moved Amendment No. 1:
Page 5, line 5, at end insert—
"( ) After subsection (7B) insert—
"(7C) The Secretary of State shall have a duty to exercise his functions under this Part and under the Railways Act 2005 that are not safety functions in the manner which he considers best calculated to—
(a) promote the use of the railway network in Great Britain for the carriage of passengers and goods; and
(b) secure the development of that railway network.
(7D) In calculating how best to exercise the functions referred to in subsection (7C), the Secretary of State shall have regard to any strategy made by him under subsection (7E).
(7E) The Secretary of State shall formulate and keep under review such strategies for the railway network in Great Britain as he considers appropriate, including strategies relating to—
(a) the resources available for the operation and expansion of passenger and freight services in England and Wales, including investment plans;
(b) rolling stock;
(d) passenger franchising policy; and
(e) policies for community railways.
(7F) A draft of the strategies made by the Secretary of State under subsection (7E) shall be laid before, and approved by a resolution of, each House of Parliament every three years.""
My Lords, this amendment follows one moved by the noble Lord, Lord Bradshaw, in Committee. The Minister will no doubt argue that the Secretary of State and his department already have a strategy. Of course, that is true. They do have one but there is a problem—they keep changing it.
In the past eight years of this Government, there has been a stream of legislation and political intervention in a private sector industry, which has strangulated enterprise and innovation and made the task of running a public service more difficult. In that time, we have had the Transport Act 2000. The main thing that that legislation did was to create the now discredited Strategic Rail Authority, which this Bill abolishes. Incidentally, it is a body that employs 500 people and costs more than £50 million a year. Nine months later, in October 2001, the Government carried out what many saw as the political assassination of a FTSE 100 company—namely, Railtrack—and then created Network Rail. That astonishingly expensive episode is to be examined in the High Court in June. I suppose that the only crumb of comfort for the Government from that forthcoming legal battle is that it will probably take place after the general election.
The administration of Railtrack was an immensely disruptive event for the railway industry. But the Government then gave us more legislation—this time the Railways and Transport Safety Act 2003—which was said by the Secretary of State at the time to settle the matter of the regulation of the industry for the foreseeable future.
But, of course, that was not the end. A mere eight months after the enactment of the 2003 Act, on
Under Section 206 of the Transport Act 2000, the Secretary of State is empowered to give directions to the SRA in relation to its strategies. Indeed, every one of the three Secretaries of State since the creation of the SRA did just that. Using those powers of direction, they each required the SRA to obtain specific ministerial approval of every one of its strategies before it established them. Moreover, under Section 207 of the Transport Act 2000, the Secretary of State has the power to give the SRA directions as to how to exercise its functions. So, in abolishing the SRA, the Secretary of State does not acquire more power than he had originally before this Bill came into being.
In effect, the Government have renationalised the network—a matter of great sensitivity, given the attention of the Office for National Statistics to the treatment of the soaring liabilities of Network Rail, now projected to reach more than £20 billion in the very near future. The Government are taking control of the funding of the railways.
When the Transport Act 2000 was going through Parliament, Ministers told us how important it was that the SRA was under a statutory obligation to have, and to publish, a strategic plan every year, together with individual strategies for things such as rolling stock procurement, route utilisation, the West Cost Main Line route modernisation, the development of rural lines, fares policies and many others.
Ministers even put out press releases welcoming the latest SRA strategy. They made speeches saying how essential it was that the industry and the wider public should first be consulted on the proposed strategies so that they could see what the strategies were and how they were to be implemented. If that was so important when the SRA was coming up with strategies, why is it not equally important for the Secretary of State to do the same? That is the question. Why should a government agency such as the SRA have to do things in an open, consultative and transparent way but the Secretary of State be allowed to do the same in secret, behind closed doors, when he takes over the self-same functions?
Could it be, as is widely feared in the industry and elsewhere, that the Bill is a blueprint for closures? By publishing a strategy, the Secretary of State could prove us all wrong. If closures and cutbacks are planned—a serious concern to both the freight and passenger parts of the industry—is it not right and proper that the Government should expose their cutback proposals at least to the same degree of industry and public consultation and scrutiny as did the SRA? Let us not forget the poor, long-suffering passengers. They also have a right to know.
Such a process is necessary also so that regional and local government can plan for the future. The private sector involved in the rail industry needs to make long-term plans as it has long-term funding commitments. Other interested parties are the PTEs and, in the future perhaps, Transport for London.
Under the Bill, Scottish Ministers will have to prepare and publish a rail strategy, as we discussed in Committee, so why not their English counterparts? The Government are required by legislation to produce a strategy for aviation. The Minister admitted that they have strategies for buses and for walking, where legislation requires them to be produced. Of course, none of those sectors soaks up the £4 billion a year of taxpayers' money as the rail industry does. Aviation is not subsidised at all, but taxed.
I am sure that the Minister will claim that the department must have an integrated transport policy. Over the years we have heard that claim from many governments and I can probably plead guilty to that as well. But, of course, that policy will be subject to change and will be published in the department's annual report. We say that that is not good enough. The industry needs stability and certainty of purpose. It needs to plan, to invest and to assure suppliers and others about orders and jobs. If there is to be continued private investment in the industry and if that private investment is to be available on economic and reliable terms that benefit the industry, it can be provided only by having a long-term, clear strategy.
We all know how much passenger numbers have grown over the past 10 years and there is every indication that they will continue to grow. I am sure that the noble Lord, Lord Berkeley, will say something about the growth of freight and about the potential growth of freight for the future. However, I believe that the industry and everyone else involved must be given a proper process and proper opportunities to see and to contribute to the development of a strategic policy for the railways.
Following the concerns expressed by the noble Lord, Lord Snape, in Committee, we have changed the amendment so that the department has to put its strategy before Parliament only every three years and not every year. Surely, the noble Lord's department can manage that. Of course, I am confident that after
I do not believe that there is a conflict between a long-term strategy and what the Minister described in Committee as a high-level output specification. They should be complementary. I do not understand how we can survive if they are not. If they are not complementary we shall all have problems, with more reviews, more muddle and, even worse, more rail Bills. For that reason alone, I hope that the Minister will accept my amendment. I beg to move.
My Lords, I believe that the Minister wants this Bill. The fact that Third Reading is scheduled for tomorrow might underline that somewhat starkly. If he has come to the House with a view to making some concessions, he shall have his Bill. However, if he is obdurate, we shall have to test the opinion of the House and no doubt there will be some obstacles.
I do not intend to delay the proceedings, but I strongly underline the fact that, because the Secretary of State has taken to himself the duties that were previously enjoyed by the SRA, and before that by the British Railways Board, that does not in any way obviate the need for strategies to be made public and for there to be clear objectives for the promotion and the use of the railway network in Great Britain for the carriage of passengers and goods. That is what we want the railway to do. Everyone behind the amendment wants to see an extremely busy, efficient railway and to see it promoted for the carriage of people and freight.
On the strategies, it is obvious that we need them. We need explicit strategies that the SRA, in its short life, has failed to deliver; for example, the rolling stock industry is in an absolute mess. We have no programme of cascades; there is no programme for the replacement of the high-speed train fleet, which is ageing. It could be rebuilt, but we need to know whether it can be rebuilt, at what cost and who will take that forward. Will the train operators take that forward or will the department do that? Someone has to do it.
On infrastructure, I shall give one brief example: the European signalling scheme, ERTMS. For my money, we are so disconnected from Europe it does not matter much, but others seem to be pushing that strategy to the extent that it would cost the taxpayers a lot of money. Someone needs to sort out the tangle, otherwise if work is not produced for signal engineers who are short of work they will be made redundant. We need a clear way ahead for signalling in this country.
Lastly, we need to know the policy for community railways. Will there be devolution of responsibility? If so, how much devolution will there be? We need to know about such matters.
When the noble Lord, Lord Marsh, spoke in Grand Committee he made it very obvious that he did not believe in annual strategies. As the noble Viscount, Lord Astor, said, we have changed the amendment in light of what was said by him and the noble Lord, Lord Snape. We have provided for three years in which to produce the strategy because we realise that difficult issues are involved. But the strategy cannot be avoided and we expect that strategy to be presented to Parliament so that Parliament can have its say and so that there is an opportunity for public debate.
I very willingly support the noble Viscount, Lord Astor, in moving the amendment, but I hope that, if we are to make quick progress, the Minister will be able to give us some comfort when he speaks.
My Lords, I support the amendment, as can be seen from the Marshalled List. It is very important for the industry to have long-term comfort so that it knows what the Government want from the industry. I declare an interest as chairman of the Rail Freight Group.
The 1993 Act placed a duty on the Government to promote the use of the railways for the carriage of passengers and goods. The goods part of it was fought over long and hard and I am pleased to say that freight won.
My noble friend has said in previous debates that "promoting" is the wrong word. It is not marketing; it is not putting advertisements in the paper saying, "Isn't this a good thing". The word "promoting" in the 1993 Act—I think it is still there today—meant something different. In the 2000 Act, as the noble Viscount said, the SRA was set up to produce strategies. I believe that it has produced some good ones in its time. The freight one was welcomed.
However, the key point is to provide the comfort that is necessary for the private sector investors who, in 10 years, have invested £1.5 billion in freight and probably rather more in passenger Roscos. They need the comfort of long-term strategies to demonstrate what the Government want from the railway system and how they see that being achieved. One or two big investors in rail freight have said that they are not investing at the moment. They do not know what is happening next because of all this uncertainty. If the amendment is passed, the Government set out their strategies anew and the Bill finally receives Royal Assent, I hope that that decision will change and that people will start investing again.
The growth and demand are there, but a lot of money is required to make the network work. Unless people know what the Government want from the railways and from the infrastructure and the community railways, what the franchisers are going to do and what is available for freight, their boards will say, "It is too uncertain. We are not going to invest".
If the amendment is not passed, all the wrong messages will be sent to the industry. The Government accepted a duty in 1993 to promote the railways. Then they wanted the SRA to create strategies. Twelve years later, they say, "We don't want those any more". You can see what will happen. They will not get the investment and the growth. The consequences for people's quality of life in moving around and for moving freight off the road and on to rail will be sadly and badly affected. That is why I very much support the amendment and wish it every success.
My Lords, I shall start with an apology for not having taken any part in Committee. My reason is that I simply cannot bear the Moses Room. If I had anything to do with managing government business, the first thing I would do is to hold a pistol to the usual channels and say, "You have got to stop taking this Bill, that Bill and the next one to the Moses Room because it stifles all debate". It might be a very convenient place, if it were properly cleaned, for the administration of anaesthetics. I hope that that is an adequate explanation for my absence at the Committee stage.
I absolutely agree with what my noble friend eloquently said from the Front Bench when he protested against the Government's record. He said that there was a need for a long-term strategy. I agree. He anticipated, in a moment of hope, that there would be a new Secretary of State after the general election. That may or may not happen.
I find the amendment difficult because it seems to encourage the Secretary of State to go on fiddling and intervening with the railways, about which any Secretary of State knows awfully little. Perhaps I may bore the Chamber for a moment with a fragment from my own past. Many years ago, when I was Minister for Transport and the noble Lord, Lord Marsh—who is unhappily not very well today—was the chairman of the railways, I recall saying to him, "I know that you have an impossible job. I am even more certain that mine is impossible. I promise to support you and not to interfere irresponsibly and unnecessarily with you. I shall support you both publicly and privately until I tell you to the contrary". That seemed to me to be a sensible relationship which more or less worked.
I have difficulties with the amendment when I see the encouragement that is given to the Secretary of State. Most Secretaries of State have not been able to spell the word "strategy" as concerns the railways. Is it wise to encourage a Secretary of State who would probably number among his many qualities an innocence of knowledge of the railways to frame a strategy or go into the detail? The amendment states:
"The Secretary of State shall formulate and keep under review such strategies for the railway network in Great Britain as he considers appropriate, including strategies relating to . . . the resources available for the operation".
I think that the Treasury should be involved in that.
