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

With this it will be convenient to discuss the following:

Amendment 88, in Clause 68, page 38, line 11, leave out subsection (1).

This amendment removes the requirement that appeals may only be made under Judicial Review principles.

Amendment 89, in clause 68, page 38, line 11, leave out from “must” to the end of line 15 and insert—

“determine the appeal on the facts and the law.”

This amendment would enable the ORR to determine appeals on the merits.

Amendment 90, in clause 68, page 38, line 20, leave out paragraph (a) and paragraph (b) and insert—

“(a) remit all or part of the provision appealed against to Great British Railways for reconsideration, or

(b) quash all or part of the decision appealed against and substitute its own decision, as, at its discretion, it sees fit.”

This amendment would allow the ORR, when agreeing an appeal, to remit all or part of the decision appealed against to GBR for reconsideration, or quash all or part of the decision appealed against, as at its discretion it sees fit.

Amendment 91, in clause 68, page 38, line 29, leave out from “question” to end of line 32.

This amendment would allow the ORR to substitute its own decision for that of GBR when allowing appeals, without there needing to have been an error of law.

Amendment 92, in clause 68, page 39, line 8, at end insert “(f) open access operators.”

This amendment would require the Secretary of State to consult open access operators before making regulations about steps that must be taken before an appeal can be brought, to make provision about the procedure and to set time limits and fees for the appeals brought under this Chapter.

Amendment 93, in clause 68, page 39, line 18, at end insert “(f) open access operators”

This amendment would require the ORR to consult open access operators before publishing its document on the practice and procedure for appeals under this Chapter.

Clause 68 stand part.

Clause 67 provides a route of appeal to the ORR for a person aggrieved by a GBR decision about access, capacity allocation and charging, including decisions made under those schemes. Clause 68 then sets out the principles for how appeals to the ORR will operate and empowers the ORR to issue a document setting out the detailed practice and procedure to be followed. Together the clauses establish the ORR’s reformed and independent appeals role, providing a clear, credible and accessible route of redress against GBR’s access and charging decisions.

Opposition Members have consistently raised the view that basing the appeals role on judicial review principles is not strong enough. However, the rationale for the ORR deciding appeals based on judicial review principles is simple: we do not want the ORR to opine on best use. That is GBR’s job and if the ORR could simply disagree with GBR because it had a different opinion, we would be leaving the system as it is today, with parallel decision makers and unclear accountability. We would not gain the benefits of a body that is truly in charge of rail. That is precisely how we ended up with mistakes like the recent 7 am Manchester service that was set to travel with no passengers on it. The ORR admitted it did not have the adequate information or resource needed to make an informed decision on the operation of that service. That is exactly why we need a consolidated directing mind for the industry that can take decisions confidently and with passengers and freight users at its heart.

Basing the appeals system on judicial review principles ensures that appeals are considered independently and on a recognised basis of fairness, legality and rationality, and without the fragmentation of decision making that plagues the current system. The appeals process will provide a robust accountability framework to ensure the railway delivers for passengers and freight customers. It is not judicial review principles that are weak; perhaps the hon. Member for South West Devon would suggest it is the powers available to the ORR to act on any wrongdoing that are flawed. I will turn to that next.

Does the Minister not see the challenge that if GBR is the single directing mind, we need to ask how it is held to account for individual decisions that it makes? Where is its accountability to the public, be it through this place or others? Secondly, the Minister talks about judicial review principles. As Constituency Members of Parliament, we all know just how high that judicial review bar is when people wish to challenge a planning decision, or something else. It cannot consider the individual merits of the decision, merely how it has been reached and whether due process has been followed. It is also incredibly costly. Is the Minister not concerned that in setting these principles, he is setting that bar at an unattainably high level, rather than striking the appropriate balance between being able to appeal and challenge something, but not unduly burdening the day-to-day decision making of the railways?

I thank the right hon. Member for that contribution, because he gets to the nub of the principles. GBR will be held accountable through compliance with its duties as set out in legislation, which ensures that it has to have regard to passengers, including passengers with disabilities, and regard to the need to promote rail freight. It also has public law accountability built into it, through its legal obligation to act in a manner that is transparent and fair. The right hon. Member asks a broader question about whether the JR principles threshold is too high. We would argue it is not too high, precisely because of what it unlocks if we get to the stage where an appeal is upheld.

