Schedule 1 - Office of Rail Regulation

Railways and Transport Safety Bill – in a Public Bill Committee at 8:55 am on 11th February 2003.

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Photo of John Spellar John Spellar Minister of State (Department for Transport) 8:55 am, 11th February 2003

I beg to move amendment No. 43, in

schedule 1, page 49, line 21, at end insert—

''(cc) has had his estate sequestrated in Scotland or, under Scots law, has made a composition or arrangement with, or granted a trust deed for, his creditors,''.

Photo of Mr Alan Hurst Mr Alan Hurst Labour, Braintree

With this it will be convenient to discuss the following:

Government amendments Nos. 44, 41 and 42.

Government new clause 3—Schedules 1 and 4: sequestration, &c. in Scotland. Mr. Spellar: The amendments reflect the different law on bankruptcy in Scotland as it relates, first, to the Secretary of State's power to dismiss a member of the Office of Rail Regulation and, secondly, to eligibility for appointment to the British Transport Police Authority.

The Enterprise Act 2002 includes new provisions on bankruptcy for England and Wales and introduces bankruptcy restrictions orders. The Bill provides that someone who is subject to a bankruptcy restrictions order may be dismissed from the Office of Rail Regulation. It also provides that someone who is subject to such an order is ineligible for appointment to the British Transport Police Authority. The relevant provisions of the 2002 Act have yet to be commenced, and clauses 70(3)(l) and 108(3)(a) allow transitional provisions on bankruptcy to be made by order, should the provisions relating to the BTPA and the ORR come into force first.

The provisions on bankruptcy restrictions orders in the 2002 Act do not apply to Scotland, and it is for the Scottish Parliament to decide whether to legislate for equivalent provision. For the present, however, the Bill must reflect existing bankruptcy arrangements in Scotland, and it is better to do that in the Bill than through secondary legislation, as currently provided for by clauses 70(2)(m) and 108(3)(b).

Amendment No. 43 sets out the bankruptcy grounds in Scotland on which the Secretary of State may dismiss a member of the Office of Rail Regulation. Amendment No. 44 sets out the bankruptcy grounds in Scotland on which a person would be ineligible for appointment to the British Transport Police Authority. Amendment No. 41 deletes the order-making power to make transitional arrangements on bankruptcy in Scotland in connection with the British Transport Police Authority. In the light of amendment No. 44, that power will no longer be needed. Amendment No. 42

deletes the order-making power to make transitional arrangements on bankruptcy in Scotland in connection with the Office of Rail Regulation. In the light of amendment No. 43, that power will also no longer be needed. New clause 3 sets out how and when ineligibility or liability to removal on the grounds of bankruptcy in Scotland shall cease.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I thank the Minister for his comments and particularly for saying that it would be up to the Scottish Executive to decide whether the provisions of the Enterprise Act 2002 should enter Scottish law. What discussions has his Department had with the responsible body in the Scottish Executive about the prospective timetable? Is it satisfactory to have two different sets of provisions? If the amendments are made, what will be the state of the arrangements in Scotland until the Executive implements the Act?

Photo of John Spellar John Spellar Minister of State (Department for Transport)

I hoped that it was clear from my initial statement that the new bankruptcy provisions do not apply to Scotland. When the Scottish Parliament legislates, we will obviously need to take account of that. At present, however, the Bill must reflect existing provisions on bankruptcy in Scotland. The mechanism by which bankruptcy is enforced does not particularly matter for the purposes of the Bill. What matters is that a bankruptcy decision made under those mechanisms—whatever they are—deals with an individual's qualification to be a member of the Office of Rail Regulation or the British Transport Police Authority. The amendments would take account not just of the difference between Scotland and England, but the potential variation in Scotland, to get to the core of the issue, which is that those who have been adjudged bankrupt should not be allowed to serve on the various boards.

Amendment agreed to.

Question proposed, That this schedule, as amended, be the First schedule to the Bill.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

Schedule 1 is extremely important, and I want to refer first to the remarks of my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) on First Reading.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I thank the Under-Secretary of State for that.

The issue is the replacement of the present rail regulator with the Office of Rail Regulation. My hon. Friend the Member for Westmorland and Lonsdale cited, on Second Reading, the report of the Better Regulation Task Force, and asked:

''Is it the case, as some people suspect, that the Government were not exactly reluctant to implement that recommendation of their taskforce, given that the current rail regulator, Mr. Tom Winsor, has demonstrated that he is capable of being independent not only of individual concerns within the rail industry but also of Her Majesty's Government? Some Members will recall the occasion when the regulator gave evidence to the Select Committee on Transport about a difference of opinion, or of recollection, between him and a former Secretary of State. It would be a matter of great regret and some seriousness if the Government's decision to change the whole nature of the operation of the Office of the Rail Regulator were to stem from their frustration at the regulator's actions on that occasion. We

hope to be able to establish clearly that getting their own back played no part in the Government's motivation.''—[Official Report, 28 January 2003; Vol. 398, c. 781.]

