Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Clause stand part.

New clause 26—Great British Railways: funding review—

“(1) Thirty months after the commencement of any five-year period covered by a funding settlement for Great British Railways, the Secretary of State must publish a review of Great British Railway’s funding.

(2) The review set out in subsection (1) must include figures for—

(a) funding allocated to;

(b) ticket revenue raised by;

(c) amount of government subsidy received by;

Great British Railways.

(3) A copy of the review must be sent to the Transport Committee of the House of Commons.

(4) References in this section to the Transport Committee of the House of Commons—

(a) if the name of that Committee changes, are references to that Committee by its new name, and

(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, are to be treated as references to the Committee by which the functions are exercisable.”

This new clause adds statutory transparency to rail funding cycles.

New clause 34—Great British Railways: Certainty of Funding—

“(1) Within 12 months of the passing of this Act, the Secretary of State must publish a funding certainty framework for Great British Railways (‘the Framework’).

(2) The purpose of the Framework is to establish and maintain terms for the funding of Great British Railways.

(3) The terms of the Framework must include provision that—

(a) The Secretary of State may not vary, reduce, or reopen the funding settlement for an active Control Period, unless either—

(i) a statutory provision made after this Act amends Great British Railway’s duties requiring funding revision, or

(ii) an emergency has been declared within the meaning of section 1 of the Civil Contingencies Act 2004;

(b) the Secretary of State must publish—

(i) the confirmed funding determination,

(ii) the assumptions underpinning it, and

(iii) any exceptional circumstances to justify any adjustments,

within an active Control Period;

(c) the Secretary of State must agree the funding for the next Control Period not less than two years before it is due to start;

(d) when determining the funding settlement for a Control Period, the Secretary of State must take into account—

(i) the Long-Term Rail Strategy,

(ii) Great British Railway’s duties, and

(iii) whole system planning considerations across infrastructure, passenger services and freight;

(e) The Secretary of State must work with Scottish Ministers to align as far as possible funding determinations so that Great British Railways receives a single, coherent, funding determination no less than two years before the relevant Control Period starts.

(4) The Secretary of State must lay before Parliament a report on—

(a) any funding determination for each Control Period;

(b) any exceptional revisions of the funding determination for a Control Period within that Control Period;

(c) whether the Office of Rail and Road, or any other relevant body, has met any relevant deadline to confirm funding for the next Control Period, and where it has failed to do so, the reasons for that failure.

(5) Nothing in this section amends or removes the ability of Office of Rail and Road to carry out Periodic Reviews for each Control Period.

(6) The Secretary of State must annually lay before Parliament a report on—

(a) the stability of Great British Railways’ funding;

(b) the effect of any instability on—

(i) the efficiency of,

(ii) delivery of services by, and

(iii) management of risks associated with projects run by, or associated with,

Great British Railways.

(7) For the purposes of this section, ‘Control Period’ has the meaning given in any final decision taken by the Office of Rail and Road which concludes each periodic review of access charges as described in Schedule 4A of the Railways Act 1993.”

This new clause would require the Secretary of State to prepare a Funding Certainty Framework, with funding for each Control Period set two years before it is due to start, to enable Great British Railways to plan effectively.

New clause 39—Great British Railways: financial duties—

“(1) Great British Railways has a duty to ensure that its operating expenditure does not exceed its operating income in each financial year (‘the duty’).

(2) The duty does not apply to capital expenditure aligned with national infrastructure investment and enhancement pipelines.

(3) Within 12 months of the passing of this Act, the Secretary of State must provide guidance to Great British Railways about its duty under subsection (1).

(4) This duty must include guidance about—

(a) operational income, including fare revenue, access and charging functions, commercial income, and non-fare revenue streams;

(b) operational expenditure, including staffing, operations, support, maintenance, rolling stock operation, management and renewals; and

(c) the exclusion of capital expenditure aligned with national infrastructure investment and enhancement pipelines.

(5) Great British Railways has a duty to ensure its business plan and operational decisions have as a priority its long-term fiscal sustainability within the objectives set out in the rail strategy.

