Welcome to this morning’s evidence session, our final evidence session on the Railways Bill. We will be examining the Government’s plans to reform the rail sector by establishing Great British Railways. We are very much looking forward to questioning the Rail Minister, the chief executive of Network Rail and Department for Transport officials, so could I ask you each to introduce yourself, starting with the Minister?

Good morning. My name is Peter, Lord Hendy of Richmond Hill. I am the Minister of State for rail at the Department for Transport.

I am Jeremy Westlake, chief executive of Network Rail.

I am Richard Goodman, director general for rail reform in the Department for Transport, and senior responsible officer for Great British Railways.

I am Lucy Ryan. I am director for rail reform, as a job share, in the Department for Transport.

Welcome. Minister, what is the precedent for GBR? What, if anything, should we compare it to?

The first thing to say is that this is the first substantial piece of railway legislation for over 30 years. We are making a very substantial reform to a system that has existed for a long time and, certainly in the recent eight to 10 years, has not worked very well. GBR will be a commercially agile public body, given responsibility over the entire railway to make economies of scale, joining track and train for an integrated railway, but with devolved and responsible management. That is recognised, I think, very largely, by everybody in the industry, as the only way forward. Indeed, one of the counterfactual questions you have to ask is: if we did not do this, what else would we do? I do not think comparisons to previous organisations are very helpful, because in those 30 years the circumstances of the railway and of the country have changed very substantially. We have considerable performance and capacity problems, which the railway and its customers are currently facing. To have one body responsible for that, for the performance and operation of the railway, is, we believe, vital for its contribution to growth, jobs and homes for the future.

We will be drilling down into some of the implications of that, but it would be useful to know what your views are on how the Railways Bill, which sets GBR up, will assist. In what way is GBR going to succeed where other public bodies, not just within rail, have fallen short?

Well, if you start with the alternative, the railway is falling short on a daily basis because it is so hard to run. I and others here have been in front of this Committee before, lamenting the fact that nobody is in charge when things go wrong and the railway is full of people blaming each other because their contractual circumstances make it more important for them to attribute blame and therefore compensation than to run the service properly. So actually this is a big change. The people running GBR will have nowhere to go, because GBR will be responsible for everything. I think there is some precedent; I have said this here before to you, Chair, and to others. I ran Transport for London for nine and a half years and I woke up every morning responsible for what that organisation did for its passengers. I want the people who run GBR, on a national, regional and local basis, to wake up every morning and know that they are entirely responsible for the service given to passengers and freight customers. That is the way for the future. It does not work now. That is what we are correcting and that is what this Bill is about.

The Bill does not make provision for GBR’s corporate structure, but you have given us a few teasers in the accompanying factsheet, talking about how it will be based on geographical business units. You just mentioned that there will be people who are nationally, regionally and locally responsible for GBR. When do you think you will be able to set out further detail on this?

No Bill in the last 110 years has set out the structure of the railways when the Bill, or subsequently the Act, has made substantial changes—not in 1923, not in 1948 and not subsequently—because, as we have remarked, the legislation has to last for a long time, and circumstances will change. We are not waiting for the legislation. I hope all of you will know that as passenger train operations come back into public ownership, we are progressively appointing managers responsible for both infrastructure and operations, to demonstrate that we can make progress faster than the Bill and the benefits of doing so. That gives a real clue about how GBR will run. The corporate centre needs to be no bigger than it has to be, because I want you and all of your colleagues who are elected representatives and, indeed, local transport authorities, combined authorities and devolved Administrations, to be able to identify individuals who are responsible for the railway—people who wake up and say, “This is all my fault, and we’ve got to fix it.” That is really important. It is more important than developing the corporate structure, but I will defer to my colleagues about the way forward, because we have some months before the Bill becomes an Act, and we have a lot to do. That is not to say we are not thinking about how this should be structured.

Thank you for that, but should we really be out there searching for clues, as you suggest? Would it not be easier for everybody if somebody laid out the thinking?

I think the major part of it is being laid out, because having a managing director for South Western who is doing infrastructure and operations, having Steve White at Southeastern and having Jamie Burles at Anglia responsible for both is a very clear directional statement about how the railway ought to run. The corporate organisations, which will have to combine elements of Network Rail with elements of DFT operations and, indeed, elements of the Department, are important and will have to be structured. The other thing I would say is that the staff who are doing those jobs need proper consideration, and we have to go through due process in order to get them appointed properly and look after them in the way that we should.

The only thing that may be worth adding for the Committee is that we have set out some details of corporate structure where we think that has important, enduring confidence for the market—for example, on online retailing, the difference between GBR’s retail functions and cross-industry management functions, showing that we will have a degree of structural separation there; and, of course, showing how some of the broader checks and balances in the Bill, such as licensing and the role of the ORR, would have to have purchase on GBR however it is organised internally. It is also worth saying that one of the aims or policy intentions behind the way the Bill is drafted is to enable a degree of flexibility over a period of potentially several decades, as you were describing, Lord Hendy. If we wind back 20 years, I don’t think I would have said to you that there ought to be a national function worrying about AI imaging services and integrating that into the infrastructure. That is the sort of area where you might want the corporate structure to evolve, rather than setting it in aspic now.

You will know where I am coming from with this question. Closely linked to the structure of an organisation is how it will operate, and how it operates is obviously linked to where it will operate. Successive Ministers, Secretaries of State and, indeed, Governments have committed to Great British Railways being headquartered operationally in Derby. From the officials’ side, what commitment can you guys give us that you are fully aligned with the vision that Ministers and Secretaries of State have set out on the headquarters being in Derby and being an operational headquarters? What feel do you have at this stage of the size of that headquarters?

First of all, we are really happy that we will be headquartered in Derby when we are GBR. Derby has a huge rail skill base, which is really important for us. The sizing of the organisation that we will base in Derby depends to some extent on the structure of the organisation, and that is being defined as being local and much closer to customers so—we have expressed this before—we do not expect the HQ to be a massive central organisation. That is not what we want; we want a devolved organisation that can work much more closely with the communities that we serve. That work is going on. We are in dialogue with Derby about location and where we will place people, and we are looking forward to getting started.

When do you think we will know a little more about size?

I think probably in about six to nine months, once we finish the organisation definition.

It is worth saying, obviously, that we have had exploratory conversations about where exactly the site should be. We will want to tie those two things together so that we make sure that we have a good footprint for the HQ we need and also that we are spending public money wisely on the final choice of estate.

We have heard a bit about where GBR is going to be and what sort of people will run it, and there have been some clues, as my colleague mentioned. The practical reality, as we have seen throughout the inquiry so far, is that the Bill itself will contain relatively little detail about how GBR will work. One of the things this Committee is interested in is when we will be able to see some of that detail. For example, the draft licence—when might we expect be able to have a look at that to perform our scrutiny function?

We will definitely publish a draft licence during passage of the Bill, in order to enable scrutiny. It is fair to say that, although we have put a lot of detail in the consultation response, there will be more to come. Recently, for example, NR colleagues have helpfully published a discussion document about access and use. Over the course of the next two years, we expect that to turn into a much fuller exploration of how access and use might work under GBR, and likewise on the code of practice with online retail. At the centre of this is a balance we are aiming to strike between providing everyone involved in the system with not only certainty, but adequate space to be able to scrutinise the plans, engage with us on them and change them as a result of that feedback. I think we have done that during the course of the consultation, and I expect us to do that again on the development of future documentation. We are trying to ensure that over the next best part of two years, while we build GBR, we bring everyone together to look at the planks of how it is going to be constructed, rather than saying up front, “Here’s one plan, which is set in stone—we shall not move from it.” That would have the advantage of providing certainty but the big disadvantage, from our perspective, of not bringing the wider industry, the public, passengers and of course Parliament the proper space to consider what we are doing and provide feedback on the proposals.

Can we be clear on parliamentary scrutiny of the licence? You said you will be producing the draft licence during the passage of the Bill. Do you mean in time for Committee stage, which will start quite soon, or in time for Report and Third Reading?

We have not committed to a specific timeframe yet.

Coming back to what you said, Richard, about the certainty of the current plans, you used the word certainty, but then said it might be two years before things are laid out. That sounds slightly contradictory to me, if you are in the private sector—particularly around the open access work and the retail piece. Have you actually spoken to open access organisations and the retail sector to find out whether what you are proposing is enough certainty for them to be able to plan for the future? My understanding of the business world is that two years is not really certainty. They might well want to know now, rather than having to wait for draft guidance to come out. What conversations have you had with them and are they happy with that position?

You will see from the evidence that you have had that there are different views from, for example, third-party retailers. I have spoken to them. I had a roundtable—in fact, I spoke to them during the development of the Bill, as well as immediately after that. There is a range of views. For example, at the point when we published it the Third Party Rail Retailers Association was very welcoming of the Bill and some of the certainty it provided, but some other individual organisations were looking for more. Fundamentally, we are not going to gainsay the views of Parliament over the course of the next year about what exactly the Bill will put into statute, because we would expect that to evolve through Committee stage and passage through both Houses. We are keen to show what the building blocks of GBR are in order to develop it to the next stage, but also, being realistic, we are going to want the organisation to work in cycles. For example, on the funding process, we have a five-year infrastructure planning window that we feel is a reasonable balance between providing certainty, which, as you say, the private sector will quite legitimately expect of us, while realistically taking account of the fact that, as the world changes, the organisation will need to change and the funding and environment in which it operates will change as well.

Let me add that, as far as open access is concerned, you can look at the evidence: the people who desire to use open access to the railway are still making applications under the current system to the ORR, so there is no evidence that the level of application has been diminished. As far as the freight sector goes, because we are so keen on developing railway freight, I have gone to great lengths to make sure that I have personally had roundtables with all the freight operators, and individual discussions with the big ones—indeed, I have seen the shareholders of two of the companies. That was both to understand their concerns and to reassure them about the future of freight on the railway. The evidence of that is manifested by the fact that GBRf is investing in 30 bi-mode or tri-mode locomotives—depending on your definition—which is a fairly substantial investment, and Freightliner has gone ahead with the demerger of the two parts of the business. In neither case does it look as though the prospect of the Bill’s becoming an Act has affected their commercial futures at all.

We are now going to move on to governance and accountability.

Clause 18 of the Bill sets out the various general duties of Ministers, Great British Railways and the ORR, but who will be responsible for enforcing the various duties given, particularly the changes to the ORR’s powers and role? Who will determine whether those duties have been met or are being met on an ongoing basis?

You are right to raise that. A central part of the Bill is the governance of GBR. We have to start from the basic premise that public bodies will be following the law. Indeed, the appointment of people to run public bodies—I have been the chair of rather a big one myself—is about getting people who, one would assume, politicians have confidence in to carry out the functions that the body is charged with by the law. But if GBR does not comply with its duties, or, for example, it fails to consider accessibility in its plans, enforcement will work as follows: the ORR and the passenger watchdog will notice, using their monitoring functions. In the end, if the actions set out in the Bill and the consultation process are not sufficient, the Secretary of State can take action. I do not think that is special to the railway; I think that is what would happen in any circumstance with a public body. Do either of you want to add to that?

