I beg to move Amendment 85, in Clause 65, page 37, line 15, leave out subsection (3)(b).

This amendment would enable GBR to have to pay penalties or compensation.

With this it will be convenient to discuss the following:

Amendment 223, in Clause 65, page 37, line 15, after “Railways” insert

“or any operator of a train on Great British Railways infra-structure”.

This amendment clarifies that freight operators should not face penalties for service disruption caused by factors outside their control, such as infrastructure failures or planned engineering works by Great British Railways.

Clause stand part.

Amendment 86, in clause 92, page 53, line 40, at end insert—

“(1A) Section 65 does not come into force until Great British Railways has published the performance scheme and laid it before Parliament.”

This amendment would prevent section 65 from coming into force until GBR has published the performance scheme and laid it before Parliament.

Clause 65 requires GBR to provide and publish a performance scheme that is designed to incentivise GBR, its subsidiaries or other train operators to minimise disruption or delay to other train services or the network. Train operators may be required to pay penalties if they cause disruption, may receive compensation where disruption is caused by a different operator’s operations and may receive bonuses to reward better than planned performance. So far, so good, you might say. However, it does not permit payments by GBR that relate to disruption outside its control.

Subsection (5) allows GBR to alter or replace the performance scheme at any time, and subsection (6) requires GBR to publish the scheme and any revisions or replacements. Subsection (7) allows

“a person aggrieved by the provision contained in a scheme”,

including a revision or replacement under this section, to appeal to the ORR.

Clause 65 gives GBR significant control over the allocation of performance penalties and compensation. Because GBR will run infrastructure, operate services and design the scheme, subsection (3) lets it decide whether disruption was in its control, creating a clear incentive to rule its own failures out of scope. That is a classic conflict of interest, which must be addressed if the scheme is to be considered fair.

Subsection (4) adds further imbalance by allowing GBR to withhold compensation from operators for technical non-compliance with information requirements, while imposing no equivalent duties on itself. The combined effect is an asymmetric scheme, where operators face penalties and strict conditions, but GBR’s own accountability is weak.

The Rail Freight Group raised significant concerns in its written submission to the Transport Committee:

“The Bill requires GBR to operate a performance regime for non GBR operators which we welcome. It is important that both GBR and operators are incentivised for high performance, including investing in support of that. However, the Bill allows GBR (but not operators) to avoid payment where it is ‘not their fault’, without definition of what this means. This suggests that GBR could exclude themselves from delays caused by trespass, suicide, ill health of staff, poor weather and so on! As this is a mandatory requirement it risks undermining the effectiveness of the regime and reducing incentives to deliver improved performance.”

Amendments 85 and 223 can be seen as the alternative: either one would address the obvious unfairness in the current drafting, where GBR is excused from paying compensation for disruption outside its control, yet all other operators remain on the hook. Amendment 85 would enable GBR to have to pay penalties or compensation just like every other operator. Amendment 223 would apply the same benefit that GBR currently keeps for itself to all operators, which is to not face penalties for service disruption caused by factors outside their control, such as infrastructure failures or planned engineering works by Great British Railways.

Amendment 86 would prevent section 65 from coming into force until GBR has published the performance scheme and laid it before Parliament. However, we will not seek a Division on that amendment.

It is a pleasure to serve under your chairship, Mrs Hobhouse. As in previous sessions, I draw the Committee’s attention to my membership of Unite the union. I will speak briefly on the amendments. I welcome the opportunity to talk about an area of narrowly gauged interest of long-standing, although I hesitate to call it tunnel vision: schedule 4 and schedule 8 compensation for planned and unplanned disruption on the network.

The delay attribution scheme has remained essentially unchanged since privatisation, and the Clause is a welcome opportunity to look again at how it works in practice. Attention has been drawn to the fact that, under the present system, approximately 400 people are employed across the rail industry to attribute delays to either operators or Network Rail. That sometimes happens in ways that defy any common-sense interpretation of good value for money, and there have been eye-catching examples of expensive lawyers gathering in a room to argue about whether a dead pheasant or a dead peacock was a small bird or a large one, for the purpose of the scheme. Depending upon that determination, the costs may be picked up by the taxpayer or by private operators, and I think we can all agree that that is nonsense.