(6) In meeting its duty under subsection (5) Great British Railways must seek to increase its revenue.

(7) For the purposes of subsection (6), ‘revenue’ includes—

(a) fare revenue through passenger growth,

(b) commercial retail income,

(c) income from property, station and land commercialisation,

(d) freight access revenue, and

(e) market expansion.”

This new clause puts duties on Great British Railways to ensure its operating expenditure does not exceed its income, and to deliver long-term fiscal sustainability. It makes further provision relating to those duties.

New clause 40—Great British Railways: non-reliance on taxpayer funding—

“(1) Within its first operational Control Period, Great British Railways must set out a transition plan towards ending any reliance on taxpayer funding.

(2) The transition plan under subsection (1) must identify—

(a) any efficiency improvements Great British Railways can make, and

(b) any cost-reduction measures necessary for Great British Railways to operate in such way as does not rely on taxpayer funding.

(3) For the purposes of this section, ‘Control Period’ has the meaning given in any final decision taken by the Office for Rail and Road which concludes each periodic review of access charges as described in Schedule 4A of the Railways Act 1993.”

This new clause requires Great British Railways to set out a plan towards ending any reliance on taxpayer funding.

New clause 41—Great British Railways: annual statement of financial performance—

“(1) Great British Railways must publish an annual statement of its financial performance, including—

(a) its operating income and expenditure,

(b) whether it achieved operating cost self-reliance,

(c) the reasons for any failure to achieve operating cost self-reliance,

(d) where it has failed to achieve operating cost self-reliance, any actions it will take in the next financial year to achieve it, and

(e) an assessment of its compliance with its duties under section [Great British Railways: financial duties].

(2) The Secretary of State must lay the annual statement before Parliament.

(3) The Office of Rail and Road must review Great British Railway’s performance as set out in the annual statement, and publish an assessment of whether Great British Railways is meeting its efficiency and revenue targets.

(4) Where the Office of Rail and Road concludes that Great British Railways has not met its duties under section [Great British Railways: financial duties], a Minister of the Crown must make a statement to each House of Parliament setting out—

(a) the reasons for Great British Railways’ failure to meet its duties, and

(b) any corrective action to be taken by—

(i) the Secretary of State, or

(ii) Great British Railways.”

This new clause requires Great British Railways to publish an annual statement on its financial performance, and for the Office of Rail and Road to assess that performance.

New clause 44—Great British Railways: savings target—

“(1) The Secretary of State must publish a savings target for each financial year for Great British Railways.

(2) The Secretary of State—

(a) must keep the target under review,

(b) may revise or replace the target, and

(c) must publish any revision or replacement to the target.

(3) Great British Railways must, when exercising its statutory functions, have regard to the target set by the Secretary of State under this section.”

This new clause requires the Secretary of State to set a savings target for Great British Railways.

Clause 12 establishes a new funding process for GBR that takes what we have learnt from the successes of the periodic review process today and applies them to the new GBR world. That new funding period review will not only provide GBR with five years of funding to carry out its job of operating and maintaining the railway network, but 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. That five-year funding certainty will help to drive the best price for Government and the taxpayer, through lower risk and the benefits of economy of scale. It will also generate consistent, longer term work for private partners in the rail supply chain, keeping good, well-paying specialist jobs alive and thriving.

Clause 12 is an enabling clause. It is very short and merely refers to schedule 2, so I make no representations to change it and shall not seek to divide the Committee on it.

I want to make a few remarks about the Conservative new clauses, on which we have mixed opinions. New Clause 34 perhaps has some merit in terms of its intention to strengthen protections for the five-year funding review period process. My hon. Friend the Member for West Dorset will speak to our new clause 26 shortly.

We feel that some of the other Conservative new clauses have not necessarily been fully thought through or recognise the reality of how railways work. For example, new clause 40 seeks to end GBR’s reliance on taxpayer funding. Of course, in an ideal world we would love all public services to end their reliance on taxpayer funding—that would be paradise because we would not need taxation—but the reality is that extremely few railways in the world are entirely independent of taxpayer funding. We invest public money in railways because they are significant enablers of all sorts of economic and social benefit, so we have some concerns about new clause 40.

