The following Statement was made in the House of Commons on Thursday 20 May.
“With permission, Mr Speaker, I would like to make a Statement about the future of rail.
The railway is one of the nation’s proudest and most enduring innovations. Almost 200 years ago the first line opened—the Stockton and Darlington in County Durham. Within decades, the railway’s iron web stretched across the nation, carrying trains that transformed our economy and society. From steam icons such as the “Flying Scotsman” and the “Mallard”, to the high-speed intercity 125, which became the stalwart of Britain’s railway for 45 years, this country was built by the railway.
In the 19th century, rail helped to make us so productive and turned us into the workshop of the world, and rail powered our great Victorian cities and shaped our economic geography. Rail opened up vast, long-distance travel for ordinary people, transforming opportunity for the masses. Just as rail moulded our past, so will it shape our future. No other form of transport can bind the nation so effectively and help us to level up our country, bringing new jobs and investment to regions such as the north and the Midlands, as we build back from Covid.
However, for rail to play that key future role and reach its true potential, the industry requires radical overhaul. The Government are deeply committed to rail. We are spending tens of billions on modernising rail infrastructure, electrifying existing routes, updating signalling stations, renewing train fleets, building new lines, and making up for decades of underinvestment, but there are problems that investment alone cannot solve, such as too many delays, too much confusion for passengers, and different parts of the industry not working together.
The part-privatisation of the railway in the mid-1990s successfully reversed its long-term decline. Private sector involvement has seen passenger numbers more than double, rising more quickly than in most of Europe. Passenger travel is safer, and our country is better connected, with billions invested in new, modern trains and upgrading our stations—investment that would not have happened under nationalisation. However, the industry is fragmented, it lacks accountability, and it is lacking in leadership. The chaotic timetable change of three years ago this week demonstrated that point, as did the Government being forced to step in to take over failing franchises. Those are just some examples of how the railway was not working, and of how it was neglecting its greatest, most precious asset: the passenger.
Today I am proud to announce the beginning of a new start for the railway in Britain. It is the biggest shake-up in three decades, bringing the railway together under a single national leadership, with one overwhelming aim: to deliver for passengers. The new public body, Great British Railways, will own the infrastructure, run and plan the network, organise the timetable and set most fares. It will be one organisation, accountable to Ministers, to get trains running on time, make the customer experience as hassle-free as possible, and bring the railway into the 21st century, a single, familiar brand, with united accountable leadership.
We are going to sort out and simplify ticketing. Instead of having queues at stations for wads of paper tickets, we will roll out convenient, modern ways to pay and book—smartphones and contactless—and a new Great British Railways website for selling tickets across the network. We will welcome independents continuing to compete in the ticket retail market, particularly where they can grow new markets, recognising the value of private sector innovation. Pay-as-you-go will be more widely accepted, and flexible season tickets will be introduced next month, saving money for an increasing number of people who do not commute five days a week. At the same time, “turn up and go” tickets, conventional season tickets and Britain’s comprehensive service will all be protected.
Although Great British Railways will manage the network, we must not ignore the contribution that the private sector continues to make. This is not renationalisation, which the Government continue to believe failed the railways. Rather, this is simplification. While Great British Railways acts as the guiding mind to co-ordinate the whole network, our plan will see greater involvement of the private sector. Private companies will be contracted to run the trains and services, with fares set by Great British Railways. It will work more like London buses and London Overground, delivered by private companies but branded as a single national service.
The operators will be rewarded for providing clean, comfortable, on-time services, and our reforms will unleash opportunities for them to innovate, helping us to change the way tickets are sold and the way data is used, so that passengers can plan their journeys more easily. These contracts will lower the barriers and bring in new entrants, including community rail partnerships and other innovative bidders operating on branch lines. That will make the competition process easier and will be good for taxpayers and passengers.
In England, we will work to bring the railway closer to those who use the services, and in Scotland and Wales, we will continue to exercise the current powers under devolution. Close collaboration with Great British Railways will help to ensure that delivery improves across the services and provides consistency for passengers across the country.
