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Train Operating Companies

Volume 777: debated on Tuesday 6 December 2016


My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given earlier today by my right honourable friend the Secretary of State for Transport to an Urgent Question on the Government’s plan for train operating companies. The Statement is as follows:

“This morning, I laid a Written Ministerial Statement in both Libraries of the House setting out my vision for reforming the railways in a way that puts passengers at the heart. This is about providing better, more reliable journeys for passengers.

Britain’s railways are crucial to our economic future, and we have seen very substantial growth in passenger numbers since privatisation, but this growth brings challenges, and the impact of disruption can be immediate, significant and wide-ranging. So our railways need to adapt and change in order to be able to cope with this huge expansion in the number of passengers. We are spending very large amounts of money trying to tackle the challenge, with new and longer trains and more capacity across the country—big projects such as Crossrail and small projects that make a difference locally.

Earlier this year, Nicola Shaw recommended that Network Rail devolve responsibility to the route level. I support the principles of the Shaw report, and I support Network Rail’s reform programme, but there is more to do. I therefore intend to press ahead with Sir Roy McNulty’s recommendation on how to make the railways run better and more cost-effectively. I will do this initially at an operational level. In order for all those involved to be incentivised to deliver the best possible service for the passenger, I expect the new franchises, starting with South Eastern and East Midlands, to have integrated operating teams between train services and infrastructure that work together in the interests of the passenger. I will also invite Transport for London and Kent County Council to be more closely involved in developing the next South Eastern franchise by embedding their own representatives in the team that develops, designs and monitors that franchise.

We will continue to develop the model for greater alignment of track and train as further franchises are renewed, including the option of joint ventures. In the meantime, my department is also publishing an update to the rail franchising schedule, which I am placing in the Libraries of the House.

I also want to bring new skills into the challenge of upgrading our railways. I will begin by looking at the reopening of the link from Oxford to Cambridge. I am going to establish East West Rail as a new and separate organisation to accelerate the permissions needed to reopen the route, and to secure private sector involvement to design, build and operate the route as an integrated organisation. This East West Rail organisation will be established early in the new year and chaired by the former chief executive of Chiltern Rail, Rob Brighouse.

These reforms will set the railway on a firmer footing for the future. We can and will make sure that our rail network plays its part in making this a country that works for everyone. I will bring forward a new strategy for rail in due course”.

I thank the Minister for repeating the Answer to the Urgent Question asked earlier in the other place.

At the moment, Network Rail has responsibility for the signalling of trains, including employment of the signallers. Will the signalling control of a reopened link from Oxford to Cambridge, including into Oxford station, come under the proposed new entity for the line rather than under Network Rail? Does this apparent intention to exclude Network Rail from a reopened Oxford to Cambridge line indicate that the Government have lost confidence in the ability of Sir Peter Hendy, whom they appointed as chairman just 18 months ago, to further improve the performance of Network Rail? What existing responsibilities do the Government intend to take away from Network Rail with their announcement today about “integrated operating teams” and joint ventures—between whom?—for some of the existing network? Alternatively, is this announcement of integrated working and operation largely a rehash of the now-abandoned closer working arrangements between South West Trains and Network Rail, and an extension of the current arrangements in that regard between ScotRail and Network Rail?

My Lords, the noble Lord asked a number of questions. First, on Sir Peter Hendy, of course the Government continue to have full confidence in Sir Peter’s work. He has concluded some important work for Network Rail and will continue to work in that respect. The noble Lord raised the issue of the purpose behind today’s announcement, which is clearly to ensure a deeper alignment, better working and a better alliance between those who operate our tracks—in this case, Network Rail—and the train operating companies themselves. We have seen this working well in Wessex between Stagecoach South West Trains and Network Rail, and indeed between Abellio ScotRail and Network Rail. This does not take away from Network Rail but merely ensures that from an operational standpoint, engineering works, for example, can be aligned. This puts passengers at the heart of ensuring a better and more efficient rail service.

My Lords, I declare an interest as a former Transport Secretary, of whom there are many, and an adviser to the Central Japan Railway, which is one of the most efficient in the world. Certainly, the plans the Minister has set out are a useful step forward, but is he aware that the real integration that is now needed is in the career and management structure, right the way up through the railway operation—from those who are on the station platforms and in the infrastructure to those who operate the train services? Is he aware that that is the practice and opinion of most well-run railways around the world, and should we not now consider that as well?