Some of the other Conservative new clauses have good intentions. For example, new clause 41 seeks to require the publication of data on financial performance. But it also seems to be over-fixated on GBR needing to reach a self-financing state, which seems somewhat unlikely.

I have said enough. I look forward to hearing the comments of the hon. Member for Broadland and Fakenham on his new clauses and of my hon. Friend the Member for West Dorset comment on ours.

I wish to speak briefly to new Clause 26, which was tabled by my hon. Friend the Member for Didcot and Wantage. In simple terms, the new clause would ensure that Great British Railways’ funding is reviewed, published and scrutinised by Parliament halfway through each funding cycle, so that there is transparency and accountability on public money and it is spent effectively.

Any long-term rail strategy, particularly one that involves large sums of public money, must be open to proper scrutiny, regularly reviewed and accountable to Parliament. This is especially important as the Bill in its current form gives the Secretary of State a significant concentration of power over the future, shape, funding and direction of the railways. If Parliament is to be asked to confer that level of authority, accountability should increase alongside it. New clause 26 provides a sensible and proportionate mechanism to do exactly that without dragging Ministers or officials into day-to-day micromanagement.

As currently proposed, Great British Railways risks becoming the rail equivalent of NHS England—a fear raised previously in Committee—a large, centralised body distant from accountability and with blurred lines between ministerial direction and operational responsibility. Transparency is the safeguard to protect against ending up with another unaccountable arm’s length body.

The new clause would require a statutory funding review halfway through each five-year settlement. That review would set out, in clear figures, exactly how much funding GBR had been allocated, how much revenue had been raised from fares, and how much Government subsidy had been received. Crucially, it would also be sent directly to the Transport Committee, thereby ensuring proper parliamentary scrutiny. That matters because taxpayers are funding the railway twice: once through general taxation and again through ticket prices. Passengers and taxpayers alike deserve to know where their money is going, how it is balanced between subsidies and fares, and whether it is being spent evenly and effectively across the funding cycle, not just all at the start or at the end.

A mid-point review would also allow us to see what is working and what is not, particularly given that GBR will be a new organisation. It would give time to correct course when things are failing, and to continue or scale up when results are delivered. Above all, it is about hardwiring trust into the railway system, with clear information, published transparently and scrutinised by Parliament, with a focus on passengers. We believe new clause 26 would strengthen the Bill and hope the Government will give it due consideration.

: Thank you, Mr Western, for allowing me a second bite at the cherry. I misdirected myself in dealing just with Clause 12 in itself, rather than the new clauses in the group.

A forward view of funding certainty is key to stopping the stop-start approach to infrastructure funding. The Committee has received plenty of evidence from the industry—both in written evidence and in the oral evidence we heard on Tuesday last week—that this is a major concern. The date in schedule 2(1)(d) is therefore important, and needs to be a minimum of two years prior to the start of the next five-year funding period. That is because, given that we currently have five-year control periods, funding certainty decreases in the run-up to the end of one control period and the beginning of the other and, as a result, the amount of work undertaken and committed to by Network Rail decreases proportionately. We therefore get a wind-down of activity, with specialist staff being laid off by the supply industry, before it all grinds up a gear at the beginning of the next control period. We end up with a bell curve of activity.

We have heard strong evidence—I will read some out in a moment—about how that uncertainty disrupts the ability of the supply sector to service Network Rail and its infrastructure development plans efficiently. It does two pretty terrible things: first, it drives up costs for Network Rail and therefore for the taxpayer, and secondly, it means that less work gets done per pound. It is expensive and it takes longer.

In written evidence to the Transport Committee, the Rail Forum states:

“The Bill states in Schedule 2 Part 1 that the SoS can ‘vary the financial assistance’ previously agreed as part of the GBR five-yearly settlement during the five-year term. This flies in the face of providing the stability that the Transport Committee was seeking to address through the ‘Rail investment pipelines: ending boom and bust’ inquiry earlier this year. Re-opening of the settlement should only be allowed in very exceptional circumstances that should be explicit in the legislation.”