This is also about changing the culture of our railway. Covid has shown the very best of the railways. Ticketing staff, engineers, drivers, guards, cleaners, signallers, maintenance workers and timetablers have all played their part in keeping supplies, vaccines and essential workers moving, and for that we owe them a debt of gratitude. They have shown us what can be achieved when this industry comes together, and we want to strengthen that.
Simpler structures and clearer leadership will make decision-making much more transparent and will remove the blame culture. There is far too much bureaucracy focused on establishing who is to blame rather than finding solutions. For example, all delays greater than three minutes have to be allocated to someone for financial penalties to apply. Until recently, under the delay attribution rules, when a train was delayed by being hit by a bird, who got the blame depended on the size of the bird. A small bird was the fault of a train company and a large bird the fault of Network Rail. Of course, trains are expected to withstand, say, a sparrow, a pigeon or maybe even a smallish duck, but not a swan or a goose.
Once a train has collided with said bird, it creates an industry for debate, argument and litigation. Network Rail and train operators currently employ a stunning 400 full-time members of staff known as train delay attributors, whose sole job is to argue with each other about whose fault the delay is. There is even a national attribution board—a sort of supreme court for the railway—which looks at these disputes and, in one case recently, had to rule on whether a pheasant is a small or large bird. It is completely bonkers. This is the sort of thing that will end. As soon as possible, under our reforms, everyone, including the train operators, will be tasked to work towards common goals and manage costs. We will create a more financially sustainable railway, saving money for the taxpayer. Rail services will be better co-ordinated with each other and better integrated with trains, buses, bikes and trams.
This new plan for the railways, three years in the making, is not about ideology. I am more interested in fixing problems, getting things done and creating the public services that people want. This plan is therefore about delivering for passengers—an ambitious but common-sense blueprint for a more customer-focused, more reliable and growing railway. As we head towards the 200th anniversary of rail’s inception, the network faces perhaps its biggest challenge with the collapse of passenger numbers during Covid. This new rail revolution will restore trust and pride in Britain’s railways, secure it for the long term and ensure that it plays just as formative a role in our future as it has done in our past. I commend this Statement to the House.”
Television has given us “The Great British Bake Off”, “The Great British Sewing Bee”, “Great British Menu” and “Great British Railway Journeys” as programmes for our delectation and entertainment. Now the Williams and Shapps plan, determined not to be outdone, but hardly in a display of originality, is offering us Great British Railways. The Secretary of State is at pains to tell us that the proposed changes for our railways, extending the role of the public sector, are simplification not renationalisation. The changes may not mean full public ownership but they are certainly a further step closer to it, and would make the final switch easier, which is no doubt why the Secretary of State doth protest so much.
The plan does a demolition job on the failed, fragmented privatisation of our railways and the insuperable problems it has created, which the Secretary of State now admits can no longer be allowed to continue. The plan is basically a statement of hope and assertions about what the proposed new structure and Great British Railways will deliver. The shadow Secretary of State has already written to Grant Shapps with questions on 15 initial specific points and we await a detailed written response. I will, though, make a few points now.
The plan makes great play of 400 jobs that exist to determine the allocation of blame for delays. The need to do this will seemingly disappear under Great British Railways. Yet the Government talk about incentivising train operators to run services on time. Whether that also means penalties for running services late is not clear. Either way, there will presumably still be a need to determine where responsibility for a delay lies, since it would hardly be appropriate to attribute to a train operator, on a management contract with incentives to run services on time, responsibility for a passenger train delay caused by a track or signalling failure or another operator.
We need to know far more about how the proposed incentives regime will work and its potential rewards and for whom. Even Great British Railways is going to be incentivised. The plan refers to the perverse effect of incentives under franchising arrangements. We could be in danger of going down that same path again, despite the repeated assertions in the plan to the contrary. Train operators will continue to bear cost risk, but there will be incentives to run trains to time, to run clean trains, to run safe trains, to run high-quality services, to manage costs, to attract more passengers and to work with other railway organisations for the greater good. It will be some bureaucracy that will be needed to devise, manage and supervise that sort of regime if these are more than token gesture incentives—and all because the Government are not prepared to countenance Great British Railways operating the rail services itself.
