administration, which was sadly not repeated by the subsequent Major Administration.
We have some good explanations for why exactly passenger numbers rose so dramatically in the 1990s and 2000s. For a long time, I think we could have all substituted our political explanations for why that happened. However, in 2018, a very good study, led by eminent modellers and academics, was published by the Independent Transport Commission on precisely that question. It found that passenger growth was overwhelmingly driven by changes in the job market—the types of roles being created and the areas of the country in which they were being created. It was also aided by changes to tax incentives for company cars in the early 2000s, which led to an additional increase in rail traffic.
Daniel Francis (Bexleyheath and Crayford) (Lab)
It is a pleasure to serve under your chairship, Mrs Hobhouse. For my constituents, in the period since the railways were privatised they have twice needed to be brought back under public ownership: once in 2003, when Connex failed, and again in 2021, when Southeastern failed. However, on both occasions, there was no impact on passenger numbers; rather, the factors that my hon. Friend is describing correlated and led to those passenger numbers. Does he agree that over the last 30 years, whether the service has been under national or private ownership has had no impact on the passenger numbers on trains in my constituency?
Laurence Turner
I absolutely agree, and we could point to other examples where franchises being taken in-house under previous Governments led to a service improvement. The Opposition’s problem has always been that public ownership works in practice but not in their theory.
I am heartened by what the Minister had to say on my amendment. This is not an issue of dispute; this is sensible scrutiny. I welcome the commitment the Minister made to take the issue away. I recognise that this Committee is probably not the place to resolve this detailed and technical consideration. I am encouraged by his comments and on the basis that we may return to this matter at a later stage, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 ordered to stand part of the Bill.
Clause 2
Crown status etc
Keir Mather
I beg to move amendment 164, in clause 2, page 2, line 3, at end insert—
“(5A) This section is not to be read as preventing the exercise of functions by Great British Railways on behalf of the Secretary of State, the Scottish Ministers or the Welsh Ministers under arrangements made by the Secretary of State, the Scottish Ministers or the Welsh Ministers.”
This amendment clarifies that the Secretary of State and Scottish and Welsh Ministers may enter into agency agreements for the performance of functions on their behalf. For example, this may be required to assist with winding up of ongoing franchises, as they transition to GBR.
Keir Mather
Amendment 164 will enable the Secretary of State to appoint GBR as an agent to undertake certain activities on her behalf—for example, to manage outstanding contractual arrangements associated with the winding down of the franchising regime while the industry transitions to the new arrangements. It may be appropriate for GBR to do that if transfers of staff from the Department into GBR have already happened, for example. It would also ensure that GBR can effectively co-ordinate the winding down of franchises alongside its new management of services. This is a technical measure that supports a seamless transition of work and resources into GBR.
The amendment also clarifies that Scottish Ministers and Welsh Ministers can delegate their functions to GBR under clause 4, or enter into agency agreements with GBR if desired. That is already the Bill’s intention, but the amendment ensures that the Bill is clear and readable.
Clause 2 sets out GBR’s relationship to the Crown and the civil service, establishing it as an independent body. It will not be part of the Crown or act as the Crown’s agent or servant and its employees will not be civil servants. Additionally, the clause confirms that the Secretary of State, Scottish Ministers and Welsh Ministers will not be considered shadow directors for the purposes of the Companies Acts.
The clause is essential in setting up GBR and laying out how it will operate. I urge the Committee to support the amendment and the clause.
Jerome Mayhew
I enjoyed listening to the Minister read out the explanatory notes; we are all under no illusion as to what clause 2 stands for. The Opposition think it is eminently sensible—in fact, it lifted directly from the structure proposed by the previous Conservative Government for the draft Rail Reform Bill. Government amendment 164 appears to be a clarifying amendment to help with the dotting of i’s and crossing of t’s and we have no objection.
Keir Mather
I thank the hon. Member for his constructive engagement on the amendment and the clause.
Amendment 164 agreed to.
Clause 2, as amended, ordered to stand part of the Bill.
Clause 3
Functions
Jerome Mayhew
I beg to move amendment 2, in clause 3, page 2, line 15, after “sale” insert—
“by promoting a thriving competitive market in the retail ticketing market”.