The Better Regulation Task Force, which is an independent advisory group, was set up in 1997, and its terms of reference are to advise the Government on action that improves the effectiveness and credibility of Government regulation. That is done by ensuring that regulation is necessary, fair, affordable and simple to understand, taking particular account of the needs of small businesses and ordinary people. Its members are unpaid and come from a variety of backgrounds, but all have experience of regulatory issues. They are drawn from large and small businesses, citizens and consumer groups, unions, the voluntary sector and those responsible for enforcing regulations.

The taskforce reviews particular regulatory issues and has set five principles for good regulation—transparency, accountability, proportionality, consistency and targeting. In July 2001, it published a report on economic regulators, which considered the form of organisational structure best suited to effective economic regulation. There is widespread agreement, we are told, that regulators should be run by properly appointed boards rather than individual regulators.

It would be most helpful if the Minister for Transport would tell the Committee what other sectors are currently being reviewed in a similar way.

Photo of Don Foster Don Foster Shadow Secretary of State for Transport

I am listening to the hon. Lady with great interest, but I confess that I have not the foggiest notion where she is going. Will she confirm that the very report to which she has referred—the economic regulators report of July 2001—specifically stated that the advantage of a broad structure for the operation in question was that it would ensure a wider range of expertise in the decision-making process, would increase continuity in decision making and provide greater transparency and accountability. Does the hon. Lady agree with that, and if she does, would it not be sensible to go ahead with the Government's proposals?

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

If the hon. Gentleman will bear with me, I shall be brief. Like a train, I will get there, perhaps not on time, and certainly not to his timetable, but in my own time.

A serious charge has been made by my hon. Friend the Member for Westmorland and Lonsdale, which I lay at the Government's door.

Photo of John Spellar John Spellar Minister of State (Department for Transport)

Perhaps the hon. Lady could help the hon. Member for Bath (Mr. Foster) by saying whether the Front-Bench spokesman on Trade and Industry or any other Conservative Front-Bench spokesman has opposed the report of the Better Regulation Task Force in that regard?

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I know that the Government do not like answering questions, but the Minister confirms that they wriggle out of doing so by asking different ones. I shall keep to the point and in order and ask the Minister, very slowly, one more time, whether he will set out, for the benefit of the Committee and the House, for me and for our colleagues at the

Department of Trade and Industry, the Government's programme for dismantling the various offices of independent regulators and replacing them with a regulatory board. That is my first question.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

No. If the hon. Gentleman's interventions were helpful, I would have no hesitation in giving way, but I want to make progress.

I want to help the Government to show that they are not being vindictive and do not have a vendetta against a gentleman whose integrity, independence and role as an independent economic regulator is not in doubt. That was reflected in the modest minority report of the Select Committee, but it was also recorded in the main report. I have no problem with the five principles, but I want to ask the Minister why this particular rail regulator, who has done a good job and who has been a beacon of independence—if he were a school, he would have been given a beacon for being a good school—is being removed from office. I also want to know how the Government plan to apply the five principles and, to repeat the question that I asked on Second Reading, to ask what role the Minister envisages the present rail regulator fulfilling.

Paragraph 1(1) of the schedule sets out the constitution. It says,

''The Office of Rail Regulation shall consist of a chairman and at least four other members appointed by the Secretary of State.''

Given that the Minister said in moving his amendments, which we did not oppose, that the amendments will not apply in Scotland, it will be interesting to know whether the Government intend to appoint someone who has a Scottish background, perhaps in Scottish law or business.

Paragraph 1(2) states

''The chairman or another member''—

[Interruption.]

I shall speak more slowly and a little louder, Mr. Hurst, as there seem to be some noises off this morning, which are most distracting.

Paragraph 1(2) states

''The chairman or another member—

(a) may not be appointed for a term of more than five years (but may be reappointed)''.

Does that mean that they can be reappointed just for a further five years, or for another five years after that? Will there a limit or a maximum appointment? I am sure that the Minister will find some assistance in his briefing notes.

The chairman or another member

''may resign by notice in writing to the Secretary of State''.

I pause slightly to put a question regarding evidence from the present rail regulator that a former Secretary of State sought to bring an injunction preventing the regulator from granting an interim review of Railtrack when more money was requested. The Government, in their worst judgment, choose to put Railtrack into administration. I asked Tom Winsor whether he had considered resigning because his independence had

been removed because he wanted to grant an interim review allowing Railtrack the further money that it felt it needed. That happened against the background of Renewco and all the efforts put into that new financial vehicle, which, we were told, would be the future life-blood of Railtrack. Renewco never came into being, and we shall not go down that track, because I get vexed about it. I remind hon. Members that I still own half my Railtrack shares, so I have a personal interest.

