My Lords, I offer my support to Amendment 44 and, beyond that, want to support and reiterate what my colleague has just asserted.
I agree that, consequent upon the Bill, the whole of the rail system needs to be kept under review during the period of transition. The privatisation of British Rail imposed costs on rail users and taxpayers. There were costs that resulted from the disorganisation of the system which might have been alleviated by rational central planning. There were also costs that arose from the profit-seeking and rent-seeking of the agents of privatisation.
Some of the main train operating companies have been paying large dividends to their ultimate owners. These include consortia of foreign banks and foreign national rail companies, as we have heard. The companies that own the rolling stock and lease it to the train operating companies have been deriving large and exorbitant rents. These companies are of course called the roscos.
The three largest companies, Porterbrook, Eversholt Rail Group and Angel Trains, own 84% of the UK’s rolling stock. They were established in 1994, at the time of the privatisation. They acquired their rolling stock at vastly undervalued prices and substantial profits were reaped when they were sold on to subsequent owners. These companies have complicated structures of foreign and domestic ownership. Between 2012 and 2018, the three largest roscos passed on a total of £1.2 billion to their parent companies in the form of dividends. We have heard that this sum has recently become even more exorbitant. The Government appear to have concluded that it would be far too expensive to bring these companies into public ownership.
It should be observed that the era of the roscos has coincided with the demise of our railway manufacturing industry, the remnants of which have now fallen into the hands of foreign owners. This demise has been due, in part, to the activities of the rolling stock companies. Instead of providing a steady flow of orders for new rolling stock, they have often opted to refurbish their existing stock. This has made it unprofitable to manufacture trains in the UK. The train manufacturers are now in foreign hands, and they may decide to retreat abroad.
To avert this, there needs to be a consistent stream of rolling stock replacements, subject to a centrally managed plan. The question is how this can be achieved. Others may have opinions to offer on this matter, but I believe that, when Great British Railways is properly established, it should undertake this task. Great British Railways would not be remitting exorbitant dividends to financial consortia, such as the owners of the existing roscos do, and it would not be paying eye-watering salaries to its executive staff. As a consequence of such savings, it would be able to offer attractive rates of return to funds borrowed from capital markets, which might assist investment in new rolling stock.
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