I do not think there is anything specific to add, Lord Peter. All I would say is that the process is as Lord Peter set out: the ORR, and now the new passenger watchdog, will have a monitoring role across the whole of GBR’s activities, including its compliance with its duties. They will have a set of actions available to them: if they are concerned, they can raise that with the GBR board, publish information, and ultimately can escalate to the Secretary of State. The Secretary of State can, again, approach the GBR chair and, in extremis, issue guidance to which GBR must have regard or, at the very end of the scale, issue a mandatory direction. So, ultimately, the accountability comes back to the Secretary of State.

One of the duties is to “promote high standards of railway service performance”. Do you feel that is specific and targeted enough to achieve the better standards we hope to see?

I do, because the result of putting that phrase in the Bill is that GBR will have to consider that duty every time it makes a decision. I contrast that with the counterfactual, which is that in the current circumstances, and for the past many years, everybody has a contractual obligation, but nobody considers the consequent result in the sense of what they need to do for the public and for freight customers. I think the phrase “promote high standards of railway service performance” is more of an obligation than the sum of the contractual parts that currently exist on the railway, as you can see in many cases on a daily basis, where people are performing contracts adequately, in their belief, but are not providing the high standards of railway service performance that the public, passengers and the freight community want.

Also, the duties are not exhaustive. We would expect GBR, as the Minister was saying, to take each of those obligations into account very seriously at the point at which it is taking any decision and, as the Bill specifies, with an explicit obligation to understand how it is balancing them. To put it very prosaically, there is never unlimited money. GBR has to have a duty to look at the available funds. That will inevitably be a balancing factor in which other duties take primacy in a particular context. It does not stop there, because the long-term rail strategy will set out, on the part of the Secretary of State, the long-term outcomes and provide additional levels of specificity about her view on how some of those duties ought to be discharged over the long term, but more particularly, we would expect the business plan to capture specific performance indicators or targets that encapsulate the balancing of some of those duties and which, of course, need to be agreed by the Secretary of State. The duties provide the broad thrust of how you would expect GBR to operate but, in answer to your question, the level of specificity is not going to stop there. It will be built on in a range of ways—as, for instance, we are very keen to do and have done with the accessibility plan, where a general commitment to accessibility is not going to be good enough. Specific commitments and improvements need to be shown by GBR, and it needs to demonstrate that in its business plan.

Indeed, in clause 18, there is a clear definition of “performance”, which is about “reliability (including punctuality), and…the avoidance or mitigation of…overcrowding.”

From my perspective, the duty to provide “high standards of…service” is perfectly adequate. The reality is that we respond very much to the directions we have been given by the Secretary of State, in terms of what is needed to meet that. The five-year business plan sets that out in extreme detail. That gets scrutinised by the ORR, and it will continue to be scrutinised by the ORR, to make sure that the plan is stretching but realistic in order to meet those aspirations and to be achievable within the funding available. Then the process that we go through year on year, quarter on quarter, of reviewing that performance is that we go back to that and report on our performance. That is judged and is publicly available, so you can see how we are performing.

Richard, can we just return to the clause 18 duties and the duty of the Secretary of State, the ORR and GBR to balance those duties? It is fine that you say, “The Secretary of State can offer guidance on how that balance should be approached,” but, for a member of the public, there is no transparency if I am concerned about the decision-making process, is there? There is no way for me to understand how decisions are reached if the Secretary of State is guiding the process and she is one of the partners in the process—I say “she”; I hope she is in place for a long time to come, of course.

The Secretary of State is taking democratic accountability for GBR’s overall performance, and that inevitably ties into decisions that are made by the Secretary of State in terms of, for example, the distribution of funding. Of the £25 billion a year that goes into the railway, the better part of £12 billion is from the public purse, so you would expect that, at a very basic level, to drive a good chunk of GBR’s decision making. Of course, those functions and duties then set out the way in which, at a high level, GBR has to approach those decisions, but you make an extremely important point about the underlying level of transparency and the standards that we have tried to put at the centre of the Bill—for example, Jeremy mentioned publication of the business plan, or the obligation to consult mayors and strategic authorities to understand how a network will engage locally and provide better services for everyone, not just “profitable” intercity services. Likewise, one of the important functions of the ORR under the future system is that it will have a broader monitoring and transparency role than currently, making sure there are strong windows into the performance of GBR. On some particular functions, such as online retail or access and use, the ORR will have an appeals function, which really does have the ability to take the long screwdriver to, “Has GBR reached a decision?”. The passenger watchdog will be able not only to take individual complaints and compel information from GBR, “How have you got from A to B? Show me that the path from A to B has been sufficient”, but to use the investigative powers of the ORR to reach enforcement action. I am sorry for a long answer, but what I am trying to drive at is that the point about transparency is multiple. The thread of accountability is to the Secretary of State, but there are windows into how GBR publishes and accounts for its own performance. It sets out how it is going to approach access and use, what services it will provide and how it is going to approach its core business, but we have not stopped there. We have provided windows into GBR’s way of operating and the checks and balances on the decisions it then takes as a result of those deliberations.

A question I was going to ask slightly later, but will ask now, is on these different actors. If they disagree about how the balance should take place, it sounds like the Secretary of State has the trump card and can make the decision—yes?

We have given the Secretary of State a power of direction. The policy intent, which Lord Hendy and the Secretary of State set out before us, is that it should be used extremely sparingly. One of the reasons why the business plan, for example, needs to be developed with mayors and the Secretary of State, and with due consultation, is to reduce the likelihood of that power needing to be used, but it is an important safeguard. At root, the people we most want Great British Railways to worry about are the travelling public and freight customers. They are the people we really want to be at the centre of decision making, but these are wrappers to make sure that, in what will inevitably be a very large organisation and an extremely precious national asset, there are no forgotten corners and there is proper scrutiny of how it all operates.

There is, of course, also an expectation about the good use of public funds, and no doubt every member of the public will have a different perspective on what that means—in terms of their own journeys, in a lot of cases—but, again, where are the criteria for what is good use of public funds? How will that be measured in this decision-making process? Will there be some kind of framework?

Well, a couple of things, the first of which is that, at root, the principle behind having a directing mind is that it can direct. It is totally fair to say that we could weigh different factors in different decisions differently, and part of the principle behind the Bill is to enable GBR to be able to weigh those factors, to reach its own decisions and to say, “In the round, this is taking priority over something else this year.” On safeguards for public money, of course there will be proper audit functions. Lucy, you might want to explain how the funding process works and the different lenses that we have.

I was going to come in on the duties. It will be the responsibility of the bodies themselves to ensure that their decision making demonstrates their consideration of their duties. It is for them to demonstrate that there is deliberately not a hierarchy of duties, that duties cannot be sidelined or ignored, such as the duty on costs and efficiency. If it were the case that GBR operates in a way that is not seen to be efficient, the ORR and the passenger watchdog have a very important—and in the case of the ORR, expanded—monitoring role to look across the whole of GBR’s activity and, if necessary, to escalate to the Secretary of State. During the operation of the business plan, should GBR not be operating efficiently, that will be the means of recourse. As I have discussed already, there are various interventions. It is also relevant—and Richard was pointing this out—that in the agreement of the business plan, the Secretary of State will need to approve it, and will only do so if assured by the ORR that the plans are practical, realistic and deliverable within the set funding envelope.

We will come to the ORR later, I expect. I am sure the public are excited to hear that it will be monitoring the situation, though perhaps they would prefer a bit more teeth than just monitoring things; measuring is fine, but it is taking action that is important.

If I may, there is one important thing to say. This organisation, for the first time in a very long time, will be able to look at the railway budget in the round, so actually putting infrastructure together with operations. I think there are considerable criticisms that people can and have made about the fact that, currently, Network Rail is over here with a five-year settlement, doing its business. The franchises, or the operating contracts, are over here, and there is a considerable mismatch. One of the benefits of the proposition for GBR, and the devolved nature of its management that we have described, is that people can look at the cost of the railway, allocate it in the best way and produce the best service as a consequence. We have had occasions where infrastructure that should have been available for train service plans has not been available; alternatively, Network Rail has been commissioned to provide infrastructure that, in fact, has not been used for train service operations for a considerable period of time, both of which are a waste of public funds. This situation will be obviated by people being in control of a whole budget.

In the system you have inherited, the same kind of multi-criteria decisions are being made to try to balance cost, performance and so on. In the experience of the Committee, we know that the losers in those multi-criteria decision-making processes are quite often people with disabilities. What will change here to make sure that, when you are making those multi-criteria decisions, we do not repeat some of the same mistakes or, in fact, make worse the really difficult situation you are inheriting?

The Bill contains a substantial improvement in the responsibilities of GBR and its constituent parts in terms of the public sector obligation, because that currently does not apply to the train operating companies—at least the ones under private ownership. You start from a proposition that GBR will have more central responsibility than the aggregate of the constituent parts of the railway now. You are right that we have not done as well as we should, or that the railway has not done as well as it should, and that some of the ways in which the money has been allocated have been opaque in a way that they should not be. The Government, separately, as they come shortly to allocate the Access for All funding, are also very keen to make sure that they are far clearer about the criteria under which this money is allocated than previously. There is quite a lot in here that makes the situation a lot better than it is now; the fact that the whole organisation will have to work for accessibility, both in terms of the physical accessibility of stations, and practically in terms of the platform–train interface and so on, will be a considerable advantage. I am fed up, as I am sure some of you are. You send me the letters, and I reply to them. The fact that we are unable to explain how the design of trains will cope with various sorts of wheelchairs, because there are about 200 designs of trains, all the spaces are different, you cannot get on them very well, and in some of them the toilets are in different places, is the sort of thing I would expect GBR to sort out much better in the future than anybody has done on the railway for the last 30 years.

I think we will come back to accessibility. Moving on to freight, our friend the Secretary of State is going to be required to set a rail freight target, but she can change it at her own discretion. Does it make sense to tell her to move the goalposts like that? Does that actually help the railway?

It is implausible to put a numerical target into an Act of Parliament. As we have already said, this Act may—and we hope it will—endure for a long time. The Government understand the importance of stability and the long-term confidence of the freight industry, and would not look to undermine it by replacing the target needlessly. I can confirm to the Committee that we plan to keep the target at 75% to support certainty for the industry, and I have told them that.

You plan to keep it—of course, you would—but the Secretary of State still has the discretion to change it.

Indeed, but why would you do that?

Convenience?

That is not going to pass public scrutiny, is it? The freight industry and freight customers need long-term certainty that the railway is keen on expanding freight. One way in which that target will be used is to preserve freight paths on the railway that are not currently used but could be used in the future. I do not think it will be in anybody’s interest, and certainly not the Secretary of State’s, to change the 75%. What might happen in the course of time, as the target is fulfilled, is that the target will have to be renewed. That is what the process is designed to produce.

Cutting across all these questions is that, for GBR to succeed, as I am sure it will, it has to have some independence from Government. It has to be at arm’s length, just so it can get on with running the railway. With the Secretary of State having so much discretion and input, is there not a danger that it will become politicised? We could end up having urgent statements on how fresh the sandwiches are on the railway, like we used to have back in the old days I can just about remember. That is what I want to avoid.