The ORR will have strong powers to dismiss the appeal or remit the decision to GBR for reconsideration, with legally binding directions that GBR cannot ignore. It is right and it is the stated principle both of the policy and of the overall notion of nationalisation that GBR can be a directing mind for the railway and have the power to do so, but there is a strong buttress against it if it is found that it has acted incorrectly as a matter of law.

We have empowered the ORR to remit decisions to GBR for reconsideration alongside legally binding directions that GBR must follow. In the most serious scenarios, including in relation to individual decisions affecting access—it is those individual decisions that the right hon. Member for Melton and Syston mentioned—we have gone even further and empowered the ORR to substitute its own decisions in place of GBR’s. When the ORR is satisfied there has been an error of law and there is only one possible decision that GBR ought to have reached, it can take those steps. That substitution power is rightly narrow. It is intended as a targeted safeguard rather than a routine step. Overuse could lead to incoherent decision making, such as an individual decision being changed without due consideration for wider timetable impacts. Or it could require the ORR itself to take on the role of a directing mind, taking us straight back to the broken system that we all agree cannot continue.

The legally binding power of direction still ensures that the appeals role has teeth, even in situations where the bar for substitution is not met. The restrictions on the circumstances in which the ORR can substitute its decision for GBR’s is an established approach for an appellate body that follows section 31 of the Senior Courts Act 1981. What we are proposing is sensible and precedented while ensuring freight and open access have a robust appeals process.

Let me illustrate the arguments with an example in order to outline this for the Committee in full. If GBR were to not allocate certain capacity for freight use during the capacity planning stage, an affected freight operator could appeal that decision to the ORR. The ORR would assess whether GBR had acted lawfully and rationally, including whether the decision was compatible with its statutory duties, such as its Clause 18 duties, which include the duty to promote rail freight.

The ORR will also consider whether the decision was consistent with GBR’s other legal obligations, such as the clause 17 duty to have regard to the freight growth target, and whether GBR had followed the process set out in its access and use policy—for example, whether it had consulted with operators at the appropriate stages and met the required deadlines. If the answer to all of those questions is yes, the decision will stand. If the answer is no—for example, if GBR has failed to apply its statutory duties or has not followed its published processes—the ORR would be able to uphold the appeal. In this circumstance, the ORR may remit the decision to GBR for reconsideration and may issue legally binding directions that GBR cannot simply ignore.

The process clearly provides protection for operators. To use the favourite analogy of the hon. Member for Broadland and Fakenham, who is not with us today, GBR is writing its homework by making the decision, and the ORR can be called on to assess that homework. In doing so, the ORR would use GBR’s legal duties, published policies and processes as its marking scheme.

Some of GBR’s decisions might be like maths homework with only one possible correct answer. In those cases, the ORR will have the ability to immediately substitute the correct answer in place of GBR’s incorrect one. But for much of GBR’s homework, there will be no single right or wrong answer, and in those cases it will be for the ORR to check GBR’s workings. Rather than substituting its own answer in those cases, the ORR should send the homework back to GBR with appropriate feedback and tell it to try again.

Clause 66 sets out who GBR must consult before issuing, revising or replacing the access and use policy under clause 59. The ORR and the Scottish and Welsh Ministers must be consulted as well as other persons GBR considers appropriate. Subsection (2) requires GBR to consult the persons it considers appropriate before issuing the infrastructure capacity planning document under clause 60, including any revisions and replacements; before issuing a working timetable under clause 61; and before making, altering or replacing a charging scheme under clause 64 or a performance scheme under clause 65.

Subsection (3) provides that a requirement in this clause for consultation may be satisfied by a consultation before or after the commencement of the clause. There is currently no express requirement to consult existing open access operators.

Clause 67, on appeals against access, charging and performance decisions, provides that a person who is aggrieved may appeal to the ORR against a GBR decision as to their train operations’ access to and use of the infrastructure, or a decision under the charging scheme or performance scheme. That sounds okay, until we realise that it is on judicial review terms, so there is no actual right of appeal at all.

Clause 68, on the appeals procedure, sets out that the ORR, when determining appeals under this chapter, must apply the principles that the High Court would apply on an application for a judicial review, or the principles that the Court of Session would apply in exercise of its supervisory jurisdiction for appeals in Scotland.