My Lords, perhaps I may just point out to my noble friend how much I agree with the principle of what he is saying. Of course it is not our idea that the Secretary of State should be responsible for running the railways; it is the Government's. We are saying that if the Secretary of State is taking responsibility for running the railways, he should have a strategy. Is that not a fair position?
My Lords, I think I accept what my noble friend is getting at. But what I am saying is that I do not take the optimistic view that Secretaries of State are particularly knowledgeable about railways or anything else. A great many Secretaries of State are innocent and have very little experience of running anything.
I accept that the Bill gives the Minister far greater powers than it should. However, I do not want it to provide what I would take as an encouragement to the Secretary of State to fiddle about with railway rolling stock, railway infrastructure, passenger franchising policy and policy for community railways. Somebody at the end of the line will have the terrible job of running the railways. That is my real point. I have every sympathy with that person as opposed to a Secretary of State who is always fiddling with things about which he does not know. I give way to the noble Lord.
My Lords, I am grateful to the noble Lord. Going back to when he was the Secretary of State and the noble Lord, Lord Marsh, was the chairman of British Rail, surely he accepts that now, effectively, the Secretary of State combines the role of Secretary of State with that of chairman of British Rail. That is his role. The combined forces of the chairman of British Rail and the Secretary of State would need to produce strategies.
My Lords, I shall not go into that at length. My simple point is that although I accept that the Bill does thoroughly wrong things, it is nevertheless wrong to underline them by telling the Secretary of State what to do. It will only encourage him to give instructions to other people. I think that that would be fatally stupid.
I should find it very difficult to support my noble friend, although I understand his motives in producing the amendment.
My Lords, I am grateful for this short and informed debate, which builds on the excellent debate we had in Committee. I am not in such a benevolent mood that I can accept the amendment. However, I hope that I am able to express how the Government envisage the development of strategy in such a form as to reassure noble Lords opposite who have pursued these issues with some force and real consideration both in Committee and again today. One matter on which I can assure the noble Viscount, Lord Astor, is that I shall be a lot closer to him than was his own Back-Bencher, the noble Lord, Lord Peyton, on the issue of strategy and the role that a Secretary of State might play.
I also note that the noble Viscount indicated that there will be a new Secretary of State after the election. He is obviously closer to the Prime Minister than I am because that knowledge has not yet been vouchsafed to me. But we shall see in the fullness of time; and the fullness of time is, after all, only a matter of weeks—perhaps. We may therefore not have to detain ourselves too long. Everything that I say about the general election today is purely conditional, as noble Lords across the House will recognise.
I am not able to accept the amendment, not because I do not appreciate the importance of the argument about a strategy for the railways, but for the following reasons. The first part of the amendment imposes a duty on the Secretary of State to promote the use of the network and to secure its development. That is unnecessary. It is stated in the amendment but is already in the Bill.
Section 4 of the 1993 Act, as amended by Clause 3, clearly envisages that to be the duty of the Secretary of State. The duty applies in relation to functions transferred or assigned to him by Sections 6 to 22 of the 1993 Act and by Part 4 of the Bill, other than relating to bus substitution in Clause 39. That includes his role in network modifications, licences, access agreements, and access charges reviews. It is important to note that that duty sits alongside a number of others specified in Section 4 of the 1993 Act.
One of those duties is to contribute to the development of an integrated system of transport. I noticed that the noble Viscount, Lord Astor, blushed marginally when referring to integrated transport—a fleeting but well merited blush, given the record that we can all recall over almost two decades of his party being in power and responsible for transport. That duty applies to the Secretary of State. We must remember that the Secretary of State is responsible for all modes of transport. It is his job to ensure that people have a choice of modes, that the various modes operate efficiently together and that growing transport demand is met sustainably. The duty that we have provided in the Bill squares with that.
I put it to the House that the duty in the amendment adds nothing material to what is in the Bill already. By creating a duty independent of the other Section 4 duties, the amendment fails to allow for the fact that the Secretary of State's role goes much wider than rail. Of course he has strategic obligations. How could he effectively fulfil his transport obligations without having a strategy?
The noble Viscount, Lord Astor, said that the Government have a walking strategy. He said that not in disparaging terms but as an aside. He emphasised that the Government have an aviation strategy. Indeed we have; that is overdue in this country, as most noble Lords will recognise. Is that in an aviation Bill? Of course not. The aviation strategy was produced in a White Paper. It is a strategy for many years ahead, as it is bound to be when it concerns the development of airports, which require huge investment and have enormous significance for users of their facilities and those who live nearby. That obligation is not contained in legislation. The Secretary of State cannot do his job of providing for the requirements of the air-travelling public unless he develops a strategy.
I turn to the duty to formulate strategies. I recognise that this is not in itself a killer argument, but the provision is unnecessary. The key role responsible for transport policy must be strategic. The Secretary of State devises, publishes, explains and promotes what he wants delivered. By its nature, that is a strategic role. Why did the Strategic Rail Authority have a duty to develop a strategy? Because it was not the Secretary of State and because unless its duties were enshrined in statute, it could not have followed a strategic role.
In abolishing the Strategic Rail Authority and developing the Secretary of State's role, we do not need to pick up those powers of the Strategic Rail Authority and apply them in legislation to the Secretary of State, because the Secretary of State is under an obligation to produce a strategy. It would be inconceivable to those in either this House or the other place that he could pursue the objective of meeting the demands of the travelling public unless he had due regard to such points.
To underline that point, last year's White Paper on the future of rail stated explicitly that the Secretary of State intended to take direct charge of rail strategy. Indeed, the chapter entitled, "The role of government", includes a section headed, "Setting the strategy". There is no need for that duty on the Secretary of State.
In presenting those arguments, I cannot, of course do anything about the dissenting voice of the noble Lord, Lord Peyton. We regret that we met in such inhospitable circumstances in the Moses Room and that we did not have the benefit of his contribution on the Bill. I cannot reach him on the question of strategy because, as a former Secretary of State for Transport, he disavows the whole notion that any Secretary of State could conceivably have a strategy. I understand that from the experience of almost two decades of the previous administration. We live in changed times when the majority of the public, and certainly the noble Lord, Lord Bradshaw, speaking on behalf of his party, has a rather different view of the virtues of strategy.
The second problem with the amendment is that it appears to set out a series of topics on which the Secretary of State would be obliged to formulate strategies. That problem with the concept of separate strategies for separate aspects of the railway is that it risks a fragmented approach. Yet the burden of remarks from all sides of the House when we discussed strategy was the necessity for a joined-up, holistic approach that has regard to all aspects of infrastructure and operation. There is an important distinction between having a strategy for the railway and having a series of strategies for parts of the railway, which is what is envisaged by the amendment.
That links into my third and most important point, which is that the amendment fails to reflect the future approach to rail strategy provided by the Bill. The Bill provides for the Secretary of State to give clear strategic direction at the most appropriate time in the run-up to an access charges review. As noble Lords will be aware, Schedule 4 sets out a procedure in which the Secretary of State will notify the Office of Rail Regulation of what he wants the industry to achieve and the funding that he is able to make available during the review period to secure the outcomes that he wants. There may need to be some iteration to match the statement of what is deliverable with what the ORR thinks can be delivered with the money available, but that is provided for.
The notice from the Secretary of State to the Office of Rail Regulation will be known as a high-level output specification and it will be the key statement on his strategy for the railway during the forthcoming period. A comprehensive statement is bound to cover most, if not all, of the topics set out in the amendment, but in a coherent and connected manner. It is vital that we do not set the Secretary of State tasks that risk cutting across the strategic approach to specify outputs. The first statement of that kind is likely to be produced at the end of 2006.
When we debated that matter in Committee, I accepted, as I do today, that the high-level output specification might not be quite enough on its own. It will meet the requirements of the Office of Rail Regulation, because it will consider the whole period to be covered by the access charges review, which will normally be five years. The argument was put with great eloquence in Committee that that will be a relatively short period for some aspects of planning for the industry. The Government recognise that there is a strong case for setting the specification in a longer-term context.
There is also a case for a document that explains and interprets the formal specification in a way that can be readily understood by a wider audience. That could be of value to local authorities and others—my noble friend Lord Berkeley again emphasised the role of freight and its interest in the issue—who need to think ahead about transport provision.
Given those considerations, I gave an undertaking in Committee that I am happy to re-emphasise today. When the high-level output statement is set out, the Government will also explain to everyone—those in the industry, in Parliament and the wider public—the implications of the specification and what is the Government's long-term strategy for the rail industry into which the specification process fits. Such an explanation will be of use and interest to many parties. The Government's key requirement is that it should be closely and clearly related to the high-level output specification and should not run any risk of cutting across that document.
Producing the output specification and the further material that I have just promised is, I contend, the right way for a government to set out their strategy. The output specification is a linchpin of our reforms because it will bring together specification and cost control more effectively than ever before. Although we understand the thinking behind the amendment and have great sympathy with much of that thinking, the fundamental reason why we cannot agree to it is that it does not make the link to the specification that we regard as crucial.
I repeat my promise that there will be a strategy for the railway in the same way that we have a strategy for aviation, which itself did not require an obligation upon the Minister in legislation. I can promise that it will look beyond the horizons of the access charges review. I believe I can promise that it will deliver what noble Lords in all parts of the House seek to achieve through the amendment.
I cannot agree to the amendment, despite the pleas of the noble Lord, Lord Bradshaw. The noble Viscount, Lord Astor, has also presented the issues with some persuasion. The noble Lord, Lord Bradshaw, indicated that he would be disappointed if I could not agree to the entire amendment. I accept the thinking behind the amendment; I know how persuasively he has argued that in Committee and today, and I recognise the strength of his views. I cannot agree to the amendment, but I can deliver the substance of what noble Lords on both Front Benches seek. I hope that, with that assurance, the noble Viscount, Lord Astor, will be able to withdraw his amendment.
My Lords, before the noble Lord sits down, the confidence that the Bill has imposed in the Secretary of State, and which the Minister has repeated today, has convinced me by a pretty narrow margin that I had better support my noble friend's amendment after all, despite the fact that it gives unnecessary encouragement to a Secretary of State to tamper in matters of which he knows very little.
My Lords, I hear what the noble Lord has said, but he indicated in fairly principled terms why the amendment was not acceptable to him. I am sorry that my perspective on the amendment differs from his. I had hoped that, had there been any further action on the amendment today, he might have joined us in the Division Lobbies. But as I am confident that the noble Viscount, Lord Astor, will withdraw his amendment, that issue may not arise.
My Lords, I must offer the Minister my commiserations. It must be sad for him to realise that he had perhaps persuaded one Member of your Lordships' House to support his argument but then suddenly to find that his argument has had the opposite effect. Never mind.
I shall deal with the Minister's two technical objections. His last point was that the amendment had no link to the high-level specification. That is not a valid excuse because it can be put in as part of the strategy. You cannot say at one point that the inclusion of "rolling-stock" or "infrastructure" in proposed new subsection (7E) is too prescriptive but then object in the next minute that the high-level specification has not been included.
"considers appropriate, including strategies relating to—".
That does not imply a fragmented strategy; it just says that, as part of a strategy, there must be some reference to those aspects. The Minister then said, rather tellingly, that most, if not all, will be addressed. That is a classic get-out clause, is it not? We run the risk that policy for community railways, for example, could easily not be addressed. Those are the two technical arguments.
I shall now deal with the principle. I am grateful for the support of the noble Lord, Lord Bradshaw, who tabled this amendment originally in Committee, for which I must give him due credit, and the noble Lord, Lord Berkeley. The Minister failed to address the Scottish comparison—Scottish Ministers will have to publish a strategy. It is not surprising that he did not deal with that because it does not help his argument.
The Minister brought up the aviation point. It is quite simple: the aviation industry is taxed, not subsidised, by £4 billion a year.
The other point related to the Secretary of State and his responsibilities. Let us be clear: if my noble friend Lord Peyton produced an amendment that said that no Secretary of State would be encouraged "to fiddle about", to use his words, I am sure that we would all support that fiddling amendment. We are all against Secretaries of State doing that on their own policies or on anything else.