This amendment makes Great British Railways’ duty to promote a competitive retail market explicit and aligns the Bill with the Government’s stated aim of delivering a system where competition drives better outcomes for passengers.
The Chair
With this it will be convenient to discuss the following:
Amendment 131, in clause 3, page 2, line 27, at end insert—
“(2A) Great British Railways’ function under subsection (1)(d) must be exercised in accordance with the findings of the report published under section [Report on Great British Railways’ ticketing function].”
This amendment is related to NC9 and requires that GBR exercises its ticketing function in accordance with the findings of the report detailed in that new clause.
Amendment 117, in schedule 1, page 58, line 6, at end insert—
“including requirements to promote a fair and competitive retail market that treats all market participants, including Great British Railway’s retailing function, on a fair and equal basis.”
This would ensure the Code of Practice to explicitly include a duty for GBR to safeguard a level playing field for third-party retailers and confirms that GBR Retail must itself comply with the Code.
New clause 9—Report on Great British Railways’ ticketing function—
“(1) Great British Railways must prepare and publish a report on how it will exercise its function under section 3(1)(d) of this Act (the ‘ticketing function’).
(2) A report under this section must include plans for Great British Railways to —
(a) introduce a cap on fare increases not exceeding the rate of inflation, applicable to and reviewed as part of each 5-year funding settlement for the railway,
(b) extend, and where not currently provided for provide, a 50% discount on all train fares for passengers aged under 18 years,
(c) establish a tap-in tap-out method of ticketing across England, Wales and Scotland,
(d) guarantee that any fare offered to passengers for purchase via any means is the best value fare, and that there is no inequality in fare for the same ticket when purchased via different means,
(e) introducing a National Railcard across England, Wales and Scotland,
(f) enable open-source access to Great British Railways’ ticketing systems and rates databases for third-party retailers,
(g) collaborate with local and regional transport authorities to enable multimodal ticketing between railway passenger services and local bus, light rail and other public transport networks, and
(h) take all reasonable steps to simplify fares and remove barriers to travel where a single journey undertaken by a passenger involves travel on—
(i) multiple rail services, or
(ii) at least one rail service and at least one additional form of public transport.
(3) For the purposes of this section the rate of inflation is calculated in accordance with any increase in the Retail Price Index.”
This new clause would require GBR to report on how it will undertake its ticketing function. It requires GBR to set out how it would cap fare increases; extend children’s discounts; provide that a single best price is available across ticketing mediums; and provide access to systems for third-party retailers.
New clause 3—Great British Railways retail requirements—
“(1) Great British Railways Retail is subject to the same conditions, standards and transparency requirements as all other accredited retailers.
(2) Conditions, standards and transparency requirements as set out in subsection (1) include equal access to—
(a) fares,
(b) products,
(c) technical systems, and
(d) data feeds.”
This new clause clarifies that Great British Railways Retail is subject to the same conditions, standards and transparency requirements as all other accredited retailers, including equal access to fares, products, technical systems and data feeds.
Amendment 132, in clause 92, page 54, line 5, at end insert—
“, except that section 3(1)(d) may not be commenced until any report under section [Report on Great British Railways’ ticketing function] has been published.”
This amendment is related to NC9 and requires that ticketing functions for GBR may not be commenced until a report under that new clause has been published.
Jerome Mayhew
This is where things liven up a bit. We have had the preliminaries; now we are going to get into the meat of the debate.
Clause 3 is where the Government set out the proposed functions of GBR—the list of activities that GBR will be expected to undertake to fulfil its purpose. I use the word “purpose” with some hesitation, because of course no purpose for the organisation is set out in the Bill. The Opposition will seek to address that in a new clause. What is contained within those functions, as well as what is not there, tells us a lot about the Government’s priorities. This is going to be quite illuminating.
The Chair
Order. We will debate clause 3 later. We are currently considering amendments 131 and 117, tabled in the name of the Liberal Democrat spokesperson. Will the hon. Member direct his remarks to those amendments, please?
