Railways Bill

Lord Grayling Excerpts

2nd reading
Tuesday 7th July 2026 Lords Chamber

[Lord Grayling (Con)]

My Lords, it is a pleasure to follow the noble Baroness, who made some very apposite points about passenger rights. I declare an interest as a member of the UK and Ireland leadership team of AtkinsRéalis and as an adviser to Hutchison Ports.

For me, this is somewhat of an endpoint, since, as the Minister rightly said, I started the process back in 2018 through the Williams review, which was intended to address the issue we will all touch upon tonight. I never believed that separating track and train was the right thing to do. It was right, in my view, to move away from a state-run monolith, and it distresses me enormously that we have ended up going back to a state-run monolith, but it was absolutely not right in the end to fragment the railways as much as happened.

The reality is that, in the two decades post privatisation, the railway turned around. Under British Rail, it declined: lines were closed and passenger numbers fell. Under the privatised railway, passenger numbers grew, the number of trains expanded and we ended up carrying more passengers on the railway network today than travelled in Victorian times, when the railway was twice as big as it is now. Therein lies the problem. I do not believe that this Bill, and the route that the Government are taking, will get to the position that they want to get to. We all want to get to a position where the railway works well, delivers for passengers and delivers for freight. The problem is that this is not just about who owns it.

When the Williams review was set up, he and I sat and talked about different options. We agreed that there are basically four ways to run the railway. You continue with franchising, you go back to British Rail, you have the model that John Major advocated, which I believe was the right one—regional integrated companies that control both track and train—or you take the model that ought to be quite close to the Minister’s heart: the TfL model, whereby you have a guiding mind but it operates concessions for the different parts of its operation.

Funnily enough, that model is in use elsewhere in the country, in Manchester, by the immediate past mayor and his Bee Network. This was established by Conservatives; the powers were provided by Conservatives and he took rather a long time to take them up. He now talks lovingly about the state-owned, state-run bus network in Manchester. Actually, it is not: it is basically a TfL-style concession whereby the private sector operates the buses.

This is not what this Bill does. It will be quite interesting to see what happens, for the Minister—although perhaps less for him. With the changes that lie ahead of us in a few days’ time, I very much hope that the Minister will retain his position. He commands respect from all sides of this House, even if we may not totally agree on all matters in the Bill. It will be interesting to see whether this Bill survives in its current form the change of Prime Minister that lies ahead, because it is absolutely not consistent with the model that was followed in Manchester.

However, the real problem on our railway is not just who owns and runs it. It is about capacity. The reality is that today’s railway is not fit for the level of demand on it. As a country, we closed too many lines in the 1960s. Too many routes are congested. You cannot easily get 19 or 20 trains through Wimbledon at peak times. You could not easily get the number of services needed into Manchester Piccadilly, which is why, in the end, some degree of capacity enhancement is needed there. The Government should be focusing on how to break down the capacity constraints.

With all due respect to the Minister for his previous role as chair of Network Rail, I have to say that Network Rail has not done us well in that respect. We need to put extra capacity into the network. It needs to be done in the most cost-effective way. It needs to be done with a bit of vision: for example, with digital signalling, which increases capacity, not simply by replacing the stuff that is there already.

Network Rail costs are far higher than they should be. Let us take the case of East West Rail, which I tried to get out of the Network Rail system; I admit to having failed. It has cost much too much. That was because it was done to standards set by Network Rail beyond those that are realistically needed today. It is an existing railway line. You can even operate, albeit at slow speeds, what was there before. Was it really necessary to ship millions and millions of tonnes of earth to make the embankments broader?

There needs to be a challenge to the engineering standards, not to create an unsafe railway but to ask: is everything that Network Rail does, whether in process, planning or engineering terms, absolutely necessary and consistent with our need to generate additional capacity?

That is the state-run bit of the railway. There is no evidence as yet that a state-run railway delivers a quantum better performance. Indeed, as I am sure the Minister himself knows, when it comes to South Western Railway, 14 months into the public sector, its performance has gone down. Why is that the case? Surely the opposite should be the case. As we go through this Bill process, the Minister will have a job to explain to us why a return to British Rail—it has a “Great” on the front of it, but it is basically a return to British Rail—is going to deliver the passenger improvements that we need.