The Bill has brought Network Rail directly under the control of the Secretary of State. He is responsible for funding; he is taking control. If he takes control and accepts that responsibility, he must come before Parliament and there must be a duty. That duty ought to be in the Bill because the industry needs to know. It is no good saying that it will just be done by the specification report and what the department publishes annually; the industry needs to know the long-term plans. It is a long-term industry whose funding requirements are long term.
The final point that persuaded me to test the opinion of the House was the Minister's remark that the amendment was unnecessary, because we all know that when Ministers say that, the amendment is indeed very necessary.
moved Amendment No. 2:
Page 92, line 18, at end insert—
"( ) the interests of the users and providers of services for the carriage of goods by rail;"
My Lords, I shall not keep the House long on this amendment. New paragraph 1D(4) on page 92 gives a list of objectives and standards which "may include, in particular," information,
"with respect to . . . the following".
On reading the list, Members will find that it mentions "capacity"; "frequency of railway passenger services"; "journey times"; "reliability of railway services"; "overcrowding"; "fares"; "information"; "accessibility"; "major projects"; and,
"protection of persons from dangers arising from the operation of railways".
It does not mention,
"the interests of the users and providers of services for the carriage of goods by rail", which we believe is a major omission. I can assure the Minister that huge numbers of people are extremely concerned about the growing problem of congestion on our roads and are extremely disappointed that the Government do not seem to have a coherent strategy for dealing with that problem. I believe that it is necessary to insert the words as printed on the Marshalled List in the Bill. I beg to move.
My Lords, I also support the amendment and the remarks made by the noble Lord, Lord Bradshaw. Following on from my noble friend's comments in response to the previous amendment, this covers in effect the content of what might be called the high-level output statement which will form part of the strategy. Like the noble Lord, Lord Bradshaw, by the time we reach heading (j) we are into a fair amount of detail, although what is left out is the interest of a major user of the railway system; that is, rail freight operators. They are in the private sector and therefore have the most to lose when things go wrong.
The list of objectives and standards set out in paragraph (4) is extraordinarily detailed and interesting. While it is not limiting, it is detailed enough to cover the "types and numbers of trains" and the "frequency of . . . services", which will probably include freight but may not cover journey times. On the provision in heading (g) covering the "quality of information", does that ask whether the indicator board on platform 2 at Goring-on-Thames is working? In the past Ministers and noble Lords have asked why we have to specify this level of detail. However, if we are doing that, I argue that freight needs to be mentioned in such a long list covering detailed points on passenger services. For that reason, I support the amendment.
My Lords, I commend the noble Lord, Lord Bradshaw, on his eloquence in moving the amendment and the noble Viscount, Lord Astor, on the brevity and force of his support. I want to repeat what I said in Committee that of course the Government recognise the importance of the rail freight industry in this country and I agree with the noble Lord, Lord Bradshaw, that there is increasing interest in freight against the background of considering how to tackle our congested road network and reduce the amount of goods being delivered by road transport. That point is well taken. I want to reassure noble Lords that the Government take very seriously rail freight issues and they intend to involve the industry fully in the development of the high level output specification which, as my noble friend Lord Berkeley pointed out, forms the basis of the allocation of resources.
In the interests of clarity, the high level output specification is the notice from the Secretary of State to the Office of Rail Regulation as part of the access charges review process, and it will be the key statement of his strategy for the railway for the coming period. It will include information from the Secretary of State and Scottish Ministers, as appropriate, about desired outputs and finances for the rail industry over the review period.
New paragraph 1D(4) of Schedule 4 lists standards and objectives with respect to particular matters that may be included in the specification. As my noble friend Lord Berkeley indicated, the list is permissive in nature, but it is not exclusive. It includes such things as objectives and standards with respect to the capacity of networks, journey times and the reliability of trains on the network. But the list does not limit what the Secretary of State can do. He could include within the specification standards and objectives in respect of the interests of the users and providers of services for the carriage of goods by rail in the information that he provides to the Office of Rail Regulation.
We are well aware that the high level output specification for passengers is bound to affect freight operators. After all, freight operators use the same tracks on the same networks as passenger operators. Therefore the Government will need to ensure that they are aware of the potential effects on freight of any decisions that are taken in setting the specification. We have already begun what we consider to be constructive discussions with the freight industry on this very important point.
Furthermore, under Section 4 of the Railways Act 1993, as it would be amended by this Bill, the Secretary of State would already be under a duty when carrying out his functions as part of the access charges review process to carry them out in a manner he considers best calculated to protect the interests of persons providing services for the carriage of passengers or goods by the railway in their use of any railway facilities which are vested in a private sector operator.
My Lords, I am grateful to my noble friend for allowing me to intervene. On a point of clarification, he mentioned the high level output statements for passenger services. I was pretty sure that it was established in Committee that the statements would apply to both passenger and freight services. Could he possibly clarify that?
My Lords, a great deal of the detail in the list referred to by noble Lords involves passenger transport services. The noble Lord, Lord Bradshaw, stressed that point. However, I want to emphasise, as I did in Committee, that the high level output specification could include freight because, over the period that the specification is due to run, it would not be possible to construct one in relation to passenger services which did not take into account the needs of freight. So the duty will apply in respect of the prices charged for such use and the quality of the service provided.
I think that this will provide the protection argued for very forcefully both today and in Committee by noble Lords. Indeed, given his declared interest in the rail freight industry, I want to reassure my noble friend Lord Berkeley that we consider this to form the basis of a reassurance to the industry that their interests with regard to the development of the specification and thus the development of the railway itself will be taken fully into account.
The amendment would not give any new powers or any new obligations to the Secretary of State and the interests of freight operators will already be protected by the Bill. So, while I recognise the strength of the arguments put forward, it is clear that we do not foresee the future development of the railway without acknowledging the very important part that freight services have to play—particularly given the remark made by the noble Lord, Lord Bradshaw, that road congestion issues also need to be tackled by ensuring rail freight provision.
My Lords, this is a more significant amendment and addresses an issue where we may be at odds with the Government. Amendments Nos. 3 and 4 reflect our concern that the decision about closures should be based on advice given by the Office of Rail Regulation, but that it should be the responsibility of the Secretary of State to make the decision. We are not in favour of a decision of that nature being sloughed off, if I may use that expression, to an official or a functionary; it must be a political decision.
I am an optimist who believes that the railways probably are on the road to financial recovery, but I am sure that it would generate a great deal of heat if such a decision were to lead to service closures. It would be incredibly difficult for a Secretary of State to get round the fact that he is the person who should make an essentially political decision about the withdrawal of services, albeit on the advice of an official—in this case the Office of Rail Regulation—who, as I understand it, would certify that the correct procedure had been followed and that the figures had been properly devised. We are not content that such a decision should not be part of the political process. I beg to move.
My Lords, I support the amendment. Perhaps I may build a little on what the noble Lord, Lord Bradshaw, said. This is the kind of situation envisaged at page 95, line 12, when there is a serious disagreement between the Secretary of State and the Office of Rail Regulation over how much money is necessary to maintain the railway to the standard required by the Secretary of State but which he is not prepared to fund, for whatever reason.
It has always seemed wrong to me that—as the Bill provides—the decision to close, for example, the West Coast Main Line or the East Coast Main Line, or to impose a 30 mile per hour speed limit because the track is in such bad condition, should rest with the regulator. The regulator could probably come up with many other options. However, that is the kind of decision that would have to be made to save a lot of money.
I think that that should be a political decision for the Secretary of State. It is not for the regulator to say, "Let us put a 50 mile an hour speed limit on the West Coast Main Line but leave the East Coast Main Line as it is". Such a decision would affect so many of the electorate of this country in one way or another that it should be taken by a Minister. I know that such decisions will be taken only in extremis, but that is what this whole section of the Bill is rightly about. It would be much more appropriate for Ministers to take these decisions rather than leaving them to a regulator.
My Lords, I am grateful to both noble Lords who have contributed to the short debate on this amendment. I am sure they will agree that it envisages an extreme situation which would arise only after two requests for provision of a revised specification of outputs.
The chairman of the Office of Rail Regulation has made it clear to the Secretary of State that in the event that the office finds it necessary to request a revised specification it will do so publicly and transparently. Similarly, the Secretary of State confirmed this commitment to transparency in the access charges review process in his letter to the chairman of
If in the extreme situation that the Office of Rail Regulation is not provided at the third attempt with a specification which is reconcilable with the available resources, it would be appropriate for the industry's independent economic regulator to arrive at a final determination of what can be delivered for the purposes of its access charges review.
In my letter to Members of the Grand Committee following its first sitting, I set out my view that where the Office of Rail Regulation had to reach such a determination, the Secretary of State could not avoid accountability for the consequences. It is not conceivable that we could arrive at a situation of such extreme difficulty and irreconcilability—which both noble Lords have indicated is their concern—without the Secretary of State being accountable and challenged on how such circumstances had arisen.
The operators have repeatedly stressed throughout the rail review and the passage of the Bill the importance of the safeguards arising from independent economic regulation. Independent determination is absolutely necessary in the extreme situations envisaged by these provisions. The Office of Rail Regulation will arrive at its determination publicly and transparently and, in doing so, will be bound by its duties under Section 4 of the Railways Act 1993. These include the duties to enable providers of railways services to plan their businesses with a reasonable degree of assurance and to protect the interests of users of railway services in respect of the price and quality of facilities.
The amendment moved by the noble Lord, Lord Bradshaw, and supported by my noble friend Lord Berkeley would have the—I am sure unintended—consequence of undermining the protections for operators which are guaranteed by the independent economic regulation of the railway industry that is so prized by the operators. The independence of the assessment meets the cardinal point of the thinking behind the Bill. I hope that the noble Lord will recognise that, even in such an extreme circumstance—in fact, particularly in such an extreme circumstance—an independent judgment should be made.
My Lords, I thank the Minister for that reply. I shall read it carefully. I fully accept that the regulator will make his judgments independently, and I am quite satisfied about the integrity of the holder of that office. However, should he come to the conclusion that, because of a lack of funds—an issue to which the noble Lord, Lord Berkeley, referred—it is not possible to maintain a railway service of a reasonable standard or at all, the decision about what should be done should be made by the Minister as a result of the facts laid before him, not by an official before the facts have been laid before the Minister.
I shall study what the noble Lord, Lord Davies of Oldham, has said and return to the issue if the Bill receives a Third Reading. In the light of what he said, and to the extent that it appears acceptable, I beg leave to withdraw the amendment.
moved Amendment No. 3A:
Page 95, line 9, at end insert—
"(2A) The Office of Rail Regulation shall not be entitled to make a determination under paragraph 1G(2) which is likely to lead to the services provided with the use or in respect of any railway facility being curtailed or discontinued (whether as to quality, time or in any other respect) unless the requirements of paragraph 1(G)(2B) have been complied with and the conditions in paragraph 1G(2C) have been satisfied.
(2B) The requirements are that the Office of Rail Regulation has consulted—
(a) the facility owner and the beneficiaries of all access contracts in respect of the railway facility in question; and
(b) the franchisee under every franchise agreement which contemplates the franchisee, or any person on its behalf, using the railway facility in question, and has taken into consideration all representations and objections made to it by those persons in respect of the proposed determination.
(2C) The Office of Rail Regulation may not make a determination under paragraph 1G(2) unless it is satisfied that—
(a) the value of the rights of such facility owner and the beneficiaries under or in respect of that railway facility or those access contracts shall not be adversely affected by the proposed determination, or that adequate financial compensation shall be payable to them out of public financial resources in respect of any such adverse effect; and
(b) in the case of a franchise agreement, the agreement shall be amended so as to relieve the franchisee from the obligation to comply with its terms to the extent that, if the agreement were not amended, compliance would be impossible or more onerous by reason of the proposed determination.
(2D) If the Office of Rail Regulation fails to make a determination under paragraph 1G(2) by reason of one or both of the considerations specified in paragraph 1G(2C), the Secretary of State shall ensure that public financial resources shall be increased accordingly."
My Lords, Amendment No. 3A is grouped with Amendments Nos. 5 and 6. At this stage, I shall not speak to Amendments Nos. 5 and 6 and I shall not move Amendment No. 5. However, if they so wish, the noble Lords, Lord Bradshaw and Lord Berkeley, can move that amendment when we come to it.
