Welcome to this morning’s evidence session, the third and penultimate one in our scrutiny of the Railways Bill. We are hosting three panels again today. We will hear, during our first panel, from the Scottish Cabinet Secretary for Transport; in our second panel, from the Welsh Government; and in our third, about provision for GBR to partner with elected mayors, and the potential for rail devolution in England. Will the witnesses in the first panel introduce themselves?

Good morning, Committee. My name is Fiona Hyslop; I am a Member of the Scottish Parliament and the Cabinet Secretary for Transport in the Scottish Government.

Good morning. I am Bill Reeve; I am director of rail reform for Transport Scotland.

Welcome. For my first question—this is true for all our questions—as you are both here from the Scottish Government, you can decide who wants to answer. I suspect that the Cabinet Secretary will want to answer the majority of them. How will the Bill as drafted affect the status quo of rail devolution in Scotland?

Currently, we have what is called executive devolution, and we have had that for 20 years, but we do not have legislative responsibilities. That is why, obviously, this Bill and others are the responsibility of the Westminster Government. The Scottish Government’s position is that we would prefer full devolution of rail, but that is not on the table in this Bill. We are supportive of the Bill in that it wants to bring greater integration of track and train. Already, in the status quo, we operate under an integration of track and train. That is operated under an agreement with what is called the alliance between ScotRail and Network Rail. Of course, we fund Network Rail—£4.6 billion in control period 7—but we do not have the ability to give ministerial direction or guidance. This piece of legislation provides an underpinning that we think would strengthen the legislative side, but what has been developed has been as a result of intense negotiation and agreement with the UK Government.

A statement released by the Scottish Government following the introduction of the Bill said that the UK Government did not think that a fully devolved railway is “in Scotland’s best interest”. Does that imply that the railway is not already fully devolved in Scotland?

No, it is not fully devolved, because legislative competence still lies with Westminster. Although we set strategy for Network Rail—with our high-level strategy document—and we fund it, we cannot direct it, so things are done by agreement and good will, as opposed to anything else. On full powers and being fully in charge of our railways, we want to have that full devolution. We are quite understanding of the UK Government’s position. Clearly, if they are trying to get a vertically integrated railway system across Great Britain, we can understand that situation. That has been an area where we have had to try to carve out a position, bespoke particularly to Scotland, because we have had far more devolution than anywhere else. We need to work with this piece of legislation to make sure that we do not go backwards—in terms of the devolved position—but get a better position. That is why, just on Friday, the Scottish Government lodged what is called a legislative consent motion for the clauses in the Bill that refer to Scotland. There are other clauses we think refer to it—there needs to be some technical tidying up about what is devolved and what needs to have legislative consent—but that is more something of a technical nature than a policy difference. That was lodged on Friday.

Thank you. We will drill down into some of the detail. Some colleagues present are on the Bill Committee, or may well be, so that will be useful.

To go back to your answers there, were I watching this at home in Scotland—I am sure that masses of people are—what would be the practical difference for them if the railway was to be fully devolved to Scotland? What difference would that make to the services that are available to them? You made it sound quite technical, with the difference between executive devolution and devolution.

In terms of being able to ensure that everything that we want to see happen from a policy point of view can be determined, Network Rail is clearly a reserved matter and legislation is a reserved matter. On the operation of the ORR or the Network Rail board, currently I meet the chair and the chief executive on occasion, but the bottom line is accountability. Currently, rail operations, particularly the Network Rail aspect, are not accountable to us in the same way as they are accountable to the Secretary of State. In terms of good governance, devolution would make that complete. What is happening with this piece of legislation is that it is formalising more of that integration and providing legislative underpinning, but a lot of the issues will still be reserved to the Secretary of State. That is why the Bill is done in the way it is, because it recognises that that is still the case.

Is it about governance, rather than practical differences for people in Scotland?

We have managed to do some very important work in terms of getting value for money from the alliance, the agreement that we have, as opposed to the legislative underpinning side. That provides better value for money. We can plan works in a way that does not disrupt the passenger, as they might otherwise do, so it is providing value for money—it is going to be a better experience. Also, under the devolution that we have had, we have managed to get one of the highest performing operations in the UK. Indeed, the publication on 11 December this year about the rail customer experience showed that we have 90% overall satisfaction, 91% punctuality, 91% on station information and 90% personal safety on trains, so ScotRail is one of the highest scoring. We are making sure, under the limited devolution we have, that there is a good experience. Also, that has been under public ownership—we have had public ownership of our operators, or certainly ScotRail—since April 2022. One of the things we have managed to do, because we have public ownership and the devolution that we have now, is to ensure that we could abolish peak fares for good. There has been a 17% cut in rail prices for most commuters and in Glasgow and Edinburgh—as I am sure you are familiar with—almost 50%. Under devolution, we have managed to operate well, but the accountability aspects are more challenging. Bill, do you want to reference your experience over the time?

Perhaps I can add one other thing. At the minute, we have had really good co-operation with Network Rail. In the past seven years or so, there has been a substantial transfer of functions from Network Rail at the centre into a more devolved arrangement in Scotland. That has underpinned a lot of the success we have had in Scotland, including our lower unit costs for infrastructure than elsewhere in Britain, for example. But that is not something that we could require; it is something that a future chief executive of Network Rail or GBR could, under the current arrangements, simply take away, as happened some years ago when we lost our Scottish timetabling function, which moved to Milton Keynes. Although there are some very good people working in Milton Keynes, we lost that connectivity to the needs and requirements of the Scottish people more immediately. So we have a really effective system, but I think the Bill offers us a chance to consolidate that and improve the level of integration, and gives us some options to secure that integration, which at the minute can be done only by good will.

As an MP, I meet—once every six months or once a year—ScotRail and Network Rail together, in the same room, and we talk about the challenges. Obviously, they are often dealing with my requests at that meeting, but you can see that they are working together quite effectively. It is something I take for granted, so it is good to see that maybe more people will have that through the Bill. Devolution of rail to Scotland has worked. There is a lot of cynicism—well, some cynicism—in Scotland just now about devolution, but devolving rail has worked for Scotland, hasn’t it? Sorry for the leading question.

That is a subjective point—whether people think devolution has been successful. Most people in Scotland do. I will leave that with you. I think the point is that this has not been legislatively underpinned; it is done by good will. That has placed a lot of responsibility on Government to bring people together. I am talking about the powers of Government to bring things together under the franchise system previously and then under the public ownership that we have had. That is what has delivered the success that we have had to date and the improvements. Actually, I can tell you that as of Friday 12 December, we had the most successful day for passenger numbers. There were 345,216 passenger journeys. It was the busiest day that we have had on our railways since public ownership. Obviously, the pandemic interruption has affected everywhere, but people are coming back to rail, which is what we need. But you cannot always rely on the good will of Network Rail to devolve internally, as an organisation. What this legislation should allow us to do as a Government is to make sure that we are more directive of what we want from the integration and to have greater accountability of Network Rail to us, or that side of that type of operation. I know and understand—because it has been said publicly—that the Scottish model is recognised as a good way forward, and that is what is trying to be replicated in the legislation that the UK Government have brought forward.

Good. I have two recap questions; I think you have already covered these points. You think the Bill will benefit people in Scotland, both passengers and the wider economy.

Yes, I think it allows us more certainty. It allows us to have more formal integration, and certainly, that is why we are supportive of the Bill. We were quite clear that if there was any rolling back of devolution, we would not be supportive, but that is not the case. With good work from our officials at Transport Scotland and the Department for Transport, and my engagement with the Ministers, we have managed to get to what we think is a good place for Scotland and a good place for devolution.

In terms of drafting and producing the Bill, do you feel that you have had a say in that, and that more or less everything that you want to see is there?

Yes. It is probably a good example of the devolved Government working with the UK Government. That is not always the case in different policy areas, but there has been a lot of intense work. I have had seven meetings with the Rail Ministers and the Secretary of State—some of them just with the Secretary of State latterly. Four of them have been just about this legislation, and three of them have been in person here in London. We have taken this very seriously indeed and have gone through different points. That is why we appointed Bill Reeve to lead on it as the director of rail reform; he was previously director of rail. It is because this is very important legislation and, having been in government for some time, I know that it is always better to try to get legislation right before you publish it, as opposed to trying to amend it as you go along. So we have worked extremely hard—as I said, this applies also to Department for Transport officials—right up until the last area, because there were different areas that had to be resolved to make sure that they could achieve what they needed to achieve. We were defending and protecting devolution, but also getting this into the state that it will need to be in. It is not legislation for next year or the year after; it is setting the template for many years to come, so it is really important that it is right from the start.

On that very positive note, I hand back to you, Chair.

Is nothing missing from the Bill?

There is one element, which I hope that the Committee may want to reflect on—I understand that the UK Government will look at this area as well—and that is more on transfers of assets. Clearly, if you bring entities together, there needs to be provision for transfer of assets, and that is an area that is not in the legislation currently, but I am hopeful that amendments will tackle it. Again, we would appreciate it if the Committee saw that as an important area to ensure is covered.

Thank you. That is helpful.

As Ministers in Scotland, you will have powers of direction over GBR under the Bill, at clause 8. Do you think that those sufficiently reflect the devolution settlement that you already have?

Yes. That is part of the work that I was just describing to Dr Scott Arthur, to make sure that in the negotiations and discussion we could have that. If we were to have accountability, we would have to have the provision for ministerial direction and guidance in the areas for which we have devolved responsibility, that we fund and set strategy for—for completion.

Obviously, the Secretary of State down here will have the power to revoke directions made by Scottish Ministers like you, under clause 8. Is that a concern? Does there need to be a specific threshold in the legislation for when they can do that, or should they have free rein to do it whenever they like?

I am sure that the Members of Parliament at Westminster will always make sure that Ministers or Secretaries of State are accountable for their actions. We would not be able to do that. The important point is the acknowledgment, in the way the legislation has been drafted, that the Secretary of State still has reserve powers, and that she still has powers in areas for which they have retained responsibility—for example, access and other different areas. With those areas and in the use of that, there has to be good reason and understanding. That is why—we might come on to this—the memorandum of understanding is quite important in this area. Do you want to add anything on the policy, Bill?

Just to say that the principle is agreed—that that which is reserved, the Secretary of State should have powers of direction over, and that which is devolved, the Scottish Ministers should have. We believe that the drafting reflects that. An awful lot will rely on the memorandum of understanding to flesh that out and give examples. Again, that same constructive engagement with DFT officials that led to the Bill is under way in the discussions to finalise the memorandum of understanding. It is a necessary piece of complication, because the asset will remain in the ownership of the UK Government, but the responsibility for the strategy, specification and funding rests with the Scottish Parliament. I am not aware of any other devolved area where that scale of funding is divorced from ownership of the asset, so necessarily that is complicated.

In Bills coming through Parliament recently, we have seen a lot of things like the code of practice not being set in stone before the Bill Committee. Are you confident that the memorandum of understanding will be finalised before we start scrutinising the Bill, so that we can make sure that everyone is happy with it, or will we need to be mindful of that as the Bill goes through?