Why has the Minister moved away from the position that was previously articulated? Why is the sanctity of the funding settlement within a five-year control period—which has been, albeit imperfect, so valuable for the industry—actively removed by schedule 2? To put it another way, why is the Secretary of State being granted new powers to vary the financial settlement without notice?

The Rail Industry Association, which represents the supply sector for the railways, states:

“The railway, and rail supply businesses, need stable funding to be able to plan effectively and be efficient. Changes to the Control Period style five-year infrastructure funding settlement (Schedule 2) undermine this and amplify the uncertainty already faced by suppliers.

RIA and our members are very concerned the current Bill drafting allows the Secretary of State for Transport to remove railway funding mid-period, at no notice and with very limited transparency over the impact, for example, on safety, performance or efficiency.

We disagree with the principle that the Secretary of State should be able to remove funding mid-period. Stable multi-year funding settlements are a longstanding principle for infrastructure networks because short-notice funding changes reduce the efficiency of spending and make it harder for suppliers to plan ahead with any confidence.

Supply chain confidence in the UK rail market is already historically low with 64% believing the rail market will contract in 2026 and 62% freezing recruitment or reducing headcount (over one in three business leaders plan to lay off staff in 2026), according to a RIA-commissioned Savanta survey of rail business leaders.

There is…currently already a lack of full work visibility to the end of the current Control Period, which completes in March 2029, and companies are now repositioning themselves away from rail to target other industrial sectors in the UK and overseas rail markets—the ability for the Secretary of State to remove funding would clearly exacerbate this situation…Concerningly, even on its own terms Schedule 2 does not require transparency over the impacts on efficiency, performance and safety if there are changes within a funding period and longer-term.”

Mr Western, you cannot tell me you agree that that is a very troubling statement from the industry, but I am sure you do agree, or are likely to. The difficulties with the current system are only going to be exacerbated by the proposed changes under schedule 2.

The statement of funds will indicate what the Secretary of State

“reasonably considers may be…available”.

That gives no certainty of funding, which is a key concern of the sector. It would be a backward step from the status quo. Paragraph 4(3)(c) of schedule 2 contains no focus on minimising the cost for the taxpayer, but merely refers to

“how Great British Railways proposes to meet those costs.”

Paragraph 4(5)(b) refers only to “good value for money” and not to good value for money for the taxpayer.

Under paragraph 4(7)(a), regarding the business plan, Great British Railways could retain a huge amount of information from potential open access operators, thereby preventing a level playing field.

Finally, paragraph 7(3) removes the whole point of funding periods, which is to provide funding certainty for five years. On its own, that provision removes that funding certainty—which is obviously a backward step. The RIA has stated:

“The railway has benefited from 5-year funding settlements for infrastructure for over 30 years, but the legislation proposes that the Transport Secretary will be able to reopen these at any time without consultation. Any deviation from 5-year funding stability risks increased future costs for taxpayers and a deteriorating experience for passengers.”

In the oral evidence on Tuesday last week, we heard that the RIA estimated that the stop-start, feast and famine approach to infrastructure spending results in an additional cost to the taxpayer of 30%. This is not small money—billions of pounds are being wasted under the current system—and the Minister, with the Bill as drafted, appears to want to exacerbate that, not to ameliorate it. The Bill mentions good value for money only in schedule 2, and we see the first mention on line 22 of page 62. I find that frankly concerning; it shows us how little regard GBR is likely to have for the concept.

That brings me to the new clauses. The Liberal Democrat’s new clause 26 proposes a funding review. I listened with interest to the explanation by the hon. Member for West Dorset and agree that it would be a step in the right direction. The official Opposition would be minded to support it were it to be pressed to a Division.

