My Lords, I am pleased to present the Passenger Railway Services (Public Ownership) Bill for Second Reading today. Public ownership will allow us to end the failed franchising system which has inflicted misery on passengers through delays, overcrowding and poor service—a system in which far too many conversations are about how the railway works or, more often, does not work, and too few are about what the railway is for. At its heart, the railway is there to allow people and goods to move from A to B, which is vital in supporting jobs, housebuilding and quality of life. Railways are central to the Government’s missions to kick-start economic growth and break down barriers to opportunity, as well as helping us move towards net zero.
We need to change the whole culture of the railway to place all passengers back at the heart of the system. This Bill will ensure that trains are run for the benefit of the British public, not for the profits of shareholders around the world. I will be clear: there is a great deal of work ahead to reverse three decades of failure, fragmentation, inefficiency and waste. Bringing the railway infrastructure back into public ownership after the failure of Railtrack in the early 2000s was a helpful step, allowing the infrastructure manager to collaborate better with train operators, but it was just one small step. Two decades later, the system remains far too fragmented, and that is costing the taxpayer dearly.
This Bill will mean that we can finally have trains that are run for the public by the public. It is narrow in scope and serves just two main purposes. First, it will enable us to bring rail passenger services back into public operation as the default option when contracts end, not just as the last resort. Secondly, it will allow us, and our counterparts in the Scottish and Welsh Governments, to keep them in the public sector rather than having to put them back out to tender.
The Bill is just the first step—although a very important one—towards a much wider programme of reform. The need for reform could not be more obvious. In recent times, the franchising system has delivered record high levels of cancellations, frequent overcrowding, a frankly bewildering ticketing system and hugely disruptive periods of industrial action. The list goes on.
Reform of the railways has cross-party support. In fact, it originated in 2018 when the Conservative Government commissioned Keith Williams to carry out a root-and-branch review of the whole railway
system. His review confirmed just how fractured and fragmented the railways are. As did the Blake Jones review, which I co-authored at the same time; I am afraid I too have contributed to the plethora of reporting on this matter.
The manifestos of all three political parties acknowledged the need for reforms to address this fragmentation. We all agree that things cannot continue as they are. There is strong public support and a clear democratic mandate for public ownership, so I sincerely hope that noble Lords on all sides of the House can put politics aside to get behind this Bill as a vital first step towards fixing our broken rail network.
That is why we have brought in this public ownership Bill as an urgent priority, and we will introduce a railways Bill later in this Session to bring about a much wider programme of reform. This will include setting up Great British Railways to act as a directing mind and put the whole railway back into the service of the travelling public and freight users.
In this debate, I am sure that some noble Lords will question the case for public ownership. In addressing that head-on, let me highlight one noticeable change for the better that did come about under the previous Government. They appointed no fewer than four public sector train operators to take over from failing private sector companies. They must agree that public ownership is a good thing, as they kept LNER in the public sector for six years and Northern for four. The devolved Governments in Scotland and Wales also support public ownership. They are right behind this Bill because it will avoid the need for them to put their publicly run services back into private hands.
Publicly owned operators exist to serve the interests of passengers and taxpayers, not to maximise profits for shareholders. The Government’s holding company, known as DOHL, has a proven track record of picking up the pieces after private sector failure, transferring services to public operation smoothly and without disruption for passengers or staff, and then starting to turn those failing operations around. LNER was one of the first operators to fully restore services after the lockdowns, with patronage last year exceeding pre-pandemic levels. It has led the way on fares reform, simplifying the confusing array of ticket types and improving the management of train capacity on the east coast main line. TransPennine Express has dramatically improved its reliability since joining the public sector. In its worst periods early last year, more than one in five services—over 500 a week—were wholly or partly cancelled, either in advance due to train crew shortages or on the day for a variety of reasons. This is now down to around 500 a month.
The newly stood up shadow Great British Railways has a strong mix of skills, expertise and experience from the top of the rail industry and will be held to account by its newly appointed chair, Laura Shoaf. DOHL, whose chief executive is part of shadow Great British Railways, has previously managed the successful transfer of services, engineering functions, back-office functions and thousands of staff members. It already has work under way to bring in the additional capacity and expertise that it will need as DOHL takes on more services.