Jerome Mayhew
I am grateful for that direction, Mrs Hobhouse, but it is quite hard to talk about amendments if we have not considered what is in the clause. I fully accept and follow your guidance that the decision and debate on clause 3 as a whole comes later, but to address amendments to a clause I have to discuss the clause as a whole.
The Chair
I can only advise the hon. Gentleman on how we are going to take the debate forward, but I hear what he says. It would be helpful if he could allude to the amendments we are discussing.
Olly Glover
On a point of order, Mrs Hobhouse. I seek clarification for my own understanding. The lead amendment in the group is Opposition amendment 2; is it correct that we are also speaking to amendment 117 and new clause 3?
Jerome Mayhew
In which case, I will speak first to amendment 2, as that is first in the grouping, and then proceed to the others.
Amendment 2 would make explicit the duty of Great British Railways to promote a thriving, competitive retail market, and align the Bill with the Government’s stated aim of delivering a system in which competition drives better outcomes for passengers. The retail market in the UK is currently one of thriving competition, as we can all recognise, and shows UK tech at its best. Trainline is—I think I am right in saying—a FTSE 250 company, and a tech growth story for the United Kingdom, being Europe’s leading train and coach app. The amendment is therefore key to ensuring that the landscape continues to thrive and that we do not drive Trainline and its competitors out of the country.
Members will remember that in written evidence to the Transport Committee, Trainline asked that Committee
“to recommend that the Bill be amended to require structural separation of GBR online retail from the rest of the GBR organisation and to publish information that enables the ORR, CMA and other regulators to assess compliance with competition law, subsidy control rules and non-discrimination duties. This should not be left to the Code of Practice alone”—
and, by the way, we have not seen the code of practice.
Trainline also said:
“We ask that the Committee recommend that the Bill include a statutory duty that all retail market participants—including GBR online retail—are treated fairly, equally and non-discriminatorily, and that GBR online retail be subject to the same Code of Practice as all other retailers…We ask the Committee to recommend that these economic parity safeguards, including structural separation of GBR’s online retail business, be written into the legislation and the forthcoming Code of Practice…We therefore ask that the Committee recommends…An explicit ORR power to impose binding orders or financial sanctions if GBR breaches its licence or the Code. ORR’s competition duty should explicitly apply in respect of these functions and GBR’s licence…Provision for an appeal body (for example the CMA or the Competition Appeal Tribunal) to hear merits of disputes…The Code development process must be led by ORR, independent of DfT and GBR. It must ensure full stakeholder consultation, clear timetable, transparent publication of decisions and mechanisms for future amendment.”
Members may say, “Well, they’ve got skin in the game, haven’t they? They’re a commercial organisation trying to compete with the future GBR, so it will be in their interest to try to fix the corporate structure in a way that gives them an unfair advantage.” But if we look at what Trainline is asking for, we see it is not seeking to gain an unfair advantage. It is merely asking GBR to create a level playing field. Trainline is not the only organisation making that argument; it is joined by others.
Laurence Turner
The hon. Gentleman said a few moments ago that Trainline and other online retailers are not seeking to make ill use of their market position, but the Advertising Standards Authority has ordered Trainline to amend its adverts, and the ORR ordered it to amend its practice of not showing booking fees at the start of the booking process. In oral evidence to the Transport Committee, Trainline accepted that its market share was significantly above the 25% test that the Competition and Markets Authority applies for a potential monopoly position. Does that concern the hon. Gentleman at all?
Jerome Mayhew
That demonstrates that the current system is working to hold Trainline to account, and that where there are abuses—if what the hon. Gentleman outlined amounted to abuses—effective systems are in position and they have been corrected.
The hon. Gentleman’s intervention did not speak to the overriding point: what do the Government want when they are applying this new structure to retail? Do they want a level playing field? Is that their intention, or do they want a systemically biased system in which GBR retail is given an unfair advantage over independent competition? Both answers are credible—it is possible for the Government to form one decision—but they should not pay lip service to a level playing field but, in design, achieve the opposite, which appears to be the case at the moment.