New clause 34, tabled in my name, seeks to deal with the feast and famine of the bell curve of supply side activity when it comes to rail infrastructure. It is important to note that the new clause is a probing Amendment, because I recognise that its consequence would be to extend funding certainty from five to seven calendar years at some periods of the economic cycle. I make the serious suggestion that the Government explore it, as opposed to saying that I have sign-off from the Shadow Treasury team and that is our solution.

We have this long history of boom and bust infrastructure spending, as the RIA and others have said, and the bell curve of activity is enormously expensive to the Government. We have been told that the evidence shows an impact on the cost of infrastructure in excess of 30%. As a result, the control periods, which were a first attempt to provide forward planning certainty, were welcomed by the industry. We can see why, because previously there was, from recollection, a 12-month spending window, so there was permanent uncertainty as to what the spending future looked like. That was clearly ridiculous when we have long-term infrastructure plans, which is inevitably the case with rail. The move to five-year funding control periods was absolutely a step in the right direction, but the problem comes when we reach the end. A rolling five-year period would provide the certainty and the cost reductions that everyone is looking for.

The problem is that the Government need to fix this problem and all they are doing is making it worse, with paragraph 6. Where did this provision come from? Has the Department for Transport been hijacked by the Treasury? It certainly looks like it, given the new provision that has been inserted into the schedule. The rail supply sector as a whole is united against this: it is, from my experience having spoken to pretty much everyone I can think of in rail over the last 12 months, the single biggest area of concern. This is a real issue of very significant concern.

I suspect the Minister will not have it in its heart to instruct Government Members to support the new clauses, but if he does anything, he needs to take this away and chew on it, or perhaps discuss it with his noble colleague, to see what can be done to assure the sector. This is not a political football; this is a very serious point that the sector has repeatedly raised with me.

My new clause 34 would prevent changes to the controlled funding period save for exception circumstances, so it would at least retain the current clarity. Its second change, in subsection (3)(c), would provide for the agreement of the next control period two years out. My new clause is a probing amendment because, by having the certainty of the negotiation being concluded at the end of year three of the previous control period, which would remain as a five-year period, it is a solution that could help to address the problem the industry has identified. I would be interested to hear the Minister’s comments about new clause 34 and what, if anything, he thinks could be done to improve on it.

As I said, the new clause is a probing amendment because I accept that, in practice, at certain times in the economic control period cycle it would lead to certainty for seven years, which would require, in accounting terms, an increased responsibility for the Treasury. But the Government need to fix the current system. There is huge support for the concept from the industry, and there is a huge financial prize. What other single change could we make that has the potential to reduce the cost of infrastructure by 30%?

We can look north of the border to the example of ScotRail’s line electrification. I very rarely praise the SNP Government in Edinburgh, but one isolated area where they seem to have made progress is in the predictable, steady progress that ScotRail has made in line electrifications. We should not ignore the fact that it has reduced the cost per mile, and the Minister needs to address that.

New clause 39, tabled in my name, would set out Great British Railways’ financial duties. Its purpose is to provide focus for GBR on its long-term need to stand on its own commercially. A degree of state support is inevitable, and I take the point made by the hon. Member for Didcot and Wantage that to remove state funding for the railways is highly unlikely, but it is nevertheless an aspiration, and we should work towards it through efficiency and revenue growth. I accept that a degree of state support is inevitable, but the aim must be to minimise the need for the taxpayer.

I appreciate what the hon. Gentleman is saying, but we have to consider the new clauses before us as drafted. Does he accept that almost no railways in the world run without subsidy on a net basis and that, where they do, there are unique geographical circumstances? The railways in Great Britain have operated with subsidies under all models since the early 1950s, and the effect of the hon. Gentleman’s new clauses, if they were to be implemented as written, would be Beeching on steroids.

I agreed with the hon. Gentleman until that last sentence, because new Clause 40, which I will come to in a moment, would require not the removal of subsidy but looking towards it—it is aspirational. It would set GBR’s sights on minimising its costs to the taxpayer, not through penny pinching if that would be the wrong decision, but through growth in its revenue by becoming efficient and doing more for less. Those are all good incentives that a private business inevitably has because of the challenge of competition.