I will also touch briefly on the issue of devolution. The model in the Bill is absolutely inconsistent. It is certainly inconsistent with the arrival of a new Prime Minister who believes in devolution. How can it, for example, be appropriate to have a system in London that is fine, the TfL-style concession system, but you cannot have it in Birmingham—even though it is perfectly possible, given the size of the West Midlands area, to have dedicated services such as the London Overground in Birmingham? I really do not understand the logic. If the Government believe in devolution, they should do it, and if they do not believe in devolution, they should not do it—but they should not create an odd hybrid.

I want to say something to the Minister about the system of consultation. Do not believe that always works, because in 2018, when we had all the issues with the timetable, the Northern franchise was equally the responsibility of Transport for the North and the Department for Transport. But, I have to say, Northern leaders hurled all the abuse at me and the Department for Transport and took no responsibility themselves for their own accountability and the performance of that franchise. Frankly, it was a disaster in every respect, but do not believe that consultation powers under the umbrella of devolution are actually going to be transformative in any way, because they are not. The Government are going to be blamed anyway if something goes wrong.

I also say to the Minister that I am looking for bold plans to expand the capacity of the network. I very much regret what has happened with HS2 sucking up all the budgets for control period 6 that I hoped could make a difference. I openly say that I personally believe that HS2 should have been scrapped in 2019 when it was clear that the costs were out of control, and that money should have been spent on capacity enhancement. I give the noble Lord, Lord Berkeley, credit for that: he was right on that point. But we are where we are now. We have to focus on capacity enhancements. People and passengers have every right to expect better, but they should not believe that simply changing from private control to state control is what is going to make the difference. We have a rail network that is simply not big enough for the demand on it today, and until that is fixed—in a whole series of ways across the whole country, rather than simply with big projects—it will not make the difference that passengers deserve.

--- Later in debate ---

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I thank all noble Lords who have taken part in this thorough and thoughtful debate. I would like to start by paying tribute to the remarks of the noble Lord, Lord Wilson. His distinguished record of service in this place and the Civil Service is a beacon of dedication and commitment to public good. He has brought to our proceedings a deep experience in the heart of government and his contributions are always thoughtful, measured and influential. As always, he is well informed about the railways. Gladstone made provision for the nationalisation of railways in the 1844 Railway Regulation Act. It was not pursued, but it was an early indication that running the railway as one system might be a good idea. I know that the House will join me in thanking the noble Lord, Lord Wilson, for everything he has done and wishing him all the best for the future after he retires in September.

Turning to the debate at hand, we have heard that everyone across the House can agree that the railways require reform. The current system is clearly no longer working for passengers, operators or taxpayers. Services have been unreliable, customers have been unhappy and the system has provided poor value for money. We have begun taking services into public ownership, but that was never a long-term solution. The Railways Bill is the answer to the issues that have plagued our railways for far too long, providing new leadership, accountability and long-term thinking to the sector and better meeting the needs and expectations of those who rely on it. The Bill continues the great work of the Passenger Railway Services (Public Ownership) Act 2024, enabling us to finally reform the wider railway and provide a better service to taxpayers.

I am grateful to all noble Lords who have expressed support, with one exception, in my doing this job in the future. I am sure everything they have said will have no effect whatever on the new Prime Minister. I also will not tell my wife. The noble Lord, Lord Evans of Guisborough, referred to me as the “guiding mind”. I just say to him that the one thing that the Bill is designed to produce is to stop Ministers being the guiding mind of the railway. The purpose of the Bill is to have a body of people that can run the railway and who are professional and committed to it.

This has been a varied debate. I am going to do my best to cover as many as possible of the topics that were raised. As ever, it is subject to my handwriting and the vagaries of my notes, and I may write to noble Lords in some cases.

I want to start with access reform because the noble Lord, Lord Redwood, said that the infrastructure was not used efficiently. He is right, actually. He talked about digital signalling, as did the noble Lord, Lord Holmes of Richmond, and they are both right. One of the issues that we have had is that we have not had a long-term plan for the railway. We have not had a long-term strategy in which to decide where to put those investments and where the capacity that they would give would be best utilised. That is one of the reasons for the provisions in the Bill.