As well as delivering better services, public ownership will save a fortune. Once franchise services are all back in public ownership, where they belong, we expect that the taxpayer will save between £110 million and £150 million a year in fees which currently benefit private companies and their shareholders. Finally, public ownership will pave the way for the wider railways Bill and for Great British Railways, which will bring together track and train in a properly integrated way for the first time in three decades. GBR will have a relentless focus on meeting the needs of the passenger and the freight user, while also driving best value for the taxpayer.
While extolling the virtues of public sector operation, I also want to acknowledge the vital role that private businesses will continue to play in our railways. As now, there will be huge opportunities for the many successful and innovative businesses within the rail supply chain. The operation of rail freight services will remain in the private sector, helping to free up our roads and put us on our way to net zero. There will be a continuing role for open-access passenger services alongside publicly run services, where they bring benefits and add value to the network. In view of the dire state of public finances, it would not be responsible to bring privately owned rolling stock—trains and carriages —back into public ownership, but GBR will take a coherent, long-term approach to our future rolling stock needs, helping to secure better value from the private rolling stock market than was possible under franchising.
There was some debate in the other place about the availability of performance data to enable public scrutiny of individual train operators’ performance. However, we are not lacking in information about operator performance: there is plenty of evidence that it has not been good enough. There have been particular concerns about the poor standards of service provided by Avanti and CrossCountry, which I am happy to address head-on.
As a result of decisions made by the previous Government, the core term of Avanti’s contract expires in October 2026, while CrossCountry’s expires a year later. We cannot bring these contracts to an end before those dates unless the relevant contractual conditions for early termination are met. So the Government will continue to monitor operators’ compliance with their contracts closely; the Secretary of State, as passenger-in-chief, has made clear that she will not hesitate to take further action where appropriate. Ministers have already met Avanti and CrossCountry and their Network Rail counterparts to challenge them on poor performance and demand immediate action to deliver improvements. The Secretary of State has also put in place a formal remedial plan for CrossCountry.
Noble Lords may question why we intend to bring services back into public operation as existing contracts expire, rather than starting with the poorest performers. That is a good question, but this is the right thing to do because it is the way to avoid paying compensation to the outgoing operators for ending their contracts early. Our blueprint for rail reform, Getting Britain Moving, published before the election, was clear on this commitment.
I reinforce that reform does not end with the Bill. This is just the beginning. As I alluded to earlier, this Government plan to introduce a wider railways Bill, which will include provisions for establishing Great British Railways. Consistent with the Secretary of State’s commitment to move fast and fix things, in advance of that Bill, she has already established Shadow Great British Railways to improve services for passengers, unlock barriers to delivery and move the rail network towards greater financial sustainability. Made up of leaders from DG Rail Services Group under DfT, Network Rail and DfT’s holding company for public sector train operators, it will signal a new way of working together to deliver a simpler and better service.
Shadow GBR will also be responsible for designing Great British Railways and will play an important role in improving the reputation of the railway with customers. It will build and exemplify the culture and ways of working in rail that we want to take into Great British Railways. The wider railways Bill will be for future debate in this House and elsewhere but I dare say that noble Lords will want to express some of their views on these matters today. I welcome those contributions. We are keen to ensure that we take the time to hear and understand views from interested parties, including noble Lords. As we refine our detailed plans for the wider Bill, I am sure that the Government will have more to say about these plans in the weeks ahead.
To conclude, this Government will put our rail system back on track to deliver for passengers and support our growth and opportunity missions, with clear strategic direction and proper integration and co-ordination. This Bill presents an unprecedented opportunity to begin reforming the railways in such a way that it will benefit generations to come. The passenger and the taxpayer have for too long been at the mercy of the private companies that operate our railways. This Bill is the first step in ending the decades of failure that have become synonymous with rail travel in this country. There is much to be done; once up and running, Great British Railways will be able to put the passenger and freight user front and centre, seizing opportunities for renewed economic growth, innovation, accessibility and a sector that we can be proud of. Public ownership is a vital ingredient in our plan to fix our railways. I beg to move.
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