My Lords, I suspect that this will be one of the shorter debates in our consideration of this Bill in Committee, but it is one of the most important. It will be short, I suspect, because this group is rather technical, but it has very great significance, not only for the operation of the railways but for the passenger experience.
There are four amendments in this group, all of them in my name. The first two, Amendments 19 and 20, are closely related. They relate to the very peculiar situation in which we are now going to see the railways operated in this country: that is, that they are going to be practically unmonitored independently as far as their finance is concerned. Compare the railway sector to the water sector or to electricity. These sectors have economic monitoring to ensure that best value is being delivered to the customer. Nothing of the sort is envisaged in relation to our new nationalised railway. There is to be no economic monitoring and no supervision of the setting of fares, and that is what these amendments relate to. One is to do with charges to customers—that is Amendment 19—and the other is to do with the costs incurred by the utility. The railways are a utility, and that is how they are going to be run.
Of course, if they were run by the private sector—as they would be if they were water or electricity—that economic monitoring would cover both the costs charged to the customer and the costs incurred by the operator, because their efficiency would be monitored. As I say,
none of that is envisaged here. We are asked to assume that, in public ownership—I am not now talking about a Bill that is going to come to us in 18 months; I am talking about the direct consequences of this Bill as soon as it starts to come into effect and as these franchises move over—the Government are going to set fares in a reasonable way that is not exploitative of customers.
It could be said that that can be assumed because it is not going to be run by the private sector—that the Government are not going to gouge our eyes out, because Governments do not do things like that. But they do. Tell somebody who is applying for an urgent passport at a cost of £1,000 that they are not having their eyes gouged out. Tell someone applying for a statement of their nationality that recognises an existing British nationality who is charged well over £1,000, including each time for their children on top, that they are not having their eyes gouged out—that is several thousand pounds for a family that are already British and simply want to have it recognised, as they are allowed to do, and register as British because they are already British.
We know from experience that Governments are perfectly willing to charge very high fees for their services in order to make a profit. Sometimes, this profit has been complained about—for example, in relation to nationality, not least by the noble Baroness, Lady Lister of Burtersett, and others on the Labour Benches when we have debated matters such as that.
Who will decide how fares are set, what the logic is, and what the railways’ aim is in setting those fares? This is particularly true in the case of railways, because they inevitably have variable fares. It is part of the nature of a railway that they aim for the highest return they can get from particular passengers; they are then willing, because of the nature of the structure of the business, to take marginal fares to cover marginal costs from other passengers who might pay very little for the same journey because they are willing to go at a certain time or book a certain distance in advance, and things of that sort. Those who do not have that advantage may find themselves being gouged because they need to travel at the last minute or because they are captive customers. Do not forget how many captive customers the railways have. There are not necessarily a lot of captive customers on the long-distance railways, but on the commuter network, especially around London, they are, in effect, captive customers. How attractive to the Treasury to turn the railways into a mill for generating money for the Government, if that is what it wants to do.
I am not saying what the fares policy should be. What I am saying is that there should be some independent monitoring of how it is done so that customers—or passengers, as I must remember to call them, remembering what I said to the noble Lord, Lord Snape, the other day—do not find themselves trapped in a system and exploited. No independent monitor is proposed, so we have to trust either the Department for Transport or Great British Railways. I am not sure which it will be in the long term, but in the short term, over the next few years, we have to trust the Department for Transport to set fares in a way that is not designed to maximise revenues from those who cannot resist paying them.
Similarly, if this were in the private sector, through the setting of charges there would be economic regulation—as there is in the water industry, at Heathrow Airport and so forth—of the efficiency of the costs with which the railways conduct themselves. There is no sign of that either in the Bill. Again, we are asked to trust the Department for Transport to ensure efficiency. Considering how many staff the Department for Transport employed to monitor and shadow the staff employed by HS2 Ltd, I do not regard it as a great guarantor of the efficiency of delivery and the control of costs. There ought to be an independent body to do that.
That deals, as far as I am concerned, with Amendments 19 and 20. We then come to Amendment 23, which is rather different but again relates to something the public should be entitled to know about: the great transfer of pension liabilities that will occur as a result of moving pension responsibilities from the train operating companies to the Department for Transport. I want to be clear about this: I completely understand that the staff are largely currently members of the national rail pension fund and that they will remain members of the same pension fund. The contributions and so forth should not in themselves change simply because of the Bill—I perfectly follow that. The costs will not increase as a result, but the purpose of this amendment is to probe where they will lie in balance sheet terms. Will they be a liability fully on the Government’s balance sheet? What consequence will that have for the national debt? This is something that we should know, because the railway pension scheme is, obviously, one of the largest pension schemes in the country. These are not trivial sums; they are very significant sums in terms of pension funds.
Finally, I have Amendment 25 on lease payments. I will not trespass into this very deeply because a similar amendment in the name of my noble friend Lord Young of Cookham is due to be debated later, and I know that he is much more knowledgeable about these matters than I am, but it is certainly the case that the lease arrangements that exist for the rolling stock are between the train operating companies and the roscos, the rolling stock finance companies. That is where the lease liability exists. Are these to be transferred to the Government? If they are, where will they sit in balance sheet terms? What balance sheet effect would that have? Therefore, there is the question of public debt.
There are two separate strands to these four amendments. One strand relates to balance sheet liabilities and the effect on the Government’s balance sheet of the measures proposed. We are told that this Bill has no cost implications, but is that true? The other relates to how we ensure that the railways are properly and independently monitored to make sure that the fares they charge are not exploitative in circumstances where exploitation is open to them, that their costs are efficient and that they are efficiently delivered. Simply saying that we should trust the Government or the Department for Transport on this is, I suggest, not a satisfactory answer.