That is also why the plan represents change from what we have at present, rather than the transformative, generational change that the Secretary of State wants us to believe. There is little more than a passing reference in the White Paper to the rolling stock leasing companies. No case has been made for why, almost alone, they need to continue in their present form, or indeed at all, in a situation where Great British Railways will have ownership of the railway infrastructure and assets, apart, it seems, from the rolling stock. This is despite the plan asserting that the new structure will increase Great British Railways’ purchasing power and economies of scale, and bemoaning the fact that we have so many variations in rolling stock.
Likewise, from reading the White Paper one would hardly know that we have elected metro mayors with responsibilities over transport. Giving metro mayors much greater responsibility, certainly for local rail services within their areas, and the associated resources, is not something that appears to be being entertained. It looks as though Mr Grayling’s boast as Secretary of State that he would not hand over control of rail services to a Labour mayor may still inform the Government’s claimed non-ideological approach.
We will need clarity on what specific responsibilities and powers are being transferred from the Department for Transport to Great British Railways, and what specific railway responsibilities and powers are being retained or created within the department. Likewise, we will need clarity on the impact of the proposals on the powers of the devolved Administrations. I assume that the transfer of undertakings regulations will apply to all staff transferred from their existing employer to Great British Railways or any other railway organisation. Legislation will be required to implement some of these proposals, not least in relation to the creation, governance, roles and responsibilities of Great British Railways and other statutory bodies whose remit is changed.
The plan refers to financial resources covering five-year periods. One assumes that also applies to Great British Railways. Those resources need to be guaranteed if service levels and quality are to be maintained and improved, and rolling programmes of investment sustained, but the plan does not make it clear whether that will be the case or how. We are already hearing noises that the Treasury is demanding significant savings. Indeed, the plan asserts that the new structure and working procedures will save £1.5 billion.
I pay tribute to the role and work of railway staff during the pandemic. I hope the Government are determined to see our railways make a full recovery from its effects and then develop further, because the plan blows a bit hot and cold on this. The foreword says:
“Much of the old demand will return … This government profoundly believes in the future of the railways. Without them, our cities could not function … We are growing the network, not shrinking it.”
Yet tucked away in the section of the plan on “Empowering rail’s people”, it states:
“The future of the sector hangs in the balance.”
That is a very different tone. Which represents the Government’s true thinking and intentions will become clearer when we find out whether the emphasis of these changes is on achieving a rapid reduction in costs, at all costs, or on growing the network and recognising that the value of our railways to the quality of life of our citizens and the economic well-being and strength of our country extends far beyond the content of a Treasury financial spreadsheet.
My Lords, I strongly welcome this long-overdue plan for reform and thank Keith Williams for his work on this. My only regret is that it has taken this long to get here. The industry has been crying out for reform for many years; one in three trains was late in the last year before the pandemic and two-thirds of contracts since 2012 have been awarded to single bidders—hardly a sign of a vibrant, competitive industry.
However, unlike some, I do not believe that the answer lies in a return to British Rail, which ended in stagnation and closures and as the butt of rather predictable jokes. This Statement harks back to the glory days of the 19th century, but the last 60 years have all been a bit of a mess. For a long time, the Transport for London contract structure has been touted as the answer, with the appropriate balance of risk for private contractors yet a fully integrated service. However, Transport for London has said publicly that it took it two decades of experience to get to the ideal contract model.
This is welcome, but it does not mean it will be easy—I do not for a minute imagine that the Minister thinks it will. The sheer scale of the thing is a problem. Great British Railways will be a massive organisation, bringing together Network Rail, many other DfT functions and some of the Rail Delivery Group functions. Currently DfT has three director-generals to cover rail services alone. The new organisation will be enormous and complex, and freedom from direct government interference will be essential for success.