I am glad that the Bill, as drafted, retains some degree of compensation scheme. My attention was drawn to the need for such measures recently in my Constituency, where there has been a long-standing problem with road surface conditions, including what has become known, infamously, as “Northfield’s big pothole” under the railway bridge that connects Quarry Lane and Coleys Lane. Network Rail pointed out to me that a single bridge strike from a heavy goods vehicle would incur greater compensation costs for just one hour of disruption than the entire cost of resurfacing that stretch of road. Clearly, we need some degree of accountability in the system.

However, the amounts paid out through schedule 8 compensation, which is for unplanned disruption in particular, have been enormous. In theory, these schemes should be self-financing, but for all the attention that is paid to dividend payments and profits in the current railway system, the money that leaves the public part of the railway through these compensation schemes has in some years been in excess of those payments. There is a very good case for these changes.

I am not sure that Amendment 85 is entirely necessary or desirable, on the basis that there may well be circumstances in which a private operator, whether freight or open access, is responsible for delays, for example if rolling stock had not been kept in the required condition. It is sensible for there to be some attribution in the system. As subsection (7) sets out, there is a right of appeal to the ORR. This is a sensible clause, and I am not sure that the amendments are necessary.

Does the hon. Member not think our amendments could actually improve the system for GBR? We have talked, in this Committee and in the Select Committee sessions on the Bill, about the real gap in terms of the incentives for GBR to improve its services and improve itself. There is no reason why adding GBR as a body that would have to pay penalties and compensation would not introduce an incentive, in the same way we expect for operators, to ensure that the service provided on the taxpayers’ behalf and using taxpayers’ money is improved. At the end of the day, GBR is paying itself, but our amendments would at least give it an incentive to make sure that it does not need to pay compensation in the first place.

If I have understood the hon. Member’s point correctly, the key is openness and transparency. We need some degree of understanding that, if GBR itself is responsible for delays, that information should be recorded so that improvements can be made. I am not convinced that GBR paying money to itself in a legal or quasi-legal process is the best use of public resources.

That transparency is lacking under the current system. The Delay Attribution Board does not publish any records of its proceedings. Some months ago, I made a freedom of information request for the minutes of the board, and the response was that they were too commercially confidential to disclose. Given the vast amounts of public money that are spent through this process at the moment, I think that is a severe limitation of the current system. This is a real opportunity to do things better.

I will not get into whether a peacock or a pheasant is a large or small bird—it takes me back to my days as a Health Minister, when we had a debate about whether a scotch egg is a substantial meal in the context of the regulations. However, my hon. Friend the Member for South West Devon made a very valid point: even if the money is going back to GBR, there needs to be some degree of transparency so that it can be seen where the attribution is, whether it is GBR that has caused the problem, and whether it is improving or going backwards. Does the hon. Member agree that, even if actual cash is not transferred in and out, a notional payment or a schedule of payments that would have been paid should be published to give the travelling public transparency as to where the challenges lie and give GBR an incentive to improve its game?

I think I agree with at least most of what the right hon. Gentleman says. The issue is whether actual payments are made, but we questioned the noble Lord Hendy in the Transport Committee on this matter, and he agreed that there needs to be some data accountability where there are delays.

I am sorry to detain the Committee on this matter. As is sometimes said, man is born free and everywhere he is in trains—I just wanted to get that one on the record. I thank Committee members for their time.

Hon. Members::

More!

How can I top that? I am not going to try.

This group of amendments concerns performance schemes, which, as hon. Members are aware, are designed to improve the performance of the railway network by incentivising operators and infrastructure managers to enhance punctuality, reliability and overall service quality, underpinned by compensation, bonuses and penalties. For example, performance schemes can require operators to pay penalties if their services cause unplanned disruption, or can offer bonuses for better-than-planned performance.

The performance scheme provided for by Clause 65 will apply to GBR itself, both in its capacity as a service operator and as the body responsible for maintaining the infrastructure. The clause supports one of the overall goals of the Bill: to dramatically improve service performance for passengers and freight operators, and to make a railway that really works.

