Railways Bill (Sixth sitting)

Edward Argar Excerpts

Tuesday 27th January 2026 Public Bill Committees

[Keir Mather]

I thank Members for tabling amendments on GBR’s funding and financial framework. In this chunky group of important amendments and new clauses, I first turn to new clause 26, tabled by the hon. Member for Didcot and Wantage, which would require the Secretary of State for Transport to publish a mid-funding period review of GBR’s funding, and new clause 41 from the shadow Minister, which seeks to create a GBR annual statement of financial performance.

In my view, the Bill already creates sufficient transparency about how GBR is funded. Further process could constitute unnecessary bureaucracy. Under paragraph 7(2) of schedule 2, the Secretary of State is already required to publish details of the financial assistance given to GBR using the funding period review funding power. Under paragraph 5 of schedule 2, GBR must publish its business plan and keep it up to date throughout the five-year period. Between those two commitments, the Transport Committee of the House of Commons will already have key information about how much funding the Secretary of State is providing to GBR, and the details on GBR’s business plan to understand what GBR is doing with its money. It would be unnecessary and inefficient to conduct an extra review.

New clause 34 would require the Secretary of State to set funding two years in advance of the funding period. First, I believe that it is misplaced to require that funding be committed two years in advance. There will inevitably be changes to economic circumstances over a five-year period, and new projects will surface. That was well acknowledged by all the witnesses at the oral evidence sessions, including those representing the railways supply chain. If there is no practical discretion, a settlement agreed two years in advance will be redundant before it even starts.

I can also assure the hon. Member for Broadland and Fakenham that the Bill already accounts for the need to provide the railways with certainty, and ensures that the funding process completes before the start of the next five-year funding period. The ORR, which will run the process, intends to set deadlines so that funding is committed in time for the industry to prepare. Secondly as with new clause 26, new clause 34 seeks to introduce additional reporting requirements that are unnecessary, given the transparency requirements already provided for in the Bill.

I now turn to new clauses 39 and 40. New clause 39 would create a duty for GBR to achieve value for money and long-term fiscal sustainability. New clause 40 would require GBR to develop a transition plan toward ending any reliance on taxpayer funding within its first operational funding period. I agree with the hon. Member for Broadland and Fakenham that GBR must deliver as efficiently as it can, ensuring good value for money and reducing costs to the taxpayer, and I assure him that the Bill is already very specific about GBR’s achieving value for money. Clause 18(2)(f) includes a specific legal duty on GBR and the Secretary of State to take into account

“the costs that will need to be met from public funds and the need to make efficient use of those funds”.

The ORR must also provide advice to the Secretary of State on whether GBR’s estimated costs in GBR’s draft business plan represent good value for money, with a requirement to publish a summary of that advice as part of the funding process. That is before the Secretary of State signs off on the business plan. Therefore, the hon. Member’s intent is already achieved by the Bill, and the amendment would only create extra bureaucracy and inflexibility without adding to transparency or financial sustainability.

A statutory transition plan to eliminate taxpayer funding would be unrealistic, and would undermine the railway’s ability to achieve its social goals. The reality is that taxpayer subsidy will always be needed for some parts of the railway. For example, while we aim to have the most profitable and efficient network possible, there will always be some lower-population regions of the UK in which rail travel will not make a profit and will need taxpayer subsidy. Clearly, it would not be appropriate for the Government to withdraw funding and neglect connectivity in those important rural regions, whether that be in Devon, Dorset or elsewhere—constituencies represented by Members across the Committee. Rapidly forcing GBR to operate without public support would be devastating for the economy and for the mobility of the public, not to mention reducing efficiency and the long-term capacity of the network.

Finally, new clause 44 would require the Secretary of State to set and publish an annual savings target for GBR. Introducing a statutory savings target risks creating a rigid measure that might not reflect the operational realities of the railway. Efficiency is already embedded in the Bill’s framework and will be a key consideration when GBR publishes its business plan and sets out how to meet its objectives, including on efficiency. Statutory targets are therefore not required to drive performance.