The first problem is that, despite the name, Great British Railways is not really British, because it does not cover most of Scotland, Wales, Northern Ireland or London. Those have devolved services. So, my question is an important one: how will GBR liaise and link in with those other services? It is essential that that link is smooth and coherent. And what about the devolution of services to local authorities, which has been encouraged lately? Local authorities can add a great deal to the standard of service. There must be a role for them in order to raise the threshold. I rather feel that the word “Great” will be at the mercy of headline writers the first time something goes wrong—but I think there is the potential to get a coherent picture of the whole, so long as devolution is taken fully into account.
In interviews, the Secretary of State has indicated the likelihood of fare rises. First, how much power will the Department for Transport have to intervene and dictate fare rises? Secondly, is it wise to raise fares at a time when the Government are trying to reduce emissions and rail services are desperately trying to attract passengers back after the pandemic? Fares are up 50% in real terms since 1997; they are the most expensive in Europe. I welcome the details on flexible season tickets and other long-overdue innovations, but the Government predict savings of £1.5 billion within five years—so are fare rises justified?
The Minister will tell us again that taxpayers have subsidised the railways to the tune of billions of pounds in the last year. In fact, they have subsidised train operating companies, not the passengers themselves. Taxpayers also subsidised Eat Out to Help Out, but the Government are not expecting restaurant customers to pay more now to refill government coffers. So I put in a plea: rather than raising fares, now is the time to reduce them for a short period, to lure people back on to the railways and, as new travel and working patterns emerge, to encourage new leisure rail users?
Finally, freight. The combination of recentralisation, better co-ordination and the current lower passenger numbers provides a big opportunity for bold steps to improve and increase freight services. But that needs capital investment, too; will we get it?
I thank the noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson, for their generally—I think—fairly positive welcome for these proposals. The noble Lord, Lord Rosser, had a long list of Great British XYZ, and perhaps I may say, as we come out of restrictions, I feel we have a Great British bounce back coming along. So, what are we going to do about our railways and Great British Railways, which will be one of the “Great Britishes” that will be so important to us as we go forward?
The noble Lord, Lord Rosser, seemed to be a little bit muted on the subject of the changes we have proposed. I do believe that we are proposing a once-in-a-generation change. It will be a massive transformation of the current way our railways operate, and it will lead to very significant improvements in service to passengers. But the noble Baroness, Lady Randerson, is absolutely right: it will not be easy. This is a national infrastructure with national services; it is hugely complicated now and will continue to be in the future. We know that. It will not be easy.
So the scale of transformation will have to be taken in bite-size pieces, and we will have to think about how the development of these phases will happen. Andrew Haines, who, as we all know, is the current chief executive of Network Rail and a well-respected industry leader, will be developing these interim arrangements for Great British Railways. It is important we do that. We could not have done it before because we had not announced the White Paper, and we will be establishing phases for the delivery of Great British Railways and all the phases that have to happen in between. We will be working collectively and collaboratively with the sector, and that is really important.
On the DfT side, I am well aware that there are an enormous number of very talented people in rail. We will continue to support Great British Railways as much as is needed in the short term. The DfT will establish the rail transformation programme, which will assist Andrew Haines and the wider sector as we make these changes.
The noble Lord, Lord Rosser, talked about how the blame for delays will not disappear. I agree. I asked exactly the same question about big birds and little birds, and whether you could be blamed for one and not the other. I am reassured that it will be vastly simplified and will not be as complicated and long-winded as it is now.
The noble Lord went on to mention the incentives regime. It is important that we have a really firm and accountable incentives regime, because we must lift the quality of services for the passenger. Therefore, we will incentivise high-quality, punctual services. We will ask operators to manage costs and to attract passengers. From a ministerial perspective, we will hold Great British Railways to account and it will hold the holders of the passenger service contracts to account via statutory powers and the ability to issue binding guidance—for example, on any of the elements the noble Lord mentioned.