Subsections (2) and (3) provide for the ORR to allow an appeal or dismiss it, and, if it allows an appeal, to use the following remedies. For appeals made against the GBR policies, plans, and schemes themselves—under clause 59(6), on access and use; clause 60(6), on infra-structure capacity; clause 64(8), on charging; or clause 65(7), on the performance scheme—the ORR can only require GBR to reconsider the decision.

For appeals made against a specific decision under clause 61(5) or clause 62(7), on the working timetable, or under clause 67, on GBR’s policies, plans and schemes, the ORR can quash the decision that is appealed against. Then, however, all it can do is to send it back to GBR to reconsider, or it may substitute the decision with its own if quashing the decision is on the basis of an error of law and without the error there is only one decision that GBR could have reached.

Clause 68(1) means that because appeals must be assessed using judicial review principles, operators can challenge GBR decisions only on procedural grounds and not on the substance or commercial merits. That means that GBR will be judge and jury in its decisions affecting its direct competition, which is obviously wildly unfair.

Clause 68(3)(a) sets out that even where an appeal succeeds, the ORR can only remit the matter back to GBR for reconsideration, which means that GBR can often reach the same outcome again without revising its reasoning. That offers little to no real corrective power.

Clause 68(4)(b) says that the ORR may substitute its own decision only where there is an error of law and where only one lawful outcome was possible. That is a very high bar and as a result this remedy will be rare.

These concerns have been echoed by the industry. During one of the oral evidence sessions for the Transport Committee, Maggie Simpson of the Rail Freight Group said:

“There are a number of problems with that appeal function. First, it will be incredibly hard to ever get to it. We are told that the appeal will have to meet the standards of a judicial review—illegality, irrationality or procedural unfairness—so there will be a very high bar to meet to even get there. On top of that, the law allows the Secretary of State by regulation to set out some steps you would have to take in advance of going to the ORR. We do not know what those are. There is also a fee, and we do not know what that is. Even getting to the ORR will be very much more difficult than it is today.

If we do get up there, in most cases, the ORR will be able to ask GBR to have another look at its decision. It has another look, and it reaches the same view—so what? Only in a minority of cases can it quash a decision and only if there was an error of law…Passengers are going to get a very powerful watchdog when, conversely, we feel that in freight, we are having those rights of access watered down.”

Steve Montgomery from FirstRail said:

“Considering other large public sector organisations—like GBR is going to be—you have to ask, ‘Why would you not have an independent regulator of it?’ Why is rail going to be different from other large public sector organisations where there are regulators looking at them?”

Nick Brooks from ALLRAIL said:

“A strong independent rail regulator has two roles. The ORR, by the way, is part of the European group of independent rail regulators called IRG. Ideally, those roles are to protect passengers and other parts of the sector from monopolistic behaviour, and to ensure the best use of taxpayer money. Their role is also, in other countries, to ensure competition and non-discriminatory behaviour. We are worried that that might be watered down in this country and needs to be improved still.”

That prompts some questions that I hope the Minister can answer. Why is GBR being set up in such contradiction to its European neighbours? Is there anything that we could have learned? Will the Government reconsider any element of GBR as a result?

These concerns were also set out in the Rail Freight Group’s written evidence to the Transport Committee:

“GBR will by nature be a very powerful monopoly of track and GBR trains, and the overarching changes in the Bill reduce significantly the independent oversight of ORR, leaving the Secretary of State holding GBR to account. By comparison, the ORR currently has a duty to promote the use of the rail network and thus has a track record”— ha, ha—

“of creating growth by approving new access applications previously rejected by Network Rail. Although we welcome the provisions for freight outlined above, there is still a significant risk that GBR could act in a way which favours its own trains, restricting growth for freight. As such, we believe it is essential that non-GBR operators have an independent appeals function that is powerful, easy to use and able to take action effectively.”

It continued:

“In essence, the provisions in the Bill mean that freight operators and customers have a very limited right of independent appeal against GBR. It is also of note that GBR may replace the current Access Disputes Committee (also independent of Network Rail) who hear lower level timetabling disputes with their own internal process, albeit we do not yet have full details of this.”

I would be interested to hear the Minister’s response to that.

