Amendments made: No. 19, in page 128, line 27, after 'definition' insert

'of "final order", after "provisional order" insert "or an order under subsection (7B)".

( ) In that subsection, in the definition'.

No. 20, in page 129, line 29, at end insert—

'7A In section 57F(1) (validity and effect of penalties), for "penalty order" substitute "penalty notice".'.

No. 21, in page 133, line 13, leave out from 'In' to end of line 15 and insert

'section 143 (powers to make statutory instruments)—

(a) in subsection (1), for "under this Act to make orders" substitute "or the Scottish Ministers under this Act to make orders (except the power to make provisional or final orders under section 55)";

(b) in subsection (3), for "to make an order" substitute "or the Scottish Ministers to make an order (other than a provisional or final order under section 55)"; and

(c) in subsection (4), for "under this Act to make an order" substitute "or the Scottish Ministers under this Act to make an order (other than a provisional or final order under section 55)".'.

Order for Third Reading read

Motion made, and Question proposed, That the Bill be now read the Third time.—[Jim Fitzpatrick.]

We had an interesting debate on Report and I thank everyone who was associated with the Committee stage, where the Bill received excellent scrutiny. It is nice for the most minor party to be able reflect on Report the views that prevailed in Committee after its representative did not bother to turn up to the Committee proceedings. I repeat that I am deeply sorry that Mr. Thomas, who represented Plaid Cymru on the Committee once in eight sittings, had a flood in his house on the day when his amendments were to be discussed and they were therefore not moved. Nevertheless, it is a shame that he managed to attend only one sitting.

The Committee took the proceedings seriously and its members, from all parties, including Government Back Benchers, considered a range of issues in depth. That, together with the discussions on Second Reading and Report, means that the measure, as part of the overall implementation of the rail review, is all the better for our deliberations. I urge the usual channels—since I am no longer a member of that fraternity and sorority—to take lightly any urgent request from Plaid Cymru to serve on Committees because, in my experience, its members do not attend. None the less, Wales is important to the Bill, as are Scotland and the rest of the country, and the House lost the expertise that purportedly comes from Plaid Cymru.

Throughout our proceedings, I said that the Bill needed to be viewed in the broader context of implementing the rail White Paper and the overall rail review. There is therefore a wider backdrop, which must be considered, to each clause. The Bill consists of 10 main elements, including the winding-up of the Strategic Rail Authority. As was said in Committee, that is not a reflection of how bad the SRA has been. To be fair, it has got us to a stage where we can move on and make further progress on the railways. It has done a splendid job and will continue to do so until its demise.

However, we are now at the stage, given the assistance of the SRA, whereby we are marching from the complete bodge that was privatisation in 1994 towards something that has greater logic and integrity; something that no longer requires a body such as the SRA. Strategic elements of the Bill allow us to take it back into the Department for Transport. It is right and proper that the Government rather than the SRA make strategic decisions and determinations.

The same is true of not only safety regulation but the relationship between safety, economic regulation, the Office for Rail Regulation and the Government. It is right and proper that the Government should set the broad strategic context for our railways and also the parameters for resources. The Bill makes concomitant changes to the relationship between the Government, ORR, Network Rail and the industry to reflect the new settlement.

In shifting safety regulation from the Health and Safety Executive to ORR so that it is much more closely bedded into all the regulatory features of the railway industry, hon. Members should be assured that nothing will change the paramountcy that is afforded to safety throughout the industry. All the rail safety regulation functions that currently reside with HSE will move to ORR and will be locked far more firmly into the overall industry than has hitherto been the case. Because of that change in the nature of the relationship between the Secretary of State and the ORR, it has been important to make some changes in the Bill in relation to economic regulation.

One of the underlying features of the Bill is the Government's real desire to devolve decisions and functions as close to the local and regional areas as possible. The Bill provides for the most significant transfer of functions to the Scottish Executive since the Scotland Act 1998. The Under-Secretary of State for Scotland, my hon. Friend Mrs. McGuire said earlier that that is, at least in part, the reason why the Sewel motion passed so swiftly through the Scottish Parliament yesterday, not only unanimously and to great acclaim, but to a roaring round of applause, which is probably unheard of there. In terms of the transfer of functions and resources to Scotland, the settlement makes sense and is also quite historic.