In oral evidence to the Transport Committee, Ben Plowden, the chief executive of the Campaign for Better Transport, essentially agreed with Trainline’s position. He said:
“We think that because the independent retail market has produced significant benefits for customers in the time that it has been in existence. It is heavily used by rail passengers. The critical question in relation to the Bill, and the other mechanisms that will be in place once the Bill has been passed, is how we ensure that there is genuine fair and open competition between GBR ticket retailing and the independent retailers currently or potentially in the market.”
This is a key point: the Government need to stop and think about what their intention is. If it is to have a fair market, the evidence, and all the feedback they are getting from the sector, is that they have not yet achieved that objective. They need to put their money where their mouth is and decide what their objective is. I hope the Minister will be clear in his response as to the Government’s thinking on that.
A second concern is that the sector is nervous about the apparent lack of hierarchy and detail in the functions. GBR is assigned multiple duties under the clause, but with no hierarchy, so it paves the way for potential confusion—or, worse, it gives GBR the ability to pick and choose which function it thinks is important in relation to any decision. It can quietly demote the importance of others so that it can serve itself and thereby reduce the power of the clause.
Nick Brooks from ALLRAIL said in oral evidence to the Transport Committee:
“To lead from your further question: with the very broad powers for the Secretary of State and a certain lack of specificity on what will happen, what we are looking for is more key performance indicators, like in business. I realise it is a governmental entity, but the quantitative KPIs are not really there.”
I would go further than that: they are not there at all.
As well as amendment 2, which I have spoken to, we have also tabled new clause 3, which sets out GBR retail requirements. As I have said previously, this is a critical issue given the evidence that the Select Committee received, and the oral evidence that we heard on Tuesday, that the Government have built a structural conflict of interest into the Bill as currently drafted.
We also heard on Tuesday about international examples where a similar concern has been addressed in a different manner. SNCF is a state-owned railway in France that has unification of track and train. It also has a retail function, through which is competes with the wider market. SNCF, or, I presume, the French Government—I do not want to claim greater in-depth knowledge that I actually possess—have taken the decision to have a structural separation between SNCF retail and SNCF operations, the equivalent to GBR. The very obvious reason why they did that was for fairness and to have a level playing field. We are not talking about SNCF, but an improvement on the current position, which I fully accept is not perfect.
The Chair
Can I reassure the shadow Minister and all members of this Committee that it is not my intention to confuse you? I interrupted on the advice of the Clerks. The groupings have been agreed on; I do not want to stifle debate and there will be plenty of opportunity to debate the whole of clause 3 later on, in group 7.
Olly Glover
I stand to speak in favour of amendment 131 and new clause 9, and we will push new clause 9 to a vote if you are willing, Mrs Hobhouse. The amendments are intended to encourage GBR to think deeply and creatively about fares and ticketing, reflecting the fact that until recently—more on which anon—rail fares have been subject to above-inflation increases for much of the past 20 to 30 years.
Many passengers feel that they are not getting good value for money and that the current fares and ticketing system requires a PhD in British railways ticketing systems, even for a nerd like me. I recently got caught out because GWR’s peak hour restrictions are utterly baffling and incomprehensible. I do not wish to speak too highly of myself—it is not my style—but if I, someone with the generally not particularly character-enhancing reputation in this place of being a railway nerd, got caught out, it does suggest that the system is too hard to process and needs to change. Given that the car is the default mode of transport for so many people, an overly complicated ticketing system creates a further barrier for people using it. That is why we have tabled amendment 131 and new clause 9.
Our amendments would require Great British Railways to prepare and publish a report on how it will exercise its ticketing functions under section 3 of the Act. Our measures set out various proposals that we would like GBR to consider and which we feel would significantly improve the value for money of the fares system and its accessibility and comprehensibility to everyone using the railway, and help it to draw on best practice from elsewhere—both domestically and in other countries—to improve the current situation.