The answer in the old days was, “That is an operational matter for the British Railways board”. The proposition that somehow the Government are going to be more involved in running the railways with this Bill is fatuous, because the Government are currently hugely involved in running the railway. I do not want to answer these letters about why the 8.24 from Richmond did not run this morning—I want them to be answered by somebody who is actually responsible for the railway. There is no better example of that than the east coast main line timetable. Previous Governments invested £4 billion in both trains and infrastructure, but the railway was incapable of putting in the timetable and I had to make the decision to do it. Outwith North Korea and the old USSR, that is not a function that a Minister should take; it should be taken by professional railway operators who understand the trade-offs that we have been talking about. In the end, they should decide the timetable. As a matter of fact, it has gone in quite well—we had a bad day on Monday, but it looks okay to me. I think those judgments ought to be made by GBR and the people in charge of those parts of GBR, and not by a Minister.

One of my office colleagues and I were coming down on separate LNER trains on Monday. Both those trains were delayed because their horns had frozen, which seems quite incredible. It was cold, but it did not seem that cold. I might write to you about that.

Do. The point we are making is that, of course, the Secretary of State is ultimately responsible and has to appoint the chair and the board. She has to be confident that the executive and the people who run the railway are good, but those people have to execute the role on a daily basis. It is no good—

You have made that point quite strongly.

You get the point. I am sorry, Chair.

The other question you will be used to being asked is: why is there no passenger target? We think about that in the context of reducing the cost to the taxpayer. Will there not be a temptation simply to reduce services in order to reduce the cost to the taxpayer? We would end up with fewer passengers on the railway, but perhaps at a lower cost to the taxpayer. Would that be a failure?

Reducing services to adjust or reduce the bill to the taxpayer is a failure, because the point of the railway is not—

Would a passenger target not help with that, Lord Hendy?

The freight target is in there because the freight market is commercial. Without a freight growth target, GBR might not have an obvious incentive to grow rail freight. The duties that we have talked about, and the obligation to follow the Secretary of State’s long-term plan and produce a business plan to execute it, are a more than sufficient guarantee that growing passenger numbers, improving reliability—which will itself improve performance—and reducing costs are all to be balanced together. I ran Transport for London for nine and a half years. It was set up by statute, but we never looked at the statute. We knew what our job was, and I want the people who run GBR to know what their job is, which is to run a decent railway in order to improve the economy, create jobs and build houses, because connectivity improves if GBR does its job properly. I think that is adequate.

Minister, are you saying that growing passenger numbers will be part of the long-term rail strategy? Will that be in the context of modal shift, decarbonisation and/or building homes?

All those things. I would expect the long-term strategy to be a really important part of this process. The Secretary of State will set out what the railway needs to do for the country.

We will come on to that, but your answer is that we will see a passenger growth number target in the long-term rail strategy.

I would be astonished if you did not.

I want to go back to something you said, Minister. Touching on disability access, you highlighted the fact that there are about 200 different train designs, and that GBR is effectively going to stop any issues with the fact that a toilet might be in one location on one train and somewhere else on another. Can you just help me understand how GBR is going to change that? It was not my understanding that the entire rail fleet is being replaced as a result of GBR. I am assuming that you will use rolling stock for the rest of its life. I just think that, if I were a disabled person or someone concerned about accessibility, and I were listening to that, I might think, “Oh great. Every train is going to be identical and I will know.” I am assuming that is not what you mean, so what is the context there?

I think the Committee will know that the Government have already set out on a journey to have a long-term rolling stock and infrastructure strategy, which is precisely to stop the vast numbers of different trains bought as a consequence of the franchise process, which are not necessarily compatible, and which do cause passengers concern on a daily basis. Of course that cannot be done overnight, but there is a real opportunity here. There are some different types of rolling stock that are needed on the railway; long distance trains are different from suburban trains, and they are probably different from ones serving cross-country needs and rural branch lines. There is a real opportunity here, over time, to make the railway more consistent for the benefit of passengers, and we have to start somewhere. You are absolutely right that it will not change overnight. Railway rolling stock lasts for 30 or 35 years, but over time, we can make that as an improvement.

As you said, Minister, the Bill requires the Secretary of State to set out a long-term rail strategy, and the factsheet that came with the Bill sets out five strategic objectives that the strategy will be expected to address over a 30-year period. Why are those objectives and the timeframe not in the Bill? I can understand that, on the objectives, the answer coming back will be, “Because they will change.” Why is the timeframe not in there? Surely you could put in a timeframe that would have to be looked at every so often.

As we have said, the Bill has to be an enduring piece of legislation. More than that, the long-term rail strategy has to accord with what the Government of the day actually want to achieve. I think that 30 years is a reasonable period because of—apart from anything else—the longevity of the life of the rolling stock and the infrastructure. I do not see that there is any benefit in putting a precise timescale on the face of the Bill. It must be obvious that a long-term rail strategy has to balance what successive Governments want to achieve and the speed at which the industry can deliver it.

The rationale, beyond what Lord Hendy said, for maintaining some flexibility is for the same reasons that we would maintain some flexibility over the objectives. It has taken us some time to get a better understanding of the post-covid travel market and the true change in travelling patterns that we have seen since 2019. Had you said, “You must set in aspic in 2018 what you are doing for the next 30 years,” that would have created real challenges for us in making good investment choices. Going back to the earlier questions about financial incentives and accountability, you can see how a conflict would brew there, where the long-term strategy did not look credible in the context of the five or 10-year period in front of you. The policy intention is to operate on 30 years, but we are assuming that as the world is uncertain, things will happen. Therefore, there may need to be some flexibility to revisit that choice—which is not to say it is something that you would leap to quickly.

I am struggling to see how it is a long-term strategy if it also must work with what the Government of the day wants to achieve, because the Government of the day changes quite frequently over a 30-year period. The Secretary of State appears to be empowered to replace it at the drop of a hat. One might imagine that every time there is a change of Government, they go back and revisit it, so how is this a long-term strategy?

Currently there is no long-term strategy at all. Some of the individual infrastructure projects that Network Rail is pursuing have not been connected with an overall wider vision about economic growth, jobs and housing—they have been specific things. We should not go into it today, but there are some very good examples of that in the past 10 years or so. You obviously cannot fetter the discretion of a future Government, but if the long-term strategy seeks to address some broad objectives about economic growth, jobs and housing—which you would assume future Governments would want, but might want to execute differently on a regional, local or city basis—then it at least provides a broad framework that the industry can plan for. I would expect the GBR business plans to be much better because of the long-term strategy than some of the business plans that you have seen from Network Rail in the last 10 to 15 years, because those have not been connected to a wider view about what the railway should do.

Should there perhaps be some kind of test that the Secretary of State needs to meet to revise that long-term strategy?

The Secretary of State must consult the passenger watchdog because passengers are important in this process and its end consequence. I cannot see how you can fetter the discretion of future Secretaries of State. What I would expect is that this process would be manifestly better than anything that we have had for a very long time, and that future Secretaries of State coming into office would say, “Look, thank goodness I have a long-term rail strategy. Let me inspect it to see whether it suits the Government’s current objectives,” and if it does not, then ask, “What do I need to do to think about modifying it?”—that would be more reasonable. You would not rewrite the whole thing.

I want to probe a little further on this business about not defining a timescale for the long-term strategy. I think we can agree that a real problem for the railway has been a lack of consistent longer-term policy. Of course, to a certain extent, one Government cannot bind the hands of another, but you would have thought that with something such as this, the opportunity would be to try and get cross-party consensus around a longer-term vision. By not defining a timescale for it, is there not a risk that a future Government could say, “Oh well, by long-term we just mean 10 years,” and therefore it will not have that long-term thinking that is needed here? On Mr Goodman’s point about not preserving in aspic something that is rendered irrelevant by changes in time, clause 15 subsection (4) says that the Secretary of State “must keep the rail strategy under review, and…may revise or replace it.” Does that not provide a guardrail against that particular concern?

I do not think we would want to set up a tension between two clauses, saying on the one hand that you need to review and change it and on the other that you must not. Lord Hendy was describing the nature of transparency and accountability, which is very important and which this system is designed to provide. Beyond making sure that passengers’ interests are captured, one reason that there is consultation, for instance with the watchdog, is to make sure that Secretaries of State account for the decisions that they are taking about why they are revisiting the strategy or changing its timeframe. Of course, that does preserve their discretion to say, “Well, this is a decision I am taking, and I am taking it within the law and this is the framework.” That is absolutely the case, but what it changes from the status quo is the ability to have a strategy without telling anybody what it is, or to have a strategy without consulting with others about what it ought to be, or without a trigger to say, “Actually, I have revisited it and therefore I have changed my mind.” As with much of the framework around GBR, it is essentially about driving a higher level of transparency about the nature of any decisions that have been taken, why they have been taken and where we would expect them to have purchase on the operating system. Of course that does not prevent future Ministers from reaching different decisions from their predecessors, and that is certainly a feature of the Bill.

I would expect that, in the development of the long-term rail strategy, those elements of wider Government policy relevant to the railway would be considered in the course of its formulation. I would also expect that, over the period for which it is valid, a decision such as the one you mentioned could be one reason why the Secretary of State might need to change the strategy. As you have described, the freight market has changed immeasurably because of the elimination of coal and its replacement with alternative fuels, so that is a real example of why the strategy might need to change in a particular circumstance. I actually think that setting the whole thing out for the long term is helpful for wider Government; the railway having its own set of bitty investment propositions not connected to wider Government strategy probably means that some of the investments are not as good as they could be, frankly.

I just want to go back to the accountability piece, given the fact that these objectives and details are not on the face of the Bill. Lord Hendy said that, when he ran TfL, he never looked at the statute and just got on with running the railway; that does not make me feel that this is in any way going to be accountable, because if you never look at the statute, and there is no detail on it anyway, how is the organisation accountable—to MPs in particular? It is one thing to be accountable to the public, but ultimately, I don’t think that letters from MPs to Ministers complaining about things are going to dry up because GBR exists. If there is no strategy detailed on the face of the Bill, and we end up with an organisation that thinks, “Well, it’s fine; we just need to run the railway. Who cares what the strategy and the statute actually say?”, what are we actually holding it to account with?

I did not say that I was not accountable, and I also did not say that I did not take account of long-term mayoral strategies in that case—because I did—but one of the primary functions was to run the system well enough for there to be some credibility in talking about the long-term vision. I was not flippant about it at all. I want many, many, many of the people who work for GBR to come to work determined to run a decent railway, but that is not the only thing that they have to do. Actually having a long-term rail strategy to set out the direction in which the railway is going ought to provide a context for much better railway planning, and therefore for more of the things that individual elected representatives want to be delivered. However, the reason I am so focused on the performance of the railway is that it is not good enough currently, and it should be better. That is not the same as saying, “Oh well, we’ll take no account of the rest of what is in this Bill,” but I do want people to focus daily on getting the trains out, on time, getting people from place to place, and that sort of stuff.