[Edward Argar (Melton and Syston) (Con)]

In the context of efficiency and cost, I want briefly to pick up on a point made by my hon. Friend the Member for South West Devon. What assessment have the Government made of the financial cost of bringing together a whole range of diverse terms and conditions and salary structures, from multiple train operating companies, into GBR?

[Keir Mather]

When it comes to setting up the operational structure of GBR, including questions about workforce and staffing, it is fair to say that no piece of railway legislation for 113 years has specified in statute what the operational decisions will be. Those conversations are ongoing, as they have been while rail companies have been taken into public ownership through DfT Operator, and they are always held, I am pleased to say, in close consultation with the workforce and trade unions.

On the overall principle of cost, I would point out to the right hon. Member that the Department’s view is that establishing GBR is set to cost £200 million to £400 million overall—which is 1% to 2% of a single year of operating budget—but could unlock up to a billion pounds-worth of efficiencies across the rail sector. Value for money is not only baked into the legal duties under this legislation, but is part of GBR’s operational ethos.

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[Olly Glover]

May I correct an earlier omission, Mr Western, by stating that it is a pleasure to serve under your chairship?

First, I want to make some general comments about this part of the Bill, which appears to be based largely on the existing five-year control period framework for rail industry planning and funding. Overall, that is a system that has been felt by the sector to work reasonably well. I had intended not to bore the Committee too much with war stories from my own time on the railway, but perhaps the only drawback of the system is that there tends to be an enormous consultant bonanza halfway through each control period, when the planning starts for the next one even while some of the plans and good intentions of the current control period gather dust on a shelf without necessarily being reviewed. That applies not so much to infrastructure enhancement, but more to process improvements for making the railway better.

First, I will say a little about our amendment 147, and then I want to speak, at perhaps rather more length than usual, about amendments 216 and 215. If there is one hill that I would be willing to perish on when it comes to this Bill and its design, it is probably the decision to not include funding for passenger services as part of the five-year funding settlement.

Our amendment 147 is basically intended to support what the Government are planning to do on five-year funding settlements, but to strengthen and protect them by simply creating a mechanism for the Secretary of State to reopen their funding should a major eventuality arise. The examples that the hon. Member for Broadland and Fakenham gave are pertinent; it is a bit of an extreme example, and hopefully we will not be there, but I think it would be reasonable to review the five-year funding of the railway in case of the outbreak of war. Our amendment would not stop the Secretary of State doing that; all it would do is require them to consult the ORR and make sure that the ORR gives written consent. It is a simple step to provide that little bit of extra governance and peer review.

I agree with the hon. Member’s comments on the shortcomings of his own amendment 129 in this area. I admire his honesty and the reflective nature of those comments—that is commendable, and something to which we can all aspire. Compared with his amendment, which would prevent variations entirely, perhaps ours is a compromise. I agree with his amendment 119, which shows good intention to make sure that the planning and funding happens in advance of the next five-year period.

Before I talk about our amendments 216 and 215, which I really do feel are critical, I want to read a couple of extracts from the policy paper on how the Government plan to fund GBR, which was published on 5 November 2025 as part of the series of factsheets on the Bill, because it will set the context for what I am about to say. The first thing that the factsheet explains is how passenger services—now known as train services—are currently funded. It states that passenger services

“run by government contracted train operating companies, such as Thameslink, are funded differently to”

Network Rail. It continues:

“The overall money available for passenger services is set at the Spending Review and then allocated via an annual business planning and funding process. Train operating companies also receive money from other sources, such as ticket fares. The train operating companies set out what they intend to deliver in annual business plans, then they seek approval from government. When approved, the contents of these plans are reflected in service agreements with the government.”