I thought long and hard about whether to cover this important issue with a number of small amendments or one large one. I eventually decided that it would be easier to bring forward one large amendment. I am afraid that I shall not be brief in summarising it because of the complexity of the issue, and I apologise in advance for that.
This is a serious issue which concerns the outcome of access charges reviews by the Office of Rail Regulation. Perhaps I may give your Lordships a little of the background. On
The noble Lord, Lord Davies, has been most helpful during the passage of the Bill and in correspondence. However, I regret to inform your Lordships that in the Minister's defence of the provisions of the Bill, in the statements that he has made to the House, and indeed in the letters that he has kindly provided to your Lordships, he has not satisfied noble Lords on this side of the House on this issue.
I remind your Lordships of what the Secretary of State said in a Written Answer to a Parliamentary Question on
"The Government also rules out any change to the rights of third parties, which will be protected. There is no question of weakening the effectiveness of economic regulation . . . There will be no diminution in the regulatory protection of the private sector investors in the railway ... The review announced on
I contend that the Bill does not, unfortunately, respect those principles.
Under Schedule 4, the Secretary of State is to give notice to the Office of Rail Regulation of what he wants the industry to achieve and the funding that he will make available over a review period. It is, therefore, the Secretary of State who sets the outputs; we are told that it will be called the high level output statement. The Bill says that the information will cover the types and numbers of trains, the frequency of passenger services, journey times, reliability, overcrowding, the levels and types of fares, the quality of information provided to passengers, major projects and so on.
That is fine as far as the franchising outputs are concerned, but with regard to the work that Network Rail is to do—the network outputs—it is a change to the current situation. Until now, the ORR, not the Secretary of State, has set the network outputs, having been informed of the franchising and other strategies of the Strategic Rail Authority. The Bill changes that. It is a change to the rights and protections of third parties to have network outputs set by the ORR and not the Government. That is a diminution of their protection, something that the Secretary of State promised would not happen. I will try and explain why.
Freight and passenger operators are clear that, by taking from the ORR the role of setting network outputs, the Government are increasing the risks for those operators. They lose the stabilising role of the independent regulator, intervening to ensure that network outputs are protected and that the decisions are taken on a proper basis. What are the risks? Quite simply, the Government—that is, the Treasury, with its perpetual hostility to the railway industry—could, through this new power, require the industry to cut back on maintenance and renewal, so putting the network into a slow decline to save money for short-term reasons.
Under the Bill, the Secretary of State does not have the public interest duties of the ORR to promote efficiency and economy and the development and use of the railway system. The ORR does not work according to short-term or political criteria. In setting network outputs under the Bill, the Secretary of State does not have to take into account the medium- and long-term view of the interests and the health of the industry. The Secretary of State is, in effect, entirely in the hands of the Treasury.
The Treasury will probably do what it consistently did throughout the 50 years of the industry's nationalisation—slowly and inexorably starve it of funds. That is what the Bill allows. It puts in place a very effective mechanism by which the Government will remove the protection that the independent regulator provides against politically inspired cash starvation of the industry.
I have put down the amendment to rein back the worst excesses of Schedule 4 and restore the protections that the private sector investors in the railway industry need, while, importantly, maintaining the right of the Government to make public expenditure decisions that are consistent with the rights of private operators.
In many respects, my amendment would give substance to the assurances given in correspondence during the passage of the Bill through Committee. But assurances are one thing and legislation another. If there is to be a protection, the best place for it is in the Bill.
My proposed paragraph 1G(3) of Schedule 4 deals with the situation in which the Office of Rail Regulation faces a cash squeeze between the high level output specification that the Minister has said he wants under paragraph 1D and the public financial resources the Treasury has told him he has to use to buy those outputs. The two do not match, and one of them has to give way.
As Schedule 4 stands, it is always the outputs which have to give way. It can never be that the public financial resources have to be increased. Of course, the Minister will say that the Secretary of State can get more money from the Treasury. That is undoubtedly true, but what happens if he does not and the ORR has to decide where the cuts will fall? They could fall anywhere. What protections are there then for the freight and passenger operators? The answer is that there are none in the Bill.
We are told that the ORR would have to make sure that as far as possible, existing contractual rights would be honoured. That is not enough: the railway network code, which is part of those access contracts, contains provisions that allow the network outputs—the capacity or condition of the network—to be reduced without the contracts being broken. The contracts may well be intact but the freight and passenger operators would still face those reductions. So, the operators need better protection.
Under the franchise agreements, the franchisees have to deliver certain specified levels of services to their passengers. In doing so, they are dependent on the capacity and condition of the network, which enables them to produce their service. What happens if the network is deteriorating because the Government have embarked on a policy of cutbacks and if speed restrictions, for example, are higher than they would otherwise be or capacity has been reduced because the network's condition is getting worse? In such a situation, the franchisee is squeezed. Nothing in his franchise agreement allows him to turn to the department, as the successor to the Strategic Rail Authority, and say, "You can't penalise me for poor performance, which is in my contract, if the network is declining because the Treasury has decreed that it should. I need relief in this case, otherwise I am in the impossible situation of being committed to deliver high standards under my existing franchise agreement but being unable to do so because you are cutting back on Network Rail's funding". For those reasons, my amendment would provide freight and passenger operators with the necessary protections.
Paragraph (3) of the amendment says that the ORR cannot make a decision under paragraph 1G(2) to cut back on the network outputs unless it satisfies the requirements of paragraphs (4) and (5). Paragraph (4) provides that, before the Office of Rail Regulation can decide on network cutbacks under paragraph 1G(2), it must consult the affected operators. That must be right. They are decisions of considerable importance to the operators who use the network.
Paragraph (5) says that having done that, the ORR may not make a cutback determination under paragraph 1G(2) unless two conditions have been met. The first concerns access contracts. The value of the rights of the operators must be maintained, or they have to receive adequate financial compensation out of public funds. So the Government can still cut the railway, but they must compensate operators if they sustain a loss as a result. That loss would be measured by the value of their existing contracts.
The second condition in paragraph (5) concerns franchisees. If there are to be network cutbacks, the franchisees must have amendments to their franchise agreements that relieve them of the obligation to meet impossible or more onerous targets or standards of performance as a result of the ORR's Treasury-inspired network cutbacks decision.
These protections should be uncontroversial. They require the Government to honour the assurances that the Secretary of State gave at the beginning of the rail review in 2004. They do what we are told in correspondence from the Minister ought to happen anyway, but they provide the protection in legislation.
The final paragraph of my amendment, paragraph (6), is important, providing the protection that the operators need. It follows from the previous two. It provides that if the ORR has been prevented from making a network cutback determination under paragraph 1G(2) because one of the conditions in proposed paragraph (5) has not been met—either access contract rights are being unjustifiably diminished in value or franchisees are not getting the relief they need—then, if the outputs cannot be turned down, the amount of public money to pay for them must be turned up. They have to be paid for, and in these limited but significant circumstances the Treasury will have to swallow the fact that the Government cannot ride roughshod over people's legitimate and valuable rights without having to pay for that. That fact must follow if the Government are to honour the assurances that they gave last year and if private sector operators in the railway industry are not to be exposed to unjustifiable interference in their rights.
My amendment would give the Government the flexibility that they say they need in controlling public expenditure—an important point—but also balances that need in cases where private rights are threatened or may be trampled on. I beg to move.
My Lords, I rise to lend support to what the noble Viscount, Lord Astor, has just said and to his amendment. This is an extremely complicated issue and I imagine that even the Minister may need time to study what is said. However, as far as I can tell, it also covers the content of Amendments Nos. 5 and 6. Obviously, in such a complex situation it has been necessary for those people who are here to scrutinise legislation to consult widely with people who are well advised. That is not something which we find easy to do. We do not have the official advice that the Minister has at his disposal.
I am interested to hear what the Minister has to say, but as far as I can tell at the moment, this amendment which has been moved by the noble Viscount, Lord Astor, touches on the salient factor that, although the network code protects people, there are certain areas it probably does not reach. We must always bear in mind what happened to Railtrack, for example. I am not saying that Network Rail will go the same way, but changes can occur and the network code could disappear. The operators, especially the open access operators, who are very badly protected without the code, could find themselves disadvantaged substantially. They have extremely expensive long-term sunk assets, which cannot easily be moved somewhere else.
I can envisage circumstances where these people might have a very good case for compensation. I believe that the terms that have been set out by the noble Viscount sketch out a way forward. I am not saying that it is the best way forward, but I am interested to hear what the Minister has to say when he responds.
My Lords, this amendment has been put down by the noble Viscount quite late in the day, but it is a neat way of achieving the intent behind Amendments Nos. 5 and 6, which, as the noble Viscount and the noble Lord, Lord Bradshaw, said, are designed to provide compensation to those organisations or companies that are affected by subsequent changes to the capability of the network.
The important thing in both this amendment and in Amendments Nos. 5 and 6 is to encourage all the parties to the discussions to come up with ways of mitigating the problem caused by a lack of investment—whether diversionary routes or different types of maintenance regimes—before one goes down the compensation route. I think that these amendments could achieve that. I agree that the network code can be changed and we are returning to the discussion that we have had many times this afternoon about government interference on the railways, which is probably not surprising given the amount of money that has been put into the railways.
However, there is also the question of changes of mind. Some very nice new trains were ordered for Midland Mainline to run a service to Leeds. The SRA asked the passenger train operator to approve these trains and then, after they had been delivered, the SRA changed its mind. The trains are now sitting in a siding, and I read recently that they may have to have their bogies changed and be sent to Ireland to run a service there. It is nice that they are being used because otherwise some company, be it the train operator or the leasing company, will lose a lot of money. That is just one example. It is not directly related to this matter, but it could have been related. We have to accept that governments will change their mind, especially when so much money is involved.
This amendment is a very reasonable means of ensuring that, if the Government do change their mind and cut the money, with adverse consequences to the companies involved, those companies should be able to get compensation if there are no mitigating circumstances. That should be included in the Bill rather than having to pursue various different codes or other routes through the regulator. Including the measure in the Bill means that it is there and people can go directly to it. There is a good structure to this amendment. It needs a bit more reading on my part, but, on the whole, it is a good idea and I support it.
My Lords, I am grateful to noble Lords who have spoken in this debate on a complex area. I hope that I am able to establish the wisdom of the noble Viscount, Lord Astor, withdrawing his amendment at the conclusion of the short debate because I fear that it leads us into very difficult areas in terms of political controversy. Certainly, if there should prove to be a general election this year he might find that this amendment places him in a somewhat invidious and difficult position. Let me establish why that is so.
First, I share with all noble Lords who have contributed to this debate the obvious concern that operators must have in regarding the potential impact of a future access charges review on their businesses. That is a proper concern that has been articulated in all three contributions to the debates. We are keen to provide operators with certainty that they will receive mitigation or compensation should their businesses be affected by these processes. We have made public an exchange of letters between the Secretary of State and the Office of Rail Regulation to that effect. We are continuing to work with the industry to ensure that access contracts and the Network Code deal as effectively as possible with this issue. But as I have said before, the fact remains that these are issues best dealt with through clear contractual processes and not through legislation.
The amendment attempts to deal with issues of compensation and mitigation which are currently, and more properly, dealt with in access agreements—for example those between Network Rail and train operators. Those contracts have been in place for more than ten years and are well understood by the parties; they have been developed, and continue to develop where weaknesses in the arrangements are discovered. The ORR approves all access agreements and when conducting an access charges review does so in the full knowledge of their contents. Therefore, where a possible consequence of a review is a change to the network which could affect access rights—the main concern of this amendment—and thus lead to the need for mitigation or compensation, the ORR would take that into account in its considerations.
The Secretary of State has recognised the concerns of some operators, and confirmed in his letter to the chairman of the ORR of
We accept that franchise agreements would need to be varied in the event that, as a consequence of inadequate funding being available for all outputs from the network, franchise obligations in respect of service level and quality would be made undeliverable.