My noble friend speaks with great expertise and knowledge of this area, and he is right to point out the importance of seeing progression through careers across the transport network—rail is no exception. Certainly, skills will be an important part of the rail strategy that, as we have announced, will be brought forward next year. As I am sure my noble friend knows as a former skills Minister and Secretary of State for Transport, we are acutely aware that we need to ensure that a proper career and training structure is provided in all areas of transport, so that those who start their career on the bottom rung of the ladder and who have the aspiration and ambition are offered a practical route to the very top.

My Lords, there are elements of these announcements today that we welcome —for example, devolution and the introduction of an Oyster-style card. However, is the Minister aware—I am sure he is—that in London Oyster is being rapidly overtaken by modern technology? Are the Government taking that further development into account in their plans? Will the fare structure be simpler, as it needs to be, as a result of this announcement?

The Oxford and Cambridge line is clearly being used as a test case for further privatisation. Can the Minister explain how, in their overall plans, the Government will prevent the cherry picking of routes, with the private sector taking on the easier routes and leaving Network Rail to continue to cope in the traditional manner with the current, most complex routes? Finally, have the safety issues been taken into account?

On the noble Baroness’s final point, safety remains very important, irrespective of the model that operates on our railways. Notwithstanding the challenges that we know exist in certain areas, our railways are still among the safest in Europe and indeed the world.

The noble Baroness is right to point out that although the Oyster card was a revolutionary idea when it was introduced, technology impacts on all industries across the transport sector. Of course, we continue to look at whether more innovative smart ticketing and seamless smart ticketing can be introduced. She makes an important point about ensuring that passengers are well versed in using such systems.

The noble Baroness referred to the Oxford to Cambridge line being a precursor to privatisation of Network Rail. That is not the case. As I have iterated and now re-emphasise, this is about operational deliverability on the ground. This proposal will ensure that teams’ common principles and objectives can be aligned for the effective delivery of services and engineering works across the network.

My Lords, I should like to ask the Minister about another group of people who are affected by the development and expansion of the rail network: those who live close to the track. I declare an interest as somebody who lives close to the track just north of Oxford station, which is now subject to the east-west rail development that we have heard about. Will he assure us that in the new arrangements appropriate consideration will be given to noise and vibration mitigation, bearing in mind that Network Rail has repeatedly been devious, if not dishonest, in the commitments it has made to the residents of north Oxford on mitigating extra noise and vibration as a result of current developments of the track?

I have made a note of the noble Lord’s concerns. I assure him that with all infrastructure projects across the transport sector and not just today’s announcement, the challenges surrounding the environment and particularly noise are key in the Government’s agenda, but I will certainly follow up in more detail the specific point that he has raised.

My Lords, I declare an interest as chairman of the Rail Freight Group. If the passenger operators are in charge of the signal box, how will freight grow? The Government have already published a freight strategy, but I cannot see the passenger operators wanting more freight if they are going to be in charge of the signal box.

As the noble Lord points out, we published a rail freight strategy in September. As I am sure he would acknowledge, it reaffirms our commitment to the industry and sets out how we want this business to work. When it comes to any new working arrangements, such as the new alliances on one route that have been announced today, we want to ensure that priority is given to the interests not just of passengers but of freight, which is a crucial part of our country’s economy.

My Lords, will the Minister tell the House whether this route, when it is changed in nature, will be subject to the Rail Regulator? Will the Rail Regulator determine the charges that people who are not running through trains may have to pay? This route links up three of the main lines of our country and was part of the so-called “electric spine”—which may or may not materialise.

The noble Lord raises an important point about the regulator. The regulator will remain the same as on other networks. On the issue of the pricing structure, again, that will feed into the development of this new working arrangement. Let me assure the noble Lord that on issues of health and safety, which the regulator also oversees, there shall be no compromise and the regulator will continue to have the same role.

My Lords, I remind the House of my railway interests, as declared in the register. On the east-west route, the Oxford to Cambridge line, the Minister will know that it was the most inexplicable of all the post-Beeching closures. It was not even listed for closure in the Beeching report. It closed in 1967 at exactly the time that Milton Keynes was designated as a new city capable of taking 250,000 people. The East West Rail consortium has been campaigning for 47 years to reopen the line. Can he give an assurance that the announcement he has made today will not delay that a day longer than necessary.

The noble Lord is right to point out the history behind this line. Indeed, it predates my life. Nevertheless, it is an important issue and today’s announcement underlines the Government’s commitment to ensuring delivery. We hope the new arrangement will, if anything, bring forward the construction that I have outlined today.