It is an honour to serve under your chairmanship, Madam Chair. I thank hon. Members of all parties for their amendments, and for their considered contributions. I commend those Members who have delivered some fabulous maiden speeches today, with such quality, passion and dedication to serve, and a love for their communities. It makes me really proud to be a Member of this House, and I am certain that the memory of delivering their maiden speeches will live with them forever.
I will begin with amendments 18 and 8 to 12, tabled by the hon. Member for Faversham and Mid Kent (Helen Whately). These relate to monitoring, reporting and scrutinising the impacts of public ownership and the effectiveness of train operators. Amendment 18 would require the publication of two reports. The first would outline the anticipated impact of public ownership. That would simply duplicate the impact assessment published earlier this year, and therefore would be redundant. The second report would assess the actual impact of public ownership, some years after implementation. A wide variety of data is already routinely published about both public and private sector train operators’ performance. That includes reliability, punctuality, service quality, customer complaints and financial performance among other measures. The Bill does not change any of that and there is no need to wait five years to consider whether train operators’ performance is improving.
Amendment 9 would require the Secretary of State to procure independent reports about the costs of the contracts awarded to public sector operators. The Department already publishes information on payments made to operators, whether private or public. There is therefore no need for the taxpayer to fund a separate body to report the same data. Nevertheless, the hon. Lady is entirely right to take an interest in the cost of
these contracts. In that spirit, I would gently remind her that ending the taxpayer funding of private profits will result in an immediate and enduring reduction in these costs.
Amendment 9 also raises the specific question of whether public ownership will expose the Government to liabilities that have previously sat with private operators. Under the current national rail contracts, the Government fund the costs legitimately incurred by train operating companies. That includes, for example, the net operational cost of running services and the cost of meeting pension liabilities. Prior to the pandemic, franchised operators bore some cost risk, but were protected by the taxpayer against, among other things, inflation and, in more recent contracts, risk on movements in pension deficit recovery payments. The franchising system meant that bidders simply priced any change in liabilities into their bids, meaning that the taxpayer was exposed to liabilities in the long term. Public ownership therefore does not materially change the Government’s exposure to liabilities in the long run.
Amendment 10 would require the annual reporting to Parliament on various aspects of the performance of public sector operators, and amendment 12 would require an independent report on the impact of public ownership on the performance and efficiency of the UK rail network. Again, data is already published on a wide variety of aspects of train operator performance, including by the Office of Rail and Road in its role as a regulator. The Bill does not change that. The Office of Rail and Road also provides independent scrutiny of the performance and effectiveness of Network Rail, enforcing compliance with its licences and conducting five-yearly reviews that set its funding and what must be delivered with that funding.
Amendments 8 and 11 look to require independent monitoring of the financial and operational performance of public sector train operators. The Department holds train operating companies to account for their financial management through regular reviews of their management accounts and business plans. That applies to both public and privately owned operators. In addition, in England publicly owned operators are overseen by DFT OLR Holdings Ltd, known as DOHL. As a holding company owned by the Secretary of State, DOHL is experienced in reviewing and monitoring the financial arrangements of the companies it manages, and contrary to what the hon. Lady said, it is building its capacity in readiness to take over more services. At the same time, public ownership will reduce the other contract management costs, because there will no longer be the same commercial tension of the taxpayer interacting with private profit. Amendment 8 refers specifically to the auditing of publicly owned train operating companies’ accounts. It is already the case that DOHL and the operators it oversees must publish their audited accounts annually.
Turning to amendment 11, train operators are already monitored under their existing contracts against targets for punctuality, reliability and service quality. They are also held to account for managing within pre-set cost budget limits each financial year. Driving up operators’ performance in those areas is vital, and the Government will continue to review train operator performance regularly in those and other areas. This has been an early priority for my right hon. Friend the Secretary of State. For example, in her first weeks in office, Ministers held
meetings with the managing directors of Avanti West Coast, TransPennine Express and their Network Rail counterparts to set clear expectations for immediate improvement. In parallel with these arrangements, the Government are developing detailed proposals for holding the future Great British Railways to account for performance. This will form part of the broader package of reform that we will set out in the forthcoming railways Bill. We expect these arrangements will be in place long before the five-year reviews proposed in a number of amendments tabled.
Amendment 11 also refers to performance improvement plans. Mechanisms to require improvement plans are already a feature of the Government’s contracts with both public and private sector operators. The Secretary of State has recently put in place formal remedial plans with CrossCountry in view of its unacceptable levels of cancellations and service reductions. Finally, amendment 11 raises the question of senior management remuneration when performance is poor. This matter can be considered when remedial plans are being put in place, taking account of the circumstances in each case.
Amendment 19, also tabled by the hon. Lady, and amendment 20, from the hon. Member for Bath (Wera Hobhouse), both propose additional procedural steps to be followed before a contract is awarded to a public sector operator. Amendment 19 would require the Office of Rail and Road to publish an opinion on the practicability of transferring services to each public sector operator. Clearly it is vital that services are transferred to public ownership smoothly, without detriment to the quality of service during the transition. For that reason, the transfer of services will take place using a well-established arrangement and process. DOHL has significant experience of managing the transition of services from private to public operation in recent years.
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