I think that would be something that, certainly, the Committee should ensure—because the Secretary of State is accountable to yourselves—is progressed at the speed we would want it to be. Our main focus was on the legislation, and the parameters of the MOU are also already under discussion, but I am not necessarily in charge of the timing of that, because it is mutual—a mutually agreed memorandum of understanding. I am also not in charge of the timetable of how long this piece of legislation will take. I will say—I ask the Committee to be mindful of this—that the Scottish Parliament will go into recess on 27 March and will not resume until after the Scottish Parliament elections in May, and it will still then need to constitute new Committees. That is one of the reasons why I have tried to make sure that a lot of the Scottish provisions are set up front, as the Bill is published, and that we get the legislative consent through in timely purpose. My intention is to ensure that that is done before the elections in May—it would make sense to make sure that that is done.

That is useful.

I am sure that we can trust the Committee to be mindful of that as well.

Can you foresee instances where the directions that the Scottish Ministers give conflict with the equivalent directions from the Secretary of State? Given your experience, how do you suggest that that could be mitigated?

That is a very good question and one that we discussed with the UK Government. It is completely and utterly undesirable that that situation would ever arise. It would be a very rare situation, but that does not mean that it could not arise, and I suppose the bit we had to try to work out is how we would resolve that. That is why the memorandum of understanding will try to work out how we would resolve that situation. But because it is quite clear what is still reserved and what is still devolved, that is ground to do that. If you end up in that area of conflict, things will have had to go badly wrong, and in all my time in government, I have not seen anything that would prompt this kind of situation. I would say, however, as a cautionary point, that in my engagement with the rail unions, they were concerned that there needs to be provision, should a Government of a particular flavour—not necessarily anybody around this room—come in at some point in the future, for us to change things, and to have powers within the Scottish Parliament and Government not to be part of this arrangement at some point in the future.

Clause 80 of the Bill puts a duty on GBR to consult with Scottish Ministers if it appears that a decision would “significantly affect the interests of Scotland’s economy or of persons living in, working in or visiting Scotland.” Do you think “significantly affect” is the right test?

I have seen the words “significantly affect” in legislation over a number of years. The point of this, if we go back to Scott Arthur’s point, is that that was not there before. It is a new thing that it actually protects and recognises cross-border issues in particular—you are talking about freight, tourism and those kinds of aspects. Again, it is about accountability for decisions that would have an impact on us. In terms of the geography of where Scotland is, we are very reliant on cross-border travel for both our tourism industry and our freight sector and economy, so it is a good thing that that is in there. Again, that is part of our discussions, saying, “How do you protect the interests of Scotland in this legislation?” It is good that it is there, and I think “significantly affect” is a reasonable legislative term to use in this context.

Do you think that more detail should be given on how that consultation would take place, or are you comfortable, given your experience, that what is there is okay?

It is quite clear that they have to consult in a way that they have not done before, and that means in advance of decisions being taken as opposed to after. Dare I say that, had they consulted us in advance, and had a requirement to consult us, on the December timetable of the London-Edinburgh service, which may have an impact on our ScotRail service, they might have been a bit more cognisant of things, as opposed to saying, “We’re going to monitor the effect.” There can be knock-on impacts of what you do to improve services to London on ScotRail services elsewhere in Scotland. That is an example of the improvements we should get from the provision on the face of the Bill that makes it a greater responsibility.

I want to touch on cross-border services. There are a number of operators that go from England to Scotland, and the ScotRail service that operates to Carlisle. Obviously, we want those to continue, but do you feel that the Bill has the appropriate mechanisms in place to manage that quite complicated cross-border arrangement?

Currently, there has to be a cross-border operation, and there is. I think it can be improved. Going back to the last question, the other point is what the investment is in England to help support the Scottish service. For example, if we want to ensure that all freight can operate using electric power, currently some of the provision in the north of England is not as strong as it should be. We are investing in feeder stations to make sure we can electrify our lines, and so on. We have extensive electrification—the newly electrified East Kilbride line, which got £144 million from the Scottish Government, opened just last week—but in some areas in the north of England, we would want to see improvement in that service, because it is not helping the extension of electric trains. There are things that need to be improved. Bill, do you want to reflect on that point?

I agree with you on the point about electrification. The Bill as drafted creates an obligation to consult on cross-border services in a way that we perhaps have not had on the face of a Bill before, so that is very welcome. Inevitably, there will need to be consultation. It is a principle of this Bill that control of the timetable will remain with GBR, at GB level. That is not devolved. Full devolution would have given Scotland the power to control its timetable within Scotland—of course with an incentive, as ever, to co-operate with our colleagues south of the border. That is not available to us. I think what we have is the best compromise available, given that position.

I have a quick question arising from a comment by the Cabinet Secretary about access. The open access operator Lumo, which has a London-Edinburgh service, is about to extend that to Glasgow. I don’t know why anybody would not get off the train at Edinburgh, but in the debate in the Chamber last week, people expressed concerns about whether the Bill will put a lot of pressure on open access operators and make it harder for them to operate. Obviously, there is a benefit to Scotland from open access—Lumo in particular. Is that a concern or is it just not on your radar?

How it would operate generally is matter that you would want to pursue with the Secretary of State, but on cross-border, Lumo started yesterday—

Was it yesterday? Okay.

Yes—the extension. LNER had withdrawn from that extension from Edinburgh to Glasgow and, vice versa, from Glasgow down to Kings Cross. That started yesterday. Where there is space and availability, open access makes sense. One of the best known open access operations is the Jacobite, otherwise known as the Harry Potter train, which many tourists use—to go back to the point about the importance of tourism. If you take the tourism aspect of the question that Rebecca Smith asked, that is something you would want to continue in terms of open access. It is also important in respect of freight. If you are trying to tackle climate change by getting modal shift—by removing freight from roads and getting more on rail—open access is a really important way of doing that. We moved earlier than the last UK Government in setting freight targets as part of our high-level operating strategy in previous control periods, and it is good to see that that target has been set in the current control period by the UK Government. That has been an important part of it. Access is important. It needs to be understood more widely, from what I can gather from the debate you had last week, but in terms of operation, we think that if there is space to do that, it is important that we still allow it.

There is a criticism of the Bill that it has freight targets, which is great—people like that—but it does not have passenger targets. Do you have passenger targets in Scotland?

In terms of our operation and what we expect to be delivered for the budget that we have, we obviously have to have a business plan that sets out the expected passenger numbers, because we want to make sure that we are getting value for money. This goes back to the Scottish Government, via Transport Scotland, and our control and accountability, certainly in terms of the ScotRail aspects of passenger numbers. That has been tracking at about 4.5% growth, which is good. Obviously, there are different factors at play. With the removal of peak fares for good, it certainly is busier on the Glasgow-Edinburgh trains that I get on, but that is good to see. We will need to see that play out. Do you think setting target passenger numbers itself drives improvement, or do you expect to see that through all the aspects of the business plan that can make a difference? That means timetabling, other services and incentives—even things like Kids for a Quid in the summer. There are different ways of trying to encourage more people to use the railway. It is not just about passengers on seats for revenue. It is a Government lead to ensure that you are expecting more commercial aspects from publicly owned railways—and I do want to see more of that—in order to be competitive in terms of value for money, to try to persuade people to use rail as opposed to using their car, and to try to get modal shift as well.

Good morning. There is already experience in Scotland of integration between track and train. We don’t know, but I imagine and hope, given that Alex Hynes is part of the GBR transition team, that some of those lessons will be learned by the Department for Transport here. From your experience of that integration and the alliance model, what lessons should we take into account as part of our scrutiny work on GBR?

This piece of legislation is a reflection that lessons have been learned by this UK Government about the benefits of integrating track and train. Alex Hynes previously headed up Scotland’s Railway with the integration of ScotRail and Network Rail, and he has been seconded to the Department for Transport. Therefore, that experience has been taken into the Department for Transport, which is a good thing. On our experience, I reflected earlier in my evidence about the success factor. We have one of the most successful operators in the whole UK in terms of our service. There is always room for improvement, and we will constantly drive that. We need to do that. When I talk to the industry itself, they tell me that we get better value for money because we are able to plan in a more integrated way. We plan the services and service disruptions, along with provision of activity for Network Rail to, for example, electrify our lines. When I spoke to the team at Network Rail that was involved in the electrification of the new East Kilbride to Glasgow line, which opened for passengers on 14 December, they had moved on to the Fife electrification that we have announced so they can have continuous work. It is really important to reflect that, yes, this is about passengers, but it is also about the industry itself, and the investment that goes on in terms of the private sector and their activity, so that they can plan their work more effectively. That certainty of investment should drive better value for money, which I think is what you are looking at. The 2011 McNulty report reflected on how, when you have such a fragmented system, that fragmentation can potentially distort the market, because everything has to be started from scratch. It is also about experience. We are keeping project teams together, so the lessons we have learned from East Kilbride are now going on to the Fife area, and we are already seeing the electrification going out of Haymarket to Dalmeny, which is the next phase of what we are doing.

Has any work been done to quantify the value-for-money benefits, or potential benefits?

In terms of the tenders that we have and all the rest of it, and the value-for-money aspects, we know we have better certainty in our plans. We know, for example, that we are keeping skills. One of the big challenges—and it is a good challenge to have—is the great demand in the renewable energies sector for construction and other aspects of engineering works and civil engineering. We are dualling the A9, too. There is a lot of competition for people to do the work. What the industry has said particularly is, “It allows us to retain good staff, and to recruit staff, because they know there’s a career in the future.” Talking to the apprentices, they have got a career in rail, which is great.

Do you anticipate revisiting the alliance agreement that was struck last year between ScotRail and Network Rail now that you know what is in the Bill?

To go back to some points we made earlier, the formalisation that exists with this provides actual, formal, legal, statutory accountability of what is currently Network Rail as part of the Scottish railways. That is going to be really important, but obviously we have to get from here to there and the railways never stand still. We have statutory responsibilities, and they have statutory responsibilities for safety, delivery and so on. We will continue to work with the alliance to make sure it is improving until such time as we can formalise this. We anticipate that it is probably more for the next control period when technically everything can come together, but, again, that is an issue for the Secretary of State—when does it formally become law and when is everything in it enacted? In the meantime, it is an agreement based on the good will of Network Rail, on a UK-basis, to devolve more powers to their Network Rail management in Scotland. We still operate with that. I still meet regularly with the alliance to make sure that they are working together and to make challenges. The issues that we have faced—I will use a very real example—include the disruptions that we experienced during Storm Éowyn. The closer and better working you have between improving the rail and improving the operations, the better you can recover from what will be increasingly adverse weather. That is a very practical example of how, if we have integrated railways, we can deal better with some of the mitigations that we are going to need.

Funding streams for passenger services and for infrastructure in Scotland are expected to remain separate. Do you think there may be a tension there? Will that impose a limitation on the extent to which track and train can be integrated?

We spend £1.5 billion a year on our railways, and currently we provide £4.6 billion from Scottish Government funds—so we are funding it currently. Regardless of the Bill, we are currently having to manage that in the most effective way we can.

What about post the Bill?

Well, we will then fund everything, and we will have powers to direct and provide guidance to Network Rail that we currently do not have. That will allow better integration.

Do you wish to come in, Mr Reeve?