We have explored many of the Welsh issues in the Bill. I do not want to dwell on the absence of Welsh Members when we met in Committee, but it is a shame that we had to have those discussions today rather than at that time. However, that is by the by. The Bill provides for a significant shift of functions, input and influence to colleagues in the National Assembly for Wales, as and when that is proper in relation to services that are entirely within Wales. There will also be a proper level of consultation and influence relating to services that go to and from Wales.

There has also been significant devolution in regard to the PTEs, and provision has been made for potential devolution in London, where appropriate. That is right and proper as well. Sadly, the geography of Wales, Scotland and London dictates that rail services are not contiguous with administrative or national borders. We have made no apology for saying that if the Mayor and Transport for London want to take a greater role in regard to heavy rail in the areas that surround London, that would be worth looking at. In the first instance, London's devolution settlement did not include any significant input in regard to heavy rail. TFL has been enormously successful. As Mr. Field very fairly said, much of what it has done has been a real bonus for London. In the broadest sense, it is appropriate to consider how its influence can be extended to heavy rail, because there is a major lacuna in London's transport settlement in that regard.

The Bill makes provision for that in the wider sense, and in the first instance, such devolution could involve the Silverlink franchises, which are more or less wholly in London, save for a little sojourn about three miles north of my constituency, where the Silverlink service finishes at Watford Junction. Given that Silverlink is almost wholly within London, however, it might provide a starting point for considering a new role for TFL. Any further role involving commuter services outside London would need to be considered only with the highest regard for the regional assemblies and areas into which such control might extend.

I thank the Minister for giving way and I apologise for not being here for the beginning of his speech. On the transfer of facilities in London to TFL, is he prepared to consider the issue of the suburban interchange stations, which at the moment are run by Network Rail but which have a huge TFL input? Does he agree that it would make sense to reconsider the structure of the organisations, so that just one authority could run such stations? I am thinking particularly of Finsbury Park, but the same also applies to Clapham Junction and a number of other suburban junction stations.

I thank my hon. Friend for making that point, which was made on Report, and Finsbury Park was prayed in aid—I think that he was in the Chamber at that time. On where the ownership should remain, I made the point in Committee and on Report that the development of suburban, inter-urban regional stations should be duly considered, and that at the very least, protocols should be put in place so that TFL, Network Rail and others can work and operate them in the interest of their collective networks far more readily than they do now. A linked point is the potential of those network hubs for local communities, which has not been explored as readily by TFL or others thus far. My hon. Friend will know, however, that interlinking either between various tube lines or tube lines and heavy rail is complex, and the benefit of the interchange must prevail in the first instance.

If the Bill is passed, the framework will be in place at least to examine how that sort of co-operation and advance can work in a London context and in the context of this Bill and other areas on which the transport White Paper elaborated last July. Our passenger transport executives, in some of the most significant cities in our country, will be able to take forward an integrated approach across all modes far more readily than they have done up to now. A good deal of devolution for Wales, Scotland, London and our major cities in terms of PTE areas would be introduced.

If we do that, there are consequences for much of the railways legislation that is currently on the statute book. Much of the Bill, admittedly in a rather tedious way, has been about accepting that the Strategic Rail Authority is going, and that the regional network of passenger committees is going, to be replaced by a far stronger passenger voice. Those two elements, plus all the devolution provisions in the Bill, have meant in some cases a tortuous track back to correct previous legislation, hence the 19 clauses on network modification and the point that we discussed on Report about bus substitution, not, I hasten to add, "bustitution".

While the Railways Bill should be considered as one element, which is hugely integrated, has a logic to it, and stands as one piece, it needs to be regarded in the wider context of all that we are doing in terms of transport generally, not just rail. It sets a framework, but as I have said on numerous occasions, the legislation only takes us so far. What really matters is what happens on the ground.