On open access, which was raised by the noble Lords, Lord Lansley and Lord Moylan, and my noble friend Lord Berkeley, and others, the truth is that open access has been severely constrained recently. Most of the applications that have been made to the ORR have been declined simply because the view of the ORR is that there is insufficient capacity on the main lines in Britain to accept more trains. I would contend that one of the reasons for that is that, without a whole system look at the use of the infrastructure, we will never create more paths.

Interestingly, that whole system view of the infrastructure on the east coast main line, which took place several years ago but was not implemented—it could not be implemented because there was nobody to authorise it until I did—did create more capacity. The chances are that, if GBR looks at the job that the Bill will give it, to correctly look at capacity across the railway, I think it is far more likely that there will be capacity on the main lines and that therefore open access will in fact have more chance in the future than it has had in the recent past.

On freight, I thank all those who have said that the freight target is welcome. As the noble Baroness, Lady Whitaker, said, it will drive the Government’s net-zero policies. The noble Baroness, Lady Pidgeon, was looking for clarity that there was no intention to interfere in private sector infrastructure. I am happy to give her that clarity: there is no intention to interfere in that. The private sector has invested in rail connections to warehouses and so forth, so I am happy to give that assurance.

The noble Baroness, Lady Leaman, referred to fares and in particular to Delay Repay. There is great inconsistency in the way that that is done currently. I welcome her support for some consistency, as we will talk about elsewhere in the Bill, because that is one of the things that is simply lacking in all the retail arrangements of the railway. It is one of the reasons to move forward with the Bill.

The noble Baroness, Lady Harding of Winscombe, talked about ticket retailing, as did the noble Lords, Lord Dixon of Jericho, Lord Harper and Lord Moylan. We have asked the Office of Rail and Road to provide an industry code of practice, which will also have a clear enforcement regime. We remain in discussion with independent ticket retailers, including the one dominant player, and there will be separation of decision-making between GBR’s retail and other functions.

The noble Lord, Lord Moylan, is right: I am keen on open data. It is important that GBR will share open data. As the noble Lord, Lord Dixon of Jericho, said, open data is vital. I am very sympathetic to the development of alternative websites, but it is equally important that we rationalise the 14 that we already have, which either are in or will come into public ownership. If noble Lords listened to the noble Baroness, Lady Grey-Thompson, they will have heard about the inconsistency in approaches to ticketing, particularly for people who need help and are disabled. That is one of the things that we propose to remedy.

That subject of accessibility, as I said when I introduced the Bill, is a major issue. A number of noble Lords, including the noble Baronesses, Lady Grey-Thompson, Lady Brinton and Lady Humphreys, and the noble Lords, Lord Blencathra and Lord Holmes of Richmond, all remarked on the need to make this better and to do more. I completely agree. It is really important. Again, the fragmentation of the railway has led to great inconsistency. It is one of the things that badly needs to be sorted out. We had several debates during the passage of the public ownership Act and I am sure we will have some more this time. I agree with the noble Lord, Lord Holmes of Richmond, that getting the passenger experience right will also get accessibility right. I know that we will come back to that subject; it is one on which the Government place great importance.

As for a passenger target, the implication that there is somehow no incentive to do that if it is not written in the Bill is wrong. The noble Baronesses, Lady Jones of Moulsecoomb and Lady Pidgeon, and the noble Lord, Lord Mohammed of Tinsley, all raised this. There will be a great incentive to grow passengers for GBR, as well as to reduce costs, because GBR will need growth and will need to treat passengers properly in order to reduce the cost to the taxpayer of running the railway. I think there are sufficient incentives in here, but I am sure that we will discuss them further.

Several noble Lords referred to the possibility of the Secretary of State micromanaging the railways. The first thing to say is that that is already the case. The present circumstances leave civil servants, reporting to me and the Secretary of State, deciding how long trains are, where they stop and what the timetable looks like at every station in Britain. You cannot get more micromanagement than that. The intention of the Bill is to turn that round; we do not want the Secretary of State to be deciding those sorts of things, we do not want the Rail Minister to decide them, and we do not want civil servants to decide them. We need a body that will take an overall view of the value of the provision of passenger services and freight on the railway and derive the best timetables with the best train service to achieve it. I am very clear that one of the intentions of this Bill is to stop that.