If I may, Cabinet Secretary, I think you were picking up on the fact that there is likely to continue to be a five-year settlement for the infrastructure and separate annualised budgets for the above-rail operations, as the Bill is drafted. I understand that there are some reasons behind that, including competition law considerations. I think we would see some value in treating that as an integrated budget, but we understand why it is arranged as it is. It is always desirable to be able to look at the most efficient way of delivering a particular outcome on a railway, irrespective of whether that is for the infrastructure or the above-rail operation. For example, to improve performance, one might be better off spending money on the trains than on the infrastructure. We will be looking for ways to maintain flexibility in the allocation of funding within the constraints that the Bill envisages.

In a practical sense, we have just published “Rail Recharged”, which is our decarbonisation plan, and that does exactly what I think you are alluding to. How do you make sure that the operations of the trains and how you drive change are co-ordinated? That is done through Transport Scotland just now, in terms of setting what our expectations are and when.

Do you think that it is the right approach to have a memorandum of understanding—I think you have kind of covered that already—and are you confident that it will cover all the arrangements it needs to?

Well, on that point, it will need to. There is a memorandum of understanding currently, but it is not statutorily underpinned. That is the difference with the legislation: the statutory underpinning and the requirement for a memorandum of understanding. It also makes the Secretary of State accountable to you as a Committee, and it makes me accountable to the Scottish Parliament’s Committee, to make sure that that is being delivered. The statutory underpinning gives a bit more force, not just to Ministers but to Parliament in terms of accountability.

You say that you think it is good to have that statutory underpinning. However, there is the opportunity to put some of what would be included in a memorandum of understanding into primary legislation rather than having it in a separate document. Do you think that that would benefit the relationship and insulate from external pressures in a more significant way?

The logic might say yes, but the practice might say no. The reason I say that is that, having dealt with legislation since 2007, apart from two years when I was a Back Bencher, I am always of the view that less is more in terms of legislation. With a memorandum of understanding, you will be able to be more direct about what it is that you are expecting and you will get better results in practice. If you took elements of a memorandum of understanding and always put them in legislation, they would probably by necessity end up being less explicit, more general and less effective. There is a place for a memorandum of understanding. That is my experience over time. Bill, I do not know whether you have had that experience working with different Ministers. I do not want to put you on the spot.

I would agree. You asked whether we are confident that it will be satisfactory. We will be confident when it is concluded, and we can answer that properly then. The discussions with DFT colleagues are proceeding in the same constructive manner that got us to the agreement that is reflected in the Bill. On that basis, I am cautiously optimistic that we will have a satisfactory MOU shortly.

Fiona, you touched on the elections that are coming up. You said you have been around over a number of years, so I am sure you have seen changes of Government in Westminster and Scotland. Are you concerned that any future changes would threaten the ways of working that are set out in the MOU, or are you experienced enough to see that the MOU is usually flexible enough to cover that?

It is the practice of it. It is the flexibility of that, because then you can adjust it. Once you have a piece of legislation, that is it. A lot of what we are trying to do is making sure that the legislation itself is future-proofed. I am sure that that is what you will be doing as well. The flexibility of the MOU allows you to do that. When I first became a Minister, Gordon Brown was the Prime Minister, so I have seen different people—yes, I am that old. There is an awful lot to be said about how you approach things: get the legislation right first time and have good relationships. I would like to commend Lord Peter Hendy, who has engaged very well, understands Scotland and has made an attempt to address our concerns. This Bill has changed from what it might otherwise have been, and a lot of that is down to him, officials from Scotland and the UK, and Heidi Alexander as the Secretary of State. As I said, I met her three times before the publication to make sure that this was in as good a shape as possible. That means compromise, but that is always going to be the case. There is always compromise between Government and Parliament in different ways, and it is about how you approach that. I have tried to be as constructive as I can, and I am glad to see that that has been replicated on the UK Government side.

Thank you. I have a question that may or may not be relevant to the Bill, but it is an issue that I have been more aware of, particularly in England: the creative and positive use of non-operational assets. Network Rail presumably owns a lot of the stations and some land around rail, which local authorities or the Scottish Government may be using or may consider using for mixed developments, or may consider the better use of assets to integrate transport or other uses. We have seen work on that in England. Is it a challenge for you to have Network Rail and an extra layer of government in Scotland? Does the Bill change your relationship with Network Rail?

I will ask Bill to talk to how the legislation changes that, because I might not be able to do so off the top of my head. It is a very important point. It is said that Network Rail is one of the biggest landowners. To give you a practical example, in Scotland we are very encouraging of our renewable energy sector. Ports and harbours are becoming increasingly important, and many of them have connections with Network Rail. Many of them would benefit from more connections. If you are looking at industrial development around those—perhaps you are looking at different aspects of construction or fabrication—that land becomes very valuable. This is where the strategic interest of Government is. That is probably one of the lessons from devolution: with Government being able to provide control or strategic oversight, you can then be smart about what you do on industrial development, housing and so on. That is not as possible now, because we have no direction or guidance over Network Rail, but only for the things that we have devolved responsibility for in terms of rail. Clearly, if you are trying to be smart about housing development or other things, you want to do it for the benefit of the public—this is where some of the issues of transfer will probably come in. But you also have the Green Book analysis and the issue of how you get the best value. Increasingly, Government are looking at how to be smart about the assets we have. You can sell them to the highest bidder and get the income from them, but that will not necessarily help the development for that town or area. We work very closely. We have city growth deals, which Dr Arthur will be very familiar with. They are funded between UK Government, local government and the Scottish Government precisely to look at strategic developments, so more powers in relation to Network Rail assets would be very helpful for that wider strategic development opportunity.

Do you have anything to add, Mr Reeve?

You asked a question about property. My experience is that the complexity of the current land ownership and lease matrix that the railway has across passenger and freight operations gets in the way of rapid change. One of our lessons from the alliance and from working together in what we call Team Scotland is that when we focus on the same aligned outcomes, we take better decisions sooner and can implement them more swiftly. I envisage that the relative simplification and the integration that this Bill takes us towards will facilitate development of property, as it will other aspects of change in the railway system generally. That simplicity should help us to make better decisions and implement them sooner.

That brings us to the end of our first panel. Thank you very much, Cabinet Secretary and Mr Reeve, for your evidence and for coming in person to London. It is very welcome. Examination of witness Witness: Peter McDonald.

Welcome to our second panel, which will look at rail in Wales as a result of the Railways Bill. I welcome to the Committee Andrew Ranger MP, who is a guest from the Welsh Affairs Committee. Thank you for joining us, Andrew. Could our witness introduce himself?

My name is Peter McDonald. I am director for transport and digital connectivity in the Welsh Government.

Thank you for joining us today. The Welsh Government have long called for greater devolution of rail policy. Does the Railways Bill as drafted progress that ambition?

I would say that the Railways Bill as drafted is neutral with respect to the devolution settlement. It reflects the current settlement. As we may get into, it takes us further in terms of how the current settlement can operate efficiently and effectively, but does not in and of itself move Wales and the Welsh Government along the devolution spectrum. As you heard in the evidence from the Scottish Government, there is a spectrum. If you want another data point, the Scottish Government and Scotland are far further along that spectrum, albeit not entirely.

Is that due to decisions made 20-odd years ago when devolution of rail happened more widely across the UK?

That was certainly the last point at which an active decision was made by UK Government and Welsh Government to review the settlements. Obviously, debates have been had since then, but essentially what you have in the Bill today is a reflection of the devolution settlement as was codified at the time you referenced.

What outcomes would devolution of rail enable that could not be achieved in Wales through the current settlement? What difference would it make?

It would clearly provide the Welsh Government with more control, and that could theoretically bring benefits in terms of integration with transport modes, because all the other transport modes are devolved—in particular, bus, road and active travel. Rail is an anomaly in that respect. On the other side of the coin, it would bring a large degree of financial liability and responsibilities, and there is a question about whether the Welsh Government’s balance sheet could currently absorb and accommodate those. Certainly, when we reflect on different devolutionary settlements, we have to reflect in parallel on the fiscal settlements that would go alongside them.

Yes. But I think we have to look at the Bill and its documents as a package. You will notice in your scrutiny—we may talk about it—that the memorandum of understanding is quite a key part of what the Bill delivers in Wales. To properly answer your question, we need to look at both the legislation and the MOU as a package.

We think there are significant benefits from track-train integration. We have seen them in south Wales for the element of the railway track that we own—I can talk more about that later if it is useful. We think there are significant efficiency benefits, from both moving towards public ownership and bringing together a series of duties and responsibilities within a single body—albeit with sufficient respect for devolution, which we do not think is a constraint.

We have just heard from the Scottish Government, and they said that it was a model engagement in terms of Bill preparation. Does that reflect your experience of how the Bill was prepared for, and the engagement you had with the UK Government?

Yes, it does. We are very grateful for the engagement from Lord Hendy, as Rail Minister, and his officials.

Does the Bill reflect everything that you asked for?

Yes—if we refer to my previous answer and look at the Bill as a package of both the legislation and the MOU. You will have seen that we have shared with you, and therefore published, the heads of terms for the MOU. If you take those heads of terms—those areas—and the provisions of the Bill, then we are seeing progress in all the areas that we sought progress on. There is then a question on the balance between legislation and non-legislation, which you may want to reflect on. I appreciate that was discussed in your previous session.

Setting aside the MOU, is there anything in the Bill that you would like to see that is not in there?

It is hard to set aside the MOU, given how much is being put in it: in terms of the operation of efficient cross-border services; in terms of how there is sufficient respect for the rail infrastructure that the Welsh Government owns; and in terms of how we create an empowered business unit—a part of GBR that really works for Wales. It is hard to comment on the legislation specifically outwith the MOU, and there is certainly a question around whether there are sufficient links between the MOU and the legislation, which you may want to reflect on.

As you said, and as we heard from the panel before, Scottish Ministers will enjoy significant powers of direction under clause 8 of the Bill. But in the context of the current settlement, or in the Bill as it stands, is there any scope for Welsh Ministers to have some powers of direction?

As I see it, this Bill and its clauses are an accurate reflection of the current devolution settlement. In the same way as a change to that settlement was not on the table as part of this process, it follows that a different approach to directions was not on the table. My Ministers, the Welsh Government and I would not mind additional powers, but it could look and feel odd in the context of the devolution settlement, given that we do not fund or pay for railway infrastructure. Certainly, if you want to take the broader constitutional approach, you need the alignment of the power to tell a part of the system to do something and the ability to fund it and be accountable for that funding. If there were stronger powers of direction, there would be a disjoint there.

It has been good to see that there has been—as you have already alluded to—some great partnership working already happening. I am thinking of the developments happening in my area in north-east Wales, but also in south Wales and all the investment that is going on. It does rely on partnership working, and there is potentially an inherent risk in that, depending on who the partners are and how they work. Welsh Ministers are accountable for quite a lot of things—if you think about Transport for Wales and that, politically, they will be held accountable for rail in Wales, even if they do not have all the levers. How will Welsh Ministers be able to influence or interact with GBR?