We believe that there should continue to be private sector investment in rolling stock, but the noble Lord highlighted the slight tension that exists. We will ask Great British Railways to take a strategic approach to the overarching issue of rolling stock. It will look at supply chain sustainability, for example, and how to generate high-value jobs in the UK, but the TOCs will still be responsible for procuring value from the market and improving the passenger experience when the trains are running.
Devolution is a very important part of improving our transport system. I am speaking specifically about devolution to the local transport authorities. That would include the metro mayors. We are extremely keen to work with the metro mayors on devolution. The White Paper publication is a significant landmark as we start the process of these implementing reforms, but it is obvious that they cannot be devolved immediately. We will work together to think about how the structures with the metro mayors and the smaller local transport authorities will work and where they will be able to take a greater level of control of the services in their area.
Scotland and Wales are both extremely important in this regard. Both will exercise their existing powers and be accountable for them. The infrastructure is, of course, all owned by Great British Railways, with the exception of some of the valley lines in Wales, and we will work in partnership with Transport Scotland and Transport for Wales. We would expect a good relationship with them, because it is so important for the services to improve.
Great British Railways will have a five-year business plan, which will be drafted in the context of a 30-year strategy. It will set out the infrastructure funding settlement for that five years and the level of operational subsidy. This will give certainty and stability to the network as a whole.
The noble Baroness mentioned fare rises. I suspect that my Secretary of State would not rule them out, but we have to simplify the current mass of ticketing options and prices and the endless bits of paper that you have to carry around with you. We will look to introduce more pay-as-you-go, more contactless payment and more digital ticketing as soon as possible.
The noble Baroness mentioned some short-term incentives to get people back on to the trains. The Department for Transport has commissioned Network Rail to look at this. It has set up the rail revenue recovery group, which we will look to for advice on short-term and long-term interventions on fares. This links back into the recovery in demand, because we want people to come back to the trains and we hope that the number of passengers will grow further. Financial sustainability is linked to demand but not necessarily on a very firm basis, because it depends on how much passengers are paying.
Therefore, it is the case that we have to make sure that our railways are financially sustainable in the long term. On one side, we will look at how we can improve services to passengers, as well as at fares, and on the other side we have to look at how we will modernise the system with regard to some areas where there might be changes to the ways in which people work. We want to develop skills and perhaps use them more effectively within the system. That will be up to the industry, working with the unions, to develop the best and most highly-skilled workforce that we can for our industry.
I hope that I have been able to answer the questions asked by the noble Lord and the noble Baroness. I thank them genuinely for their positive engagement, and I am sure that there will be more questions to come. I look forward to comments and questions from all noble Lords, and I hope that they will consider joining me at the all-Peers briefing section with the Rail Minister on Wednesday.
My Lords, we now come to the 20 minutes allocated for Back-Bench questions. I ask that both questions and answers be kept short.
My Lords, I remind the House of my interest as chair of the West Anglia Taskforce. Does my noble friend except that this railway, having only two tracks, demonstrates the impossibility of satisfying the competing needs of Transport for London, Hertfordshire and Essex commuters, freight operators, the advanced industries around Cambridge and the operators of Stansted Airport? Will the creation of GBR offer a better prospect for the restoration of the two extra tracks that were torn up after the Beeching report?
My noble friend raises an important point and highlights why Great British Railways is so desperately needed, in that we have so many different operators and indeed types of train services—be they passenger or freight—trying to access limited track in certain areas. It is the case that we will continue to invest tens of billions of pounds into the railways on new lines, trains, services and electrification; we want to provide the stable foundation for innovation and future investment. My noble friend mentioned the Beeching closures. The £500 million Restoring Your Railway Fund remains open, and any ideas should be forwarded to that fund.
[Inaudible]—the experience, particularly of Southern, has been blighted from time to time by industrial disputes. What involvement have the rail unions had in helping to formulate these new plans? Post Covid, many people may continue to work part-time from home, reducing passenger numbers below the 2019 figure of 1.8 billion per year. What assessment have the Government made of this likely reduction?