The report that we are asking for would need to include the following information. To give credit to the Government, they recently embraced a long-standing Lib Dem campaign for a rail fares freeze, for which we are grateful and praise them, but it should not just be a one-off that Department for Transport Ministers somehow managed to achieve the miracle of persuading the Treasury to do it. It is something that we need to think about for the future. On this side of the House we are not so fiscally irresponsible—
Jerome Mayhew
I do not wish to interrupt the hon. Member’s flow, but there is a wider point there. The hon. Member is right to mention that the Government have frozen fares, but they have not reduced the cost of providing railway services. All they have done is frozen fares on the one hand and increased taxation on the other—and the taxpayer is having to pick up the difference. Does he agree that what the Government have done is put money into one pocket, but taken it out of the pocket of passengers who are, presumably, taxpayers?
Olly Glover
Of course, taxpayers pay for a wide range of services, public or otherwise. Too often, the railway has been viewed almost uniquely, with the high expectation that it covers its own costs. The key challenge with a rail fares freeze is that it needs to be fiscally responsible. While the one-off gesture is welcome, and relieves some of the pressure that has built up over the last few years during the cost of living crisis, our measure for the future is, we believe, more fiscally responsible. A cap on fare increases that does not exceed the rate of inflation should become the default, and should be reviewed as part of each five-year funding settlement.
We also advocate for extending, where not currently provided for, a 50% discount on all train fares for passengers aged under 18 to address the anomaly of fare rates for young people aged 16 to 18. We want a tap-in, tap-out method of ticketing that is consistent across the countries of England, Wales and Scotland.
Edward Argar
May I ask, on a factual point, what assessment the hon. Gentleman has made of what the cost of that 50% discount would be?
Olly Glover
I have not made an assessment of it at this moment. But that is not unique: at this stage in the parliamentary cycle, the right hon. Member will find that a number of the Conservative proposals that are debated in this place have not yet been fully costed—
Rebecca Smith
I beg to differ: they are all costed, because we are the official Opposition.
Olly Glover
I look forward to hearing all the figures. The point is that it is not always about coming up with the exact cost for absolutely every measure. There are plenty of things that are the right thing to do, and that can earn a return on investment. The number of young people who are not in employment, education or training is a significant barrier to economic growth. This measure, by making it easier for young people to use the train to access jobs, is likely to earn a significant return by getting more people into employment and paying taxes.
Before I accepted the right hon. Gentleman’s intervention, I was saying that we want a tap-in, tap-out method of ticketing across England, Wales and Scotland. If that sounds absurd, the Netherlands has it at this exact moment—and there is much that we can learn from that example. We want a guarantee to be issued that whatever ticket passengers purchase, via any means, is the best value fare. There should be no inequality in fare for the same ticket purchased via different means, which can be the case now because of the proliferation of ticketing platforms.
We want a national railcard to be introduced across the country. Many other countries, including Germany and Switzerland, offer national discount cards, but it is a bit of a postcode lottery here, with the network railcard in the London and south-east England area and a number of other regional or local railcards. We want open-source access to Great British Railways’ ticketing systems and rate databases for third-party retailers. That would build on the useful example demonstrated by Network Rail about 15 years ago, when it made the data feeds for its performance and train running systems available for the public to use. That created a wonderful ecosystem of useful train running and disruption apps that were much better than the official ones provided by train operators.
We also want to see greater collaboration with local and regional transport authorities, so that we see much more multimodal ticketing between railway passenger services and local bus, light rail and other public transport networks. That would help us to get the integrated transport system we need to deal with the first and last-mile issues that are often a barrier to people deciding to take public transport over the car. Where a single journey involves travel on multiple rail services, or at least one rail service and another form of public transport, we want steps to be taken to simplify fares and remove barriers to travel.
We believe that our new clause makes a number of proposals that would put our fares and ticketing system on a much better footing. It would deliver value to the taxpayer as well as reduce cost, because it would stimulate many more people to use our railway and therefore increase revenue. I look forward to the Minister’s comments.
Edward Morello (West Dorset) (LD)
It is an honour to serve under your chairship, Mrs Hobhouse. I am always slightly concerned about speaking after my hon. Friend the Member for Didcot and Wantage, who has a justifiable reputation as a train expert—I will not say “train nerd”—so I am slightly circumspect.
Rail users, both regular and irregular, have many gripes about the rail system, but the most frequent I hear from constituents undoubtedly concerns the cost of tickets. New clause 9 is about requiring fare increases to be capped in line with inflation. At time of a sustained cost of living pressure for working families, that would provide a long-term guarantee that rail fares will not continue to spiral up unpredictably, which would drive down usage.