I thank hon. Members for their amendments, which I will speak to in turn. Amendment 85 seeks to remove the provision that protects GBR for liability for performance scheme payments or penalties where the disruption is not its fault. To be clear, that provision is not designed to prevent GBR from ever paying penalties or compensation. Clause 65(2) clearly provides for GBR to pay penalties, compensation and bonuses. Where it is at fault for disruption, there is no question but that it must compensate other operators.

GBR will have the flexibility to design a bespoke performance scheme for its network. The Bill is intentionally broad, including at clause 65(3)(b), which does not define what constitutes disruption outside GBR’s control. Instead, GBR will consult the industry on its policy on the extent to which disruption after an unplanned event has occurred, and whether it is or is not outside GBR’s control. It will consider any legal requirements before publishing all agreed terms for transparency.

The Minister says that GBR will be able to design a bespoke performance regime, but does that not go to the heart of what my hon. Friend the Member for South West Devon highlighted, which is essentially that it will be designing a performance regime against which its own performance will be managed? It gets to set the rules, determine what the parameters are, and then decide whether it meets those criteria. Subsection (7) says:

“A person aggrieved by provision contained in a scheme…may appeal to the ORR.”

Will the ORR have binding powers to make an adjudication, and will GBR be compelled to follow it?

The right hon. Gentleman pre-empts my later comments about the role of the ORR in this process.

On the principle of whether GBR should be able to design a performance scheme for its own network, that is completely in keeping with the aspiration of the Bill to create a single uniting mind for the railway. We are cognisant of the fact that GBR has a threefold obligation in this process. First, it must create a scheme that it can use to deliver the efficiencies and operational realities of the railway in a way that suits the interests of the travelling public. Secondly, operators that use the service need to be able to ensure that they can have fair service under it. That is why consulting with the industry is so important.

Thirdly, and arguably most importantly, GBR must protect taxpayers’ interests where it is reasonable to do so. A scheme is being created that directs GBR to run the railway in a purposeful way but with robust consultation and enforcement mechanisms, which I will come to in a moment, embedded within it. I believe that strikes the right balance. We are giving GBR control over the system but not allowing it to mark its own homework in every way, as the Opposition might see it. I will go into that in more detail in a moment.

To build on the point that my right hon. Friend the Member for Melton and Syston made, Clause 65(3)(b) says that compensation may not be paid by Great British Railways

“in relation to any disruption that is outside its control.”

It strikes me that that relates to what the hon. Member for Birmingham Northfield said happens already: people have to decide what constitutes significant disruption, and what is inside its control. If I were an outside operator looking at this, I would be thinking, “Hang on a minute. Where’s the definition of what is inside GBR’s control?” There is a whole long list of options that I will not even begin to bore the Committee with for what could be said to be outside its control, but where is that conversation? It strikes me that it might be like trying to claim for a bag that was stolen on holiday on insurance—you have to literally prove that you were mugged to get reimbursed. I would be interested in a bit more information on how “outside its control” will be defined.

That is why the point about designing the scheme in close consultation with industry partners is so important. The hon. Member has read my mind, as I am about to turn to specific instances or potential demarcations with respect to what does or does not constitute being within or outwith GBR’s control.

It is probably important to briefly explain what happens if an unforeseen situation arises and operators believe it is GBR’s fault but GBR disagrees, and the role of the ORR in that process. That brings us back to the Intervention from the right hon. Member for Melton and Syston. The Bill will include in the future scheme a clear route to appeal, to protect all parties in instances that are disputed, but the risks will be mitigated by requirements for GBR to clearly publish the details of the performance scheme, including criteria for when GBR would be liable to pay compensation. That goes back to the public law point about transparency and fairness. The ORR, as the independent appeals body, will have a legal obligation to review the situation impartially and advise on appropriate action where necessary. In addition to the ORR, to further mitigate the risk, operators will be able to seek other means of resolution though the Access Disputes Committee where matters relate to a contractual dispute.