But that sounds like quite a short-term plan, and what we are looking at is a long-term strategy. I guess I am just probing again about how, as elected representatives—actual MPs representing the public—we are supposed to hold GBR and the Secretary of State to account on the long-term strategy alongside the day-to-day actions. I hear what you are saying about wanting to improve the railway, but if the decisions that you are making to improve the railway day to day are believed to hinder the delivery of the long-term strategy, how do we hold to account if the detail is not on the face of the Bill?

The business planning process is an important component. That is the bridge, if you like, between the high-level objectives that are set for the railway by Ministers. Those must, as a matter of law, reflect the broader duties that the Secretary of the State, GBR and the regulator have. For the first time, those duties will be shared, as a means of making sure that we do not set incentives in a wayward direction across the system as a whole. To begin with at least, that business plan will operate essentially on two cycles: the five-year funding settlement, drawing on many of the principles that Jeremy’s team work through at the moment, with control periods and back to that question of enough certainty about the investment pipeline, while ensuring that that is credible over the course of the period; and the annual business planning—what services will be provided and what is the level of substantial subsidy, or not, that the Government may provide—on which GBR has to consult mayors, among others. That will enable the information and the process to enable scrutiny of its decisions. The Bill is not the end of the process; essentially, it creates the mechanism for it to happen and the obligation that it must happen. That therefore creates the space to say, for example, “If the Secretary of State said over a period of 30 years”—to go back to some of the Committee’s earlier questions about freight—“that freight really matters, why can I not see it in the business plan?”. Where is the obligation? How is it delivering? So that there is no vacuum post Royal Assent that says, “Right, now go off and get on with it”; that is designed to crystallise those choices, and to make sure that they are transparent and can be scrutinised.

In fact, if there were no long-term rail strategy, you could not ask questions about how it was being delivered through the business plan. That is one of the problems at the moment, and the existence of it in the future will enable elected representatives to question whether the business plan and its execution on a daily basis are consistent with the long-term railway strategy. I think that is an important thing to do.

I am very conscious of the fact that we are almost an hour in and we still have to cover quite a lot. Over to Scott on the licence—

I will try to get through the questions quickly.

And if answers could be brief, please.

I want to return to the Secretary of State accumulating all these powers. Currently, the ORR is the licensing authority, but that duty will now pass to the Secretary of State. Why?

The Government are committed to reshaping the state, to ensure that those who are democratically accountable set the direction of travel, reducing the number of strategic decisions taken by regulators. That is the reason.

There is an issue there, though, isn’t there? The public probably want independent regulation of the licence, rather than its being undertaken by a politician.

We want a regulator who offers reassurance and validation by acting as an expert adviser to the Secretary of State, not something that is burdensome and bureaucratic, and one where GBR cannot act flexibly. A wider point is that GBR must face the passengers and freight customers, and not feel that its primary accountability is to a regulator.

To complete the question, this change has been described as streamlining. Is anything being lost in this streamlining?

First, on that point, it is important that—I think there might have been a little confusion in earlier discussions of this Committee—the ORR will continue to enforce against the licence. The licence will be issued by the Secretary of State, but the ORR, as the independent regulator, will continue to enforce against it. That is the first point.

Will the ORR have powers to enforce, or will it just send stern letters to people?

It will. The ORR will be able to make requirements of GBR that are mandatory on it, so it will be able to enforce fully. On your point about streamlining, one thing we want to do in creating this new system is to create a system that is clearer on where the accountabilities sit and that reduces duplication. That is one of the reasons for thinking about a more streamlined licence. The licence will be subject to consultation, so all this is for members of the public and parliamentarians to make representations on. We would expect the licence to contain things like requirements around industry processes, information requirements and minimum consumer standards, which the passenger watchdog will have a role in setting. That is broadly where we think the licence will be. There will be some things—for instance, at the moment, there is something in the provisional licence about how Network Rail should be structured in the current Network Rail licence. Our view is that the corporate structure should be a discussion between DFT and GBR. But this is all up for consultation during the course of this year.

That sounds like quite a good role for the ORR in that process. Should the enforcement duty not be extended to the business plan? That is one of the other tensions, isn’t it? There is a feeling that the ORR can monitor and measure things but, in terms of the best service to the public, is it not better that the ORR has a bit more teeth? I know we keep returning to this point—I’m sorry.

There is a distinction in the Bill and in the policy plan between a licence, which is obviously a licence to operate but is essentially a floor against which GBR must discharge a particular duty or face enforcement action, versus—as you described earlier—the incentives and targets you want to put on the organisation to drive its future performance. I do not think we could be confident that if we said the business plan was a regulated activity against which we would take enforcement action, it would drive incentives for the organisation to hit every target in the business plan. We know from other contexts that regulation does not necessarily drive that behaviour. Lord Hendy has set out the Government’s position on how that can drive perverse incentives in the system, because you hit the target and miss the point. There will need to be, as in all organisations ever, a trade-off.

Do you think the Secretary of State—a politician—is the best person to enforce the business plan, then? Surely an independent regulator is better placed and perhaps more trusted by the public. I think the Secretary of State is fantastic, by the way—I am the chairman of her fan club—but is the ORR not a better place and more trusted by the public?

She is providing the money. That is quite an important point, actually: the Secretary of State and the Government are funding this plan, so there is a principal responsibility on them to make sure that the plan is executed.

I will not stay too long on licensing, but we talked earlier about the delay in being able to see the draft licence, and we have talked a lot about the role of the private sector, and particularly some of the retail businesses. Given the fact that the retail code of practice does not really get given life until the licence is out there in the public domain, there is surely an issue for business confidence if they cannot see what is going to be in the licence, and surely delaying it is going to be an issue for the ORR in starting to prepare to roll it out. Surely it is an issue if we do not get to see it soon, because there are other players, outside of GBR, who will be impacted by this Bill. Ultimately, we do not want a damaged sector; we want to take the best bits that already exist and keep them. But if there is no business certainty, that is potentially going to be quite a problem, isn’t it?

The first thing to say is that it is not delayed.

I did not mean delayed, but we get this a lot with Bills: we are told it is going to come and then we do not actually see it till very late.

Understood. We have committed to publication this year.

Sorry—this year as in by December, or during the passage of the Bill in the Commons?

This calendar year, as in 2026. The code of practice is not contingent on the drafting of the licence in order to be developed. We are doing both in parallel, because we have already said that the code of practice will be one of the features of the licence. A failure to comply with that code of practice would itself give rise to a breach.

But we do not know what is in either of them yet.

That fact will be in the licence, even though the rest of the licence has not yet been populated. To go back to your earlier question, we are engaging with third-party retailers about what exactly should go into the code of practice. Again, it is fair to say that there are differences of view, reflecting both the market positions of some of those retailers and, of course, our obligation to drive the best possible value out of the money that GBR is spending. Obviously we want to provide those frameworks promptly and in good time. Equally, we want to make sure that we have engaged with all the people who have a stake in them and that we have heard everything they want to say about those documents, rather than presenting them with a fait accompli.

The Secretary of State may issue directions and guidance to GBR in the exercise of its statutory functions. Could those provisions not fatally undermine the concept of a railway run without daily micromanagement from Whitehall?

Guidance is non-binding, but it is not the intention of the Bill for the Secretary of State to be writing daily instructions and guidance, because that would be entirely at odds with the principle of having a body directly responsible for the railway. It is a common power; it is not exclusive to this Bill. Indeed, there is a power in the Infrastructure Act 2015 for the Secretary of State to direct National Highways; she does not do that very often. I do not know whether she has ever done it. You have to have it there simply because the Secretary of State, in the end, is responsible and provides the money, but it is not a means by which the Secretary of State runs the railway on a daily basis; otherwise, the construction of GBR would be a waste of time. In fact, I think it is going to be done a lot more sparingly than ministerial intervention in the railways now.

Are you fairly confident that the Secretary of State will not end up running it by decree, and that separation exists?

I am very confident, because I think that setting up a competent, professional organisation that has a business plan to discharge its obligations in the long-term strategy is the way to ensure that the Secretary of State does not need to wake up every morning and think about what directions and guidance she needs to instruct the railway to do on a daily basis. That would be a disaster, and well before then there are all the intervention processes, some of which we have already described. In those circumstances, she ought to be contemplating whether she has confidence in the chair, the board and the chief executive.

You mentioned the organisation’s agility at the beginning of your remarks. If we think about how Parliament works, ultimately, if there is an issue with GBR, my understanding is that the Secretary of State will have to come before Parliament and talk about that. How is that relationship going to work, and how understandable will that be for the public? At the end of the day, I completely hear the aspiration for this Bill to create a knock-’em-out-the-park railway system, but if that does not begin to happen, and the Secretary of State has to come and defend it, who is actually going to take responsibility when it comes to the public perspective? Will that not have an impact on the relationship between the Secretary of State and GBR?

That is why the railway has to be devolved. I hope you will all know that as we appoint people who are in charge of both the infrastructure and the operations, one of the things I have said to them—I have not written to them; I have just said to them—is that I expect them to have met every elected representative in the area of their operation in the first six months. That is why your Chair and several other people have met Lawrence Bowman, who runs South Western: because I told him to do it. Now, he wants to do it anyway, but it is that relationship which is important. If the train service is no good at Fulwell, I want the MP for Fulwell to be on his back until it is any use. It is no use the Secretary of State coming and trying to account for the train service at a particular station in south-west London. He has to do it. That is the relationship you would want to see. Obviously, that interaction might not be successful. There might be bigger issues that create poor service in a larger part of the railway. We hope not, but there might be. In that case, whoever is in my position and the Secretary of State might have to get involved. That is why you have to have a devolved railway; otherwise, it will look like the old British Railways did, with a massive headquarters in London.

I am sorry, but what you have just described sounds incredibly like what we already have; it is just that services are franchised rather than devolved from GBR. If a railway line at Fulwell, for example, was not delivering before it was brought into public ownership, ultimately it would still have been the Secretary of State who was expected to come back and say they had knocked some heads together. How is what you are proposing going to be better than what we already have?

You have not had it for 30 years, because it has been very easy for whoever you meet on the railway to blame other parts of it for not providing—

But is the Secretary of State not just going to do the same thing and blame the devolved people? I do not understand how the devolved people are somehow going to be different from a franchise in terms of accountability.

The whole purpose of this is to get into a position where the management has nowhere to go, apart from accounting for its own performance and making it better. You have not had that for 30 years, because if you meet the operator of your railway in the current circumstances—apart from the ones we have already put together—unless you get Network Rail there as well, and unless they have rehearsed their position very well, they can too easily blame each other for something not happening.

Specific and measurable targets would be another key element of that.

Indeed.

The Bill allows a longer funding process for passenger services in the future. From where we are now, both because of what the railway needs to do to make itself better in the funding circumstances it is currently in, and because of the effects of the economic cycle on fares income and so on, it is actually quite difficult to contemplate moving to a five-year settlement, but the Bill enables that to happen in the future. Richard and Lucy, do you want to add more to that?

I agree. The challenge at the movement is that farebox income is hard to predict over a long period of time, and therefore the Bill does not initially widen the funding approach that we are using for infrastructure over five years to include passenger services. That is why it continues to be funded through the spending review for the time being. But it is true that we are looking to GBR to join up budgets where they can as far as possible in any case, recognising that the funding sources will be different. For instance, we want closer working between track and train under one organisation to allow engineering works to be planned and carried out in a more sensible way that works better for passengers and the timetable, because you are taking two sources of income and thinking about how you use them as a single budget.