You make a very good point: when partnership happens, it can really deliver significant benefits. It is quite hard to codify partnership in legislation, and that is not just a comment on rail; it is a comment on all other parts of the devolution settlement. The key intervention that I would point you towards will be the creation of a Wales and borders business unit within GBR. This a place where we feel we can codify the current effective partnership that happens, but wire it into the GBR system in the right way. GBR will be a very large organisation in quite a highly regulated and structured industry, so certainly we feel that we need to wire the system within GBR effectively, such that there is adequate respect and consideration of things that happen in wider parts of the country that might not be where the majority of services are, but matter very much to my Ministers. That is why the creation of the business unit within GBR is a really important intervention for us.

I will give you two examples. We, as the Welsh Government through Transport for Wales —the best way to think about that is as our equivalent of ScotRail—think that there is a case for running more services between Cardiff and Bristol. Those are cross-border services that will be quite economic, joining up two big city centres of employment. We think the business unit will provide a very effective way to have the partnership discussion around cross-border services. Under the devolution settlement, we do not have the same powers over cross-border services as Scotland does, as you can clearly see from the Bill—there are very different provisions. For the second example, let’s take Cardiff Central station, which is the busiest station in Wales. Everything comes together in Cardiff: Welsh-Government owned valley lines come into Cardiff, freight goes through, there will soon be an open access from London to Carmarthen, and there are Transport for Wales, GWR and CrossCountry cross-border services. Those are not the types of things that I would like to attempt to codify in legislation, but ultimately there needs to be a decision about how to use the capacity of Cardiff Central. That is another example where a business unit working effectively could really deliver benefits for the passenger.

Apologies, just to clarify, is that the west coast of England?

I think most of those services would be cross-border services because they will probably start somewhere in England, albeit they then move on to Pembrokeshire. Some of them would be Wales-only services run by Transport for Wales. I think that it is a place where the two can come together in the same pot, albeit those two different types of services—the cross-border and the non—are funded by two different Governments. People who currently work together would be working together in a more empowered system, so I do think there would be benefits.

Sure. That is a really good question. Irrespective of the current devolution settlement, the Welsh Government chose to purchase for a nominal fee what we call the core valley lines, which are in effect the pieces of track that go from Treherbert, Merthyr and Aberdare down to Cardiff. It is a relatively segmented part of the railway. It does not really connect with a lot of other things, which is one of the reasons why the transfer worked. Using Welsh Government money, again irrespective of the devolution settlement, we have been significantly upgrading the lines. They are now fully electrified with brand-new trains. They will be turn up and go services. Transport for Wales is now therefore not just a rail operator; it is also an infrastructure owner and an infrastructure maintainer. We are really seeing, in how Transport for Wales operates, how we can get better performance and efficiency when we own the asset, control the asset and run the services. You can see that in the rail performance data on the lines that come down to Cardiff.

I would not necessarily apply the lens of competition to it, because these are railway lines that go to valleys’ heads and then stop. You are not looking at a lot of potential freight paths or cross-border connections. As I say, it is a pretty segmented part of the railway. In terms of cross-border services, it could not be simpler. There are none and there never will be any, so I do not see that the benefits are at risk. I think the benefits are harder to do in other parts of the network. Some of the clauses on infrastructure are important. We would like some simplification of the infrastructure requirements on this bit of the railway.

We have learnt a lot about what they call in the business “discontinuous electrification”, for example, where the pylons are interrupted by a tunnel or other features. We are building infrastructure expertise in Transport for Wales and would very much like to use that expertise in broader projects. That is why we are working closely with the UK Government on whether Transport for Wales can take on some responsibility to help develop, plan and deliver some of the infrastructure projects announced by the UK Government in the spending review. It is technically UK Government track, technically UK Government money, technically UK Government responsibility, but we think that we can help with the delivery, and that is all within the current devolution settlement.

That is useful. Andrew, do you want to come in at this point?

Yes, on a continuation of that point. Lots of Transport for Wales assets are actually in England. I am thinking about Chester station, Shrewsbury station, the Shrewsbury-Chester line and the Marches line, which are key connection routes. The Transport for Wales brand, as you have highlighted, is quite a strong brand in Wales. I am thinking of the future development of the North Wales Metro in that pipeline up there, which we are looking forward to. How do we maintain the balance? Obviously, there will need to be some sort of devolution within Network Rail to work along those lines as well—pardon the pun.

Again, that is a very good question. It all comes down to how empowered this business unit is. Does it have its own leadership? Does it have its own budget? Does it have the right recourse to GBR senior leadership? We are quite optimistic on that front. We think there is the opportunity to codify a lot of that in the MOU. But it does mean that we are quite reliant on the MOU. It is a very important document in the context of the Bill, given the devolution settlement.

Clause 80 of the Bill puts a duty on GBR to consult Welsh Ministers “if it appears…that the decision will significantly affect the interests of Wales’ economy or of persons living in, working in or visiting Wales.” Do you think that the words “significantly affect” are the right test?

That is reasonable for the purposes of primary legislation. I have a lot of sympathy with some of the comments made by the Cabinet Secretary in Scotland on the role of primary legislation once you get into operational rail services. I am afraid that this is another of my answers that takes me to the memorandum of understanding, because this is the place where “significant” and the nature of consultation could be codified. That is where I would expect to see that, rather than on the face of the Bill.

Could you give an example of something that you think would “significantly affect” and that you would like to see codified in the MOU?

Just to give you a sense of scale, a third of all passenger journeys in Wales are cross-border. It is a very different border from Scotland’s. It does not take a lot for a change in cross-border services currently controlled by Network Rail, and soon to be GBR, to affect Wales materially, not least because some of these cross-border routes are the most economically important routes in Wales. They connect Welsh centres of employment with English ones, and that applies in both north and south Wales.

It sounds like this power might have to be used quite a lot because lots of things will be “significantly” affecting. Do we need further detail on how that consultation should be done?

I think you should put both Governments under some pressure to codify it effectively in the memorandum of understanding. I return to my answer that primary legislation is not the usual place where you would put such a process. A lot of this consultation is happening already in practice on the ground between the current Network Rail teams and those at Transport for Wales. There was already a very close sense of partnership at working level. We need to wire that partnership into the wider GBR so that it can be protected and promoted. I come back to my point that GBR will be a very large and structured organisation and that, in the grand scheme of GBR, the services that I care most about are not going to be a huge percentage of those services, but they matter a lot to the constituents of my Ministers.

How often should this MOU be looked at and revisited, or do you see it as a document that is going to last for a very long time?

Every few years is a good rule of thumb. It is worth noting that since devolution began in Wales 25 years ago, the devolution settlement has probably changed on four or five occasions. You would certainly want to reflect on the MOU at any point where the devolution settlement was to change, especially in relation to transport, or if anything were to happen in respect of devolution in rail. We will learn a lot through running this empowered business unit—at least I hope we will. I suspect that we will think of things and interactions and links in five years that we have not quite worked out now, so I think it needs to be in the realm of a living document.

Are there any more specifics that you can think of in terms of the links between the MOU and the Bill that you would like to see now, bearing in mind, that it is soon to go into Bill Committee?

Without wishing to put that question back to the Committee, I think it depends upon where Parliament reaches a view on the right balance between primary and other documents in this Bill. I refer back to my comments around there being quite a lot in the MOU that you would not want in primary legislation. It is more of a question of whether there should be more links in process terms between the MOU and the Bill. Should it be laid before Parliament? Should it be consulted? Should there, for example, be a duty to have regard to it? Given that there are a lot of metaphorical eggs in the basket, it is a very reasonable question for both Parliaments—and the Welsh Senedd will want to reflect on this while the Bill is going through the legislative consent process—as to whether there is enough legal weight around the MOU to reflect its importance. Again, I come back to my previous comments, that you would not want to over-encumber it with weight, given that this is about getting operations right and that is often quite hard to codify.

It sounds as if there is still quite a lot of talking and working out to be done on this. You heard the Scottish Cabinet Secretary for Transport say that things have to be sorted by the beginning of March because of purdah—prior to the Scottish elections in her case, and Senedd elections in the case of Wales. Does that present some urgency? Is there time?

I think it is helpful urgency. We have published via your Committee, for which we are very grateful, the heads of terms of the memorandum of understanding, and we are committed to working with the Government to publish a full draft in the spring. I would ideally like that to be in the early spring next year, so that it works for the Welsh Parliament’s electoral cycle, and so that the document is there, in draft, for elements of the Public Bill Committee and certainly Report, depending on the timetable in Parliament.

Okay, that is quite useful. Obviously, the Bill Committee kicks off in mid-January. We will move on to railway operation.

We have covered bits of my questions already, so I am going to pick out bits that we have not, and then possibly throw in something else. To start, given the different devolution settlements between Scotland and Wales, do you have concerns that Scotland will get better outcomes than Wales under the Bill?

I am not going to comment on different devolution settlements.

I do not mean the devolution settlements; I just mean the work through of your relationships with the British Government on the Railways Bill. Do you think your outcomes will be worse than Scotland’s, as a result of that?

No, I do not. I think that partnership working can be very effective, where it is sufficiently codified and empowered. I think a lot rests on the degree to which the Wales and Borders business unit is empowered, and a lot rests upon the provisions of the MOU.

Will the Wales and Border business unit have the detail of how it works in that MOU, or is that a separate thing that we need to be mindful of in the workings of that unit?

Without wishing for there to be a plethora of documents, there will be more than the MOU—that is the nature of rail. Certainly, one of the things that the MOU says is that the Wales and Borders business unit will have its own business plan, and that will be quite an important document.

There is quite a lot for this Committee, and those people on the Bill Committee, to be minded of to understand the detail of what this work will actually look like, isn’t there?

Yes. There is already a lot of detail in the rail industry; I do not feel that this is adding complexity in the round.

You have discussed Transport for Wales a little bit, which is obviously what you are here to represent. In a Welsh network largely owned by GBR, which is where the Bill will take us, and on which some GBR services will run, what risks do you feel there are to Transport for Wales’s ability to run its services effectively?

I think this gets you to the access and charging elements of the Bill. Again—I am going to sound like a stuck record—this is another important part of the memorandum of understanding. Certainly, it is true that the Welsh Government will be seeking for Transport for Wales to have sufficient access to the railway to run the services that we think that Transport for Wales can best run. In other evidence sessions, you will have listened to the debates from the freight operators and the open access operators, and this plays into that broader debate. Actually, it takes you back to the example I gave earlier of Cardiff Central. There is limited capacity in that station, and judgments will have to be made about which services should run through it. That materially affects Wales and the Welsh Government.

Finally on that, following the cancellation of the Avanti services in Wales, what discussions have you had with the UK Government about GBR reinstating some of these services once it is back in public ownership?

I am not aware personally of the detail of those discussions, but I can provide some details to the Clerks, if that would be useful. I should emphasise that I am representing the Welsh Government today. If my chief executive officer from Transport for Wales were here, he would be happy to help—we can provide some correspondence.

It would be useful to have some more correspondence on that.

Unfortunately, he was prevented from coming today.

I think you have covered some of this. You spoke about the experience of running an integrated track and train operation on the core valley lines, as well as running services on track owned by Network Rail. You spoke a little bit about the lessons you have learned by doing that and what help you could offer GBR. Overall, how could GBR as a whole learn from the experience of Transport for Wales?