There are some real problems with the amendment tabled by the noble Viscount and I counsel caution. The amendment would effectively provide that the cost of compensation would be met out of public funds. In conducting an access charges review, the ORR determines Network Rail's overall funding requirement, which is met through track access charges and network grant. Part of this funding requirement will be funding for compensation, which will feed through to some proportion of access charges. The train operators' ability to pay access charges comes both from subsidy and their other income sources. I assume that by "adequate compensation" the noble Viscount means the compensation which is due under the access contracts.
Subsection (2D) of Amendment No. 3A would oblige the Secretary of State to increase public financial resources to secure what he and the Scottish Ministers want to be achieved as opposed to the situation envisaged by the Bill, that the ORR will determine how much of what is wanted can be afforded for the purposes of the access charges review. Subsection (2D) would also have the, presumably unintended, impact of making the Secretary of State pick up the funding shortfall between what the Scottish Ministers want to be achieved and the budget specified by them. Under the amendment the gap could be filled only by the British taxpayer picking up the bill.
It should be for Parliament, not an independent regulator, to determine how much taxpayers' money is spent on the railways. That is not the role of the independent regulator. Every week the Government spend £73 million on the railways. Is the noble Viscount, Lord Astor, really suggesting that the Government should not be able to set the budget for the railways? Would a future government really be prepared to write a blank cheque for the railways, because that would be the effect of the amendment?
My Lords, I am grateful to the Minister for giving way. I am always prepared to accept drafting lessons as this is a complicated area. However, I believe that the noble Lord may have misinterpreted my amendment, or perhaps my amendment is not sufficiently clear. Under the terms of the amendment public funds would be used only where mismatches occurred; that is, if franchisees were unable to deliver their existing contracts due to changes in the Secretary of State's spending on the network; in other words, where it was impossible for them to fulfil their contracts. However, if the ORR allowed those contracts to be changed so that there was no such mismatch, there would be no burden on the public purse.
My Lords, I understand that but it does not alter the burden of my case against the amendment. The problem is that it would shift the position with regard to what we are trying to achieve in the Bill—which is that the ORR will determine how much of what is wanted can be afforded—into a situation where the Secretary of State would pick up the tab for compensation where failure had occurred. That would be the impact and effect of the amendment. I am not quibbling about a small drafting point. I have always been grateful for the generosity of the noble Viscount, Lord Astor, when, from time to time, we have nitpicked about certain amendments from the perspective of the greater resources that are available to us than may be available to noble Lords on the opposite side of the House. However, this is a point of principle on the question of the resources that are allocated to the railway. The amendment is explicit in subsection (2D) which states that,
"the Secretary of State shall ensure that public financial resources shall be increased" to pick up the bill for a shortfall in compensation for decisions taken in regard to Scotland. That cannot make sense as regards what is sought in the Bill.
I entirely concede the point that all three speakers who contributed to this debate emphasised. Of course, I recognise the obligation to have security within the industry regarding compensation in circumstances where changes are effected which have deleterious consequences. The amendment would not lead to the writing of cheques for staggering sums because we would not expect to see such a situation develop too often. Nevertheless, the principle behind the amendment is that the Secretary of State may be confronted with the need to write a blank cheque regarding compensation. That surely cannot be the intention of those who see merit in the Bill and that is why I reject that absolutely fundamental point.
I turn to Amendment No. 6, which is grouped with the amendment that we are discussing. My noble friend Lord Berkeley referred to Amendment No. 6. As noble Lords are aware, Section 21 of the Railways Act 1993 allows the ORR to prepare and publish model clauses for inclusion into track access agreements as it considers necessary. This amendment would introduce no new powers, nor, as it is permissive in nature, create new obligations on the ORR to prepare such a model clause. Section 21 of the 1993 Act is wide enough to permit the ORR to prepare and publish model clauses on this subject if it considers it appropriate to do so. We recognise the thrust behind the amendment but we have the legislative power to meet the relevant requirement. Therefore, Amendment No. 6 is unnecessary.
My Lords, I am grateful to the Minister for his reply. I tabled this amendment late on Friday and he may not have had time to consider it with his usual care. The noble Lord claims that the amendment would result in blank cheques being written. However, that is not the case. The amendment would do nothing of the sort. I am afraid that the noble Lord misinterprets the amendment. The only situation in which the Secretary of State would pick up the bill is if he did something which diminished the rights of those who held contracts. That is all. The difficulty that we have is that the Government can cut with one hand, but those who have contracts will not be able to fulfil those contracts because of the cuts made by the Government. There is no mechanism under the Bill in that situation for ensuring that those rights are protected. The Minister did not really address that point, nor did he adequately explain how those rights should be protected.
I will obviously consider carefully what the Minister has said, and I hope that he will also carefully consider my response. He may be able to address those issues further, and we may be able to have some conversations about them before we get to the final stages of the Bill. I am not trying to give a blank cheque to anyone; I would be the last person to do that. I hope that the Minister will understand that that is the last thing that we on this side of the House want to do. There is not adequate protection in the Bill, which is an important problem. We feel obliged to insist on that at some point. Obviously, I want to try to be reasonable; the Government want the Bill, and we support the Bill in principle. I hope that, over what may be a fairly short period of time in the next few days, we may find some way of agreeing.
I shall withdraw the amendment, I shall put it down for Third Reading, and in the mean time we shall see whether we can have any conversations that allow us to come to some agreement. I see that the Minister wishes to rise.
My Lords, before the noble Lord sits down, of course I am only too prepared to discuss this issue further. He will recognise that we have a significant difference over this point. If it is a question of an element of misinterpretation, we may make progress. I shall be only too pleased to meet him.
had given notice of his intention to move Amendment No. 6:
Page 98, line 20, at end insert—
:TITLE3:"Consequential amendment to the 1993 Act
In section 21 of the 1993 Act, at the end of subsection (1) (which gives the Office of Rail Regulation the power to prepare model clauses for access agreements), insert "including a model clause providing for compensation for or mitigation of the effects of an access charges review under Schedule 4A."
My Lords, so far as Amendments Nos. 5 and 6, which are in my name, are concerned, we wait to hear the outcome of the discussions with the noble Viscount, Lord Astor. We will reconsider them at Third Reading.
moved Amendment No. 7:
Page 12, line 10, at end insert—
"(1A) An Executive, that has been consulted under subsection (1) in relation to a franchise agreement where the services to be provided under the agreement are or include services for the carriage of passengers by railway within the passenger transport area of that Executive, may, before the expiry of a period of 60 days following the date on which that consultation began, make a statement to the Secretary of State specifying—
(a) the services for the carriage of passengers by railway which the Passenger Transport Authority for the area in question considers it appropriate to secure to meet any public transport requirements within that area, so far as relating to the provision of services of the same description as those to be provided under the franchise agreement in question;
(b) any minimum level of quality to which any services so specified are to be provided;
(c) any requirements with respect to the fares to be charged to persons using any services so specified; and
(d) any minimum level of quality with respect to the operation of any station within the area in question which may be required by any such franchise agreement.
(1B) Where a Passenger Transport Executive for an area in England submits a statement under subsection (1A), the Secretary of State shall ensure that the services, and any minimum levels of quality or requirements with respect to fares, specified in that statement are provided for in any franchise agreement into which he may enter in respect of the services in which the Executive have an interest.
(1C) The Secretary of State need not do anything under subsection (1B) if or to the extent that it would—
(a) have an adverse effect on the provision of services for the carriage of passengers or goods by railway (whether inside or outside the area in question); or
(b) increase the amount of any expenditure of the Secretary of State in respect of railways under agreements or any other arrangements entered into with any franchise operator, any franchisee, or any servant, agent of independent contractor of a franchise operator or franchisee, and the Secretary of State considers that the Executive would not fund that increased expenditure."
My Lords, in moving Amendment No. 7, which stands in my name and those of other noble Lords, I shall speak also to Amendments Nos. 8, 9 and 10.
We have, of course, been here before. At Second Reading, I drew attention to the concerns of passenger transport executives—PTEs—about the Bill's effects on their ability to ensure that the public transport needs of their areas are met. In pressing their case for what these amendments now seek to achieve I was supported by, among other noble Lords, my noble friends Lord Burlison and Lord Faulkner and the noble Baroness, Lady Scott, speaking for the Liberal Democrats.
The PTEs' case won further strong support in Grand Committee—when regrettably I was hors de combat—and notably from the noble Lord, Lord Bradshaw, who initiated the debate there on
I found two of their speeches deeply evocative. First, that of the noble Lord, Lord Bradshaw, who with his long involvement in public passenger transport management, paid warm tribute to the memory of the redoubtable Lord Sefton of Garston. He said:
"I was divisional manager in Liverpool in 1973, when the Merseyside PTE built the loop and link system . . . That came about through the energies of Bill Sefton, who then became Lord Sefton and who as PTE chairman went to Downing Street and banged on the door and got the money".—[Official Report, 3/3/05; col. GC160.]
Some 22 years before then, Bill Sefton was my parliamentary agent when, as Labour's youngest candidate in the 1951 general election, I contested the Garston division of Liverpool. The kindly tribute made by the noble Lord, Lord Bradshaw, to Bill's achievements in this policy area left me reflecting on how extremely serious it would have been for the people of Merseyside had his mission to Downing Street failed.
Perhaps I could leave it to the noble Lord, Lord Bradshaw, to explain just how fortunate those who instructed this Bill's draftsmen are that my late and still widely mourned parliamentary agent is not here to back these amendments today.
The other speech I found so evocative was that of my noble friend Lord Snape. I have known him as someone well worth listening to on public transport issues since the 1970s. Not only did he work on the railways from boyhood, but he was involved in them from birth. His father, whom I also knew well, was a highly regarded representative of railwaymen.
The speech made by my noble friend in Committee exploded the myth that the Bill as now drafted would speed up negotiations between franchisees and PTEs. In truth, as he said, it would considerably prolong them. He was demonstrably right also to stress that, in sharp contrast to the pledge in last year's White Paper to devolve responsibilities to the PTEs, decision-making would be centralised rather than devolved.
That contrast is highlighted by the publication this morning of the Commons' Transport Committee's report on light rail, with its pointed criticism of current limits on local power outside London to control local bus services. The report says they have,
"hindered the development of integrated transport systems".
The Select Committee calls for more local decision-making, not less, to secure integration; and the rights of PTEs to prescribe their own rail services are a prerequisite of successful integration. Surely none of us here wants now to compound the problems so clearly identified by the Select Committee.
It is because the case made for the amendments at Second Reading was so strongly reinforced in Committee that it need not be restated at length today. We debate them now, however, in a much different parliamentary setting. I refer to the imminence of a general election, and the involvement of all parties in deciding which of the Bills currently before Parliament can still by agreement be enacted in the days left before dissolution.
Thus we need to know today, in detail and in this debate, not only the Government's position on the Bill's future—which I am sure will be clearly stated by my noble friend Lord Davies—but that of each of the Opposition parties. Is the Government's position that they will withdraw the Bill if these amendments are carried, or simply that they would prefer the Bill not to include them? Are the other parties determined not to allow the Bill to become law without them? We need to know exactly where we stand with all parties in advance of the haggling soon to begin.
I am now in my fourteenth Parliament and, as a Front-Bencher for 23 of my 33 years in the House of Commons, I had much direct involvement in pre-dissolution haggling. Time and again over the years I heard junior Ministers threaten to drop Bills rather than accept amendments, only to be left eating their own words on instruction from on high. The essential needs always are for candour and clarity from all parties; and never were they needed more than in the case of these amendments today.
Amendment No. 7 would introduce three new sub-sections into Clause 13 to preserve current PTE powers to specify local rail services, and to have them incorporated in franchise agreements. One serious concern about the Bill is that, despite repeated assurances by Ministers to consult them, there is still nothing in its provisions to ensure that the views of PTEs will be taken into account or worked into franchise agreements.
Amendment No. 10 makes it clear that a PTE may not specify services for franchises that include services only to and from its own area. This clarification was made in direct response to the concerns raised by the Minister in another place, and I trust that my noble friend will accept it.