As some of my hon. Friends have suggested during our deliberations, the Railways Bill needs to be seen firmly in the context of taking steps: to continue sustained investment in our railway network; to ensure that the management of the industry is as robust and efficient as possible; to make changes increasingly to franchising arrangements to introduce a degree of vertical integration; to introduce far greater co-operation between train operating companies and Network Rail through integrated control centres, and a good deal more co-operation at regional and franchise level; and to develop a far better rolling stock strategy than that which prevails at the moment to help the industry derive best value from future lease renegotiations. That is not part of the Bill but is central to our overall vision for the future of railways.

To deliver a far better deal, it is not necessary for freight to be a substantive part of the Bill, but as we discussed a little on Report and in more detail in Committee, freight remains very important in terms of the delivery of this Government's vision for rail. It is also important to recognise all that we have done, in full-co-operation with the outgoing Rail Passengers Council, to develop a far stronger, far more focused voice for passengers and consumers.

All that is possible because of the sustained investment being put in by the Government. We feel that we are now ready to move on to the next phase. The Bill will realise an exciting and improving vision for rail.

When I was made rail Minister last September, I announced that I could say without fear of contradiction that I was very pleased to be rail Minister, and that it was a very exciting time at which to become rail Minister. Had I said that five or 10 years earlier, John Major's fabled white coats would have been flapping over the horizon; but, not least because of the sustained investment that has taken place since 1997, this is indeed a very exciting time for the railways. The number of rail passengers is back to pre-1960 levels—and we should bear in mind that about a third of rail capacity was denuded by Dr. Beeching some years after 1960.

As I said on Second Reading and in Committee, despite my excitement at being rail Minister, I have no intention of going down in history as the next Dr. Beeching. That cannot prevail, given our vision for the railways and the framework outlined in the Bill. We are starting to put right decades of mismanagement and underinvestment in both the private and the public sectors. The Bill will enable us to build on that sustained investment and accelerate the improvement of our transport networks to the benefit of all—the rail industry, business, taxpayers and, most important, passengers.

I thank everyone who has been involved in the Bill's passage, which has taken place in an engaging, informed and, dare I say, friendly fashion. Mr. Knight accused me of, for most of the Committee stage, doing a passable impression of Leslie Phillips. I do not know quite what he meant, other than that I was being nice rather than nasty. My hon. Friends said that I was probably more like Sid James, but I will leave hon. Members to decide.

I am very pleased to have been party to our dealings on the Bill. Once it has Royal Assent, given everything else that we are doing—which I have sought to outline, at least in passing—we will have a railway industry fit for the 21st century. Strategic control will be with the Government, where it belongs, and operational control will be with Network Rail and the operating companies, where it belongs. I commend the Bill to the House.

As on so many occasions in Committee, the Minister has demonstrated that he is not lost for words. We greatly appreciated much of the conduct in Committee, and we are grateful to the Minister for dealing with so many of our concerns.

My right hon. Friend Mr. Knight would have liked to be here this evening, but he is helping to raise money for charity. A large number of hon. Members will be at the Palace of Varieties raising money for Macmillan cancer care. I think they will raise £50,000 tonight, and my right hon. Friend is heavily involved.

The Minister has been seeing the Bill through rose-tinted spectacles. He cannot disguise the fact that it is big on bureaucracy and centralisation, and very weak on how customers will actually benefit. I foresee that the passenger experience will involve more delay, increased overcrowding and rising fares during the years ahead. The only possibility of avoiding that would come from a change of Government, which we are working earnestly to bring about later this year.

Various aspects of the Bill represent unfinished business. Let me remind the Government of a specific worry of ours, which has not been resolved. We pointed out in Committee that paragraph 1G of schedule 4 is objectionable because it undermines the jurisdiction of the Office of Rail Regulation in carrying out an access charges review. Currently, the ORR, not the Secretary of State, determines network capacity, what it can deliver, where it needs most maintenance and what its renewal pattern should be. This was made very clear in a letter from the permanent secretary at the Department for Transport to the ORR on 16 December 2003—the time of the most recent ORR access charges review—which is published on the ORR website. The permanent secretary said:

"Under the Railways Act 1993, and the licences issued and contracts approved by virtue of that Act, it is the role of the Rail Regulator . . . alone to determine and establish the income requirement of Network Rail, and to set access charges accordingly."