I will answer that in two respects. The first is about efficient delivery of innovative infrastructure. I will not repeat the points I have made, but I think that is an important first answer to your question. The second, which we have not spoken about yet, is about multimodal transport operation. The story of Transport for Wales began as a rail operator. We have added significant infrastructure responsibilities to it, but in addition, I am currently in the process of giving it bus franchising responsibilities across the whole of Wales. There is also an active travel design team inside of Transport for Wales. It is supporting me in delivering a road project inside Transport for Wales. The point I am trying to make is that Transport for Wales is much more than a rail operator. We are seeking to develop it into a fully-fledged multimodal transport authority. That links to the final question that the Chair asked the Scottish representatives about land ownership. Multimodal links are quite important for other organisations to bring in, because GBR will be a very large and necessarily rail-focused organisation. I think there is a role for other institutions in the hinterland—in the mosaic—to bring these broader perspectives to bear.

Is the network under GBR truly going to be integrated as long as funding for services and infrastructure is separated?

Again, it is a good question; again, I have a lot of sympathy with the answer that my Scottish counterpart gave. Sometimes when you want to improve things, you want to reach for the capital infrastructure lever, and sometimes when you need to improve things, you need to work at how things work operationally. It is a different type of expenditure—a different lever. In general, you would want to look at all these things in the round to decide the most efficient interventions and the best use of public money. At the same time, I am sympathetic to the wider fiscal constraints around use of public money, but certainly, from a railways perspective, alignment of the business processes and the funding cycles as much as possible can only be a good thing.

You have talked a lot about the need for the MOU and how you are positive about that. Do you think there are any lessons to be learnt from that MOU structure and what is going to be in it for local authorities and mayoral authorities? From your experience, what should we be looking for particularly on that modal shift? Should that modal shift be included in those MOUs just to ensure that interaction, whether at a devolved Government level or a strategic mayoral authority level?

The short answer to your question is yes. I think we should look at the arrangements that are being developed for mayoral authorities in parallel with devolved government. There are similarities there; I am sure there are lessons we can learn. It is especially relevant for Wales and city regions such as Manchester, given the cross-border services. I think that is really important. I would also come back to the broader point I was making about the culture inside GBR—the extent to which it takes account of multimodal considerations and regional and national considerations. It will necessarily be a very large organisation and railway focused. We certainly want the benefits of a single guiding mind and a system-wide approach. I do not think they are inconsistent with having a culture that promotes multimodal operation and regional and national variety. You can see that on the continent, where you have different countries that are very closely connected and relatively small, and the railway works. You can still have a single view while having a culture that respects these broader considerations.

Finally, next year’s elections came up in the session with the previous panel. Do you have any concern that changes of Government in Cardiff or Westminster threaten the ways of working that are set out in your MOU, and what do we need to be mindful of with the Welsh elections coming next year?

I need to be slightly careful how I answer that, as a civil servant. You can certainly say that how devolution works in practice depends, to an extent, upon the relationships between the Governments in play. When devolution works best, it is with non-statutory partnership alongside statutory frameworks and protections. There are lots of examples where it can work really well, even when there is a political difference. I remain optimistic that if we can get the memorandum of understanding right, that is something that works in lots of different political scenarios, regardless of what happens.

That brings us to the end of our second panel. Thank you very much for your evidence, Mr McDonald. I will suspend the session for a few moments while the witnesses for the third panel take their places. Witnesses: Jason Prince, Mal Drury-Rose and Jamie Ross.

Welcome to our third panel today, in this session looking at devolution in the context of GBR and the Railways Bill. Could I ask the panel to introduce themselves?

Good morning. I am Mal Drury-Rose. I have met most of the Committee before; I gave evidence to the investment pipeline inquiry. I am the executive director for West Midlands Rail Executive and the director of rail for Transport for West Midlands as part of the West Midlands combined authority—that is a very long title. It is really important, because it is not just the West Midlands combined authority that the West Midlands Rail Executive represents; it is also the wider region in the West Midlands, as I have explained before to the Committee, from as north as Cheshire East to as east as West Northamptonshire and as far west as Herefordshire and Shropshire. We have a very wide responsibility, which is quite interesting in the current proposal.

It is useful to be reminded of that. Thank you.

Good morning. My name is Jason Prince, and I am the director of the Urban Transport Group. We represent transport authorities—a number of big combined authorities, as well as smaller authorities across the United Kingdom.

Good morning, everyone. I am Jamie Ross. I am the director of transport at the Liverpool city region combined authority. We have a fairly unique perspective: we were the pioneer authority in terms of rail devolution, taking control over the Merseyrail concession from 2003. That was ahead of the Scottish and Welsh Governments and TfL. We are embarking on a huge programme of public transport transformation, including franchising our bus network. Part of our message will be that rail is part of a wider integrated transport network, so the Bill needs to be viewed in those terms.

Good morning, all. Thank you for giving evidence this morning. From your perspective, will the provisions of the Bill enable a better railway for passengers in your areas? I know, Jason, that you cover quite a few areas. I am particularly interested in whether, as representatives of mayoral authorities, you think that there are substantial enough duties that can be enforced on GBR to work in genuine partnership with MSAs. Mal, let us start with you.

First, the creation of Great British Railways has been a long time coming. We have talked about that before. Unsettling the industry has not been helpful for lots of reasons, but moving on to track and train being vertically integrated is really sensible. There are some misaligned priorities within the existing structure and system that we have been involved in, and I am pleased to welcome and delighted to have that integration. On our priorities, in the West Midlands we already have a collaboration agreement that sets out an arrangement for how we get involved in the rail system, particularly around local services on West Midlands Railway. The Bill does not give provision for that collaboration agreement to continue, although we are delighted to have got the Rail Minister to approve it in the transition to Great British Railways. To answer your question, it depends. Operationally, having one organisation to deal with for track and train is clearly simpler. Hopefully, if we can align its priorities with the regional priorities and our growth agenda, the potential is huge. But I think that, on our role going forward, the Bill has shortcomings. The Bill needs to be strengthened to ensure that our growth agenda on rail in the West Midlands is subject to more than a consultation, so there is more compelling long-term planning for rail investment and transport investment in the region. It needs to be strengthened. We can work with Government to help to achieve that, but the principles of Great British Railways are clearly sound. I remember British Rail—I of course used to work there. I can see the benefit. But the important thing is that it is a different world. We now have devolution. We have a really good English devolution Bill. I am proud of the investments that we have received from the West Midlands combined authority, such as the transport for city regions grant funding. It is important for us to be more involved in the Bill as it goes through Parliament.

I will move on to Jamie because he represents another combined authority. I am interested in your take on it too, Jamie.

I would echo some of Mal’s points. We very much welcome the Bill and the setting-up of GBR. The key themes of passenger focus, simplification of fares and ticketing, and integration of train and track are all very welcome. The Bill does not deal with—and nor should it—the culture of GBR. We suspect that we might need to grapple with that from a mayoral strategic authority point of view. In the Bill there is probably not enough on freight, on accessibility and on setting new standards for accessibility, and not enough, as Mal said, on the wider policy context, particularly around growth. There is not enough on placing rail in the integrated transport context. At a local level, on the integrated transport networks, categorically, mayoral strategic authorities should be in the lead. I think that, overall, the Bill is off the pace on devolution. There should be a presumption in favour of further devolution, and that is perhaps something that we could explore in more depth. Perhaps the elephant in the room is that the Bill is silent on, and does not necessarily tackle, the cost base of the rail industry. Mayoral strategic authorities are huge promoters and funders of rail enhancement schemes. At the moment, the rail industry does not deliver those schemes quickly enough to be in line with our ambition, and does not deliver them at the cost that we would expect. So there are plenty of good principles in the Bill, but it does not go far enough, particularly in terms of devolution.

I am not going to try to use many rail puns during this session, but it is great that we have light at the end of the tunnel, shall we say, in having the Bill. It is worth remembering, in preparing for this session, that we are here because of the collapse of the 2018 timetable. I remember that acutely, being a Greater Manchester resident. People, particularly in London on the Great Northern line, will remember that as well. It is great that we have got here, and we should acknowledge the work of previous Administrations in commissioning the Williams review, and the other work done by the previous Government to get to where we are now. At last, we have an ambitious Bill that will hopefully redefine how rail is placed within transport and ultimately what it can deliver for passengers. That said—I am going to echo my colleagues to my left and right—there is some further strengthening of the Bill to be done, particularly around the relationship with devolved areas. This Government has really pushed hard on devolution through integrated settlements and granting further power. There are some aspects—less so in the Bill, but more so in the “right to request” guidance, which was published on Friday—that feel more detached than the general direction of devolution, which we may want to explore. I think there needs to be greater transparency embedded in the Bill. When you are developing things such as the rail strategy, I think there is a bit more about how you need to take account of what our members and regions do for rail. There is significant merit in the Bill, and we all support the ambition, but some strengthening needs to be done to ensure that we do not create a single point of failure in a Secretary of State. What we actually need to do is make sure the SoS is empowered through many different mechanisms so that when they make a decision, it is for the good of the railway and, ultimately, of passengers.

As a Greater Manchester MP, I don’t always like to say this, but as you acknowledged at the start, Jamie, Merseyside already enjoys a high degree of rail devolution in Merseyrail. You have spoken a bit about your reaction to the Bill, but could you speak a bit more about what it will mean in practice for the Liverpool city region combined authority? I assume it will strengthen Mayor Rotheram’s powers.

It certainly has offered to protect the existing devolution settlement. As I said earlier, we have been in control of the Merseyrail concession since 2003. What we and our mayor are very keen to do is deliver a public transport network locally that works for everyone in the city region. To that extent, we are hoping that the Bill promotes the cause of devolution, and our mayor is very keen to look at additional areas where that devolution can be gained, starting potentially with rail stations. In the 30 years of rail privatisation, rail stations were the poor relation. ROSCOs were set up to fund new trains, train operating companies were set up to run services, Network Rail was set up to run the track and signalling, and stations were the poor relation. To go back to the Chair’s question in one of the earlier sessions, of course there is a lot of property around stations that is owned by the rail industry. I think our mayor is very passionate that station devolution should be the next step, but obviously the overall principle of the Bill is to bring train and track together. At the moment, although we control the train services, we still rely on Network Rail, managed regionally and nationally, to make the infrastructure perform. That is an area that we will want to look at. The Bill generally is very loud in talking about opportunity for mayoral strategic authorities to fund further improvements, but it does not specifically talk about the devolution of funding to go with that. We welcome the Bill and can see that we can push the devolution settlement further as part of that integrated transport network, but the devil will be in the detail. I just worry at the moment because, as Jason said, the guidance on the right to request further devolution has been written almost as if it is in a pre-devolution world. It is a bit off the pace with the wider push for devolution that we saw in the English Devolution and Community Empowerment Bill earlier this year.

Finally from me, what lessons from Merseyside’s experience of rail devolution can be learned and usefully applied to this Bill?

I think local services should be under local control. That is easier if the network is largely self-contained, but you get a responsiveness from a locally controlled service specified and, indeed, enhanced locally. Let me give a very simple example to bring it to life. We have one of the biggest visitor economies in the UK, and we host major events all the time. A few years ago, we had the Open golf and Eurovision. We wanted to enhance services, particularly into the late evening and early morning, and Merseyrail were extremely responsive, as the local operator, in boosting their timetable. We had less success with the Department for Transport-controlled train operating companies, which have a much wider remit across the country, but the local responsiveness to meet and implement timetable changes at really short notice is a phenomenal advantage for the city’s economy to have.