I don’t think so. First of all, we are trying to plan the railway now in an integrated fashion, regardless of its funding stream. The business plan needs to incorporate what you are doing to drive revenue up and how you will support that with the appropriate infrastructure interventions. You also need to link it to a third element, which is the capital funding that comes through the Government’s enhancements fund. You link all that into new rolling stock strategies. You want to plan the business in an integrated fashion. How you fund it is a second question about whether you can now afford to do all those things, which is why you will go through various processes. At the moment, we are perfectly aligned, in fact. You have a three-year timeline under the spending review, and you have three years remaining on the infrastructure funding. We are planning now for the next three years to say, “What are we doing on an integrated basis?” When we come to the next round of funding, we will work out whether we need to adjust that based on the opportunity for revenue growth. Revenue is the thing that I really want to drive. You cannot drive passenger numbers and passenger satisfaction if you are trying to plan the business on a very fragmented basis. There is a huge opportunity here to rethink how you define the outputs for the railway.

The intention, as I was explaining, is that GBR will be managing its budgets in as integrated a way as possible, reflecting the fact that the funding is coming from two different sources. I gave an example of that. There is a provision in the Bill to add passenger services to the funding period at a point in the future, but it is really important, as Jeremy has described, that GBR is actively thinking about how it manages its budgets across the full suite of what is available to it, within those constraints. The constraints are there for sensible reasons, which we have talked about, but it will be for GBR to think about the source of the money being one thing, while thinking about how it best deploys its resources to meet its objectives.

Under the current framework, no, you cannot repurpose money between those two lines. The driver behind that is that we want to make sure—going back to transparency—that we are really clear about the balance of funding between operational costs and what is going into future infrastructure and investment. That is obviously important as GBR develops what its future access and charging regime might be, in order to make sure that that is also transparent for the private sector. What Lucy is describing is the fact that, notwithstanding whether I have 100 quid in one bucket and 50 quid in another, I can still say that the thing I care most about, across both of those, is the following improvement and make my own apportionment choice. It may involve 10% of the operations budget and 30% of the infrastructure budget, but I can bring those two things together. It is fair to say that under the current framework that is comparatively constrained, partly because of the way the regulatory set-up works, but also because of some of the accounting principles. The aim is to enable the railway to be managed as a whole, but with transparency around what the funding sources are and how those are distributed to the challenges that the organisation is trying to meet.

The consequence of GBR will be that there might be funding agreements related to individual parts of the railway, but GBR will be the majority funder of it. We are about to appoint a new chair of the authority. There are benefits in the authority being independent. The most important thing currently is to make sure that the BTP are properly funded and that their objectives and what they do through the chief constable are compatible with and support the operation of the railway. That is much more important than contemplating at this point some massive change in the organisation. But you are right that the funding will in future be principally—very largely—GBR-based and TfL-based. There are a few other bits of funding, but they are not particularly material.

What difference will passengers notice between the new passenger watchdog and what they currently experience with Transport Focus?

It will be stronger. It will have additional power and resources. For example, the watchdog will be a statutory adviser, and we are transferring sponsorship of the Rail Ombudsman to it. It will unify the current fragmented and complex consumer landscape by bringing all the functions, including the consumer functions in the ORR, into one body, giving it better intelligence. It will therefore be in a much better position to understand passenger experience and pursue it with GBR.

The Bill makes provision for the passenger watchdog to set standards on behalf of passengers. Can someone confirm that these standards will be enforceable as a licence condition?

They will.

Brilliant. It also specifies that these can include standards on accessibility complaints, information and compensation. Is this an exhaustive list? Do we expect the watchdog to set standards in other areas as well?

I expect it to be grown-up and sensible, and to contemplate the complete passenger experience and have a view on all of it, so it is not a comprehensive list. The indications are examples, really.

At the moment, we have the delay repay system in place. If a particular train company is not delivering its passengers to where they need to be at the right time, it has to give money back. I have certainly benefited from that in the past, in getting to where I live. What are you going to do about incentives to improve performance? It goes back to that “marking your own homework” piece. Ultimately, delay replay is Government money that is being redirected back to the public. What sort of mechanisms will you use, first, to highlight performance, and secondly, to ensure that passengers are not worse off as a result of this Bill?

Delay repay is the element that compensates people, as you remarked, for less than perfect experiences. One of the principal objectives of GBR is to improve the performance of the railway; it is not just about delay repay. Indeed, I would say that you need a strong passenger watchdog, because it needs to have a wide variety of views about the whole experience, including some things that people find really difficult about the passenger experience and stuff like that. Actually, we are looking for the performance of the railway as a result of its being unified to be a principal objective of GBR. That is not driven by the amount of delay repay you pay out; as the Chair remarked, it should be driven by performance metrics. That should be in its business plan and should be the ethos with which the chief executive and the people responsible on a more local basis for delivering the railway wake up every morning.

We have a system at the moment that needs to compensate passengers. Our point is to drive performance and reliability. That drives passenger confidence and revenue, which drives down net subsidy. Those are the aspirations we have for GBR. That is its focus—to improve performance, because that will improve both service and value for the taxpayer.

You have not actually answered my question. My question was, what are you going to do to incentivise performance along the lines of that? It is great to have that ambition—I hear that and it is laudable—but in the process of getting from A to B, from where we are now to this utopia of perfect performance, what will happen for passenger compensation? What will the incentive be for GBR to make sure that that increases? Is delay repay staying or going when this sets up?

I think it is you who are connecting delay repay with incentives. Delay repay will stay, because delay repay is the compensation for when things go wrong.

You are right—there is no incentive at the moment, because actually, it is not the train companies that pay it, but Government. Forgive me on that point, but in terms of how you would use it to drive performance, now that it is the Government delivering the railway service and having to pay out delay repay, is it going to be used as a matrix to increase performance?

First, at a senior level, we are envisaging that there will be performance-related schemes tied to the performance of the railway as a whole. There will be a personal vested interest in senior leaders getting that right. That will be one of the incentives at our disposal. On transparency around the business plan, we would expect that to drive an incentive around performance—for that to be owned and for the chair to feel accountable for the performance of their organisation against that business plan, including scrutiny by elected representatives. The third thing comes back to some of the questions about the passenger watchdog. That watchdog is bringing together the window into what this service is delivering on the ground. We are conscious that in any large organisation service is never uniformly perfect; something always needs to be improved. We are ensuring that it gets proper care and attention, with enforcement if needs be. Also, by bringing the rail ombudsman under the aegis of the watchdog as well, we are saying that where you have got a specific problem that needs fixing, someone will fix your specific problem, and not just say “Oh well, the organisation will deal with this in due course.” There are remedies for individual complaints as well as for driving the organisation as a whole.

That takes us neatly on to Jacob’s question.

The passenger watchdog will not have enforcement powers, but it will be able to refer matters on to investigation with the ORR. Why have you taken that approach, and not given the watchdog its own enforcement powers?

Primarily because we want one clear enforcement body for the entire sector. When Transport Focus came in front of the Committee, they recognised that themselves. Since ORR will enforce the licence, I think it makes sense for ORR to enforce passenger standards as well.

Do you imagine that if people have got complaints, they would first go to GBR? For example, if I was a disabled passenger and my assistance did not arrive, would I go to GBR or the passenger watchdog, and what would be the threshold for that to be referred on?

I would expect GBR to want people to contact it.

That was not the question.

And they should go to GBR in the first instance, which I think is the answer that you are looking for.

The Bill’s main purpose, as you have spoken about, was to streamline the results, but when things do go wrong there are about three different organisations that could have a role: the passenger watchdog, the rail ombudsman and the ORR. Obviously, that might also be after a customer has gone to GBR itself. Are you confident that the Bill is making the system work better, and that it will lead to a better outcome for passengers?

Yes.

Why not just merge the functions of the watchdog into the ORR?

Because the two things are different. The range of passenger experience, frankly, needs some improvement; there are a number of areas where we know the railway does not do as well as it should. It would be a retrograde step to turn the current and future functions of Transport Focus and the passenger watchdog back into the ORR, which is primarily an enforcement body. The whole intention of the manifesto commitment was to set up something strong for passengers, so that they could see people actively pursuing their interests.

Do you foresee the passenger watchdog as primarily taking up the complaints of individual constituents and residents, or do you think that it can deal with more systemic issues? If it spots things happening all over the place, is that something that it ought to be following up on?

I think that is absolutely right. There are issues that the railway has to confront better than it does now—certainly in terms of people with disabilities. They must do that, because the railway needs to be better at dealing with these systemic issues about access, passenger assist and the passenger-train interface. It is really important that they aggregate what they see from passengers into wider issues, and interact with GBR so that GBR, frankly, starts to solve those issues in a better way than the railway has done for a long time.

It is worth saying that the passenger watchdog will be able to request information to a deadline from GBR and will also be able to request improvement plans. It will look more thematically at GBR’s activity and will not be limited to individual complaints.

Is “request an improvement plan” a polite note? Or will a reply and an improvement plan be mandated?

Should the passenger watchdog conclude that GBR is in breach of any of its licence conditions, it can refer to the ORR as the enforcer against the licence. That is the ORR enforcement route on the licence—that is the next stage in the process.

The passenger watchdog can refer things to the ORR—we talked earlier about how accessibility often loses out in these situations—but the ORR can disregard that referral, can’t it?

The ORR is subject to a set of duties different from the passenger watchdog’s, but that is deliberate, because the ORR has a different responsibility within the system. The ORR will be under an obligation to inform the passenger watchdog of the action it has taken when there is a referral to it and to explain the reasons for that. It is for the ORR to then decide what enforcement action is appropriate, given the balance of its duties, but it must notify the passenger watchdog of what it has done.

We have heard that provisions should be made for the composition of the passenger watchdog board to ensure its independence and representativeness, such as a requirement for a minimum number of disabled people. Lord Hendy, the Mobility and Access Committee for Scotland got in touch with me to say that it is really happy with the Bill and with how you have engaged with it on it, but it has concerns about the representation of disabled people on the passenger watchdog board and wants this mandated in the Bill. Is this something you are considering?

We expect the disabled representation currently found on the Transport Focus board to continue under the passenger watchdog. We don’t—

Is that a yes?

We do not think we need to specify it in legislation for it to happen. We are expecting it to continue.

The Mobility and Access Committee for Scotland said that it raised this with you and that you said—forgive me; this is what it says you said—that you would support such an amendment if it was tabled. Surely you could table that amendment, Lord Hendy?

I’m not—

Will you?

I am not immediately able to confirm that that is what I did say—

It seems like a thing you would say. Lord Hendy—principally because I cannot remember the interaction.

But why wouldn’t you do that, Lord Hendy?

Our current position is—

It would relate back to what we said earlier about the fact that disabled people often feel that, right across the railway, accessibility so often comes second when we make these decisions. Surely one way to fix that would be for the Government to bring forward their own amendment, rather than suggesting that someone else could do it and that you would support it.