That is what the factsheet says about how things work today. It goes on to explain how things will work in future and in relation to the five-year funding review periods for other things. It states:

“Given the greater uncertainty of passenger services spend and income, due to changes in passenger demand which are difficult to predict, Passenger services will not be included within this commitment at this point. Passenger services and other activities outside of infrastructure operations, maintenance and renewal will be funded using existing powers, which will be updated to account for GBR. As these powers already work well in allowing the government to provide transparent and flexible funding to the railway industry, we have decided to keep them and continue to use the Spending Review for these aspects of GBR funding.”

Why does this matter? My real issue with the exclusion of funding for passenger services from the five-year funding review periods, and the failure to align it with infrastructure funding, is what the Rail Minister in the other place, the noble Lord Hendy, says about the objectives of the Bill. He has said it on the record on many occasions, including in front of the Transport Committee and when speaking at the Rail Industry Association reception a couple of weeks ago. He says that one of the key aims of the Bill is to properly enable the alignment of track and train—of infrastructure and train operations. He is absolutely right about that; I agree with him very much. Having worked on both sides of the fence, for Network Rail and for train operating companies, I have seen the endless misaligned objectives, budgets and ways of working and can say that he is absolutely right in his diagnosis and his prescription. However, the omission of passenger services from the five-year funding period runs the risk of undermining that. Let me explain why.

The key issue is that critical elements of the running of the railway are included in passenger services funding. Those include staffing on stations, in rolling stock maintenance depots and, critically, of train crew—drivers, guards, conductors and so on—as well as train crew training, which for many train operators has been a complete mess since the pandemic. Often, the temptation is to paint those train operators as evil private sector ogres and figures of terror from whatever fantasy franchise one wishes to quote, but in reality, since the pandemic, they have been subject to very tightly prescribed contracts by the Department for Transport, and that has led to some very poor short-term decisions about train crew training that have, at times, led to serious service cuts. We are thankfully recovering from some of that, but not wholly: for example, CrossCountry is still running at a significantly lower level than before the pandemic.

There is also the key question of the impact on Network Rail delays. A figure is often cited by those who like to bash Network Rail—having worked there, I know that there are plenty of reasons for doing so, but this one is a bit spurious—that 60% of delays are caused by Network Rail and only 40% by the train operators. Therefore, they say, aren’t the train operators wonderful and isn’t Network Rail terrible? The problem is that, partly because of the way that train crew operations and train operators are funded, a lot of the delays counted in that 60% are fundamentally train operator delays—delays that they have the most ability to influence.

Very sadly, from time to time, people commit suicide on our rail network. That is of course terrible. It initially causes very significant delay and passengers are generally sympathetic to that. Generally speaking, the benchmark for clearing and reopening the line in a way that is safe for everyone, having done the scene of crime investigation and so on, is 60 to 90 minutes. Passengers are understanding of that. They are not understanding when 12 hours later the service is still in complete meltdown because the trains are in one place, the drivers are in another and the guards are in yet another.

A few months ago I was travelling from Didcot to Cambridge via London, because we still do not have East West Rail—maybe one day we will, but that is one for another time—and many hours after a fatality between Reading and London, Reading was a trainpark. Every platform was strewn with Great Western inter-city trains or commuter trains, because its train crew and rolling stock diagrams are so complicated that it is not able to recover during disruption. That has happened partly because there is not a whole-system focus on the alignment between infrastructure funding and train crew and train operations funding.

There has been a lot of pressure, through the franchising process, to cut back on train crew costs, and therefore to diagram—forgive the jargon; I am trying to avoid using it. Diagrams are the daily allocations of instructions as to which trains drivers, guards and others work on. The way to reduce train crew costs, particularly given that there have been above-inflation pay increases, is to tighten those diagrams and squeeze every bit of productivity out of them. When the train service is working normally, it is fine if the train does one thing, the guard does another and the driver yet another.