On 9 February 2004, the Secretary of State told the House that the rail review—the Bill is a significant part of the review's implementation—would definitely not do certain things. He expressly excluded from the review re-nationalisation, loss of independence of the ORR and

"any change to the rights of third parties, which will be protected."

He also excluded

"weakening the effectiveness of economic regulation" and any

"diminution in the regulatory protection of the private sector investors in the railway." [Hansard, 9 February 2004; vol. 417, c. 1237–38W.]

In our view, it is impossible to reconcile paragraph 1G of schedule 4 to the Bill with the Secretary of State's statement to the House on 9 February 2004, because the schedule transfers from the ORR to the Secretary of State the role of determining the size and other features of the network. It diminishes the ORR's jurisdiction and thereby transfers a very important function from an independent regulator to the political Secretary of State.

Can the hon. Gentleman explain why he has a problem with a network that is funded largely by the public being determined by an elected Secretary of State who is answerable to this House? Surely that is a more democratic and transparent process than the arcane bureaucracy that the Opposition seem to be promoting.

I know that the hon. Gentleman has different views from the Secretary of State, and certainly from me. He wants re-nationalisation.

indicated assent.

At least that is a coherent policy. The Secretary of State said last February that re-nationalisation would not happen and he gave various guarantees. I am trying to point out that those guarantees are not reflected in the Bill.

I hope that this and other issues will be taken up with vigour in the other place, and that the Lords will also be able to examine the memorandum of understanding between the Government and Transport for London concerning the definition of TFL's control of rail services in London. I understand that the MOU has been produced and is available, but that it was not made available to members of the Standing Committee. That is a matter of regret, and I hope that the Minister will ensure that it is publicly available, so that it can be discussed in the other place. That was a missed opportunity for Members of this House—even some Labour Back Benchers might have liked to scrutinise the MOU.

We are extremely unhappy about the Bill in major respects, but it does of course abolish the Strategic Rail Authority. It is typical of the Minister's selective memory that he omitted to remind us that in 2001, Labour's election manifesto stated that the SRA would provide a clear, coherent and strategic programme for the development of the railways, so that passenger expectations are met. Here we are in 2005, abolishing that self-same authority. What a mess the Government are in with their railway policy, and how passengers are suffering as a result!

It is true that our deliberations at all stages on this Bill have been good natured and largely constructive, and that the Bill is all the better for it. However, I retain reservations about a number of matters.

I know that other hon. Members want to contribute, so I shall make only one or two brief points. First, my party continues to support he Bill's general principles. If the House divides on Third Reading, we shall support the Government.

I expressed my concern about closures on Second Reading. I am grateful that the Minister of State made it clear throughout our deliberations—he has done so again this evening—that he did not intend to be the second Dr. Beeching. In Committee, he said:

"This is not about a secret agenda. It is not about closures. It is not about me or any successor of mine being the new manifestation of the Conservative Dr. Beeching."—[Official Report, Standing Committee A, 13 January 2005; c. 204.]

I am grateful that he put that on the record.

However, I think that my noble Friends in the other place will want to look again at the strategy developed by the Secretary of State. I agree with the plan to get rid of the SRA. Given that the railways are largely, if not entirely, paid for from the public purse, and that the Treasury and the Secretary of State will make the decisions, it is correct that an elected Government—the representatives of the people—should have the duty to produce a strategy. I am completely at odds with those on the Conservative Front Bench on that matter. Even so, it is also right that the Bill should place a duty on the Secretary of State to develop that strategy, and to make an annual report on its progress. I know that that question will be revisited.

The Minister indicated that the Government would support rail freight, and I am grateful for that. Various issues are not covered by the Bill and will be dealt with elsewhere, as was said on Second Reading. I hope that the Government will continue their commitment to rail freight, the development of rail freight interchanges and other measures. Britain needs a safe, reliable and affordable railway as a real alternative to the roads.

We look forward to supporting the Government if the House divides on Third Reading.

I welcome the Bill overall, as it is another stepping stone on the way to achieving a rational policy-making process in the industry. I have lost count of the number of rail and transport Bills that I have sat through, each of which has been said to establish a permanent structure for the long-term future of this country's rail industry and transport network.