New clause 39 would require Great British Railways to focus on other opportunities for funding and on minimising operational costs, just like any other business. The areas of focus under subsection (7) are the revenue opportunities.

New clause 40, on non-reliance on taxpayer funding, would make the direction of travel for GBR clearer. It may be—in fact it is almost certain—that it will never achieve it, but it is a noble objective. It should be clear that GBR should aspire to reduce the need for the taxpayer to support the rail sector by making it as efficient and attractive to passengers as possible, thereby attracting more passengers and freight on to the railways. That would create a virtuous circle, rather than the opposite. We should start thinking about that, which is what new clause 40 is intended to achieve.

New clause 41, also tabled in my name, would require Great British Railways to publish an annual statement of its financial performance. The new clause builds on the theme, forcing Great British Railways to focus on its financial performance and reduce its reliance on the taxpayer. It may be the skimmed-milk version of new clause 40 that the hon. Member for Birmingham Northfield might find more palatable.

It is important that we do everything we can to design into a nationalised structure, where there is no competitive tension, incentives for GBR naturally to seek to achieve efficiency and productivity enhancements. There is a very real need for that, because the taxpayer’s pound can only be spent once, and funds are needed in many areas of Government. Apart from anything else, we need to reduce the tax burden, which this Government have raised to the highest on record, so anything we can do to build a structure that incentivises GBR to reduce its dependence on the taxpayer is a good thing. It also forces public accountability.

Finally, new clause 44 would require the Secretary of State to give GBR an annual savings target. Taking all the new clauses together, the intention is to allow GBR to focus on providing genuine value for money for the taxpayer, not just in abstract terms, and to cut away some of the existing inefficiencies in the infrastructure commissioning and decommissioning process, to provide a longer period of certainty for the supply chain so that it can pass on the resultant efficiencies to the taxpayer. That money can be either reinvested in accelerated infrastructure roll-out, rather like the ability of ScotRail electrification to do more for less, or—heaven forbid—used to produce tax cuts for the hard-pressed taxpayer. I hope the Minister will be bowled over by those suggestions, and look forward to hearing his response.

It is an honour to speak with you in the Chair, Mr Western. I will touch on three of the new clauses—one at greater length than the others—to follow up on the words of my hon. Friend.

For me, new Clause 39 highlights something that is clearly missing from the Bill: what actually happens when these currently franchised, privately run rail services come into public ownership across the board. Over many years, unions have fought hard for terms and conditions for staff and railway companies, but these are not uniform across the board. There is a huge differential in the terms and conditions that staff are subject to.

I pay huge tribute to the men and women who work on the railway; they are a brilliant group of people. I am obviously on a train every week, coming up and down from my Constituency. However, it is really important that we have this conversation about what the Bill will actually mean. As my hon. Friend pointed out, value for money is mentioned only once in the Bill. We are, in effect, writing a blank check for GBR to spend whatever it wants on bringing all these staff into its employment.

We were told very clearly when the Committee began that this is not a civil service; it is the public sector, so there is a difference there, but it is effectively a private body as well. I would be interested to hear the Minister’s comments about how staff are being brought across—obviously some franchises have been brought into Government control already—and about the Department’s plans going forward, because time and again, we see pay going up for public sector workers without that necessarily reflecting any changes in performance.

The 1992 white paper that preceded the Railways Act 1993 said that, at the time, British Rail had the second highest workforce productivity of any railway in Europe. What does the hon. Member think went wrong in all the years under privatisation that followed?

That is a very long time ago. Under privatisation, the unions have done a very good job. In my Constituency in the south-west, there are no seven-day contracts, for example. If I want to get a train up from my constituency on a Sunday, those trains are cancelled quite regularly, because the service relies on the good will of the staff to do overtime to make the train even come up to London.

Whatever we do, we need to look carefully at the terms and conditions that will be brought forward into this new public body. Up to this point, it has been down to each individual company to negotiate. That has been done with highly professional and competent union representatives, but we are not on a level playing field at the moment. As a member of the public, I want to be sure that those public sector staff are not receiving undue recompense for what they are doing, which would not be in accordance with other public sector bodies.