Jamie, in Merseyside you have a private operator running the trains in Liverpool, with the mayor’s oversight, so you have both bits there. Is that private operation with mayoral control of what is being offered a good alternative to nationalisation?

The good thing is that the mayor and our combined authority decide. The mayor has committed to looking at the future operating model for Merseyrail with the key principle of much greater public control. At the moment, it is a private operator, but very much under our specification and direction. The operator has performed well—performance levels and customer satisfaction are high—but our mayor and combined authority believe that greater public control fit much more closely with the aspiration for a completely integrated and locally controlled network, so we are working through future options at the moment.

Jamie, I am thinking of north-east Wales, with lots of co-ordination with Merseyrail and Liverpool about links with Chester and the whole Liverpool-Manchester link, and how that is expanding. Some great co-operation and partnership working are going on there. Will the Bill make that more complicated or easier? The devolved Welsh Government will be involved, with the arrangements there, and yourselves and maybe others. Does the Bill help, hinder or make no change?

The Bill should help the position by bringing a clarity of purpose to the rail industry and joining up train and track more widely under Great British Railways. A lot of it will come down to the culture of GBR and trying to drive a much more agile and fleet-of-foot response from the rail industry, which in all honesty, is very complex. It is over-convoluted, station enhancement schemes take too long and there are all sorts of complications around rail access. A lot of this is about whether we can bring fresh leadership to the rail industry to simplify what has become far too complicated, particularly from a passenger point of view. Going back to the devolution guidance that Jason referred to, the Bill does not quite bring rail up to speed with the wider devolution process. What we have seen in the past few years, particularly with our mayor and Greater Manchester’s mayor promoting the concept of a new Liverpool-Manchester railway, is that it is not just about the GBR or a local strategic authority. Strategic authorities can come together—I think the Yorkshire authorities are doing the same to boost rail investment and rail networks—and that is hugely powerful. I am confident that the new structure, if the culture is right, should encourage different partnerships at different levels. The key thing is to have decision making as close as possible to the passenger.

Mr Ross, I am curious about how the concessionary model will interact with GBR. There was a time in the 1990s when it looked like British Rail might have survived, but in a form where it bid alongside private operators for franchises. On the future of the Merseyrail concession, the next time it comes to market, do you have any indication that GBR may bid to operate it?

We do not have any indication of that. The situation is fairly clear in the sense that, prior to this Bill coming into force, we are the authority with control over and specification of the concession. We receive a special rail grant, which provides core funding from DFT; that will continue to come from Great British Railways. Any enhancements or increases to frequencies or new stations, we fund locally, based on the priorities we set out. The Railways Bill does not really change anything on infrastructure, because at the moment Network Rail provides the infrastructure, and Great British Railways will provide it going forward. I think your question is about whether the Bill creates an opportunity for GBR to step in and operate the local railway. I do not think that that is foremost in our minds at the moment. As I mentioned earlier, the mayor wants to bring in a model with much greater public control, but the key principle for us is local control, rather than handing it back to a nationally controlled body. At the local level, you get a laser-sharp focus on what passengers need to have delivered.

I understand. But as you read it, is there anything in the Bill to prevent GBR from putting in a bid to meet that local specification, should it wish to?

I do not think there is anything to prevent GBR from making proposals on that. The Bill continues the position of Merseyrail as being exempted from what is called a designated rail service, so we do not necessarily have to follow national policy, but our mayor is very keen to promote greater public control with the integration of public transport. If GBR wanted to engage with us, we would look at different models of how that could be done going forward.

Mr Drury-Rose, as you touched on, the West Midlands already has a collaboration agreement with central Government. As we go into the transition period, I am interested in the amendment that you referred to. What is changing in the collaboration agreement, and what lessons can usefully be applied from the West Midlands experience to both the Bill as drafted and its implementation?

Thank you; those are very good questions. The collaboration agreement was set up when there was a different rail system. The national rail contracts are transferring into the public sector and to DFTO. That is ongoing. Our collaboration agreement was coterminous with that. West Midlands Trains will end on 1 February and transfer into the Department for Transport; that is when our collaboration agreement had to be changed by default. We have gone through that process with the Department. To be quite honest, it is not going to be a fundamental change. It is a transitional arrangement before Great British Railways is fully set up. It does still mean that we have oversight of what will be DFTO, so it is an interesting one. It is different. If I am honest, we are working through what that will mean with the Department. We are delighted that we have retained that collaboration agreement. Why is that important? The key for us is that, because of the oversight we have had locally, the collaboration agreement has created capacity improvements in the West Midlands. For example, it was the team in the West Midlands who ensured that the growth in the previous national rail contract was high—30%—in the Birmingham area. That triggered, in the national rail contract bid, newer trains in the West Midlands, which we see with the new diesel trains and the new Cross-City electric fleet. We have already done that, but we have done plenty of other things. I would say that local involvement sometimes stops own goals—let’s be blunt. We are able to get in and say, “Hang on a minute; are you sure about this? We do not think this is going to work for our region.” Why is that? Because regional leaders know what the priorities are. We can also look at things from the point of view of the integrated transport system. I can say, with my rail experience hat on, that rail people do not always do that very well—it can be quite siloed. We have to encourage that culture shift: it is an integrated transport system. Rail plays its part, but actually, in the West Midlands, bus is the biggest by far. The West Midlands Rail Executive is a good model, particularly for authorities that are not a combined or mayoral combined authority. Within our structure, we have 14 local authority partners, including the combined authority, as well as other authorities, which have a say on the rail system for the wider West Midlands travel-to-work area. That is important to them—hence why they still want to have that voice and say in the future. To answer the question, the collaboration agreement is only one step of the way. It is great to retain it, but it is not strong enough. It still does not give us the overall say about what should happen in the region and how we integrate the transport system. If I may, I will make one other point. One of the biggest journey flows that we have outside London is between Birmingham and Coventry—fact. Who operates all the services? It is a combination of local services—of course we have oversight of West Midlands Trains—and longer-distance inter-city services, such as CrossCountry, Avanti and Transport for Wales. There are a number of operators, and they all contribute to that important metric of getting people to those two key cities. Therefore—we are not silly—we still need a good partnership arrangement with Great British Railways, because, clearly, we are not going to be responsible for all those services, and nor would we want to be. We have to ensure that, in terms of the planning going forward, it more than takes cognisance of what we want and actually puts it as a mandatory-type approach, because we are looking for growth and transport is an enabler of growth, and rail has to play its part.

Yes, and we will come on to the formal powers and duties in the Bill, inasmuch as they relate to combined authorities and transport authorities, but are you confident that the positive benefits of that partnership approach in the West Midlands will be preserved as we go through this transitionary period in which public ownership is coming in but GBR is not fully established?

I think so—absolutely. Again, the reason is that we are not waiting for Great British Railways. We have a good, strong relationship with the local Network Rail team, which we are growing. That is something that we want to get on with. Of course we have private and public operators in the West Midlands that we are keen to work more closely with. There is a lot to go for, I think, to improve the customer experience, journey opportunities and integrated transport. I keep saying that—I have to, because I do not think that it always gets up there on people’s agendas. Of course, from the combined authority point of view, we invest in the transport system generally, whether it is rail, metro or active travel. We have to bring that together as a system. I think it does keep us in that place. Of course we will be talking up our role as we go through the Bill, and ensuring that, with our capability locally, with the skills we have, we can help the transition to get the right outcomes.

In the last panel, we heard that quite a bit of store was set by the Wales and Borders business unit. Has there been any discussion about what business units might cover the geographies that you represent?

There is some history with this. The design of the current service is really a business unit in all but name, but it is being managed through West Midlands Trains. There are two elements of the current service. One is London Northwestern services, which of course provide really important connectivity in the West Midlands but operate from London Euston and the north—

Indeed. They go through Leighton Buzzard.

Absolutely—exactly. But also, of course, there are the West Midlands local services. However, they were designed originally as a separate business unit. Therefore, there is the potential in the longer term to have a business unit that is perhaps similar to my colleague Jamie’s, assuming that local leaders want it—it all depends on that as well. We could have that type of model that brings it together, but that is not really on the table at the moment. It could be, and we have seen the framework, which we will come on to. But absolutely—it is pre-designed for a business unit already.

There are a couple of key points from our point of view. Locally, obviously we have control of Merseyrail, and Network Rail has taken steps almost to try to mirror that, with a local area director for the Liverpool city region. But in a much wider sense, we have slightly different governance arrangements in the north of England, with Transport for the North and the Department for Transport working together with joint oversight over the TransPennine and Northern operations, which are now under direct Government control. I think there has been some talk about how that north of England dynamic gets reflected in the GBR structure. For me, though, it is not just about the operating structure but about how the regions and the devolution angle are represented at main board level in GBR and in its senior leadership and senior executive team structure.

The two local authorities represented here are very well established and already have a very significant role to play. However, do you think that the Bill sets out a viable road map for enhanced local control by relatively immature strategic authorities? What outcomes might be expected?

It is a framework—it is a road map. You can see it is, so I think the potential—the opportunity—is there for less mature authorities in this sector. It would not be easy to go through as the current framework sets out, in terms of having oversight of where priorities are made. For example, your local transport plan will be given consideration—those are not quite the words that are used, as I am sure you know—so I would suggest that it is not particularly strong for all local authorities. I will do another plug here, I am afraid, but bringing together a group of authorities that do not have the status of a mayoral combined authority, such as West Midlands Rail Executive, gives them a say as well. The framework does set that out—in all fairness, it is quite clear. There are—dare I say it?—levels, from full control to just collaboration, which is where the baseline is for most mayoral combined authorities. But I am not going to say it will be easy; it is a challenging framework. To be fair to the Government, I think it has been quite difficult, with so many local authorities and, of course, local government reform—it is a broad church. You have Liverpool, Manchester and ourselves—of course, London is separate again—which have different levels of devolution already, and you have many other authorities that are perhaps aspiring to that. To be fair to the Bill, it is trying to provide a baseline, but that is its flaw as well. Because it is a baseline, it is perhaps trying to be jack of all trades, and I do not think that is quite appropriate. From our point of view, we should not be looking at going backwards, because we already have a collaboration agreement and we seek to go higher. The framework does allow that, but it also says that we need to take on financial risk. We do not have financial risk right now, but we have a say on where public money—which is, of course, what it is in general terms in rail—goes into the West Midlands train service. Sorry, that was a bit of a long answer. I think it is there and there are ways of achieving it, but it could be strengthened again.

You described how you have the West Midlands piece but you also have this wider thing that brings in the smaller councils. I am assuming that is the equivalent of the peninsula rail group down in the south-west, where you have several counties that work together. Does this not just highlight how complicated the Bill is making the railway? For the moment, Devon, Cornwall and Somerset are in that peninsula group, but they are potentially going to end up in three separate combined authorities—well, not combined authorities, but strategic authorities that are not mayoral authorities. Where is the power for those aspiring, let alone immature, councils or authorities—sorry, even I can’t get the words right—going to come from? As you have said, the aspiration is there and the road map is there, but looking at it purely logically, I do not think we are going to see the outcome of that for some regional areas for a significant amount of time, if ever, purely because they do not fit what the Bill is saying. Do you have any thoughts on that? Jason looks like he is itching to come in—sorry, Mal—particularly on the urban piece.