I will take that away. Currently, we are expecting that representation to continue. We would not contemplate any circumstance in which the passenger watchdog did not have at least the same level of disabled representation as currently found on Transport Focus, but I will take it away. First of all, I will check what I did say might happen, because I am afraid I simply do not recall. But you’ve got it from me now that we would not contemplate the passenger watchdog not having disabled representation.

Excellent. Can you write back to the Chair on that, then?

I will.

Looking forward to that. We will now move on to accessibility as a subject in its own right.

We have heard from Transport for All that the duty in clause 18 to promote the needs of disabled passengers is vague and unenforceable and has no real targets attached to it. How do you see that duty being enforced—hopefully long before it gets to GBR, board or Secretary of State level?

First, as a public body GBR will have to follow the law; we have already discussed the circumstances in which the ORR, the passenger watchdog and the Secretary of State can deal with GBR if it ignores its duties. But the most important thing to say is what we said earlier, which is that for the first time the entire railway will be covered by legislative obligations related to accessibilities and the public sector equality duty, which is a fundamental shift in the priorities of the sector. I think this is really important; it is not semantics at all. This is a step change in the basic responsibility of the railway in terms of equality and the legislative obligations regarding accessibility.

To reflect that, Transport for All has suggested changing the wording in the Bill to “actively and continuously improve accessibility across the rail network”. Is that something the Government would consider on Report or in Committee?

We will see what happens during the progress of the Bill through Parliament, but I think what I have described as being a basic step change in the public equality duty covers much of what people would expect to see on an individual basis. For example, I have been involved in the bus services Bill in the Lords, and we had a lot of discussion about applicability. A lot of disability campaigners rightly want to see the public sector equality duty apply to all the bodies that provide public services. The result of this legislation is that it will apply to the whole of the railway in circumstances where it currently does not. I think that covers that point, but no doubt that will be discussed during the progress of the Bill through the Commons and the Lords.

Finally from me on this bit, what happens when there is a disagreement between the Secretary of State, the Great British Railways board and the passenger watchdog about how much accessibility is enough? For example, that might be differences of opinion about how many stations have step-free access. What happens then?

The first thing to say is that there may well be disagreements. Part of the wider mechanisms of the formulation of the long-term strategy, the business plan and so forth has to be to reconcile various demands, frankly, on spending money. That is one way of resolving it. If the passenger watchdog feels that GBR is not performing in the way that it should or is not applying the public sector equality duty in the way that it should, we have already discussed the enforcement activities that it can organise through the ORR. That is quite well covered. In a number of these areas, there is going to be discussion about how much money is spent. Making every railway station in Britain fully accessible costs a huge sum of money, which can only be spent over a long period of time. We can do it better and we can be clearer about the criteria used for allocating that money. You are right that there will be differences, but some of the wider construction of the Bill is designed to give transparency to the decisions taken about the allocation of funding—in particular, accessibility of stations, for example.

Hopefully the answer to this question is yes: will the arrangements set out in this Bill result in more regular and effective enforcement action against any breaches of accessibility obligations?

Yes.

Okay—then how?

Because we are setting up the passenger watchdog with stronger powers, which we are giving it through the ORR enforcement powers, and we are obligating GBR to perform to the public sector equality duty. All of that heightens the visibility of this issue. The railway has not been good at being consistent in this—we know that, and you all know that. We both get the correspondence; I get some terrible stories told to me by people who have been badly treated at one stage or another during journeys over multiple operators. We have to fix that. I think that what we are describing here is a much better mechanism for fixing it. Also, we are describing an organisation that has a basic obligation to treat people fairly and equally. I want that to go down through the management and find itself at station and train level so that people are not forgotten and are dealt with better.

Going back to our report “Access denied” and the experiences of disabled passengers who wanted to make a complaint, will the process for them be easier, more transparent, quicker and more sympathetic to the issues they are raising—not just on behalf of themselves and the particular journey they struggle to make, but future passengers on those journeys?

The answer to that must be yes, but I would take it back a stage further. We know, for example, that we can do much better in terms of the basic way in which you interact with the system in booking tickets and accessibility in the first place. That hugely varies according to the train company in a really unsatisfactory way. Fixing that will be one of the ways of making sure that that works not only for individuals, but for whole classes of people. The complaints about the lack of the accessibility—

The point I was making was not about the overarching issue of lack of accessibility, which is obviously a big issue in itself, but the process for challenging the experience of trying to make a complaint.

Oh yes. I am expecting that to be much better as a consequence of this, because I am expecting the railway to be consistent about how that works in a way that it is not now.

You touched on the PSED a moment ago. The Bill will make GBR subject to the public sector equality duty; why does the Bill not also make GBR subject to the specific duties under PSED? Is there any intention to do that? There is no specific mention at this stage.

I shall defer to Lucy.

The Bill is very clear in that it has a duty to have regard and to promote the interests of users and potential users of railway services, including and in particular the needs of disabled persons, so it is as clear as it can be, and it is the first time that there is a legislative underpinning for an accessibility duty in this way. On the specifics of the duties under PSED and the extent to which that is applicable, we would have to come back to you, but the policy intent is absolutely clear—there is a clear duty on GBR to promote the interests of disabled people. That is also followed through in the duties on the passenger watchdog.

But on the specific duties, will you come back to us?

Yes.

Thank you. On that, the impact assessment for the Bill states that the Department has included an equalities impact assessment. Why has that not been published and when will it be published?

Again, we would expect to be putting all the information that is necessary to the scrutiny of the Bill in the public domain. Let us come back to you on that specific point.

To come back to the accessibility topic and what you were saying earlier, Minister, about rolling stock with incompatible doors and all the ramps and so on, we can all agree that is utterly farcical and needs to change, and it is good that there is a commitment to doing that, but one of the reasons why we, on this Committee, have been really pushing that is that I am not sure it is right to blame the system that is being overturned by the Bill for that. It is not as if the Department for Transport has had no role in franchising decisions, specifications or rolling stock tenders and so on. Would you, and perhaps Mr Goodman, accept that the Department for Transport has had a significant role in the fact that we have a multiplicity of rolling stock? What will be learnt from that and how will things be different in future?

I am not going to account here for the actions of my predecessors, other than to say that the evidence is that the rolling stock procured through the previous franchise system has been hugely diverse, and has not generally, so far, had any practical effect on level boarding, with one or two very clear exceptions. We are determined to change that. Providing more consistency around future specification, which we are doing already through the development of the rolling stock and infrastructure strategy, is really important. There are two problems, one of which is what trains you buy and what floor height they have. The other is that there are thousands of stations, all of which have different platform heights, which are historical; that cannot change overnight, but we can start to do that better. My observation is simply that, in the past, it has not been a consideration. It does not seem to have been a consideration in most train procurements, and it damn well will be in the future.

We cannot underestimate the importance of accessibility, because it benefits all passengers, not just people with disabilities. Let’s move on to fares and ticketing.

We are yet to agree exactly what the future fare-setting framework for GBR will be, but we are keen—to go back to the earlier questions about incentives—that it drives a very different way of thinking that complements some of the fares and ticketing reform under way. That reform is about making fares simpler to understand and more affordable in many circumstances—obviously, we are piloting through some of the dynamic fare trials, for example on LNER, at the moment—but critically, it will provide better value. For example, a journey that I need to take this afternoon is about 35 minutes long, the trains are about 10 minutes apart and, depending on which operator I take, the difference between the price of the tickets is £10, from exactly the same station. That is the sort of area where, instead of incentivising train operating companies to look at their market share on a particular line and to drive a different set of passengers on to their service rather than another service, we want to get people taking the train in the first place, showing that it is good value for money, and we also want to even out some of those anomalies with fares. Inevitably, that can be a lengthy and complex process, but we are making inroads with colleagues in Manchester and across the south-east on pay as you go. We are trialling new approaches to do that on the east coast main line—

We have not yet set out what the fare-setting parameters will be.

Again, that that will form part of whatever guardrails the Secretary of State decides to put around fare setting overall.

Correct.

There are a couple of answers to that. There are obviously strategic decisions that the Secretary of State will make as part of any spending round, about how much public money ought or ought not to go into the railway. We are very keen to ensure that, in a devolved railway, there is more decision making locally about what services will work best to connect Britain. That is one of the reasons why mayoral partnerships and the engagement of strategic authorities are so important, because we want GBR to feel incentivised to design services around promoting growth and connectivity in the country as a whole, and not just to do what somebody told them to do in a contract. Related to that is, of course, a conversation about the appropriate balance of ticket prices in a given area. For example, we know from the roll-out of pay as you go that it will involve some reconciliation of anomalies in different price points, which we expect GBR to be incentivised to look at. Critically, it should look at all of those three things in the round, because they are not really separable. For instance, one of the drivers behind the trials that we are doing on dynamic pricing, for example on the east coast main line, is to help to get proper data about where we are trying to get more people on the train, making better use of a service that is running, reducing overcrowding at peak times, improving use of off-peak times, and determining whether our pricing strategies are really supporting that or not. We can only really establish that by testing the system and learning from whether or not it is working in a controlled way.

Inevitably, GBR services will run their own price points, and we are not suggesting that those should be pegged to, for instance, open access or private sector operators, which account for a comparatively small number of journeys—about 0.5% of journeys—in the system as a whole. One of the incentives that we want to drive through the system is that, where the private sector is prepared to take revenue risk and thinks it can beat the value of GBR, the access and use policy supports that and enables it to take that opportunity. That is going to require some flexibility from the private sector on fares, in the same way as it will require some flexibility on fares in GBR.

Under the Bill, third-party retail will continue to sit alongside GBR’s platform. Why is that?

There are two things to say. One is that, again, the driver here is to ensure that the railway company can sell its own services, and can sell them more straightforwardly to people. We know that people find the system extremely confusing as it stands, particularly when they are trying to get across 20 different apps and individual train operating companies may offer different fares from what they might get through, for example, National Rail inquiries. That is the customer driver behind it. In terms of structural organisation, GBR is of course a retailer in the bricks and mortar sense, as well as being a retailer online. Yes, we expect it to sell its own tickets online, but people also need to be able to buy a ticket when they are on the train, at the station and through the ticket vending machine. The retail operation of GBR is not an online retail operation; it is a retail operation with an online component.

Will GBR retail have targets to grow its share of the market in terms of passengers buying tickets?

That has not been decided. The policy ambition is for a thriving market; the policy ambition is not driven by, for instance, a GBR market share. Obviously it will be at the discretion of Ministers to decide whether they want to adopt that sort of target as part of the business planning process, but we do not have one as it stands.

The real policy target is to increase the use of the railway, regardless of how people pay. A variety of ways to pay is an important component of that.

Can you set out the expected development, operating and ongoing upgrade costs of the GBR retail app and website, which you are suggesting are going to happen and which are set out in the Bill? How will the Department demonstrate that this represents good value for money for taxpayers, particularly given that high-quality services exist already? It is great that GBR wants to extend these services, but I think the Committee is concerned about the cost to the taxpayer of duplicating something that exists already.

