Future of Rail Services

John Penrose Excerpts

Tuesday 20th December 2022 Westminster Hall

[John Penrose (Weston-super-Mare) (Con)]

My hon. Friend is making an excellent speech. I want to back up his suggestion for a much more slimline future system operator for two reasons. First, if I understand his point correctly, that would put customers and passengers right at the front rather than system and network engineers, which is the right way round and the right order of priority. Secondly, that addresses the fundamental point that my hon. Friend raised at the start that the difficulties from 2016 onwards were of an overly centralised, overly controlled agglomeration of power. He suggests a dispersal and relaxation of that power, and a transfer of it out from the centre, which is essential if we are going to have the flexible system we need to adjust to the changes that the pandemic has brought.

[Stephen Hammond]

I am tempted to say that great minds think alike, because my next point is to suggest to the Minister that the Government should look at passenger service contracts. We all accept that the post-2016 franchising system and the pandemic have meant there is a need for change, but passenger service contracts are a journey rather than an end in themselves and the Government should look at what the end might be, so I suggest two things. I suggest that we should look at evolving mechanisms, so that there is a spectrum of possibilities for either new contracts or revised franchises that look at revenue risk, how it is shared, a range of revenue incentives, and a range of arrangements that in some cases would allow slot auctions as well as new franchises and that potentially ensure passenger service contracts in some areas. To that end, a commitment to review what is now in place after two years would allow that to happen. As I say, it would also provide for greater competition by introducing slot and route auctions—initially, I suggest, for a limited number of some of the long-distance routes. It would drive passenger satisfaction, encourage initiative and secure a future for open access, which had been one of the drivers for change, and for a range of competitions.

Some really exciting recommendations in the Williams-Shapps review should be kept. They include a steady programme of electrification alongside the utilisation of enhanced battery and hydrogen technology; new procurement processes based on whole-life value, with consideration of opex and social value, not just old-style cost-benefit analysis; and the provision of open data being more accessible and available to all industry participants. Those are some of the sensible, well-thought-through suggestions, as is the need for a guiding mind, but I hope the Minister will also accept that now is the right time, as I understand that the Government are looking to bring forward new plans or even a Bill in the new year. I hope he will accept the points I have made about separating the guiding mind from the infrastructure provider, giving a commitment to revise the spectrum of possibilities for train operating companies, and giving a commitment to see the private sector work alongside the public sector to deliver a clear, identified and accountable investment programme, so that all the money that is available for investment is spent in control period 7.

I am optimistic about the future of the railways, and I am particularly optimistic about their being in my hon. Friend the Minister’s hands, so I hope that he will accept that what I am trying to do—in a very thumbnail and headline way—is to set out some ideas that I think will make the future of the railways even more secure. I hope he will accept them as positive, constructive and implementable ideas, so that we have a railway that is fit for the 21st century.

--- Later in debate ---

[Huw Merriman]

I agree with the hon. Lady, and I am aware that she applied for an urgent question on the matter. I will write to her.

I call for all hon. and right hon. Members to come together as one on this issue. We cannot focus on good passenger experience and a future for the railways if there is industrial action that involves the workforce not working on rest days when it has previously done so. I have never encouraged that pattern or seen a future for it, because it means that we are reliant on goodwill. When goodwill is withdrawn at short notice, we end up with what the hon. Member for Twickenham (Munira Wilson) described. We need to move away from rest-day working, which does not work. Equally, I urge all those who are involved on the union side of matters to consider that it is Christmas. If we want a future for our railways, we must work positively and constructively, rather than withdrawing labour. I will write to the hon. Lady, as I mentioned.

[John Penrose]

Will the Minister give way?

[Huw Merriman]

I should make some progress, because time will push me towards the end. I shall try to take a further intervention if I can.

I want to talk about other parts of the reform: fares and ticketing. As part of the plan, we will invest £360 million to radically reform and improve the passenger experience. We will also look to deliver our manifesto commitment by introducing tap-in and tap-out at additional stations in regional and urban areas, and contactless pay-as-you-go ticketing at over 200 stations in the south-east. We will also introduce simpler, modern ways of paying for travel and a straightforward compensation process.