[Edward Argar]

The hon. Gentleman is making a very good point, in the context of infrastructure and operating companies coming together—although it also applies more broadly—about the tightness of those diagrams and that scheduling. On East Midlands Railway, although normally the trains are short-formed, we regularly see a 10-car train that is packed in the front five carriages because the back five have to be locked, completely empty, and travel to London with no one sitting in them because there is not a member of staff to staff them. That is because the diagrams are so tight that there is no contingency to put extra staffing in place at short notice when someone does not turn up.

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[Keir Mather]

It is of course our obligation as the Government to meet the concerns of stakeholders, whether raised in the oral evidence session or elsewhere. It is also incumbent on me to point out that we want to abolish boom and bust in the rail system. On the fear about cliff edges, as was acknowledged by the ORR in its oral evidence, in reality there is not a cliff edge when funding always tends to run over the five-year period. Five years is the basis for the decision process by which funding allocations must take place. It is important to take the oral evidence in the round. It is also important to note that the ORR, which will be running the process, intends to set deadlines so that funding is committed with time for the industry to prepare. The amendment is therefore unnecessary.

Amendments 129 and 147 both seek to prevent or restrict the Secretary of State’s ability to vary the agreed funding settlement. I assure Members that the intention of providing a five-year funding commitment is that it lasts for five years. The Government are signed up to that principle. I also agree that certainty for GBR and industry is beneficial. More funding will mean we can get the best out of the railway and encourage investment, innovation and value for money.

Putting a hard restriction on all change, as amendment 129 suggests, would not be proportionate, as the shadow Minister acknowledged. As he noted, there may be unforeseen circumstances that require changes to funding, either to provide more or to reduce the amount. For example, GBR may outperform expectations and need less than is awarded, in which case Ministers will need to recoup the costs for the taxpayer, and can choose to do so in whatever way they see fit.

[Edward Argar]

The Minister is ever optimistic.

[Keir Mather]

Indeed! The operating environment may also change and GBR may need more funding than is committed. It is right that elected Ministers are able to make decisions on public spending and allocate resources as needed, balanced against the clear benefits of certainty.

Amendment 147 would restrict Ministers’ ability to vary funding by adding a requirement that the ORR must provide written consent. Although the Office of Rail and Road will have an important advisory role, it would not be appropriate for it to entirely determine changes to funding. Responsibility for decisions of public expenditure must remain with the Secretary of State, particularly where changes may be required due to wider fiscal circumstances. The amendment would also result in ORR consent being needed for increases in funding and immaterial changes.

The Bill provides assurances. If the Secretary of State considers that the impact of a funding reduction could be material, the Bill requires her to notify the ORR, giving it an opportunity to comment publicly on the likely effects on the railway. That balances the need for the Government to retain control over Government funding with the opportunity for independent evaluation and, if needed, public pressure, to protect certainty for the railway.

On amendments 215 and 216, I thank the hon. Member for Didcot and Wantage for so ably setting out, based on his practical experience, and far better than I ever could, the need for a single guiding mind for the railway. His explanation was buttressed by the right hon. Member for Melton and Syston. I thank the hon. Member for Didcot and Wantage for his amendments, which seek to align passenger service funding within the five-year infrastructure funding cycle. I support that intention. The Government agree that many benefits are derived from integrated funding streams. However, I do not agree that the amendments are necessary.

It is important to note that passenger services are already fully considered under GBR’s statutory duties and through the integrated business plan, in which GBR will plan all its activities on a five-year basis across track and train. The Bill requires GBR to deliver safe, reliable and efficient services, taking passenger needs into account.

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[Keir Mather]

No, I am not willing to say that those objectives, in principle, should not be pursued as a result of this legislation. The question is where within the Bill these things reside. If we are talking about short-term objectives relating to GBR’s operational efficiency as an organisation through, say, a key performance indicator, that is best placed within the business plan. If we want legal duties to ensure that we improve passenger experience or the reliability of train services, they are best placed as legal duties. There is a question about where we apportion the responsibilities and accountability mechanisms within the Bill. I do not believe that schedule 2 is the right place to be as prescriptive as the shadow Minister intends with those specific requirements.