The Secretary of State will, of course, have significant powers, as one would expect, bearing in mind the amount of public money that goes into the railways, but these powers exist in other places in government. They are not commonly used. The Oil and Gas Authority has received only one ministerial direction in its 10-year history. That contrasts with the situation for several years now where the Secretary of State or the Rail Minister has been invited to approve detailed business plans every year, which more or less go down to the trains stopping at every station. That is something that we need to stop.

There are clearly different views about the powers of the regulator, the Office of Rail and Road. The noble Baroness, Lady May, deprecated the apparent reduction in its powers, as did other noble Lords. I always listen very carefully to the noble Lord, Lord Bradshaw, who has long experience in this. He has said to me, both outwith the discussions today and in the course of this debate, that the regulator should not be in charge; of course there is a role for regulation, but the regulator should not be in charge of the railway. The sad history of the fragmentation of decision-making on the timetable is good evidence that having the regulator deciding how the system is used is not the best way of doing it.

I turn to a long-term railway strategy, which we have not had for 30 years. My noble friend Lady Alexander of Cleveden is right that a long-term railway strategy makes it possible for GBR to drive economic growth in regional and local communities.

The noble Lord, Lord Grayling, raised the question of enhancements. I agree with him about the challenges to standards. I do not think the fragmentation of the railway between operations and infrastructure led to any significant challenge on standards—it was certainly difficult to achieve it in a railway infrastructure organisation. There is more likelihood of this challenge in the future where operators will be challenging the cost of running and enhancing the railway, and there is also far more chance of the right schemes being authorised because a long-term plan will set out the best things to do with the best returns on the railway, the best capacity increases, in a way that we have not seen for a very long time. We can discuss the point made by the noble Lord, Lord Lansley—

[Lord Grayling (Con)]

I hate to disagree with the Minister, but he will know that the programme of enhancement set aside for CP6 was carefully discussed with him and the executive of Network Rail and represented a significant plan to do precisely the things that the industry said would make the most difference. The tragedy is that it did not happen, and even now under this Government, it is still not happening.

[Lord Hendy of Richmond Hill (Lab)]

Recollections are a great thing. I recollect that not one of the of schemes that I was invited to by the predecessor of the noble Lord, Lord Grayling, had a business case attached to it. It was a list of schemes that was just a list of schemes. I think that we can do a lot better than that. A long-term railway strategy that invites the railway to list and make business cases for the right schemes is entirely right.

My noble friend Lord Faulkner of Worcester made the most important point, which is that if you do not have a list of schemes prioritised by business case, you have no chance of getting private sector contributions to railway enhancements which create growth and wealth. That is an important point and something that a long-term railway strategy and the resulting GBR business plan will deal with.

On private sector involvement, the first thing to say is that this Government are not fundamentally opposed to it at all. At the end of this process, when this Bill becomes an Act, 60% of the expenditure by GBR, once established, will be spent in the private sector.

On the balance sheet implications raised by the noble Lord, Lord Young of Cookham, I say that the Railways Bill will not impact the way that the rolling stock leases will be classified by the ONS. I have previously discussed with him the confidence of the rolling stock leasing companies that this will not be the case. The story that the noble Lord, Lord Tunnicliffe, told about how Network Rail crept back into the public sector in 2014 is absolutely right. It did go back on the balance sheet. No fuss was made about it at all. It turned out to be—all the time—a nationalised industry.

The experience of the franchises in recent times is interesting. A number of noble Lords said that concessions could have been adopted. Of course, the last Government had the chance to do that. They already had four private sector operations in their control, but they did not choose to do anything with any of them; that is an interesting feature. One noble Lord—I am afraid I omitted to note the name—said that, in fact, the private sector operators before the last election were not enamoured at all of that model and, therefore, they were not very keen on it. The truth of it is that the railway had stagnated, and this Bill is the way of retrieving the situation.

In answer to the noble Lord, Lord Hampton, Platform4, which is a successful amalgamation of the Network Rail property function and London and Continental Railways, will undoubtedly continue. The railway has an important role in developing land on and around stations, and the rest of the railway land. It is very important that the railway plays its part in the economic development of the places that it serves.