The Bill makes it clear that for the relationship with devolved nations and MSAs, there are MOUs and there is a statutory mechanism to give due regard or engage. That is not strong enough, but we can discuss that. There are provisions on the face of the Bill that allow a level of engagement. Coming to your point, what about those areas that are not established authorities but may be on a journey to becoming an authority, and the new tier of local government that is set out through the devo framework? That is where the provisions in the English rail devolution application—I am looking at Jamie, because I just say “right to request”—do actually set out a bit of a road map of how you can start to—

This is the document that has just been published.

Yes. It sets out a road map for how you can start to engage in partnerships. I think there is something that is coming across quite clearly at the moment. Partnerships are already working at a local level, whether that is through the rail executive, or without business units. There are already some really strong and quite varied partnerships in delivering rail. UTG has been working quite closely behind the scenes with SGBR and colleagues here on hopefully producing the document that different areas can use as a guide for practitioners on developing partnerships now and preparing for when GBR comes up. On the face of the Bill, there are some provisions reflecting the devo framework. The English rail devolution application process gives a little bit more. However, as we sit here now, I can see that, if you are an authority without established status, there is potential for it to be quite confusing as to where you need to start to think about what influence you may want in a future nationalised network with local influence, and whether you want to have a level of control. Those two things are very different. Influence is a key thing. Some clarity from Government on that point after these sessions might be of benefit for those non-major established MSAs.

Out of interest, what engagement have you had on the production of the guidance that has just been published? Have you had any say in that, or has it just landed on your desk from the DFT, leaving you thinking, “It might have been nice to be asked about this”?

I think it is fair to say that there was probably light-touch engagement on the right to request. To be fair—I am going to defend the Department—we are engaging in very different avenues, through GBR, or SGBR, and DFT. However, I hope and expect that there will be further iterations of the guidance, and I am confident that we will have much more thorough engagement on how that document evolves. That is a diplomatic answer.

I assume that, particularly where you have overlapping travel-to-work areas, you are always going to get complications.

Indeed.

There are also the governance elements that a couple of you have alluded to—the distinctions where you have a directly elected mayor as opposed to other governance structures, and the power of a directly elected mayor versus the relative lack of that.

The Bill talks throughout about consulting with mayoral strategic authorities, but in respect of Scotland and Wales it talks about consulting with Ministers. Do you think there is an issue whereby it is talking about the authority, as opposed to the directly elected mayor as a person?

That is a very good question. I can understand why there would be a difference for devolved nations, and there are also different financial settlements through the Barnett formula and so on. In the Bill, fundamentally, it may be that you consult with a nominated MSA but different arrangements will happen within a local area. The bottom line is that, whether it is the MSA or the mayor, I do not think the Bill is strong enough in its language on how you consult and what you consult on. For me, that is the more fundamental issue, and where the Bill needs strengthening. I can give some examples of that, if that is helpful. One is the rail strategy. You would expect, and I can see why—I think clause 5 is about the development of the rail strategy—

The long-term rail strategy.

Yes. There is explicit mention of engaging with devolved nations on that, but nothing about how you engage with MSAs or established authorities. That is a weakness and something that could be rectified. I do not think you need a great deal of specificity, and you would not put a great deal of specificity in a Bill, but you could put that in guidance. Obviously, we will have the legislation, but making sure the guidance is fit for purpose and allows us as MSAs and our members to apply the Bill is also really important. You might put more specificity about what that looks like—LTPs and so on—in guidance, but it comes back to what Jamie said: if you are looking to really let rail shine again, which is the whole purpose of GBR, and you are giving powers and funding to local areas to make really good transport networks, all for the benefit of passengers, why would you not in the development of a rail strategy want to engage with MSAs and mayors? It is a little bit out of kilter, in terms of the aspirations for what devo can do and the development of a long-term strategy. The Bill enables the Secretary of State to make a variation on a five-year infrastructure plan without consultation. National rail infrastructure may not stop at the border of LCR or West Mids. It seems slightly peculiar that the Secretary of State, whoever they may be, would not want to at least inform or have a mechanism to engage on that process when looking to vary some spend. There are some points where the Bill can be strengthened. I am confident that we can work very closely with the Department on that—there are very proactive officials in the Department, which is great—to strengthen the Bill, so that GBR is set up ultimately to serve local need, which is about delivering a better rail service for passengers with a multimodal mix, particularly at local level.

Devolution is about greater local accountability. Do you feel there are mechanisms in the Bill for GBR to be held to account locally, and what needs to change for that to happen? Jamie, do you want to comment on that?

One of the worries about the Bill is the level of control that GBR has. There is going to be a passenger or customer watchdog. There is still an Office of Rail and Road, so there is a regulator in place, but it does feel at times that, in large parts of the Bill, including the devolution process, GBR is the judge and jury and the ultimate arbiter. There needs to be an ability to hold GBR to account. In the previous rail regime structure, the ultimate sanction for private train operators if they were not performing was that they would have the franchise taken off them, and it would be taken under public control. If the railway is under public control, there is no longer that sanction. There is something in all this around the customer watchdog having enough teeth that GBR is scrutinised in great depth by the watchdog and the ORR and is held to account by mayors and strategic authorities for how it is performing locally. For that to happen, there has to be a customer culture that pervades through GBR, and there has to be total transparency in the operating, safety and customer satisfaction data that is made available to mayoral strategic authorities and other authorities across the country. I think we can get to a position where there is that level of accountability, but I do not get full assurance from the Bill as it is currently positioned.

That is a very useful point from our perspective, because obviously, passenger satisfaction and passenger experience is key to us.

I am more than happy to follow up with the Committee on some particular points, but I think that much more of the Bill could be strengthened. The Bill as it is written would not give full visibility of costs, revenue and subsidy levels to MSAs. That is quite important when an MSA is wanting to consider different levels of devolution—not even full devolution, but different levels of control. The Bill could benefit from strengthening there. The Bill may benefit from strengthening around non-GBR infrastructure facilities, where there are some uncertainties. There is a little bit of open language there. Also, we should consider whether there is a role for MSAs and TfL, for example, to have a mechanism for directly challenging decisions. There is a debate to be had there, but it comes back to what Jamie said. It is about the role of the ORR, which probably has not covered itself in much glory recently. Is the ORR going to be suitable and strong enough to ensure that the SoS and GBR can deliver a national railway, but with accountability embedded at local level and a mechanism to challenge decisions? I think the Bill could benefit from some strengthening in those areas.

Can I just make one point that I think is quite important about common purposes? We go back to the planning stage. If the planning in the long-term rail strategy is completely aligned with what the regions require, you find that there is stronger ownership. I can give you many examples from when we were doing rail investment of where it sometimes felt to us that things were being done to us—we felt we were on the receiving end from the industry. It is our priorities and part of our long-term strategy, but in the future, we must look at Great British Railways’ long-term rail strategy being our rail strategy, so that we all own it. I think that helps the behaviours. The Bill is not strong enough at all on accountability. The mayor has made it very clear that the accountability of the operators providing services in our region is critical to us. When we have no services or the services fail, the region stops, and Birmingham stops, because the road network just cannot cope. How can we not have a say on accountability and holding GBR to account? It just does not feel right at all. Supporting my colleagues, it does need strengthening on that. Of course, WMRE does that to a degree already because we do bring in the operators and Network Rail, and in our way, we hold them to account on their performance, the customer experience and so on. I am concerned that this cannot be seen as a national performance metric. We need to have a route-based metric, so that we are ensuring that all customers, whatever their journey, are receiving good service. That is why the regional element is really important. Good service should not just be in pockets.

You have touched already on the power to consult and the lack of anything stronger—there is no requirement to listen to or to have regard to the consultation. Are you disappointed by that?

I do not think I would say disappointed. I think it is a good starting point for a discussion on how we can strengthen the Bill over the next 10 months.

I was going to ask about the ORR, but I think you have answered a number of supplementary points. It is really a question about how the process for holding GBR to account for performance against its business plan will work. As I understand it, the ORR has that role, and then ultimately any decision is escalated up to the Secretary of State for enforcement action. Do we know whether there will be a role for devolved Administrations and transport authorities within that process? Is there a danger that we are creating quite a centralised system when you are the people who see the tensions and the trade-offs most closely?

Again, I think it needs to be strengthened. In my experience in the West Midlands, Merseyside and the Welsh Government, when you have had devolution, expectations on service quality go local. It will be the mayor’s postbox that is very full when we have lots of issues in the region—seen it, been there, done it. We therefore have to make sure that accountability—going back to that point—is strengthened in the Bill. But I think we can help on that. I feel that sometimes we are saying “Strengthen the Bill” without trying to be helpful. We want to be helpful. We want Great British Railways to succeed. We want it to deliver for the region, with our own priorities. That is where I want it to get to. The transition is an opportunity to strengthen the areas that bring that about.

Just to be really clear, in respect of anything that might be beyond the Bill, such as guidance or plans for how this will operate in practice, have you heard from the DFT at this point as to whether they see a role for local transport authorities within that ORR and central Department process?

I am just trying to find the exact part in the text of the Bill. I may have to follow up and correct this, but I believe there is a mechanism to—

Follow up in writing—that’s absolutely fine.

I will follow up, but I think there is a mechanism for engaging with the ORR and MSAs, although there isn’t the follow-on mechanism that I mentioned earlier. Actually, it will just be incumbent on the SoS to make the final decision, but the ORR will engage with—I will follow up on that point of clarification for you.

It is critical for us that the provisions are strengthened, because although everyone on the outside looks in and sees that we have control over Merseyrail, Merseyrail serves only part of our region. Parts of the city region, like St Helens, slightly to the east, are served by Northern and TransPennine, and in some cases those services have been substandard in recent years. Trying to get accountability and responsiveness when you are not in control of those services will drive us towards trying either to claim further devolution over the services or to strengthen the accountability over how they are performing. At the moment, we have within the city region almost a two-tier structure, which passengers simply do not understand.

And then there are the services in really rural areas—well away from those municipal areas—such as North Norfolk. Their communities will want a voice as well. You may want to come back if you have anything on that, but we have other authorities that have submitted evidence.

Can I just make a point, thinking about strategic authorities and rural authorities? I think that, collectively, we may have missed a trick here, in that a lot of this process has been top down and quite centralised. There has been some very good engagement, but paragraph 260 of the explanatory notes states that the set-up costs for GBR and the watchdog will be between £200 million and £400 million—the cost of setting up this national structure will be anywhere between £200 million and £400 million. I think that, collectively, we should have said, “Well, maybe 10% of that budget should go out to authorities—particularly those that are emerging into the rail space—to help fund a level of resource to co-design how rail services should be delivered.” I think that some of that funding allocation, which sits in the centre, to be designed by the centre for this new national body, should have gone out to authorities—in particular, smaller authorities or authorities that do not currently have rail capacity. If we are being genuine about devolution in the rail space, there should have been more co-design.

That is a helpful remark.