Private companies have been expected to give their staff a huge amount of benefits—quite rightly; that is their choice as private companies. If the staff become public sector, things like free rail travel need to be on the table. We must at least acknowledge those issues and make a decision to continue them, rather than assuming it is a given, which is down to unions to negotiate.

There is no conversation in the Bill about that TUPE-ing across of staff members. Value for money is really important. We do not want inequality being built into our public sector workforces simply because we are renationalising something.

Subsection (7) of new Clause 39 provides that we should be showing where revenue comes from. That is absolutely justifiable. The private companies that will continue to operate in the railway system will have all that information available to their shareholders—to the people they are reporting to. If Great British Railways does not show that information, there is, again, no opportunity for scrutiny. If commercial retail income is flopping because GBR is not doing a very good job, we have no way to hold it to account for that. I do not see why it should be frightened to share that revenue information. It should instead see this as an opportunity to show good practice and how things could potentially progress under GBR.

I have one more point, which came up right at the end of the Select Committee hearing—I managed a question to the Minister, Lord Hendy, but have not seen a response. There is a huge amount of land and value that belongs to these railway stations, currently run by private companies, in some cases, including for things such as parking. What happens with all that income and all the opportunities for Great British Railways to potentially make some money? How will we know about that money and where it is coming from? New clause 39 seeks to bring that information to the fore and ensure that it is transparent and in the public domain.

Turning to new clause 40—this might be something of a segue, but I am going take the opportunity to put it on the record anyway—there is something about the aspiration to move from heavy taxpayer-funded reliance that speaks to the devolution conversation that we have been having. We have had multiple conversations, and I am sure we will have more, but ultimately GBR is being set up to give more powers to certain local authorities and local areas if they wish it, which is great—we want those communities to be able to control more of what happens. However, as we have been discussing, we are effectively developing a two-tier system, whereby anyone who is not in a mayoral authority will effectively be paying into the railway company and GBR, but not necessarily getting the levers to effect change locally. The Minister has reassured me that that will be done through business units and so on, but given that we do not know the scale of those business units or which regions and communities they represent, it is important that we know how that taxpayer money is to be used for funding across the country.

There has been a huge amount of storm damage in the south-west this weekend. Where will the funding come from under the new GBR? The south-west is not a mayoral strategic authority. Will we get our fair share of funding through the set-up for GBR? New clause 40 sets out the aspiration to move away from taxpayer funding and would surely create a more equitable system for the future.

Finally, new clause 44 would introduce a savings target. My hon. Friend the Member for Broadland and Fakenham has been alluding to the point about the costs we currently see in the system, particularly around infrastructure. That has certainly come up in the Transport Committee, in terms of how much it costs to build a bridge or a new station and the lack of competition and challenge. The new clause would create an opportunity to ensure that we pay as little as possible for the best outcomes. We have had lots of evidence in the past few months to show that other parts of the world can produce the station infrastructure that we need for a lot less than we are paying for it. I believe that is down to how the system currently works, and new clause 44 would force us to look at how it could work under GBR.

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.

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?

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.

I again draw the Committee’s attention to the fact that I am a member of Unite the union. Does the Minister agree that changes to terms and conditions, if they happen at all, often take place on a very long-term transitionary basis? Indeed, that is my understanding of what happened the last time that the railways came under public ownership, when many people remained under pre-1948 terms and conditions for several decades. I would not wish to make assumptions or pre-judge future discussions, but can he confirm that nothing in the Bill would prevent similar transition arrangements in future?

As my hon. Friend rightly highlights, questions about the operational structure of GBR have been left outside the framework of this Bill. That is precisely to allow those conversations to continue and so that the legislation can be fit for the creation of a railway system that works for the long term.

I thank hon. Members for their contributions, but would encourage them not to press their amendments.

Question put and agreed to.

Clause 12 accordingly ordered to stand part of the Bill.

I remind Members that decisions on new clauses are usually taken after decisions on existing clauses and schedules, even though we may have just debated them—one for a future day.