I believe that we shall return to this matter, and relatively soon. The travelling public have expressed a great many concerns about transport. For example, many people were trapped on the tube this week as a result of Metronet's mistakes, and the same thing has happened again this evening. I think that people will demand further change from the Government.

I regret that we were unable to use the Bill to acknowledge the efforts of the rail work force. Our rail system depends on the hard work and commitment of dedicated professionals in the industry, some of whom have been treated unfairly since privatisation. An example of that is the two-tier system of travel concessions available to workers. I hope that that problem can be addressed in another place, or perhaps in subsequent legislation. Some rail staff working before privatisation gained full travel concessions, whereas others employed after privatisation received only a fraction of that, or none at all.

Without the dedication, commitment and professionalism of staff we would not have the efficient service evident in many sectors of the industry. In addition, we should pay tribute to the commitment to safety that has persisted since the development of the regional rail network.

I hope that we will be able to deal with some of those staffing issues at some time in the future, and that we can establish a structure based on public ownership and accountability.

Like other hon. Members, I have listened with interest to much of the debate on this Bill. I wish that it went a lot further, and various opportunities have been missed, but I nevertheless support it.

As my hon. Friend John McDonnell noted, today's Evening Standard carries screaming headlines about rail company profits. We should remember that we are voting to invest large sums of money in the rail network and infrastructure. That is correct, but we must be aware that much of that money is simply creamed off in profits by the train operating and rolling stock companies, and by many others. It is our public responsibility to think carefully about that.

I hope that it is not too late for my hon. Friend the Minister to think again about the consequences of handing the South Eastern Trains franchise back to the private sector. The franchise has been run efficiently and effectively in the public sector, and Government money has been saved.

The amount being invested in infrastructure is enormous. I welcome that and we now have a higher level of investment in railways than we have had for decades. Investment is now higher than in most other parts of western Europe, which is welcome. That investment recognises the role of railways in our society—their efficiency, safety and environmental sustainability.

I welcome the increased investment, but I hope that Ministers will recognise the need to think seriously about the expansion of the network. We have seen the reopening of several lines, but many more could be reopened, such as the east-west freight route or the Waverley line in Scotland. It would be very welcome if such lines could be reopened and money put into them.

We also need to consider the serious issues of rail congestion that affect all the main routes in this country, to some extent because of the success of the transfer of freight from road to rail, but also because of the increase in the number of passengers. We have huge opportunities to develop, expand and improve the network.

I agree with my hon. Friend the Member for Hayes and Harlington that the opportunities I have mentioned should be taken up within the concept of public ownership, because that is the more responsible and efficient way. I am sure that we will come back to that subject.

I welcome what my hon. Friend the Minister said earlier in response to my intervention on the question of local stations in London. The city has a complex transport network, with an over-used London underground system, a rapidly and vastly improving bus network, but several under-used overground railway lines. They need to be fully integrated. London's transport planning has been bedevilled in the past by the separation between London Transport and the railway network. We have an opportunity with Transport for London and the concepts enshrined in this Bill to make TFL the body that can integrate the tube network with the overground network, the expanding tram network and the bus network. We need good local hubs and interchanges.

I mentioned Finsbury Park station in my constituency. It is a parochial example, but I think that a lesson may be drawn from it. It is a local inter-transport hub. After much work between the bus companies, TFL's bus section and the local authorities, we have a wonderful refurbishment of all the external parts and the interchanges at the station. However, we do not have the necessary improvements to the station itself, where the underground and the overground meet, because the two organisations involved cannot agree on who will pay for it and what to do. If the station were run by one organisation, such as TFL, we could make some progress. I expect that exactly the same arguments apply to Willesden Junction, Clapham Junction and several other local suburban interchange stations. I welcome my hon. Friend the Minister's comments on that point and I look forward to further discussions with him about it.

These are exciting days for rail, which is expanding all around the world. I hope that we see more new lines in the future, but above all I hope that we see public ownership of our railway system.

Question put and agreed to.

Bill accordingly read the Third time, and passed.