Let me touch on the proposals for reform. In addition to our significant investment in the passenger experience, one reform that we are considering is the creation of a new guiding mind to bring the fragmented railways under a single point of accountability. That would not be nationalisation; rather, it would be simplification. A simple, more agile structure will be needed to change travel and working patterns, introduce new technologies and enhance business models. My hon. Friend the Member for Wimbledon talked about the role of the private sector.

My hon. Friend the Member for Wimbledon talked about the role of the private sector. Rail reform must have at its core greater private sector involvement. I want any new model to take the very best of the private sector: innovation, an unrelenting focus on quality and the type of models that drive reform, a better experience for the passenger and better return for taxpayer value. I am happy to discuss the private sector contribution, and to meet my hon. Friend to reassure him about that. He knows that I have always had a real passion for what the private sector has brought for rail. I agree that, although the franchise model may have run its course, it was not made easy for the private sector to navigate, because it became a very complex, documented process that put off new entrants to the market. Any rail reform has to be simple and nimble enough to bring in new innovators, not just the largest.

My hon. Friends the Members for Wimbledon and for Weston-super-Mare (John Penrose) have championed open access. Rail reform must see an important role for open-access operators. We want to make the best use of the network and grow new markets for rail. The Department recently supported Go-Op’s innovative proposal to operate open-access services from Taunton to Swindon and Weston-super-Mare, providing new direct services and improved connectivity for communities.

I have challenged my Department on open access. It seems to be the case that we are not putting open access on equal footing, which means that there is some sort of charge and enablement. The response is always, “It just takes away from the other contracted operators.” We need to charge open access more to allow it not to take away but to compete. In my view, open access definitely has a place, but we perhaps need to reform the entrance requirements so it is not constantly turned down. I am very excited about those possibilities.

My hon. Friend the Member for Wimbledon asked when legislation would be forthcoming. We will not be taking forward legislation on rail reform in this parliamentary Session, as he is aware, but we will introduce it when the parliamentary timetable allows, and I am very keen that we do so. In the interim, rather than do nothing because legislation is not immediately forthcoming, many areas can be progressed outside legislation. They include making significant investment in ticketing and retail, and the formation of the reform proposals that we will focus on. I assure my hon. Friend that we will bring those forward in parallel with legislation.

My hon. Friend mentioned the control period 7 settlement. That process is vital for securing value for money for the taxpayer and providing certainty to investors. The Government published a strong funding settlement of more than £44 billion for England and Wales for the next control period, which begins in April 2024. My hon. Friend touched on that. That demonstrates our long-term commitment to securing a safe, reliable and efficient railway. The industry—public and private—now needs to work together to establish stretching yet realistic targets for improvements and reliability, supported by Government investment.

On the lack of reference to rail reform or GBR, the HLOS, which my hon. Friend mentioned, is more of a statement of principle. He should not read anything into that. We have not landed on one particular model, so it would not have been appropriate to insert one in there. I got my pen out and made sure there was reference to innovation and private sector involvement—I do not believe anyone took those words out. I was particularly keen to ensure that, with innovation, we included small and medium-sized enterprises so that we are focusing not just on larger private sector involvement but on the small innovators that can really drive change. They need to be in the room too.

On industrial action, passengers rightly expect a regular, reliable service, seven days a week. Current shift patterns and voluntary weekend working for railway staff make that vision nearly impossible. The only solution is for everyone to come together and agree a new way forward. I have met the unions and employers, and the Secretary of State has met the unions too. I hope that will send a message to this House that we want to facilitate an end to industrial action. I again ask all right hon. and hon. Members to come together and push not just the train operators and the Government but those who are responsible for the strikes—the trade unions. It is time for all to be called out where they can deliver more.

The Government are wholly committed to improving journeys for passengers and creating a better, more modern rail industry. I thank my hon. Friend for his contribution. I assure him that the private sector will be right at the heart of any reform proposals. The Secretary of State and I are committed to an improved railway with the private sector at its heart, and I hope that my hon. Friend will keep me to that mantra.