On amendment 123, there is already a mandatory requirement in the Bill for the Secretary of State to obtain advice from the ORR on whether the activities that GBR is to undertake represent value for money. Unlike the list of potential objectives, that is mandatory. I also direct the Member to the assurances that are already in the Bill: there is a duty on GBR to make efficient use of public funds when exercising its functions, and a clear role for the ORR to assess the value for money of GBR’s proposed plans and to publish that assessment.

[Edward Argar]

Will the Minister confirm that the advice it will be obliged to seek will be published? If it is private advice, it has no teeth whatsoever, because the Secretary of State could accept it or refuse it, as could GBR, and no one would ever know. Would that advice be public?

[Keir Mather]

The purpose of issuing advice is so that we can enter into an era for the railways where these discussions happen in a way that is far more commonplace than the broken-down patterns of accountability that currently exist. I therefore envisage the sort of adversarial situation that the right hon. Member suggests occurring less than it does under the existing rail system.

The ORR and the Secretary of State are both required to consider value for money when they advise on and approve the business plan. I hope that the relevant measures will show the hon. Member for Broadland and Fakenham that we are serious about getting the best out of GBR and provide him with enough reassurances to seek to withdraw his amendment.

Amendment 122 would specify that the Secretary of State’s statement of objectives may include an objective on increasing passenger numbers and freight. It would narrow the wording of the objective in paragraph 2(3)(a) of schedule 2 from relating to passengers and freight to just increasing the numbers of those things. I do not think it would be wise to require ever-increasing passenger numbers as an objective in itself. Different objectives—such as increased reliability, improved passenger experience or references to spare freight paths—might contribute to that overall outcome while being more important in the moment. Again, that should be for the Government of the day, not inflexible legislation, to decide. I urge the hon. Member for Broadland and Fakenham to withdraw his amendment.

Finally, amendment 206 proposes to expand the list of potential topics that could be covered in the statement of objectives, with the hon. Member for Didcot and Wantage suggesting the inclusion of a section on customer experience and satisfaction. The current list in the Bill is purely illustrative, so Secretaries of State may in future add to the list of topics, and include just some of the topics or slightly different ones in their statement of objectives. I invite the Committee to note that the illustrative objectives already included in the Bill contain reference to the carriage of passengers or goods, as well as to fares and accessibility—all matters that are important to passenger experience—so it is unclear what more would be achieved through the amendment, which would simply add a further example to the list.

Furthermore, the Bill contains a duty for the Secretary of State and GBR to exercise the functions in the manner best calculated to promote the interests of the users and potential users of railway passenger services. Unlike the list of potential objectives, that duty is intended to be mandatory. I hope that demonstrates to the hon. Member for Didcot and Wantage that we consider passenger experience to be absolutely central to GBR’s objectives, and provides him with enough comfort not to press his amendment.

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[Keir Mather]

I thank the hon. Member for the amendments, which seek to add requirements to the production of GBR’s business plan and the ORR’s advice on that plan. However, on the subject of the publishing of advice, I briefly return to a question that was put to me by the right hon. Member for Melton and Syston. I feel that I was unnecessarily circumspect in the answer that I gave him, and it did not reflect the incisive nature of his question, which was about a mandatory requirement that exists in the Bill for the Secretary of State to obtain advice from the ORR on whether the activities of GBR represent value for money, and whether or not that advice can be published. I tell him that the ORR must publish a summary of that advice, and it can publish the advice in full. Although I do not wish to predict the future, I expect that it will likely to so, as part of its work in holding the Government to account. I hope that that is a full answer for the right hon. Member.

[Edward Argar]

I thank the Minister very much. I cannot imagine where that flash of inspiration and recollection came from, but I am grateful to him for the clarification.

[Keir Mather]

Committees move in mysterious ways—that is all I will say.