Amendment No. 8 would preserve PTEs' existing powers to be parties to franchise agreements. When this issue was addressed in Committee the Government's response was totally unconvincing. It was based on a mistaken assumption that co-signatory status for PTEs involved additional costs and complexities that would outweigh the benefits of PTE involvement. The outcome has been further to increase all-party support for the amendment.
Co-signatory status on rail franchise agreements is crucial in providing PTEs with important rights of benefit to passengers. They include: the right to consultation on service changes; the right to approve increases in local fares above regulated levels; the right to require participation in multi-modal ticketing schemes, integrated transport schemes and concessionary travel arrangements; the right to receive performance information on punctuality, cancellations and provision of capacity; and the right to be consulted on de-staffing of local stations and improvements to access for disabled people.
Amendment No. 9 deals with disputes and the need to preserve current statutory provision for the Secretary of State to disapply the Strategic Rail Authority's obligations and PTEs' rights under Section 34 of the Railways Act 1993 where any dispute is referred to him. Again, this amendment is in response to concern expressed at the Bill's earlier stages and bears further testimony to the readiness of PTEs to listen and respond reasonably.
Taken together, the amendments would allow PTEs to vouchsafe the best possible transport services for their areas. Failure to accept them would gravely damage their ability to do so.
Yet there is a further compelling reason for these amendments to be accepted. I refer to the proceedings on the Bill in another place on
"unceremoniously dumped in the wheely-bins of Westminster".
Thus the only way for Greater Manchester MPs to have any say on an issue of such high importance to thousands of their constituents is for these amendments to be incorporated in the Bill as it returns to the House of Commons.
Nothing could explain more succinctly, or more starkly, the importance of the role of this House vis-à-vis the Bill. I hope the amendments can be accepted, not after haggling behind closed doors but here, by open agreement, on the Floor of the House of Lords today. I beg to move.
My Lords, I support very warmly what has been said by the noble Lord. I am also grateful for his tributes to Bill Sefton, who was known to me over a long period as someone who avidly worked—I mean worked—for the people of Merseyside and would never accept so much as a cheese sandwich in response to all his efforts. He was a true public servant of the sort that we should all try to emulate.
The amendment goes to the very heart of what we are talking about—local decision-making of people elected by people who live away from London. It is essential that we build on local decision-making. We must also appreciate that those people will become funders of railway services as well as designers. I think that it was Wilkes who said, "No taxation without representation", which holds very firm. If they are going to pay, they should be co-signatories. I cannot see what the Secretary of State is doing in trying to take away from people the right to have their say and actually be co-signatories to a franchise agreement that affects them intimately. We in Westminster are not talking about somewhere remote up in Manchester or Leeds; if you happen to live there, it is your train service that is affected, not something that is 200, 300 or 400 miles away. I cannot see why the Secretary of State wishes to be so intimately involved with those franchises.
Earlier this afternoon, I was talking to a member of the Greater Manchester PTE. He said, "In the negotiations with the franchise-holders of the Northern Rail franchise, if we were not co-signatories we would not be at the table talking to them about punctuality, reliability, stations and collecting fares". You need not only someone who pays, but someone who is your gamekeeper on the spot to see that the large sums of money dispensed are actually spent on what people want. I am at a loss to understand why the Government resist that so much.
I do not know whether the noble Lord proposes to press the amendment to a vote today. He is no doubt aware that, if he does so, he will have the support of noble Lords on these Benches, as the noble Baroness, Lady Scott of Needham Market, said earlier. I promise that, if he chooses to wait until Third Reading in the hope that Ministers will reflect on what he has to say, he will be supported then; he may be able to muster more troops to support him. If people will listen to the arguments rather than just be shepherded through the Lobbies, they will understand the strength of feeling about the issue.
Through their long history, the PTEs have been very good at investing money in the railway. When there has been a famine of investment, they have often been the one body producing new stations, rolling stock and ideas. They are a force for good. Occasionally Ministers may be irritated by the likes of the Strathclyde PTE in 1997 playing political games to hold up a couple of franchises, but that is not the usual way in which they behave. In a spirit of compromise, could the Minister not even allow the PTEs to be co-signatories and say to them, "You'll get so long to sign. If you hang up your signature for a year or two years, you cannot expect to be co-signatories. However, if you come forward to negotiations and sign at the end of them, you should be co-signatories. You should be the people who represent the local users of the service and determine whether the taxpayer is getting value for money"?
This is a signal issue that puts on trial the Secretary of State's real wishes about whether he wants a railway that we all own, or one that is governed only by the people over there in Marsham Street.
My Lords, I support my noble friend Lord Morris of Manchester in bringing forward the amendments. I agree very much with what he seeks to achieve, and I too urge the Minister to consider that the changes be incorporated in the Bill this afternoon. I would like to make two short contributions on the issues of service specification and rail franchise co-signatory status.
I maintain that the Government should not be removing PTE specification powers and centralising decisions on local rail services within the Department for Transport. The PTEs do not accept the Government's view that—I quote the Minister's words at Second Reading—the present arrangements for PTEs,
"give responsibility without the commensurate accountability".—[Hansard, 10/2/05; col. 931.]
It has been difficult for the Government to dig up examples of how PTEs have required changes to specifications that have led to increased costs. I have heard only one such example—the extreme case involving the new rolling stock in West Yorkshire PTE.
PTEs have no right for their increased franchise payments to be reimbursed through SRA grant or through any other funding channel. Indeed, it has been made clear that any increase in services required by a PTE at any time will not be funded by the SRA unless expressly approved. It has also been made clear that PTE rail funding may in future be reduced, which would leave PTEs to meet rail costs themselves if they chose not to reduce services accordingly.
In both the west Midlands and west Yorkshire, the PTEs have directly funded the provision of additional rolling stock above the level at which the SRA would otherwise have funded it. So, it is nonsense to suggest that the PTEs make all sorts of wild and unreasonable requests, leaving others to pick up the tab. I hope that my noble friend the Minister is prepared to concede that point and to accept the amendments.
I fail to understand the Government's position on rail franchise co-signatory arrangements. Replacing the existing rights of PTEs to change services and fares with separately negotiated contracts for individual service changes does not reduce complexity or bureaucracy. It simply does not. If the Bill were to pass into law as drafted, PTEs would have to support local rail services by way of separate contractual arrangements with the Secretary of State and with franchisees. Surely, anyone can see that that would result in additional contractual complexity and inefficiency while weakening the PTEs' contractual position.
How would it work in practice? In the case of the northern franchise, it would have resulted in the franchisee entering into five additional contracts, each potentially relating to different aspects of the franchised services, in place of a single "all parties" agreement. The scope for contractual conflicts is substantial and the additional administrative burden and bureaucracy immense.
The PTEs have accepted the assurances that they will remain co-signatories to current franchise agreements, although the northern franchise is to be subject to review in the light of a proposed significant re-specification in 2006. However, Clause 14(3)(a) would give the SRA the contractual right to remove PTEs from the northern franchise agreement within three months of the legislation coming into force, irrespective of the position of the Minister. To date, the SRA has given no assurance that it would not seek to exercise that contractual right. What are the PTEs to make of that? Can my noble friend the Minister give the PTEs that categorical assurance this afternoon?
I hope that the powerful case made at every stage during the progress of the Bill will convince the Minister of the strength of feeling on these issues. I fear that I may have spoken for longer than I had intended, but I hope that the arguments put forward today and at earlier stages by noble Lords from all parts of the House will find favour with the Government, and I urge them to accept the amendments.
My Lords, I start by declaring an interest as an employee of the National Express Group. I do not wish to detain your Lordships for more than a few moments, because the matter was debated extensively in Committee. I am grateful to my noble friend Lord Morris of Manchester for his kind words about my contribution at that stage.
Governments regularly do things that many of us in this House and the other place find baffling. We are, of course, expected to support the government to whom we give our political allegiance, although we may be baffled, but I must confess that I cannot understand the Government's view of this matter. A government who profess to want to listen to the voice of local democracy should not behave in this way regarding PTEs.
I make no special claim to any greater experience than anyone else in your Lordships' House. Although I have been here only a short time, I am aware of the danger of so doing. But I pointed out in Committee—I do not wish to repeat anything that I said there—that, as an employee of the National Express Group, I joined the team that was successful in gaining the Central Trains franchise eight or nine years ago, and we were subjected to some thorough cross-examination by PTE and PTA members at that time.
I can also claim, as my noble friend reminded me, that I was, although it was 30 years ago, a member of the somewhat clumsily named, South East Lancashire and North East Cheshire PTA. Again, at that time, in the aftermath of many of the cutbacks of the Beeching era, that PTA in that area fought not just to preserve the local services that remained, following the ravages of the good or not-so-good Dr Beeching, but to increase those services. We are seeing a similar pattern emerge throughout the PTE areas in the United Kingdom.
North of the Border, where the Scots have their own Executive and PTE—perhaps they are doubly blessed—there has been enormous progress towards reopening long-closed stretches of railway line. Indeed, in the past few weeks, the wide-scale reopening of the Waverley line has been announced. Are we seriously considering that such advances would be made if these matters were left to the Department for Transport—whatever it is called, wherever it is based and whichever government is in power? I doubt that such a happy situation would come about in those circumstances. Sometimes it seems to me that Ministers, in whatever government, and their civil servants, regardless of government, are most concerned to see that their own services, inevitably based in London and the south-east, are not just preserved, but extended. That fleet of ministerial cars does not just bring Ministers to their departments, it brings many civil servants, and it can regularly be seen parked outside main line stations in this city.
Yet, as the noble Lord, Lord Bradshaw, reminded us, matters outside London are all too often seen as being "somewhere else" and "someone else's problem". Yet, the very people whose voices should be heard in the planning and expansion of their rail services will, if the Government fail to accept the amendments, not be heard. Their experiences will be discounted and, despite being answerable to their electorates, they will obviously play no part in the planning of rail services in their areas.
I cannot believe that that is what my noble friend on the Front Bench believes, although I do not know what it might say in the brief that he must deliver on behalf of the department. My noble friend and I have been friends for many years—although I might be straining that bond by my comments. After all, if I remember correctly, we were founder members of a football team in the other place. I might well receive a good kicking as a result of my contribution today. Seriously, I cannot believe that a Labour Government can behave in this way towards passenger transport executives, who have brought not only their money and expertise to local rail services in their areas—throughout the UK—but have brought the wishes of their electors to bear in improving those rail services.
I am not sure what my noble friend's intentions are with regard to the amendment. However, whether or not the negotiations, about which I continue to hear a great deal, take place in the next few days, I hope that the Government will look again at the matter and ensure that the voice of local democracy is not only heard but is preserved for the future.
My Lords, I did not realise that the noble Lord, Lord Snape, and the Minister were such famous footballers. I hope that the Minister is not about to score an own-goal—probably for the first time. I hesitated to rise in an internal Labour debate, but as the noble Lord, Lord Bradshaw, intervened perhaps I should.
The Government's position is correctly described as "baffling". When we discussed the matter in Grand Committee, a number of points were made. On re-reading the debate, I realise that I had not gained a clear understanding of the Government's position. I do not understand why they do not want PTEs to be co-signatories of franchises which they are part funding. I do not understand the explanation.
There have been criticisms of PTEs. Some train operating companies have said that PTEs exacerbate the situation and make it more difficult for a service to be established. They say that negotiations take longer, the procedure does not work and it mucks up the system. Equally, there have been criticisms by those who represent passengers that PTEs do not do enough. Under the Bill, a rail passengers council will be created and the rail passenger's committee will be abolished. There are genuine criticisms of PTEs.
I shall listen carefully to what the Minister says. I am sympathetic to the point made by the noble Lord, Lord Morris of Manchester. I am not yet 100 per cent convinced because I want to hear what the Government say. Perhaps I am as baffled as anyone about where they are coming from because it seems that they are taking away local responsibility and centralising it.