We believe that the Clause is important, as there is a need to balance rightly protecting operators whose services have been disrupted with protecting taxpayer interest where it is reasonable to do so. For example, in instances of trespassing, we would not expect the exclusion in clause 65(3)(b) to apply, as the disruption that it causes should be within GBR’s gift to mitigate through investment in defences, and GBR would have significant opportunity to influence how quickly services are restored. In such an instance, therefore, we expect that compensation would be payable. However, where disruption follows events in extremis that are clearly not within GBR’s ability to mitigate against or control—for example, an act of terror—we envisage that the exclusion in clause 65(3)(b) might apply.

I reiterate that formulating the scheme in consultation with industry will allow us to flesh out in far greater detail the demarcations, and make sure that private sector operators and rail freight have the surety they need that the scheme has been designed in the right way. The ORR will play a key role in the process in ensuring fairness, acting as the independent appeals body if GBR does not act in line with its duties.

Amendment 223 seeks to ensure that third party operators do not face penalties for disruption outside their control. The Bill stipulates that only GBR is protected from paying penalties or compensation for disruption outside its control, because GBR is the only party that bears responsibility for the operation, maintenance and renewal of its network. There is no responsibility for that placed on third party operators, including freight.

On that basis, we do not see how the concerns raised by the hon. Member for South West Devon that a freight operator could face penalties for, say, infrastructure failures or planned engineering works would arise in practice, other than in extremely unusual circumstances —perhaps where an operator’s faulty train had caused damage to the infrastructure. Such events could only be the responsibility of GBR, as today they are not the responsibility of the infrastructure manager or the operator, so it is GBR that would pay the penalties for such issues.

It is right, therefore, that the Bill pursues a policy that protects the rights of third parties to reasonable compensation when disruption occurs as a result of another party’s actions or inactions, while also mitigating the risk of unjustified costs to the taxpayer when disruption is not reasonably in GBR’s gift to avoid or resolve. I hope the hon. Member will be reassured that the amendment is therefore unnecessary, as we believe the Bill already achieves the intended effect.

Amendment 86 would prevent the performance scheme set out in clause 65 from becoming operational until it has been laid before Parliament. Such provisions for parliamentary scrutiny are a well-trodden path at this stage of the Committee’s proceedings, and we again believe that the amendment would add unnecessary layers of bureaucracy to what is effectively a technical industry process. In reality, the expertise about what specific incentives should be set for different operators on different routes is within the rail industry, and those experts are the ones who need to review and help GBR to develop the performance scheme.

That is why the Bill includes requirements for GBR to consult on its performance scheme and requirements for what GBR must include and consider as part of its design, with clear rights to appeal to the ORR in the event of disputes. The amendment would add little practical value. It would delay the new access regime and the benefits it will bring to passengers.

Clause 65 requires GBR to provide for and publish a performance scheme that is designed to incentivise it, its subsidiaries and other train operators to minimise disruption to other train services and to the network itself. The scheme may include provisions for GBR and other operators to be required to pay penalties for causing disruption, receive compensation for disruption caused and receive bonuses that reward better-than-planned performance. The scheme may not provide for penalties or compensation when one train service causes disruption to another but they are both operated by the same person. The clause also prevents GBR from having to pay penalties or compensation in relation to disruption outside its control.

The clause gives GBR the power to require operators to provide information necessary for the scheme to function and offers no right to compensation or bonuses for parties that do not comply with those rules. The clause allows any person aggrieved by a provision in the scheme or any replacement or revision to it to appeal to the ORR. The clause is vital to create an efficient and reliable railway. It equips GBR to design a scheme that safeguards operators, forces accountability across the network and promotes continuous improvement. I therefore commend it to the Committee.

Question put, That the amendment be made.

The Committee divided: Ayes 4, Noes 8.

Question accordingly negatived.

Amendment proposed: 223, in clause 65, page 37, line 15, after “Railways” insert

“or any operator of a train on Great British Railways infrastructure”. —(Rebecca Smith.)

This amendment clarifies that freight operators should not face penalties for service disruption caused by factors outside their control, such as infra- structure failures or planned engineering works by Great British Railways.

Question put, That the amendment be made.

The Committee divided: Ayes 3, Noes 8.

Question accordingly negatived.

Clause 65 ordered to stand part of the Bill.