The first thing to say is that it is de-duplication. We are currently paying for the LNER app, and we will soon be paying for apps West Midlands Trains and elsewhere, so there will be a consolidation. We have not yet given approval to the final procurement and commercial approach to how the app is going to be built, so I cannot tell you a speculative cost. I am afraid that I cannot immediately remember the operating overhead for the GBR retail operation as a whole, but it is an expensive way of selling tickets. As Lord Hendy was saying, the more we can make buying tickets in an online context more straightforward, the more we can, first, drive up ridership—which, of course, improves value from the investment in the railway overall—and, secondly, make the underlying cost of that system cheaper. Of course there will be an investment cost, but we would expect to see a return on that over time.

Will it essentially be a rebadging of the National Rail app? There is already a website where you can buy tickets at a national level through the National Rail app.

National Rail inquiries will direct you to a retailer.

But the National Rail website allows you to buy tickets, doesn’t it? I do not use it, because I do not find it very helpful.

It directs you to a train operator’s website, so taking the best of breed from those websites will enable us to provide a much simpler offer. The functionality in those websites is also not up to scratch yet. For example, going back to accessibility, booking Passenger Assist and things like that, we need to look much more at whether the app contains everything you need to plan and take your journey.

Very quickly, do you think that there needs to be a more level playing field between GBR and third-party retailers on the face of the Bill?

No. We are proposing a range of safeguards in the arrangements for GBR’s dual role as a retailer and a provider of wider management functions, to ensure that GBR has the right relationship with the third-party retailers. We need to get that right as we want them to succeed as well, because the overall intention is growth in the number of people travelling by rail.

We have heard quite a few mentions of dynamic pricing in this session. Would that be available to the third-party retailers?

Yes. The principle here is that—

The answer is yes. Baggy, the final question on this section.

The crux of the matter is whether passengers can reasonably expect fares to be cheaper and more affordable under GBR.

The Government have recognised that the price of railway travel is really important by freezing fares for the first time in 30 years—you would expect me to say that, and I just have. That is really important and it is going to save railway travellers appreciable sums of money in the next year. We obviously want railway fares to be competitive. In the end, it is a balance between taxpayers’ subsidy and fares, but the most important component, which we keep referring to, is to drive up the use of the railway so that we have more income for the same train service. All the things that we are talking about in the whole of the Bill are designed to make the railway work better, perform better and drive up its income, which is absolutely as important as saving money.

In the UK, travel by car or by air is usually cheaper than travelling by rail. Do the Government have an aspiration to address that challenge?

I take issue with what you have said. It is not usually cheaper—

It often is.

It depends on what sort of tickets you buy and when you buy them. There are some astonishingly good-value tickets.

For instance, a family driving a few hours, or flights from London to Scotland.

I think the answer, Chair, is that that is a much wider question. What we are trying to do here is to make a better railway. On the wider question about the relative cost of motoring, air travel and railways, there are of course some issues there, and it would be foolish not to acknowledge what you have said in the round. The objective of this Bill is to make the railway perform better, drive its income up, reduce its cost and improve its performance so that the railway is better value. In the course of that, it will change at least part of the dynamic that you have talked about.

Obviously, for many people the relative price of a journey is fundamental to their decision about what mode to use. I am very conscious of the time, so let’s move on to network access.

We know the Bill will strip the ORR of the ability to grant access rights to the network, and instead allow GBR to make those decisions. With that, is there a danger that GBR will effectively just cherry-pick the best bits? What will you do to make sure that the lines that might currently be offered to open access do not get delayed while GBR decides whether it wants them? I just thought of a similar analogy: Openreach obviously gets a lot of broadband contracts, but it often leaves the harder-to-reach villages until the end of the pile, because they are harder to do. I think there is potentially a parallel with the railway; with those slightly less commercially viable ones—or ones that might be harder to deliver—GBR might want to keep an option on it but then delay the process. How are we going to make sure that communities ultimately stay at the basis and heart of what is being done, and that GBR is not effectively marking its own homework and picking off the best bits to store in its cheeks like a hamster for later?

As far as marking its own homework goes, there are of course provisions that you can see in the Bill about an appeals role on access, and the ORR returning decisions that it believes GBR has not properly taken back to GBR. GBR has a general obligation, and the long-term railway strategy and the business plan that the Secretary of State will have to approve will obviously want to say that GBR has a duty to serve all of the railway, to the extent to which there is evident passenger demand, and what it believes it should do in terms of the wider Government proposition on economic growth, jobs and homes. That is actually a better obligation than there is at the moment. The franchise commitments, which were turned into contracts after covid, just set out the existing levels of service. They are not related to any wider economic plan for the railway, but GBR is not going to be able to say, “Oh, we don’t really want to serve Cornwall because we don’t think we can make any money there.” The wider set of obligations for GBR, which the Bill sets out, will oblige it to give proper consideration to every station and journey. It will have to make decisions about that and some of those are about the density of passenger demand, but it will not be able to say, “Oh, we’re not serving those places—we’d rather go somewhere else.” It has an obligation to the whole system and that is one of the basic tenets of all of this.

I suppose the specific question is around what is currently offered through open access. It makes sense that the existing network would not necessarily be changed, but, on those routes that could now be offered under the current open access system, how would GBR ensure that that competition and opportunity still exists if GBR itself does not want to take the route?

Perhaps it is worth setting out a bit about what the Bill does and then how that bites. Clause 60 is deliberately drafted to say, “Great British Railways must issue one or more documents setting out how, in its view, the best use can be made of GBR infrastructure for the operation of trains.” It specifically says “trains”, not “its trains”. Not to get technical about it, but subsection (4) is designed to make sure that all of those are considered explicitly and that they are accommodated in the round. To mirror what Lord Hendy was saying, the ambition that GBR should be incentivised to connect Britain better and to make choices about that—for instance, to contemplate what the future of the west coast main line looks like and intercity and regional commuter services. Of course we would love to have both, but in a land of finite capacity, how can we allocate that best? That must have regard to how private sector operators can come on. More than that, it must ensure that where the private sector sees opportunities that GBR is not taking, GBR feels incentivised, first, to look hard at that before it reaches a decision and, secondly, to say, “Here is an opportunity for you; if you can deliver value for customers—we know it can be really popular from lots of the existing services—there is space for you on the network.” We must recognise that, outside the infrastructure investment we are making, we cannot increase capacity overnight. We know that a very highly congested network is not very good for open access operators, any more than it is good for GBR services, because they rub up against each other and there is more disruption and conflict between services.

That links helpfully to my last point on this, because I am conscious of time. Given that, how would GBR be expected to manage its capacity duty in conjunction with its other duties, such as the use of rail freight, on the already congested railway you have just described?

By its capacity duty, do you mean clause 63?

Yes, sorry; my question was specifically on clause 63.

There is an important point to make here. The infrastructure capacity plan set out in clause 60—whereby GBR has to establish what it believes to be best use of the railway, consistent with its duties and all those points under subsection (4) that Richard mentioned—apply before the provisions in clause 63, which are GBR’s duty to secure capacity for the services it deems to be its own. That is to ensure that, where GBR has deemed that those services should be run by GBR trains, and the Secretary of State has funded them, those services should be delivered. It is a clause that relates to protection of taxpayers’ money as much as anything else. It is really important that, in terms of how the process operates, the infrastructure capacity plan part of the process—the establishment of best use by market segment—happens before this capacity duty kicks in.

So freight will still be prioritised?

Exactly.

Some evidence the Committee has received from stakeholders welcomes the ability of GBR to offer discounted access charges—although perhaps some might be a bit more concerned that it also has the ability to give higher ones in certain circumstances. Could that positive ability to offer discounted access charges be offset by GBR’s provision to raise them where it judges that “an efficient operator would be able to pay”?

Part of this is about moving away from the market can bear terminology that is used as a test of affordability today. We are moving away from that because it is based on EU law terminology. Our policy intent is exactly the same; we are just using different words for it. I think that there is a good opportunity here for better and more flexible charging, and in particular for developing the freight market so that we can be more flexible in the future than the railway is now, making sure that new flows are stimulated and supported. The railway is quite full, so finding a way for trains to access alternative routes to the east and west coast main lines—alternative routes that might be slightly longer and might take slightly longer, but in consequence the charging might be discounted in order to encourage their use—is a sensible way of using a network in a way that the railway is not able to do currently.

How do you see that ability to set those differential charges being policed?

Operators will have a clear right of appeal to the ORR. Actually, if they believe that higher charges have been imposed unfairly or in violation of the affordability test, they will go on appeal.

It is also fair to say that the charging approach will be set out in the access and use policy, which will be widely consulted on and on which the ORR will be a statutory consultee.

Is your point about the ORR being the avenue not somewhat undermined by the fact that the Bill requires the ORR to apply similar criteria to those applied by the High Court in a judicial review? Is that not an exceptionally high bar that, in effect, renders appeals unviable?

No. The ORR can take action long before it gets to that level, can’t it? It can send the decisions back.

First, on the bar for appeal, it is really important as a matter of policy intent that GBR should remain the directing mind for the railway. Should ORR be receiving appeals and making decisions on the merits of the case? There is a question about the ORR actually making the substantive decision there, rather than taking a view on whether GBR has followed its established processes, set out in its access and use policy, and acted consistent with its duties. That is the role for ORR in that process; where GBR is in effect the directing mind, the ORR is policing whether or not it has applied its processes. If the ORR, under that circumstance, decides to uphold an appeal, it can either remit the decision back to GBR for further consideration, with mandatory directions as to how it chooses to do that—basically it can say, “Go away and come back with a different answer.”—or, if there has been an error of law and GBR is seen to be acting inconsistently with its duties, ORR can substitute a decision with its own. That is how the process will work. The reasoning for the JR threshold is to be absolutely clear that GBR needs to remain the directing mind, able to take decisions about optimising the use of the network.

We will now move on to devolution.

We have already seen the draft memorandum of understanding between the UK and Welsh Governments—I am trying not to get my Governments mixed up—but when do we expect to see the final versions, both between the UK and Welsh and between the UK and Scottish Governments, published?

They are being developed as we speak and, as representatives of those Governments noted in your previous evidence sessions, the forthcoming elections provide a helpful urgency for finalising them. A lot of work is going on concurrently. I and the Secretary of State have had very good discussions with Ministers and I think, in both cases, officials have been getting on well with relevant officials in the devolved Administrations.

If you watched that session, you will know that the Cabinet Secretary for the Scottish Government, Fiona Hyslop, seemed quite content—if I can put it that way—about the way things are proceeding, so that is great. Would the memorandum of understanding prevent any friction between the two Governments? Will it stop any contradictory instructions being given to GBR? Is that the intention?

We have had some very good dialogue, both at a political and at an official level. We are working very hard to make sure that there are no circumstances in which conflicting directions might happen. We have recently had a lot of discussion to make sure that the Scottish Cabinet Secretary has the appropriate powers, that the Secretary of State has the appropriate powers, that both positions are consistent with each other and that some conflict of direction, which would be a pretty extraordinary circumstance anyway, did not occur and could be resolved if there was any potential for one to happen.

That is good—that is what we want to see—but the Secretary of State for the UK Government will still hold the power to revoke any instruction given by the Scottish Government to GBR. Should there be a test for at what time or place that power would be invoked? Obviously that could be a little bit controversial.