The noble Lord, Lord Bradshaw, made an interesting point suggesting a period of time after which, if PTEs are not co-signatories, they would drop out of the loop. I shall be interested to hear the Minister's views on that suggestion: on when consultation starts and stops. There may be a way through and perhaps it should be discussed between now and Third Reading. I do not know what the noble Lord, Lord Morris, intends to do and we will listen closely. We have not yet been quite convinced by the Minister's replies, but we have some genuine questions which need answering before I can say to the noble Lord, Lord Morris, that we will march through the Division Lobbies. And looking behind me, perhaps I may suggest to him that I do not have quite as many passengers in the carriage behind me as I need to get there. One would need to fill the train first. I look forward to the Minister's response.
My Lords, I intend to intervene only briefly. I fully support the remarks made by my noble friends Lord Morris of Manchester, Lord Burlison and Lord Snape and the noble Lord, Lord Bradshaw. In Grand Committee, we had a good debate about the role of the PTEs and their achievements and I do not want to go over that ground again.
There is one aspect of the Government's approach which I find most puzzling. If the PTEs had demonstrably failed the people they exist to serve, if they had not provided new rail services, if they had not opened up new opportunities for people to travel by train and to leave their cars at home, and if they had provided a service which recorded huge levels of dissatisfaction among the public, one could understand why the Government would want to take away their powers as co-signatories to franchises. However, it is demonstrably not the case that they have failed.
As the noble Viscount says, there have been some irritations on the part of train operating companies over the speed with which some of the franchises have been signed. That is normally because the PTEs are attempting to wring out of the franchisees—the train operating companies—a higher level of service than that which they wanted to provide. An example is the delay of the signing of the Scottish franchise and the wish of the Strathclyde PTE to continue the service of through trains between Glasgow and Leeds—an aspiration with which I have considerable sympathy.
One should look at the record elsewhere. Last week, I was in west Yorkshire and saw the Airedale line at first hand. It has benefited from new rolling stock and has achieved huge increases in ridership. Now 75 per cent of the people travelling to Leeds in that corridor do so by train as a result of the improved service, the re-opening of stations, increased safety at stations and an attractive package of fares. That is the kind of railway service which we should be encouraging. I am afraid that if the co-signatory powers are removed, it will be much more difficult to achieve that.
I hope that my noble friend will take account of what has been said today and of what was said in Grand Committee. I hope that in the final stages of the Bill he will indicate that the Government accept the logic of what we have all been saying.
My Lords, to paraphrase the old saying, I can look after the Opposition but God protect me from my friends! This has been an interesting debate and we have gone over much of the ground we covered in Committee. The points of difference remain between us but not because in any way I seek to gainsay the achievements and activities of PTEs. That is not the nature of the argument. As my noble friend Lord Morris would recognise, I would be the last person to decry past achievements, including those on Merseyside by Lord Sefton who was responsible for that area when in local government. I recognise those achievements, but I want to put the role of the PTEs into a new context which is envisaged by the Bill.
The Government are altering the current rail arrangements with respect to PTEs because the current system was built for a different time and does not fit with the ambitions set out in the rail White Paper. The Government are attempting to build a structure which works for the future and not to recreate the past. If I can express it pithily, forward not back. Crucial to the structure set out in the rail White Paper, the Secretary of State will be responsible for setting the strategic direction and the amount of national funding which will be invested in the railways. The system which the PTEs are seeking to retain cuts across that structure.
That is not to deny the PTEs having a role within the new structure and I shall delineate that role in a moment. However, I want to demolish the notion that within the new framework it would be appropriate to retain the PTEs and their powers as they were. Of course we are sympathetic to the concerns of passenger transport executives. When the rail White Paper was published in July last year, it was announced that the PTEs would not be a direct party to franchise agreements under any circumstances. However, before the Bill was introduced in November, the Government, having listened to the arguments of the PTEs, concluded that it should include a provision, which we now have, to allow the PTEs to be party to franchise agreements at the invitation of the Secretary of State.
Our problem is straightforward. The amendment which my noble friend proposes would allow passenger transport executives to dictate to the Secretary of State, who is responsible for rail across the whole country, what services should be provided in their area. I recognise that there is some protection against that as subsection (1C) of the amendment allows the Secretary of State not to take on board those proposals if it would,
"have an adverse effect on the provision of services for the carriage of passengers or goods by railway", or if it would increase the amount of expenditure on the railways. However—and this is the crucial point—it would be for the Secretary of State to prove that these tests had been met. If it was disputed by the PTE, we could end up in protracted negotiations which could, ultimately, have to be decided by a court. Delay costs money—taxpayers' money—and we are eager to reduce those costs.
The new provisions are based on the premise that what we had in the past was an adversarial arrangement which would perpetuate and exacerbate the old system, in which some PTEs have used the fact that they have to co-sign a franchise before it can be let as a powerful lever in their negotiations with the SRA. I reassure my noble friend Lord Burlison that there is no question of the PTE for the northern franchise being excluded from that position until a review is completed. There is no question of peremptory action in those terms. But that powerful lever has been used by PTEs in their negotiations with the SRA, and we do not want that replicated in respect of the Secretary of State.
We should be aware of the extent to which PTEs have made significant contributions in the past, and we want them to continue with those contributions, but within a new framework, based not on the adversarial relationship but one in which there is co-operation and a partnership approach, with clear financial accountability for decisions taken. The new system set out in the White Paper matches responsibility with accountability. The Secretary of State will consult the PTEs before issuing an invitation to tender for any franchise that includes services to, from or within a PTE's area. Therefore, the PTEs will have a clear opportunity to set out the needs and ambitions of their areas and the Secretary of State will be required to balance the needs of the PTEs with the needs of the wider franchise and the wider network, which is something that the PTEs have neither the ability nor the responsibility to do. That is the Secretary of State's responsibility, and his role as a funder for the majority of the system. He also has accountability to Parliament for the overall strategy and development with regard to the railway, which has been the subject of debates under previous amendments this afternoon.
Once the baseline specification for a franchise, including services in PTE areas, has been set, the PTEs will also have the right to amend the services in their areas—buying additional services or reducing services or retaining the services. That will give PTEs the flexibility to make choices about the balance of transport in their areas, and allow them to make rational decisions based on financial accountability. I contend that that is a clear improvement on the present system.
My Lords, is what the Minister has just outlined almost like saying that the Secretary of State will say, "Look, there is this much money available, I know it is less than you want, and what you will effectively be given the job of doing is to decide what bus substitution will replace railway services"? Is not that what he has just said?
My Lords, I have not said that at all—it will be for the PTE to decide. Of course, it may in some circumstances reach the decision that a bus system is preferable to rail. PTEs have done that in the past, under the existing structure, and there is nothing about the amendment, if it were passed and inserted into the Bill, that would change that position.
Let me make it clear that we are not talking about investment in the system. It is not the case that with PTEs and the present structure there will be the capacity for greater investment in the system, and under our system, when the Secretary of State assumes responsibility—but in fact is concerned to consult PTEs—that investment will thereby be reduced. I hear what the noble Lord, Lord Bradshaw, is suggesting, which is the pejorative view of the situation—that it leads to closure. Why should it?
As my noble friends have articulated, PTEs are extremely good at defining the priorities of their areas and, in circumstances when they have done so in the past and will continue to be able to do in future, at expanding services when they are prepared to meet costs. But that is the basis of financial accountability. It surely cannot be contended that it is a rational system in which people can take decisions and the national taxpayer must pick up the tab, regardless of what those decisions are.
My Lords, before my noble friend leaves that point, can he tell me what the difference is between a PTE agreeing to spend some of its own resources on providing better rail services and that PTE having the right to say to a franchisee that it should provide the services, provided they could come to some agreement? What is the basis of his view that PTEs can do the one thing but should not be allowed to do the other?
My Lords, PTEs can do that because the franchise is wider than just that particular provision. The Secretary of State has responsibility with regard to the overall franchise. What has happened in the past, as my noble friend will recognise, is that PTEs as co-signatories have been able to indicate that unless certain requirements have been met, their co-signature will not be forthcoming. Effectively, there can operate a degree of veto, while not having the overall responsibility for the consequences of that franchise not having been achieved. The responsibility for that—as envisaged in the whole of the Bill; indeed, it is what the Bill is about—is the responsibility of the Secretary of State.
Within this framework the Government are not seeking to reduce the constructive role of the PTEs. We all recognise the virtue and value of local contributions in those terms. That is why I am hopeful that my noble friend will withdraw his amendment. The old system produced a degree of adversarial challenge about the allocation of resources and decisions, while the new system is based on co-operation and partnership. It is on that basis that we intend to go forward.
My Lords, there is a specific clause with regard to Transport for London and extending the area of its authority, as the noble Viscount will recognise. In the concept of the Bill, what is being envisaged is a system in which there is an effective partnership with those with local responsibilities. On that basis, I hope that my noble friend will recognise the virtues of that and withdraw his amendment.
My Lords, I am deeply grateful to have received the wide-ranging support of so many of my colleagues for the amendments. I am grateful also to the noble Lords opposite who contributed to the debate. It has been an informed one reflecting considerable credit on this House.
Noble Lords were virtually unanimous in supporting the PTEs' case. That must have been noted by my noble friend Lord Davies, and I hope it will be urgently communicated to his ministerial colleagues.
Indications I have had during the debate are that there may be some value in further consultation between us before proceedings on the Bill are concluded. I very much hope that a settlement can be achieved that the PTEs can accept and that we can honourably put to them as worthy as acceptance. On that basis, I beg leave to withdraw the amendment.
moved Amendment No. 11:
After Clause 13, insert the following new clause—
(a) issuing an invitation to tender for a franchise agreement in a case in which the services to be provided under the agreement are to include services in which a Passenger Transport Executive for an area in Scotland has an interest, or
(b) entering into a franchise agreement in respect of such services in a case in which no such invitation has been issued, the Scottish Ministers must consult the Passenger Transport Executive for that area.
(2) For the purposes of subsection (1), the services in which a Passenger Transport Executive has an interest are—
(a) services for the carriage of passengers by railway within the passenger transport area of that Executive; and
(b) services which are not such services but are services for the carriage of passengers by railway to or from such an area.
(3) A Passenger Transport Executive for a passenger transport area in Scotland and the Scottish Ministers may enter into arrangements under which one or both of the following occurs—
(a) sums become due from the Executive to the Scottish Ministers in respect of services for the carriage of passengers by railway within that area or in respect of station services or bus substitution services provided within that area; and
(b) the Scottish Ministers undertake to exercise or perform their powers and duties in relation to or in connection with such services in a particular way.
(4) A Passenger Transport Executive for a passenger transport area in Scotland may enter into agreements for purposes relating to or connected with the provisions, by a person who is a franchisee or franchise operator in relation to a franchise agreement, of—
(a) services for the carriage of passengers by railway within that area; and
(b) station services provided for purposes connected with any such services.
(5) A Passenger Transport Executive for a passenger transport area in Scotland may not enter into an agreement (whether by virtue of subsection (4) or otherwise)—
(a) with a person who is a franchisee or franchise operator in relation to a franchise agreement, or
(b) with a person who is proposing to become such a franchisee or franchise operator, unless the agreement is approved by the Scottish Ministers.
(6) The Scottish Minister may—
(a) give a general approval for the purposes of subsection (5) in relation to a description of agreements, as well as specific approvals for particular agreements; and
(b) withdraw their approval in relation to any agreement at any time before the agreement is entered into.
(7) The agreements to which a Passenger Transport Executive for a passenger transport area in Scotland may become a party with the approval of the Scottish Ministers include franchise agreements under which services are provided which are or include services for the carriage of passengers by railway within that area.
(8) The Scottish Ministers and the Passenger Transport Executive for a passenger transport area in Scotland must each provide to the other any information which—
(a) the other reasonably requires for purposes connected with their functions in relation to railways or railway services; and
(b) is information which it would have been lawful for them to disclose apart from this subsection.