FirstGroup wrote in a similar vein, saying that it was concerned

“about the ORR’s responsibility for track access decisions being transferred to GBR…The Bill removes the ORR’s powers to independently adjudicate on whether applications for access best meet the needs of all railway users. Under Clause 68 the ORR is an appeals body but with no ability to uphold appeals if they are discriminatory or anticompetitive. There need to be more checks and balances to maintain confidence in fair access, independent regulatory oversight and to protect the interests of passengers…As a broader point, independent regulation is vital to all large comparable bodies—consider for example the CQC’s role in healthcare or the Civil Aviation Authority in airlines and airports.”

The pushback against this grossly unfair clause is overwhelming, and the Government can surely no longer turn a deaf ear.

Amendment 88 would remove the requirement that appeals may be made only under judicial review principles. We think that it is an obvious improvement. At the Transport Committee on 7 January, the Department for Transport’s official, Lucy Ryan, stated that the requirement is deliberate:

“The reasoning for the JR threshold is to be absolutely clear that GBR needs to remain the directing mind, able to take decisions about optimising the use of the network.”

That is an insufficient safeguard against monopolistic behaviour by GBR. Large monopolies with structural conflicts of interest need effective decision-making oversight. It cannot be done by the Secretary of State, because this is operational, so it has to be the ORR.

Amendment 89 would enable the ORR to determine appeals on the facts and the law. It builds on amendment 88, and we think it is the only way to create a fair and non-discriminatory process. Amendment 90 would allow the ORR, when agreeing an appeal, either to remit to GBR for reconsideration or to quash and/or substitute its own decision for all or part of the decision appealed against. An independent appellate body applying the rules to GBR and its decisions would not challenge the role of GBR, but make sure that it was applying its rules fairly and correctly.

Amendment 91, which I believe the hon. Member for Didcot and Wantage supports, would allow the ORR to substitute its own decision for that of GBR when allowing appeals, without there needing to have been an error of law, resulting in only one possible outcome. It would remove a ridiculously closely drafted requirement, and it is obviously fair. It is a test to see if the Government actually want a fair and level playing field.

Amendment 92 would require the Secretary of State to consult open access operators before making regulations about steps that must be taken before an appeal can be brought, to make provision about the procedure and to set time limits and fees for the appeals brought under this chapter. Operators clearly have skin in the game, and should be consulted by right.

Amendment 93 would require the ORR to consult open access operators before publishing its document on the practice and procedure for appeals under this chapter. The argument for that is very similar to the one behind amendment 92, which I just set out. Will the Minister stand up for the open access and freight sector, and support our amendments to create a fair appeals process?

It is a pleasure to serve under your chairship, Mrs Hobhouse. I have a short point to make. The Minister seems to be saying that it is important to restrict an appeals process to the judicial review principles, which is a more restrictive set of criteria by which a body or company can appeal. Otherwise, that might lead to “incoherent decision making”—I think those were his words.

That sentiment and assertion undermines the entire court system of the United Kingdom—save for judicial review applications—which is based on disputes being had in, for example, the county court or the High Court, or another court making a decision, and the possibility of an appeal going upwards all the way to the Supreme Court, depending on the issue. However, nobody would suggest that that leads to an incoherent society or to incoherent contracts, family law, employment law, decision making or anything else.

For some reason, Great British Railways has this special carve-out, such that it can be challenged only through judicial review, because of some notion of incoherence. It seems to me that the entire purpose of that restriction is to prop up Great British Railways and allow it to act in a way that is not really comparable to anything else in the way we deliver public transport in this country. It gives me considerable concern.

I will respond first to the hon. Member for Isle of Wight East. The point about confusion does not pertain to confusion created through arbitration in the courts on the principles of access decisions as a matter of law. I think that that is fundamental to making sure that GBR works within the boundaries of the legislative framework we have created, as well as, via public law principles, operating in a way that is both fair and transparent. The point about confusion is having two decision-making bodies on what constitutes best use of the network and access to the network. That is where we want to avoid confusion, because that is the system we have inherited, and it does not work for passengers.

The Shadow Minister raised a point about fees, and the right hon. Member for Melton and Syston mentioned costs. Any appeals will be made against JR principles and not processes. It is not that each case will be brought before the courts, with the associated costs that that would bring, so I am confident that the costs of appeal would not be a significant factor under the new system as opposed to the old one.