The noble Lord, Lord Bradshaw, raised the question of funding certainty. Of course, the Bill continues the infrastructure funding in five-year periods, and it is shown through the provisions of the Bill to continue. The Bill also gives the opportunity to Ministers in due course to give longer funding periods for the operations, but I think that most Ministers would want to see GBR making a success of its job to do so.

As to passenger safety, the noble Baroness, Lady Pidgeon, rightly draws the attention of noble Lords to the importance of passenger safety. GBR will have to face this subject directly; I think it will be more equipped to do so than the current railways. The noble Baroness is absolutely right that the safety of women and girls is crucial. This is true in relation to personal safety but also, frankly, for encouraging more travel by half the population.

The noble Baroness, Lady Whitaker, referred to staff safety. I am happy to confirm to her that the Office of Rail and Road will continue its function of managing safety on the railway and, indeed, prosecuting where that is the appropriate thing to do.

A number of noble Lords raised questions about the passenger watchdog and I know we will have a lot of discussion about this. The noble Lord, Lord Mohammed of Tinsley, and the noble Baroness, Lady Pidgeon, raised the question of a passenger charter and the importance of passengers, which is of course right. I am sure that we will have some discussion about how much power the passenger watchdog should have. I disagree, as I generally do, sadly, with the noble Lord, Lord Moylan. I think that enforcement of what the passenger watchdog wants to do in relation to the Office of Rail and Road is quite sufficient, and I do not see any problem in doing it.

On devolution issues, which the noble Lord, Lord Grayling, raised first, the limitations of some of this are the limitations of railway geography as opposed to political boundaries. As the still current Mayor of Greater Manchester has discovered, very few train services within mayoral boundaries are wholly within the boundary. The other point is that they run on lines which are part of a national network. That does not at all mean that devolution cannot be done with success, and it does not at all mean that mayors cannot have the passenger services they want. Look at the growth of the Overground network in London. In some cases, those services go outside the London boundary, as several noble Lords will recall from their history in London government.

The way that we achieve that is through intelligent discussion about the balance between the network and its local influence and the network and its national influence. The provisions in the Bill are currently quite sufficient and will allow for a discussion between mayors who have an aspiration for economic development in their part of the country and on the connections that their cities and towns need to have with other parts of the country. The Bill is drafted in precisely the way it is for that reason. My current belief is that the Bill allows that to happen and gives sufficient powers for them to influence how the railway is structured.

The noble Lord, Lord Wigley, raised several points about Wales. He will know, of course, that the Barnett formula and how it is applied are matters for His Majesty’s Treasury and the Chancellor. I am sure that the new First Minister of Wales will be asking any new Prime Minister shortly about not only that but fiscal devolution in general. All I can say is that the £445 million that this Government have provided for rail enhancements in Wales is far in excess of that of any previous Government. It includes the north Wales coast and Wrexham, and it is a very good start to the Transport for Wales investment plan, which the noble Baroness, Lady Humphreys, referred to. I am sure it will continue like that. I have already met the new Transport Minister for Wales and I am sure we will have some powerful discussions.

As to the design of GBR, I hope noble Lords will know that the Government’s firm intention is to devolve GBR to a route and regional basis. It is quite clear that it should not be some grand, centralised and distant organisation. There will have to be functions that are centralised—the access and use policies are one such example—but, in general, this Government want the railway run by people who are identifiable to elected politicians and the local communities they serve. The noble and right reverend Lord, Lord Sentamu, is right that it is about leadership—not mine, but the leadership of people who can be appointed to run both operations and infrastructure and produce a better service.

One thing that was lost in the previous 30 years is that franchisees changed quite regularly and so did their managements. Local communities and elected Members could never quite get used to who was in charge because it changed quite regularly. That is not right. I have told the people we are appointing now to integrated business units that they should behave as though they are there for the rest of their careers and that they should get on with it.

I am told my time is up, so there is a limit to what I can answer, other than—

[Lord Grayling (Con)]

My Lords—

[Lord Hendy of Richmond Hill (Lab)]

I will not take any more interventions.

[Lord Grayling (Con)]

It is a procedural point. There has been a discussion about whether the Bill is going to be committed to the Moses Room or to the Chamber, and there is no Motion before us tonight. Could the Minister reassure us that the discussion now is with a view to having Committee stage in the Chamber?