(9) In this section—
(a) a reference to a Passenger Transport Executive is to a Passenger Transport Executive in Scotland established under the Transport Act 1968, or to any successor body to such a Passenger Transport Executive established by any Act of the Scottish Parliament or by any Order of the Scottish Ministers or other responsible body;
(b) a reference to a passenger transport area is to an area so designated in terms of the Transport Act 1968, or to the area covered by any successor body under the relevant provisions of any Act of the Scottish Parliament or of any Order of the Scottish Ministers or other responsible body;
(c) a reference to a service for the carriage of passengers by railway within a passenger transport area is a reference to a service for the carriage of passengers by railway between places in that area or between places in that area and places outside it which are within the permitted distance;
(d) a reference to station services provided within such an area is a reference to station services provided in connection with any such service for the carriage of passengers by railway; and
(e) a reference to a bus substitution service provided within such an area is a reference to a bus substitution service for the carriage of passengers between places in that area or between places in that area and places outside it which are within the permitted distance; and in this subsection "the permitted distance" has the same meaning as in section 10(1)(ii) of the Transport Act 1968 (c. 73) (twenty-five miles)."
My Lords, Amendment No. 11 concerns the railway functions of passenger transport executives in Scotland. Before anyone rises to their feet to say that there is only one PTE, we are of course legislating for the future. This legislation is presumably for the future, and so we must take this opportunity, although at present there is obviously only one PTE—that is, Strathclyde.
The amendment has been discussed with my honourable Scottish friend Nicol Stephen, the Minister for Transport in Scotland, who has told us that he is content with it. Such an amendment to the Bill would have the merit of enlarging, and completing the logic of, executive devolution of rail activities to Scottish Ministers.
The purpose of the amendment is to transfer legislative responsibility for PTEs in Scotland to the Scottish Parliament. Not to do so would mean that the Bill would create a constitutional anomaly—and a clumsy one at that—which we should aim to avoid. The anomaly would be that if, in future, Scottish Ministers wanted to alter the relationship with SPTE or any other PTEs which may evolve, they would have to seek parliamentary time for their legislation here in Westminster rather than legislating in the Scottish Parliament.
Straightforwardly, this evening we need to hear from the Minister an assurance that Clause 14 will not be commenced for Scotland until Scottish Ministers have secured the order transferring responsibility for SPTE to Scottish Ministers. I beg to move.
My Lords, the noble Earl made an interesting comment when he introduced the amendment. He said that he had had conversations with Mr Nicol Stephen, who, as we know, is the Scottish Minister for Transport, and that Mr Stephen was content with the amendment. That is not quite the same as saying that that is the considered position of the Scottish Executive. I wonder whether it would be possible for the noble Earl to clarify the position of the Scottish Executive, because there is of course a totally different route through which this process should progress.
My Lords, I am grateful to the noble Earl, Lord Mar and Kellie, for explaining the concept behind Amendment No. 11. He is correct that the Bill as drafted has provisions which apply to English PTEs but not to the Scottish PTE. However, that reflects the different policy approaches taken in England and Scotland.
The provisions in Scotland were developed in consultation with the Scottish Executive and reflect the policy approach that Scottish Ministers have decided to take. Nicol Stephen wrote to Alistair Darling only last week to reiterate that the provisions in the Bill relating to Scottish PTEs were what Scottish Ministers wanted. We have ensured that that letter has been placed in the Library of the House. It would seem very much against the spirit of devolution to force Scottish Ministers to accept provisions relating to PTEs in Scotland that they did not want.
I heard what the noble Earl said about his view of where Nicol Stephen stands on this matter, but we are working from our latest consultation, which my noble friend Lord Sewel also commented on in passing. We are working on the basis of a letter, which is available for scrutiny by all Members.
However, I recognise that there is an element of difficulty in this area and that there may have been cross currents in the discussions that have taken place. Therefore, I want to assure the noble Earl on the salient point that he made in asking me about this matter. The ability to commence the provisions of the Bill in Scotland at a different time from that in England and Wales includes Clause 14, as he wished. I can confirm that Ministers intend to commence Clause 14 in Scotland only once the Transport (Scotland) Bill and the following order have passed through the Scottish Parliament. The Secretary of State wrote to the Scottish Minister for Transport on
moved Amendment No. 13:
After Clause 42, insert the following new clause—
(1) The Secretary of State must lay before each House of Parliament a copy of any guidance or revised guidance, or modifications of guidance, which he publishes or makes (whether or not jointly with any other person) under section 42.
(2) The Scottish Ministers must lay before the Scottish Parliament a copy of any guidance or revised guidance, or modifications of guidance, which they publish or make (whether or not jointly with any other person) under that section.
(3) Any guidance or revised guidance published under section 42 is to have effect, and any modifications of guidance made under that section are to have effect, in accordance with an order made—
(a) if subsection (1) applies in relation to the guidance or modifications, by the Secretary of State,
(b) if subsection (2) applies in relation to the guidance or modifications, by the Scottish Ministers, and
(c) if both subsections (1) and (2) apply in relation to the guidance or modifications, jointly by the Secretary of State and the Scottish Ministers.
(4) An order under subsection (3) which relates to guidance or revised guidance published, or modifications of guidance made, by the National Assembly for Wales jointly with the Secretary of State or the Scottish Ministers, or both of them, may be made only with the consent of the National Assembly for Wales.
(5) An order under subsection (3) is subject to the negative resolution procedure.
(6) If a statutory instrument containing an order under subsection (3) is annulled—
(a) the guidance or revised guidance, or modifications of guidance, to which it relates is, or are, treated as having been withdrawn, and
(b) where revised guidance or modifications is or are so withdrawn, any guidance published under section 42 which had effect before the publication of the revised guidance or the making of the modifications is to continue to have effect.
(7) The withdrawal of guidance or revised guidance or modifications of guidance under subsection (6)—
(a) does not affect anything done in consequence of the guidance before the withdrawal, and
(b) does not preclude the publication of further guidance or revised guidance or the making of further modifications."
My Lords, in moving Amendment No. 13, I shall also speak to the other two government amendments in this group. Subsections (1) and (2) of the new clause introduced by Amendment No. 13 require that any closures guidance, or revisions to it, must be laid before both Houses of this Parliament, as well as the Scottish Parliament, as appropriate, depending on whether the Secretary of State or Scottish Ministers or both have a duty to publish the guidance under Clause 42. A draft of the guidance, or the modifications to existing guidance, will already have been consulted on. The document laid before the Parliaments will be the final version, incorporating, as appropriate, any comments made in the course of consultation.
For the closures guidance or modifications to have effect, subsection (3) of the new clause provides that that can be done only in accordance with an order made by the Secretary of State or Scottish Ministers or the two jointly—again, depending on who has the duty to publish the guidance under Clause 42.
Of course, the National Assembly for Wales also has a role in publishing joint closures guidance under Clause 42; for example, in relation to Welsh services. Where that is the case, the order bringing the guidance into force can be made only with the consent of the Assembly. Orders made by the Secretary of State or Scottish Ministers or both under subsection (3) are subject to the negative resolution procedure. The Government believe that this is more appropriate than an affirmative resolution in these circumstances, given that there will already have been a wide-ranging public consultation on the draft closures guidance or modifications to it.
Should the order made under subsection (3) be annulled by either House of Parliament or the Scottish Parliament, then the closures guidance, or modifications to which the order relates, is treated as having been withdrawn. In those circumstances, any existing guidance would remain extant. The Secretary of State, Scottish Ministers and the National Assembly for Wales would have to reconsider the closures guidance or modifications to it.
From the above, I hope it is clear that this amendment fully meets the Delegated Powers and Regulatory Reform Committee's recommendation; it provides for parliamentary control over the closures guidance and modifications to it both in Westminster and in Holyrood.
I would suggest that the Government's amendment has a number of advantages that are not found in the approach proposed in Amendment No. 12, which the noble Lord, Lord Bradshaw, declined to move. That amendment would require the guidance to be part of an order. We do not believe that that is appropriate. The closures guidance is essentially a manual, intended to set out practical guidelines about how assessments of closure proposals should be carried out, including the criteria that proposals should meet. It will also include material on how consultations under Schedule 7 to the Bill should be conducted as well as other factors. I believe the House will recognise that it would not be helpful for this guidance manual to be written in the precise language and format that would be required if it were to be part of an order. That is why we have disavowed that approach to the issue.
We just do not believe that an affirmative resolution procedure is appropriate. Clause 42 requires that the closures guidance, and modifications to it, have to be consulted on in draft. For the initial closures guidance, the Government have committed to making this a very extensive exercise, as set out in the note on the closures guidance provided for Members of the Grand Committee.
The consultation will be very extensive. It will include rail operators, including freight operators and their representative organisations, passenger representative groups, freight customers, railway funding authorities, national authorities, local authority representative groups and a number of others. All those with an interest will have an opportunity to feed in their views.
The consultation will take place before the new network modification procedures come into force. I would also expect future modifications to the guidance to go through a similarly comprehensive consultation exercise. I beg to move.
My Lords, we on these Benches welcome the alterations made in response to representations and the fact that there will be parliamentary scrutiny, albeit of the negative, rather than the affirmative, variety. I reserve judgment on that, partly because I wonder how much notice will be taken of the public representations that will no doubt be made following the publication of the Government's closure guidance.
I realise that I have only a draft copy, but there are one or two welcome points in it: for example, it says that cost savings that might arise from withdrawing services or closing parts of the network will be important. It also says that cost savings should be as detailed and as accurate as possible rather than being based on broad averages. Broad averages were used in the Beeching closures and, as a result, the money that it was said would be saved was not saved because broad average costs cover a much wider range of activities that were still considered to be necessary.
There is also provision here for consideration of micro-franchises and other local people running services in the absence not of the main franchisee but of someone else. Another operator could step in to provide the services which otherwise it was proposed to close. In those circumstances, I hope that the Government will consider leasing the track to such an operator on a peppercorn-rent basis or something similar, as operators are never going to be able to take on very large-scale costs.
However, I ask the Minister to ensure that in these assessments care is taken to use plain English which people can understand. I am afraid that I have been associated with the railway for a long time—back to the days of Beeching. I have attended closure proceedings and the obfuscation which surrounded them was manifest. The documentation used in support of them was more to confuse the people rather than to enlighten them. I ask that plain English is used in all these matters so that people can understand what the Government are saying. Otherwise, I welcome the changes made by the Government and I am sure that they will go some way to mitigating the concerns expressed to us.
My Lords, perhaps I may ask my noble friend to clarify the wording—not the intention—of Amendment No. 15. It refers to,
I am sure I have this wrong, but the meaning I take from that wording is that the Secretary of State and the Scottish Ministers can be joined together through a resolution of either a House of this Parliament or of the Scottish Parliament, whereas I would have thought it would require a resolution of this Parliament and—rather than "or"—a resolution of the Scottish Parliament. I accept that I may have misunderstood the whole process.
My Lords, I shall deal with my noble friend's last point first to ensure that I deal with it accurately. When joint guidance is produced, a joint resolution will be required.
My Lords, at this juncture I can only reiterate that on this point we are addressing it on the concept of joint guidance. I thank the noble Lord, Lord Bradshaw, for his welcome of certain crucial features of the draft guidance. I assure him that, of course, further representations will be welcomed and taken on board. He will recognise the areas where he sees some improvements, and I pay tribute to the fact that he identified those weaknesses in Committee and emphasised that it would be advantageous for certain concepts to be identified in different terms. I am grateful to him for that and for his continuing interest in this area.
On the more general issue, he will recognise that I am prepared to accept his plea for plain English. We are all in favour of plain English on all occasions. The problem with plain English at times, as our lawyers are prone to tell us, is that it may not have quite the degree of accuracy that is sometimes necessary, both in legislation and in guidance. I want to reassure the noble Lord. He has laid this complaint presumably against my department, the Department for Transport. In falling short of the highest standards of plain English on occasions, I just say that it is not alone.
Many other departments can be open to this challenge. We all bear the cross which the noble Lord urges us to bear; namely that on occasions we shall get complaints about complexity on issues which are genuinely complex. He will recognise one in particular, which is the whole question of costs and cost-benefit analysis, where jargon creeps in. I agree with the noble Lord that unless the legislation is in plain English he will not be satisfied and I shall not understand it.
moved Amendments Nos. 14 and 15:
Page 57, line 34, leave out "and"
Page 57, line 36, at end insert ", and
On Question, amendments agreed to.