We have already heard a few comments from you on the passenger watchdog, and from others we have heard the view that it will lack sufficient power and independence to be a sufficiently powerful voice for passengers. Do you share that view?

I will give an initial view. First, we think it should be regionalised—no surprise there. We think it should be closely aligned to what we do in the region. One region is different from another—let’s be honest—and there are different needs, different requirements, so we think it certainly should be regionalised. And it should be at the granular level of local detail. I think the risk to all of us is that it is taken up to a level of customer experience that masks areas that are being left behind. We will certainly be looking at that through all our authorities. Going back to the remedies when we see difficult performance and so on, I think that while we all want to see great performance, we need to be honest: there are going to be moments when there are challenges. It is a live railway; it has live issues. The question is how, collectively, we respond to that, so I think the passenger watchdog needs some teeth. If I’m being honest, it is a bit unclear at the minute what they will have that enables them to mandate change.

Can I give a real-life example of the difference that we have experienced? In Merseyrail, a couple of years ago we opened a brand-new state-of-the-art station at Headbolt Lane, serviced by the UK’s first battery-powered trains, but there was lots of disruption on that line for a number of months with infrastructure work. The new trains did not get up to full frequency until a couple of months later. Immediately, our mayor said—not just because of his mailbag; he is a passenger too—that we need to compensate passengers on this line, as they had suffered substandard service for months. I reached out to Merseyrail, and in a matter of days we had a compensation scheme, where season ticket holders got full refunds. Contrast that with Northern trains, which we do not have control over and which have had a decimated weekend timetable, particularly on Sundays, for the last couple of years. It is still decimated, with hardly any services on a Sunday. We reached out and said that it has got to the point where you need to compensate passengers, as there is no longer a reliable service on those lines—which are not just for local services in the city region but connect Liverpool to the west coast main line going north. A couple of years on, there is still no compensation scheme delivered. How would we deal with that situation with GBR going forward, and what powers would we have to call into account? That is a worry. As Mal said earlier, it definitely needs to be strengthened.

I am going to answer this question in two ways. The first thing is that you need a strong passenger watchdog, in any sphere, to hold public bodies to account. A broader question that we have not discussed, because it is slightly separate to the Bill, is that we need to think about the culture of GBR and how it will deliver. How will you get a culture that runs from the boardroom down to the platform and is customer and passenger focused? GBR’s success will be measured on good service delivery, reliability, and getting people where they want and need to go. The question is then: what does that look like on the face of the Bill? There is a bit of a debate about whether you could put a statutory duty in the Bill to get GBR to formally respond to watchdog recommendations. However, the unintended consequences of that could slow the response of GBR. I think there are a few more debates to be had. I know you had some passenger representatives in last week. It is about finding the balance between something you can put in the Bill and something you can put in guidance, to ensure, as Jamie said, that there is a quick responsiveness in GBR to something like what happened with LCR. You need quick responsiveness on a national level for railway, but also to give it some teeth. That is the bottom line.

Thank you. Let us have brief questions and answers now, given the time, although it has been very useful and interesting.

Of course, Network Rail owns the infrastructure. In my area, I have seen good collaboration, but the interests of different parties might not always point in the same direction. Do you see tensions between local aspirations and Network Rail’s operation of the infrastructure at the moment, and do you think there are lessons from any of those tensions, or potential tensions, for the Bill and its implementation?

I said earlier that I am really pleased with how we are engaging in our region, in terms of collaboration, so thank you for saying that, and we made it a top priority to work closely with Network Rail. It takes a lot of work. Going back to culture and behaviour, when I say work, I mean effort to understand their issues and build trust, because transparency is really important. When they are going to have a big problem, it is good to know about it so that we can react. On the micro level and the operational side, it is absolutely working really well, but as I said earlier, we are already working a joint plan. In the West Midlands, we have the midlands rail hub, and we are a co-client with Network Rail. There are major schemes, contracting Network Rail for station investment. We are aligned—as best we can—but, of course, they have their own governance structures to consider. As Jamie mentioned, we must not lose sight of the difficulty, bureaucracy and challenges that we all sometimes have to get the output of the outcomes from the investment. It should not just be the Bill; it should be a complete change in the culture and approach of all the organisations, including Network Rail.

We see some great co-operation with Network Rail, but as Mal said, a lot of its processes are very heavy, unwieldy and monopolistic. The elephant in the room is the cost base of the industry, particularly with regard to enhancement schemes that are not delivered quickly enough. We would urge, culturally, that GBR cannot be a rehash of Network Rail and end up an infrastructure-driven railway. It has to be a passenger-driven railway, and to that extent, I think it needs fresh leadership and impetus to think in a different way, as Mal has said.

I am interested that you both used the word “culture”. We heard from our previous witness, Mr McDonald, that you cannot codify collaboration. In respect of culture, and hopefully moving from a long period where the central Department—in addition to Network Rail— has set service specification often at a very micro level, what can be done in practical terms? Mr Ross, you made the point about changing leadership, but what else can be done to make sure that culture does change and that good collaboration is not dependent on the quality of local leadership?

One thing that might be beneficial is looking at how devolved areas are tackling this and how they deliver for the passenger. Ultimately, GBR has to focus on the passenger. The culture has to be around what passengers do. There are some fantastic examples now through devolution of how that is being realised. We do not have any sight of how GBR will be structured or what the board structure will look like. In some ways, that does matter, but actually, there is a lot of learning that can be done from the regions and nations of how you can deliver good transport services. Tapping into that might be good.

Turing to our last batch of questions, are there any that have not already been answered?

Just a quick question: do you feel there is anything in the Bill that would serve the interests of people living outside a mayoral strategic authority, as it stands?

I am going to say yes, aren’t I? We have a role, in terms of the wider West Midlands Rail Executive, that is outside the mayoral combined authority.

But you are in an existing mayoral authority with that outside role. If you have no links to a mayoral authority, is there anything for people in the Bill? I am thinking, say, about those in the south-west.

I see what you are saying. What do I think about the role of the south-west within—

I am thinking of those examples where they are not near one of those big chunky mayoral combined authorities that exist already.

I understand.

I think there is opportunity. The concept of a passenger-focused national body that immediately sets out to consolidate and simplify all the different websites, fare systems and ticketing should be a benefit across the country. There is the notion of a scale of devolution options—almost a menu of options. If you are an experienced authority, you might want full devolution; if you are not, you might want to start influencing and moving towards a commissioning model. I think there is opportunity, but it goes back to the fact that none of this has been funded for authorities at a local level to really input to the extent that I think they should have done. There is an issue in that all the funding has gone to central design rather than out to the authorities, but overall, there should be an opportunity.

But basically, they will get a website, possibly, and some easier ticketing until those opportunities get grasped, because of devo.

The menu of options, I think, is what each authority will be grappling with, and whether they have the capacity and funding to aim somewhere on that menu.

Thank you. Last but not least, Olly, do you have any more questions that have not been answered?

Yes. Feel free to add anything that has not been covered. We heard from panel two about how south Wales’s infrastructure and the valley lines have been taken over by the Welsh Assembly Government. Do you feel that under the Bill, there is a good opportunity for local authorities to have more control not just over service specification but the funding of infrastructure?

Some of this goes to the right to request. The fundamental principle should be the art of the possible, in delivering a good railway locally and how that interfaces nationally. At the minute, the English rail devo application is more about what is most likely improbable, rather than being the art of the possible. The Bill, as it is written, does not define any steps for devo, but the guidance has been published about what that looks like. That is fine, though it needs to be improved. More work could be done. There is another fundamental thing. The Bill says that MSAs can give GBR money, which is all well and good, but where is the reciprocal arrangement?

Very nice of them to say that.

Yes. Jamie mentioned that fiscal devolution, more broadly, will be really important. We need a much broader conversation around the Bill and what that looks like, to empower local areas to deliver good rail services.

I think we also need to address through the Bill some of the perverse incentives in the system. We invest in lots of new stations in the West Midlands—they are about to open next year, which is great news—but there is still a challenge for local or combined authorities investing to pick up the tab for ongoing operational costs. It does look a bit odd, doesn’t it? You have to explain to a finance director that as well as X million pounds-worth of funding, with partners including the Department for Transport, you also have an operational cost. The whole issue around funding, going back to the funding devolution debate, needs looking at.

They are thinking whole-system/whole-life costs.

Absolutely.

Given your roles in strategic authorities and mayoral areas, you rightly focused on passengers. Jason, you used the term “passenger-focused” more than once. In our first session, representatives of the freight sector were really concerned about the need to continuously run freight through areas of the strategic decision-making authorities that you represent. Do you see that as a challenge? How would you respond to the freight sector’s concerns?

I mentioned at the start that I do not think there is enough in the Bill around freight. For our city region, the freight logistics sector is huge, with the Port of Liverpool being one of the nation’s main ports. At St Helens, there is a huge new multimodal freight terminal at Parkside.

That is relevant because it is within the strategic context, but for some strategic authorities, freight is a long-distance service running through, and it is around competition for train paths.

Of course. The point I was going to make is that the Bill talks about targets. As Jason mentioned, we have not had clarity on the structure of GBR. Is it going to be set up to concentrate on freight, to give freight some degree of parity with passengers? On access rules, how will GBR manage access, because it will have operators using the track? There will be open access operators and freight operators. Who gets preference? If GBR is the ultimate arbiter, judge and jury, that may not benefit freight customers. There have to be some safeguards in the access rules in the regulation of GBR and in the structural design of GBR. If not, we are missing an opportunity for rail freight.

Rail freight and passengers need to run side by side. There are instances, and this is something we have to deal with, where infrastructure investment has not been delivered, which has made competing challenges—

That goes without saying.

Therefore, GBR needs to fix that in its structure and set-up, so that that does not happen again. Freight is really important for our members, whether they are passing through, but all of our members have some freight infrastructure or depots in their patches. When freight has such a big role in looking to decarbonise and many other things, they can live comfortably side by side. As Jamie said, a bit more guidance on the role of GBR and how it will deal with that might be beneficial.

That is particularly in a context where there is tight competition for access. Your political leaderships will want to deliver the best for their residents and, dare I say, voters. Is that a challenge? Would the mechanism be there to resolve those kinds of challenges?

That comes back partly to rail. The Bill has been written—quite rightly, in many respects—to set up GBR, but there is a much wider context. Of course, in the last 12 months, with the new Government, the focus has been on local growth plans and growth in local economies and businesses. Our mayoral agenda is not purely about passengers; it is the growth plan, and how other major planning documents like that should influence future access on the railway. I think our mayor would feel very passionately that he is representing not only passengers but the local business and logistics community.

That comes back to why we need to strengthen the Bill. In the long-term rail strategy and things like that, I think there needs to be a much stronger link between what the Government are doing in other areas on devolution and how you create great places economically, and what they are doing to deliver for passengers. The Bill does not reflect what mayors and local areas will have economic aspirations for, alongside passenger aspirations, too.

Thank you all very much for your evidence, and for the time that you spent preparing for the session. The evidence we have heard today from all our panels has been really helpful. If you, or any other panellists, feel there is anything that you did not get the chance to say, please feel free to write to us pretty soon, if that is possible. We will reflect on the evidence that we heard today, and we look forward to our final session on the Railways Bill with the Minister for Rail and the chief exec of Network Rail in January.