It certainly would be, and the Bill makes it clear that before a revocation of direction is made by the Secretary of State, they must consult Scottish Ministers. We discussed that with the Cabinet Secretary, and I think the wording we have come to—do you want to come in, Lucy?

The Bill is already clear about the circumstances in which the Secretary of State would be able to revoke a direction given by Scottish Ministers: where it is in conflict with, or contradicts, a Secretary of State direction, where it affects railway activities that are not Scottish railway activities, or where it is outside the legislative competence of the Scottish Parliament or outside Scottish Ministers’ functions. The intention is that this provision in the Bill is a backstop. As Lord Hendy says, the point of the memorandum of understanding is to avoid a situation in which there are contradictory directions being given, but evidently you need something in the Bill just in case something happens that would create a contradiction.

It certainly gives mayors a much enhanced role compared with anything currently. That is the intention of all this. It gives them a right to request in terms of services that they believe that they could control or run, which is perfectly reasonable. It preserves the existing processes by which rail services can be devolved. The intention more widely is to work collaboratively with all devolved leaders to meet local needs. It has to be tempered by the reality, which is that the railway network is not generally consistent with mayoral boundaries. The result is that GBR must have an obligation to work very closely with mayors and to consult them and listen carefully to what they are saying but, in the end, to formulate the wider railway network, both to satisfy as many of those aims as they can and not to create, outside the boundaries, worsening of other services. Does that make sense to you? I do not think I am being particularly coherent this morning.

It is worth saying that we envisage different types of relationships in different parts of the country. Obviously, as the Bill recognises, there are distinct arrangements for London. We have recently published the right to request guidance; in fact, a local area may wish to make a business case for taking control of both the infrastructure and the operations, which of course would create a different relationship again. We are keen to secure mayoral partnerships. The Bill sets out the baseline that that co-operation must exist and that there has to be proper engagement and disclosure of information. We would like to formalise more of those relationships into strong mayoral partnerships, on which we will publish more soon, as well as facilitating the devolution of services, where it makes sense for both the local area and the network as a whole. We would expect a mixed economy between those different patterns, reflecting the mixed economy that we have now in the distinctions we see between London and Manchester and other areas.

We have just published the right to request guidance.

The partnerships advice guide will be coming out, I would say, within the coming weeks.

I think you are right about section 13. I think the franchise system rather did for the ability to make more, and more meaningful, local agreements. I am expecting the statutory role that we are giving to MSAs in governing, managing, planning and developing the network to provide a far more active discussion about what is good. I am expecting them to be effective clients for the railway for their areas, and to know what they want the railway to deliver. It is a proper partnership activity. You cannot do this with an authority that does not have any knowledge about what it wants to deliver. Indeed, the reason for concentrating on MSAs is because of the wider targets, powers and resources on economic growth, jobs and homes they are going to have. I think it is almost inevitable that there will be more of these agreements in the future, because I am expecting those people to say, “Having a better railway is part of my plan, and here’s what I want. Now I’ve got to client a discussion with the railway about the trade-off between more local services and long-distance services,” as Richard said earlier, and the result is something better, as you have seen in the west midlands in the past.

I can’t see why not—I think it would be helpful, actually. One of the dangers is that the demands from inside a mayoral boundary adversely affect passenger services outside it. I have some personal examples of that from way back. The development of the London overground network, for example, could have damaged service provision outside Greater London. We had to come to an agreement about the effects of those things. Having, in appropriate cases, a wider geographical area with more than one authority is quite a helpful way to resolve those issues.

In answer to that question, and to some earlier ones, you have talked about the duty to consult mayors. That is not actually what the drafting of the Bill says. It talks about Scottish Ministers and Welsh Ministers as specific individuals, but in no part of the Bill does it talk about the directly elected mayor; it talks about consulting the mayoral combined authority or the mayoral strategic authority. Is there a reason for that?

I will defer to my officials.

I would be happy to examine that and look at the drafting. I had in mind clause 5, as you described, which says: “A relevant local government body and Great British Railways must provide to each other such information…as the other reasonably requires for the purpose of exercising its functions in relation to railways and railways services”. That is a broad church, where we would expect there to be high levels of information sharing and collaboration.

Let us come back to you. It may be that the drafting allows for discussions with a mayoral combined authority as opposed to the person of the mayor, purely because there may be situations in which there is not a mayor sitting at the time, but we will come back to you on that.

We have talked a lot about mayoral strategic authorities. There is lots of transport legislation going through at the moment with specificities about devolution. We also know that there are more areas than not around the country that do not have mayoral authorities at the moment, and a lot of those have been explicitly ruled out of the option in this Parliament. If you are a resident of an area without a mayoral strategic authority, what avenues for local accountability do you have, and how will funding be allocated to make sure that areas without a mayoral combined authority do not lose out on investment simply because of the timeline of devolution that is currently going through?

The objective is that GBR works collaboratively with all devolved leaders. Just to evidence the fact that we mean what we say, if you look at the example of Cornwall, which does not have a mayor but does have a Cornwall-wide authority, the Mid Cornwall Metro scheme has been progressed to the point at which it will be operational in May, I think. The authority has been very thoughtful and has produced a business case, which the Department has accepted. That improvement and its advocacy of the scheme is testament to the fact that we can make this work in areas without mayors just as we can in areas with them.

Will money be allocated by GBR to them? What has happened in Cornwall is great, but its neighbour Devon does not have a mayor and is not likely to have one any time soon. Is it therefore going to get less money for developing local services than Cornwall, just as an illustration?

With Devon, the evidence is that the county council has been extraordinarily active in promoting new stations and services. They have been funded, and the result is a much better railway in Devon than was there 10 years ago. We would aim to carry that on.

So you are aiming to carry that on? Because none of that is being done under the current system. We are looking at what is going to happen—

Indeed, but I am using them as examples to show that we are cognisant of the fact that we need to continue to develop the railway in those areas, as well as ones with a mayor.

I apologise, but I will have to leave at 11.45 am at the latest. If colleagues still have questions to ask at that point, I will hand over to Rebecca Smith to take my place in the Chair.

On the topic of devolution, you have spoken a lot about the importance of co-operation and working in partnership with mayoral strategic authorities. We have heard evidence that they should be commissioning rail services. If they can demonstrate the capability and funding to do that, why not?

Do you mean actual operation?

Yes.

I think the right to request certainly gives the opportunity for that. I think the primary difficulty is not any reluctance to allow it, but the geography of the railway compared with the geography of the combined authorities. In very fruitful discussions with the Mayor of Greater Manchester and his transport commissioner, we have identified a lot that the railway can do better for Greater Manchester, but there are still relatively few services that operate wholly within the boundary. It is important that GBR has a wider function of looking across the railway network and making sure that improvements in one area do not create, frankly, a disadvantage in another. [Rebecca Smith took the Chair]

Don’t take this as a criticism—we have talked a lot about where we are going and less about how we are getting there, and that is reflective of the balance of detail in the Bill itself—but I would like to push gently for clarification on the question of the draft licence publication. I know the consultation is due in 2026, but will you reconfirm that we will see the draft before the end of the passage of the Bill through Parliament? More broadly, a big, long list of documents have been mentioned in the course of the inquiry so far. We have made progress today on things like the partnership working and clarification of the timing of that, MOUs with devolved Governments, and consultation on the rolling stock plan—indeed, the rolling stock plan was confirmed in the consultation write-up—but with things like the LTRS, the passenger experience standards, the five-year business plan and the infrastructure capacity plan, it would be hugely useful for our planning purposes if, as a Committee, we could get an indication of the arrival dates for the drafts of those documents as well.

Part of what you have described is a reason why they are not all available now—there is a lot of stuff to do. Rather than go through the same thing again, I have heard carefully your desire to see more of these things sooner, and I will go away and talk to my official colleagues about how soon we can do that and when you might expect to see those.

There is not an indication of urgency or priority in there; just some indication and foresight would be very helpful.

Indeed. Obviously, I take very seriously—as we do at the other end of this building—the fact that you need as much in front of you as you can have in order to understand the whole nature of the proposition.

Thank you. And can we confirm that the publication of the draft of the licence will be visible before the end of the passage of the Bill through Parliament?

Yes.

Thank you. There was enthusiastic nodding, but I wanted to get it in verbally. That is great.

I have said to the Committee before that we are not waiting for the passage of the Bill, or for the creation of GBR, to start making a difference. One obvious manifestation is the Government’s fares freeze for regulated fares, which is a real difference. As the passenger operations come into public ownership, they start from different places. On Greater Anglia, we have had some discussion here in the past—it was a good operator before and it is still a good operator, but it has to get better. It will get a bit better, but it is already good. SWR inherited some pretty serious problems. There is an improvement in SWR, but it is not yet at the stage where anyone can be satisfied, let alone the managing director that he is doing a great job every day, because he still has two thirds of the new trains parked in sidings and a shortage of drivers, and the cancellation rate is too high. But he is but he is starting to get there. We have published performance data at every station in Britain for a new era of transparency and accountability. The fares improvements that Richard talked about earlier—in Greater Manchester and the west midlands, and pay as you go in the south-east of England and the LNER fares—are all examples of what we can do now. I take your point about stations. One of the glaring issues is the lack of capability of the previous, balkanised railway to look after stations in total. There is the famous paint line: the train operators paint to eight or 10 feet above the platform, and then Network Rail comes around to paint the rest of it. That is all ludicrous stuff, and there is a lot we can do. We are in discussion with some of the combined authority mayors about whether they could manage some of the stations and their buildings more effectively than the railway could, because if there are any opportunities for local development or improving passenger demand at those places, then they are better placed to do it. The railway should absolutely not say, “Oh, this is ours. It’s nothing to do with you.” I hope that we can do some of that. I cannot promise you everything in the west midlands, but when we take in West Midlands Trains, since you have raised this, I will remember to ask the new management to see what they can do about that disparity. To be fair, that is not down to me; they should do that anyway. They should see it as a total proposition for the area.

Two final things from me. One is a request for any letter that you send to the Chair. Something that cropped up when the Chair mentioned the modal shift to getting more people to use the railway is the role of car parks at train stations. It would be interesting to get something back about how the Bill relates to parking specifically, and what will happen with Network Rail or station-owned car parks, or whatever it is. I would be interested in that personally, so if you could put a bit of a brief on that in the letter, that would be quite helpful.

Fair enough. Thank you.

Ultimately, if parking costs a fortune for a family, they are not going to do it, even if fares shift. My final question is: are the Government planning to table amendments to the Bill in Committee and, if so, in what main areas?

We will take our decisions in due course, informed as much as anything else by this sort of discussion and the discussions that will be had in Committee in the Commons. Then the Bill will get to my end of the building and there will be more, no doubt.

Perfect. That concludes today’s session and our evidence gathering on the Bill. Thank you very much for your evidence. Please feel free to write to us with anything you have not been able to cover in your answers this morning. The Committee will now carefully consider any recommendations that we wish to make about the Bill. There will, of course, be further scrutiny of the Bill under the House’s separate procedures for legislation.