I will take each amendment in the group in turn, starting with amendment 124, which would require GBR to develop key performance indicators for each of its statutory duties. I am sure the hon. Member for Broadland and Fakenham will agree that KPIs should be realistic and measurable, so they would also need to be grounded in the specific proposals for what GBR intends to deliver over the next five years. They also need to be allowed to evolve over time, to ensure that they are most relevant to GBR’s planned delivery and can be effectively used to track GBR’s progress.

The way an indicator is set out can influence how an organisation behaves, and we should be able to refine them over the course of several funding periods, to get GBR to deliver in the way that it needs to. Therefore, a more flexible process works better than fixing the nature of the indicators in legislation—and I give way to the hon. Member.

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[Keir Mather]

Schedule 2 will establish a new funding process for GBR that takes what we have learned from the successes of the periodic review process and applies them to the new GBR world. The new funding period review will provide GBR with five years of funding to carry out its job in operating and maintaining the railway network, and will create a structure through which GBR will develop and own integrated business plans across track and train that reflect its role as the directing mind for the railways.

The schedule retains the role of the ORR in testing and scrutinising the plans, ensuring they are ambitious but deliverable, and providing confidence to the Government. The new funding process, with the five years of certainty it provides, will help to result in the best price for Government and the taxpayer, and generate consistent, longer-term work for private partners in the rail supply chain—keeping good, well-paying, specialist jobs alive and thriving in the United Kingdom.

The schedule will also give greater representation to devolved Governments and mayoral strategic authorities, providing them with a real opportunity to advocate for the countries and places they serve at the national level. The funding period review will provide GBR with the structure it needs to set out how it will make our railways reliable, offer better value and be more accessible. I therefore commend schedule 2 to the Committee.

[Edward Argar]

I will not detain the Committee for long. As ever, I am grateful to the Minister for his succinct explanation. However, I have two concerns; while he may be able to reassure me on these, I certainly think they need an airing. First, how does he propose to ensure that the funding period is properly aligned with a spending review period? I have seen the challenges faced in government when there is a misalignment, or where one period overlaps the other.

I was only very briefly Chief Secretary to the Treasury, but I have also been a Minister in a spending Department, and I have seen the challenges that occur when there is a misalignment, because the Treasury is very clear about non-commitment beyond an existing comprehensive spending review period. How will the Minister ensure alignment and certainty? Without alignment, although there is the impression of certainty, we all know the all-powerful hand of the Treasury if one, as a spending Minister, cuts across its bow on such matters.

The other challenge has been raised by my hon. Friend the shadow Minister a number of times in various contexts. Although I take the point about the five-year period—and the Minister referenced seeking to bring greater certainty to investment decisions with that—I am still not quite clear. I may have missed it, but I do not think I have heard a clear explanation of what steps are being taken to iron out the peaks and troughs that my hon. Friend the shadow Minister mentioned, because it is still a five-year period.

Unless the budget is set for the next five-year period in, say, year two or year three, well ahead of its coming into force—I would posit that the Treasury would be highly unlikely to agree to that—it still does not get around the problem: year one is scaling up, we might see spending in years two and three, and possibly in a bit of year four, but then that spending will drop off again due to a lack of certainty about what is coming in the next year one. I would be grateful if the Minister could clarify how what he sets out in the schedule will help to address the peaks and troughs that my hon. Friend the shadow Minister so ably highlighted to the Committee previously.

[Keir Mather]

I thank the right hon. Member for Melton and Syston for his contribution. He is right to note that the five-year funding process has a different period from that of the spending review. It is tested in the sense that the funding process for Network Rail works similarly now. As was acknowledged in the oral evidence from the ORR, there is not in reality a cliff edge through the five-year funding settlement, as funding always tends to roll over the five-year boundary, but five years is the envelope through which those decisions take place.

That is my assessment of how the process works; if I have failed to answer any of the right hon. Gentleman’s questions, perhaps he will illuminate me on what they are and I can provide him with a more fulsome response later on.

Question put and agreed to.

Schedule 2 accordingly agreed to.

Clause 13

Charging and terms and conditions