On the first issue raised by the noble and gallant Lord, Keith Williams met with the general-secretaries on a number of occasions while he was carrying out this review. As I previously mentioned, we need to create an efficient and sustainable railway; that is in the interests of passengers, taxpayers and the workforce as a whole, so we will of course continue to work with the unions to achieve that as we take these reforms forward. On future demand, we are confident that people will return to the railways, and in line with the road map we will continue to work closely with the sector on measures to enable people to come back again, and to come back quickly. This includes the introduction of a flexible season ticket, which will be introduced across the network and which will make it easier for those people who commute, say, two or three days a week. It will make that more cost effective for them, and that will be introduced to coincide with the final step of the Government’s road map out of lockdown.
My Lords, I draw attention to my interests as set out in the register. I welcome the Williams report, but we should recognise the very great changes that were brought about by privatisation. Up until 1992, the number of people using our railways was 700 million. In 2019, it was 1.9 billion. That was a tremendous success, which was partly brought about by engaging with the private sector so that we got better services across our railway network. While I accept the necessary changes that the Secretary of State and my noble friend have set out, will my noble friend also acknowledge the very important part played by the private sector, and will she say that the private sector will be very much seen as partners in the way forward?
My noble friend is absolutely right: during privatisation, passenger numbers more than doubled, so the involvement of the private sector has had a transformational impact on the way that we run our railways today. This Government want to keep the best elements of the private sector. We want to keep its capacity for innovation and work with it to drive growth in the railways. We will do that by having these new contracts for passenger operators, with strong incentives to run very high-quality services.
The noble Lord, Lord Adonis, has withdrawn, so I call the noble Lord, Lord Bradshaw.
My Lords, I believe it is very important that a clear distinction is made between what Ministers do and what Great British Railways does. It is important that they do not tread on each other’s feet, because that will lead to disputes and trouble. A clear financial target, preferably for three or five years so that the industry can make trade-offs without constant Treasury interference, will give the freight railway a chance to do what it does best. An electrified freight railway will make huge inroads into the amount of fuel we burn with lorries. Lastly, we need to follow best practice in using data to improve the passenger experience. Do not level down to the standards of the worst performer; rather, level up to the standards of the best.
Those were some very interesting observations from the noble Lord, who is clearly well versed in the railways. He is right that we need to make sure that Ministers’ responsibilities are separate from those of Great British Railways, which is why we are proposing strong levers to hold them to account, but will not meddle in the day-to-day running of the organisation. So there will be statutory powers and the ability to issue binding guidance in specific areas, which will be important.
The noble Lord mentioned planning, and I have already pointed out that there will be five-year business plans within the 30-year strategy. He also mentioned freight, which is a very important part of this. It is often a forgotten area of the railways, and we believe that it will benefit from the national co-ordination that Great British Railways will bring. His last point was on data, which is one of the key areas where we feel that we can improve customer satisfaction. Historically, data has been held by the train operating companies and not shared as well as it should have been. By putting all this data and responsibility for revenues within Great British Railways, we will necessarily bring together all the data. We believe that from that we will not only simplify tickets but think of better ways to use that data to provide more value-for-money services for passengers.
My Lords, as a frequent user of Transport for Wales and GWR from west Wales to London, I very much welcome this Statement. It is good to see the travelling passenger put at the forefront, in ticketing and the adoption of modern, flexible ways to pay. I note the comments that close collaboration is promised between Great British Railways and the devolved nations. Can the Minister perhaps elaborate on how the new ticketing system will integrate, for ease of use by the travelling public, with the payment systems of the now nationalised Transport for Wales and the proposed south Wales metro scheme? What conversations have the Government had with the Welsh Government on this?