On the matter of European systems, the shadow Minister tests the boundaries of my knowledge of the operation of rail systems overseas. There are systems in Europe in which a body similar to the ORR has too dominant a role in having charge over access and decision making in relation to it. That is not working in the existing system, and that is what we are trying to change through the Bill.

Amendments 88 and 89 seek to remove the requirement that appeals be made on judicial review principles and replace this with a requirement that appeals are determined

“on the facts and the law.”

As I set out in my Opening Speech, judicial review principles will ensure that the ORR focuses on the legality and fairness of GBR’s decision making, not on retaking the decision. Replacing this with a requirement to determine appeals on the facts and the law instead would convert this to a merits-based system, which would require the ORR to rerun strategic judgments and exercises on best use of the network. That is not the role we intend for the ORR. The framework is designed to provide strong, independent oversight while preserving GBR as the single directing mind.

We have discussed repeatedly in Committee that what is wrong with the railway today is the fact that there is no one decision maker. There has to be just one, or the railway will continue to stagnate. GBR is the body with the expertise to be that decision maker, and the ORR is the body that should check that it has acted fairly and proportionately. Judicial review principles strike the right balance between accountability and effective decision making.

Amendments 90 and 91 would extend the ORR’s powers to substitute its own decision for one of GBR’s. As I have mentioned, the Bill deliberately distinguishes between types of appeals and the powers available to the ORR in each circumstance. For appeals concerning provisions within GBR’s strategic documents, such as the access and use policy, infrastructure capacity plans or its charging and performance schemes, the ORR may remit the provision appealed against to GBR for reconsideration, and may do so with binding directions, but may not substitute its own decision. That is because these are not yes or no decisions—they are not simple decisions—but rather complex and comprehensive policies that govern the railway. It is not appropriate for the ORR to rewrite strategic policy documents, and that is not what regulators are meant to do. The ORR should be checking that GBR has acted consistently with its procedures and policies, not substituting them with its own.

However, for operational decisions, for example about charges for operators or about whether someone should be included in the timetable, the ORR has stronger powers. The ORR may quash all or part of the decision and may substitute its own decision in cases where there has been an error of law and, without the error, there would have been only one decision that Great British Railways could have reached. The amendments would remove these carefully drawn distinctions, potentially allowing the ORR to step beyond its oversight role and into decision making on best use of the network. We cannot have that. The amendments would allow the ORR to make decisions on best use without decisions going back to GBR to correct, removing GBR’s ability to learn from and correct its mistakes, and adding duplication between two decision-making bodies. The Bill already provides robust remedies where an appeal is upheld, including the power to remit with binding directions, even when substitution is not available, which ensures effective redress while preserving GBR as the single directing mind.

Amendments 92 and 93 would require the Secretary of State and the ORR to consult open access operators before publishing either regulations or practice and procedures for appeals under this chapter. The Bill already sets out a clear and proportionate consultation requirement, and the current formulation is deliberate to provide flexibility for the ORR to engage industry and stakeholders, including open access operators, without creating an inflexible statutory list. It may also be helpful to emphasise that the ORR’s appeals role exists precisely to ensure fairness, transparency and lawful decision making for operators, including open access operators.

The ORR has already begun engagement on its approach to developing its appeals process and has published a discussion document setting out its emerging thinking, which is publicly available and open to comment and views from industry and other stakeholders, including open access operators. The work is intended to inform its final appeals process, and there will be a formal consultation once the Bill receives Royal Assent. Open access operators will therefore be able to provide views as part of the consultation without the need for an explicit mention in the Bill. The process already provides a clear and appropriate route for open access operators to have their views heard.

I also note that the Secretary of State regulations relate to process matters only, such as steps that must be taken before an appeal is brought, time limits, and fees. They do not determine access rights or decision making on capacity allocation or charging. It is therefore appropriate that the statutory consultation requirement focuses on bodies with system-wide responsibilities and oversight roles, rather than individual categories of operator.

As with other consultation provisions in the Bill, singling out one category of operator will create a precedent for others to request to be added to the statutory list, and we will risk making the framework overly prescriptive. The current drafting already achieves the right balance, ensuring engagement and maintaining flexibility. For those reasons, I urge the hon. Member for South West Devon not to press the amendments, and commend clauses 67 and 68 to the Committee.

Question put and agreed to.

Clause 67 accordingly ordered to stand part of the Bill.