The new clause would also mean that children aged 16 and 17 who are still in education would not be charged adult fares simply because of an arbitrary age threshold. In rural West Dorset, this is another issue that comes into my mailbox all the time. Children who are still in education hit the 16-year-old threshold and have to get across the constituency to colleges in Weymouth, at astronomical cost. Extending the 50% discount for under-18s who are in full-time education is sensible and fair, and will be especially good for people in rural communities.
The new clause would also address long-standing inconsistencies in ticketing. As mentioned, a national railcard system would end the postcode lottery whereby some areas benefit from low fares while people in other constituencies, especially rural ones, are left paying more.
Rebecca Smith
I appreciate the heart behind the hon. Gentleman’s proposal, but can he explain a bit more about why we need a national railcard? There are already all sorts of other railcards, as he rightly points out. There is one for the south-east, and I know there is one in Devon and Cornwall, but they are for specific sets of people doing specific types of journey. If there was a national railcard, would it not incentivise everybody to possess one, so that nobody ever paid a full rail fare?
Edward Morello
At one point, going through all the amendments that had been tabled to the Bill, I concluded that accepting them all would mean that the only people who would pay for a full-price ticket would probably be working-age men aged 35 to 45—they would have to single-handedly fund the entire rail network. I am not sure that that is a desirable long-term system, but a simplified system is ideal. I accept the premise of the hon. Lady’s intervention: the regionalised or localised railcards have their own benefit. But invariably we are just creating more and more carve-outs, and a simplified national system may be fairer and easier to sustain over the long term.
A move towards a national tap-in, tap-out system would modernise the network and make it far more user-friendly. In West Dorset, passengers too often step off a train only to have to wait 45 minutes for a bus, because timetables are poorly aligned. Enabling multimodal ticketing would allow rail, bus and other services to work together, making journeys smoother for residents and visitors.
New clause 9 would require Great British Railways to report on and plan for fair fares, modern ticketing, innovation through an open-source system and integration across all transport nodes. Like new clause 8, it would allow us to advocate for passengers, which should be the central theme of the Bill.
Keir Mather
I thank all the hon. Members for the amendments, which relate to GBR’s ticket retailing functions. I will turn first to amendments 2 and 117 and new clause 3. The amendments and new clause seek to amend GBR’s retail function and code of practice to promote a level playing field for third-party retailers, with parity of access to fares, products, systems and data.
Once GBR is established, it will have a retail function, as provided for by clause 3. Crucially, that function will be accessible via all channels—at station ticket offices, ticket vending machines, onboard trains and online—ensuring that it serves passengers however they buy their tickets. GBR’s future online retailer—its website and app—will operate in a fair, open and competitive market.
The Government have consistently recognised the significant value of independent retailers, as they help to innovate and drive up standards for passengers. Therefore, I recognise and agree with the motivation behind amendment 2. Nevertheless, the Government do not believe that the amendment is necessary. Significant safeguards have already been announced to ensure that our shared vision for the future of the rail retail market is realised—not least a code of practice, which will be owned and enforced by the Office of Rail and Road.
The provisions in the code of practice will ensure that GBR cannot abuse its position or self-prefer as it also operates vital cross-industry functions that independent retailers rely on. The incentives to comply could not be stronger: if GBR fails to adhere to the code of practice, that constitutes a breach of its licence, and the ORR will take enforcement action. It is as simple as that.
Rebecca Smith
I thank the Minister for the clarity on the code of practice, which has also been echoed in some written answers I recently received from him. While we are talking about open access, what thoughts have the Minister and the Department given to working with independent retailers who have probably spent billions of pounds developing an app and a website that do a particularly good job? What work will they do collaboratively with those organisations, rather than viewing themselves as competition?
Keir Mather
The hon. Lady is right to point out that there are certain areas where GBR will operationally have to work with third-party retailers to ensure that they have the information that they need to continue to discharge their service.