Our engagement with Transport for Wales and the Welsh Government has been very significant and over a long period, both at ministerial and official levels. Next, we want to develop a joint working agreement with Transport for Wales and Great British Railways, so that all issues around fares, not only within Wales but for cross-border services, can be considered in the round. We would like them to join us in sharing data and using the single website and app to purchase tickets. We cannot force them to do that, but we look forward to having a close working relationship as we take this forward.
Does the Minister agree that rail fares are already far too high—the highest in Europe—but that if they are to be kept at a reasonable level, it is necessary for railways to carry more passengers? This means increasing the capacity and more investment. Are the Government willing to put in the necessary investment? Of course, this would also be highly desirable from an environmental point of view. I understand that Chiltern Railways—which in my experience has always been very efficient—has in fact put in a lot of investment in recent years. I wonder what lessons there are to be learned from its example.
I think there are lots of ways to attract passengers back on to the railways, and investment in improving capacity is one of them. Of course, that is why the Government are investing many billions of pounds in HS2, which will release capacity on other lines to enable more short-distance services to be put into place. But it is not just about those mega-projects; it is about the small and urgent network capacity upgrades that we can make, and the Government continue to look at these. I reassure the House that the RNEP—which sets out which projects the Government will take forward over what sort of timeframe—will be published soon, and that will set out all the schemes under consideration.
Does the Minister accept that we have spent many years listening to Conservative Ministers extolling the virtues of franchising, yet the White Paper acknowledges, in effect, that the franchising system has been an expensive failure, the abolition of which is long overdue? On rail freight, what actions will Ministers take to ensure the future success of the rail freight industry if we are to achieve a meaningful transfer of freight from road to rail and reduce the number of heavy goods vehicles on our roads? Will Ministers reject the RHA’s incessant demands for bigger and heavier lorries on our overburdened road network? Does the Minister agree that, properly encouraged, rail freight could make a significantly greater contribution towards the Government’s carbon reduction targets?
I cannot agree with the noble Lord that franchising has been an expensive failure. We have seen an enormous growth in passenger numbers as a result of the involvement of the private sector, and I think that has given us a really firm foundation from which to go better. However, rail freight is a topic that we can probably agree a little more on. I believe that it will benefit from this national co-ordination, as I said earlier, and we will consult closely with the freight industry to find out what challenges it has and how we can help it by making changes. We will introduce a new rules-based track access regime, which will have a statutory underpinning. That will be relevant for both freight and open access operators. We believe that that will yield more goods going by rail freight, and we will engage with the industry to make sure that this is the case.
My Lords, train operators run many stations. If a train operator such as LNER runs stations well, enhancing facilities to support customers and promote its services, would it not make more sense to contract it to continue to do it, rather than doing what the Government propose in this White Paper, which is to transfer station management entirely to this behemoth of an organisation—Great British Railways—where it may well be administered from some distance away? We would end up with two lots of staff on the platform, with one administered from a great distance.
The noble Lord raises an interesting point about stations. Stations are a great asset, particularly in local communities, because sometimes they are not just railway stations. Certainly, I would like to see many more of them being developed into integrated transport hubs where we could have buses and active travel interventions as well, so that they connect much more into transport for the local community. Obviously, how station ownership and operation will pan out in the future will be subject to a fair amount of work. For example, some of them may end up being run by local government or local transport authorities, and we will be able to say more on that in the levelling-up White Paper.
Can my noble friend confirm that the key objectives of privatisation—which could have been called the “Young-Major plan for rail”, had modesty not intervened—will be retained? These objectives are: no monopoly in the train operating industry but new entrants encouraged; the capital costs of the passenger rolling stock and freight rolling stock borne by the private sector, not the public purse; and passenger service contracts being constructed to reward efficiency, quality and passenger growth. None of those characteristics is available under full nationalisation.
Bring back the Young-Major plan for rail greatness is what I say. I can absolutely confirm all those things to my noble friend. We are retaining the original objectives of privatisation to make sure that passenger services are awarded following a fair competition. We had to strip out some of the complexity of those competitions to allow train operators to bid on a simpler basis, and we think we have achieved that. We will open up new opportunities for private sector involvement where we can.
As I have said, the capital cost of passenger and freight rolling stock will be borne by the private sector. There will be a certain element of a guiding mind when it comes to a strategic intervention on the rolling stock, but this will not preclude train operating companies purchasing their own rolling stock. Obviously, we are replacing the franchises with this more commercially sustainable model of a passenger service contract, which will ensure that we get the right amount of innovation into the system and passengers benefit.
My Lords, I remind the House of my railway interests as declared in the register. I am happy to share the optimism of the noble Baroness for the future of the railway, not least because of the involvement of both Andrew Haines and Sir Peter Hendy in Great British Railways. I have the highest confidence in both, and I believe they will work well to deliver what could be a very successful railway.
I would like to ask the Minister one specific question about the reference in section 4, on page 33 of the White Paper, to a “national brand and identity”. Does this mean that train operators will have to repaint all their rolling stock in new standard Great British Railway colours? Not even British Rail had a common identity for all its passenger trains. The Government may find some resistance to making companies abandon their established, and in many cases attractive, liveries.
May I also ask about the reference to electrification, which I asked about last Tuesday, particularly the references to Oxford, Sheffield and Swansea on page 14? An announcement is promised “shortly” on page 88. How shortly is “shortly”?
My Lords, shortly is shortly. I, too, am optimistic about the railways and all forms of transport because they are the great connector. The noble Lord asks about branding. Branding is important because having a coherent, consistent and clearly branded rail network gives passengers greater confidence in using it. Great British Railways will use an updated version of the classic double arrow logo. We also have an updated version of the font, which I think will be widely recognised across the system. However, variants of the national brand will be developed to reflect the English regions and Scotland and Wales, while emphasising that the railway is one network serving the whole of Great Britain. It may well be that, as the noble Lord suggests, there will be slight variants depending on which part of the country the train operates in.
The Government are committed to decarbonising the railway as part of our wider, legally binding target of reaching net zero emissions across the whole UK economy by 2050. Our forthcoming transport decarbonisation plan will set out the scale and pace of rail decarbonisation that is necessary for us to achieve that. The rail network enhancements pipeline—the RNEP—will be updated soon, and in that we will have various schemes which will lead to decarbonisation. Indeed, we are working very closely on research to look at how we can also decarbonise the vehicles themselves; for example, by looking at hydrogen trains. The new industry structure, including Great British Railways, will ensure a more co-ordinated approach to delivering our carbon emissions commitments.
My Lords, as the White Paper states, passenger service contracts work well for local, regional and commuter services, but experience here and elsewhere has shown that these service contracts work less well on intercity routes because they allow less room for innovation. Will there be two types of passenger service contract to allow for this? Where will the line be drawn? Will it be just one size fits all?
My Lords, there will not be two types of passenger service contract. There will be many types because the noble Lord is right. Some may incorporate revenue risk in due course to encourage innovation and get passengers back on to the railways.
My Lords, rail fare income is closely correlated with the economic cycle. The new arrangements involve a complete transfer of fare risk from the train operating companies to the taxpayer. This means that the Chancellor of the Exchequer is going to have to be very indulgent towards Great British Railways, especially in an economic downturn, if falling fare income is not to cannibalise the investment programme. Has my noble friend reached a specific agreement with Her Majesty’s Treasury on its approach to this aspect of funding Great British Railways? If so, will it be in the public domain?
The five-year business plan that will be developed by Great British Railways will be in the public domain and it will set out the capital and revenue funding over that period. I agree with my noble friend that passenger demand is challenging to predict as we move out of the pandemic. Evidently there will be risks for the Government as the holder of the revenue risk. The Government have supported the railways to the tune of £8.5 billion in the last financial year. However, on a positive note for the Treasury, we expect that the reform package will deliver savings of around £1.5 billion per year after about five years. That is 15% of pre-pandemic income.
House adjourned at 6.43 pm.