However, another important point is that there are lessons to be learned about existing functions—where they work and where they do not work—in providing value for money for passengers and ease of access to the railway network. That is certainly something that we can take forward as part of the discussion on the Bill. I know that the Rail Minister consistently meets with stakeholders across the breadth of the railway industry, and it should be incumbent on us all to ensure that competitive measures, where they serve the interests of passengers, are incorporated into the way GBR works.
Rebecca Smith
The point I want to come back to is about value for money for the taxpayer. I want some reassurance that GBR will not go right back to the beginning of the journey of creating a ticketing app and website, which would effectively cost the general public an inordinate amount of money, when we already have a lot of platforms that could be brought in-house rather than having to be separate businesses.
On the value for money point, call me a cynic, but my understanding of computer programming is that it is not very cheap. I assume that that is something that GBR will have to factor in. Perhaps using some of the existing independent retailers might be a better value for money option.
Keir Mather
Of course, those independent retailers can continue to operate. GBR also has, as part of its duties—the things that it is required to follow by law—an interest in promoting the efficient use of public funds. We also think that there are significant economic benefits that can be realised through consolidation when it comes to aspects of ticketing.
As has been so ably pointed out, taxpayers and railway passengers are the same people. To that extent, people being taken in different directions by a vast variety of ticketing apps, not being able to realise the potential savings that are in place, does them a disservice economically. We believe that consolidation can offer them a smoother experience of ticketing and, hopefully, access to benefits that otherwise they might not be able to realise.
To return to the code of practice, it will be fully consulted on before its introduction, so it would not be appropriate for the Bill to pre-empt the specific provisions that it will contain. However, I can confirm to the Committee that the principles I have set out today, which I believe are consistent with some of the concerns that amendments 2 and 117 and new clause 3 seek to address, will very much guide ongoing work in this area.
On that point, I turn back to one of the comments made by the Opposition spokesperson about his concern regarding the setting of fares. I would like to make clear to him that it is not for the Secretary of State to interfere in day-to-day fare decisions. The Secretary of State will be limited to setting high-level strategic parameters to ensure that fares remain affordable for passengers and sustainable for taxpayers. GBR will make all of the operational decisions within those parameters and changes to those parameters would occur only to reflect GBR’s financial settlement, or in exceptional circumstances. That is, in my view, a necessary and proportionate safeguard to protect passengers, taxpayers and Government money. Therefore, as we are already taking significant and sufficient steps to deliver what the amendment envisages, so I urge the hon. Member to withdraw it.
I turn now to new clause 9 an amendments 131 and 132, which are dependent on it. New clause 9 would mandate the publication of a report covering various elements of GBR’s fares, ticketing and retail functions. Many of the items that this report would be required to cover relate to affordable and accessible rail travel—causes to which the Government are steadfastly committed. Affordability for passengers will be a key consideration when the Secretary of State sets strategic parameters and guardrails for GBR to follow on fares. As the Committee is by now aware, the Bill ensures continued statutory protection for concessionary discounts for young, older and disabled passengers.
Elsewhere, new clause 9 covers matters such as tap-in, tap-out payment and integrated ticketing, as well as third-party retailers’ access to systems and products. On integrated ticketing, we are already working with local authorities to integrate rail with local transport modes—and to trial or expand pay-as-you-go travel where appropriate. We are also progressing evaluations of how different pay-as-you-go schemes impact passengers, and the final reports will be published in due course. This work, which has not required additional legislation, is consistent with the ambition set out in various parts of new clause 9.
In summary, a legislative requirement to publish the envisaged report is not needed to deliver the outcomes that we want to see going forward. With that reassurance, I hope that the hon. Member for Didcot and Wantage will agree not to press new clause 9 to a vote. Amendments 131 and 132 are dependent on new clause 9 and, for the reasons set out, the Government do not believe the report that new clause 9 would require is necessary, so I hope that the hon. Member will also agree not to press these amendments.
Jerome Mayhew
I have great respect for the Minister and I hear with interest what he said, but I am not convinced that the sector will receive sufficient reassurance from that, so I intend to push the amendment to a vote. Perhaps others, subsequently, as well, but we will deal with those later.
Question put, That the amendment be made.