Photo of John Spellar John Spellar Minister of State (Department for Transport)

Will the hon. Lady tell us the price at which she bought her Railtrack shares?

Photo of Mr Alan Hurst Mr Alan Hurst Labour, Braintree

Order. The hon. Lady will not answer that—this is not the stock exchange.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

And I am not a financial adviser, you will be pleased to learn, Mr. Hurst. Suffice it to say that I feel so passionate about the rail industry that I took the first opportunity to purchase shares in companies such as Railtrack and Eurotunnel. The price was whatever it was at the outset. Perhaps if the Minister shared my passion, the rail industry would not be in the mess it is in today under his stewardship.

I return to the circumstances in which an independent regulator would be forced to resign. Tom Winsor and I debated that in the former Environment, Transport and Regional Affairs Committee. The rail regulator was clear that his independence could be removed only by Parliament, yet the Bill goes counter to that. Schedule 1 goes to the heart of the independence of the rail regulator. I wish to record my—

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

My distress. My interest is already recorded.

I record my distress and disappointment for the rail regulator, who has been exemplary in his performance, who could not have behaved better, and who has shown himself to be a man of integrity and strength in difficult circumstances. His reward for that is to be removed by a Bill.

Under what circumstances would the Minister for Transport expect the chairman or another board member to

''resign by notice in writing to the Secretary of State''?

How would the Government react if the Office of Rail Regulation proposed a course of action similar to that proposed by the rail regulator, and all the members of the board resigned en masse? Would they simply reappoint the chairman and the other members of the board, or would they accept the resignations and find alternative appointees? Paragraph 1(2)(b) of the schedule relates to what the rail regulator informed the Select Committee were the only circumstances under which his independence would be removed. However, I believe—I could be proved wrong and the matter is up for debate—that the schedule is vindictive and seeks to get rid of an individual who has proven to be independent and a man of integrity.

I seek the Minister's guidance on how paragraph 1(2) puts into place the five guiding principles proposed by the Better Regulation Task Force—transparency, accountability, proportionality, consistency and targeting. We all want the railway

industry to have a degree of economic independence. The idea has been tested to the full, but it seems that the reward for acting independently is for the body to have its independence removed by the provision before us this morning.

The schedule says that the chairman or other member of the Office of Rail Regulation ''shall hold and'', curiously,

''vacate office in accordance with the terms of his appointment.''

I seek assistance from the Minister on that: I have limited experience in Committee, but I have not seen that expression before. When I have been employed in the past, I never noticed a clause in my contract stating that I should vacate office in accordance with my appointment. It is a curious and rather vulgar expression, and I look forward to hearing the Minister shed some light on it.

We are told in paragraph 1(3):

''Before appointing a member other than the chairman the Secretary of State shall consult the chairman.''

The chairman may be minded to have alongside him as a fellow member the present regulator who, I repeat, is a man of integrity and independence who could bring a sense of stability to the new office in view of the difficult decisions that have to be taken. Would a place be available for the present regulator if the chairman of the Office of Rail Regulation wanted him?

Paragraph 2 is deeply worrying:

''The Secretary of State may dismiss a member of the Office by notice in writing on the grounds that the member . . . has been absent from meetings of the Office without permission of the Office during a period of more than three months''.

What would happen if someone were genuinely ill for three months? Someone doing a good job could be seriously ill and have to be absent for longer than that period. That provision is strict and unnecessary.

People can also be dismissed where they have

''a financial or other personal interest which is likely to influence the performance of his functions as a member''.

Will the Minister take note and help us with what counts as ''personal interest''?

We are clearer about paragraph 2(c) on bankruptcy, but paragraph 2(d) curiously uses the phrase ''has misbehaved''. I am sure that Government Members sometimes feel that I am misbehaving, but happily they are guided by your good self, Mr. Hurst. What does the Bill mean when it says that someone can be dismissed from office because they have misbehaved? What misbehaviour could be construed as grounds for dismissal? Again, it is a curious expression, and I wonder whether it is a common one among Government advisers and parliamentary draftsmen? What misbehaviour would be sufficient to cause the Secretary of State to dismiss a member? What concerns me is that the chairman or a member of the Office of Rail Regulation may behave in a way that is not pleasing to the Secretary of State. It would the most appalling state of affairs if he could construe that as misbehaviour. The office of the present rail regulator is being removed by the Bill to be replaced by a different office with five members, who may serve

for five, 10, 15 or 20 years; but if they misbehave, they will be dismissed. It would help to know what form of misbehaviour is meant.

Photo of John Spellar John Spellar Minister of State (Department for Transport) 9:15 am, 11th February 2003

On the slightly naive assumption that the hon. Lady is not spinning out the debate and playing for time, I reassure her that the phrase ''hold and vacate office'' is used in section 1(4) of the Railways Act 1993, passed by her own party—so there is no change. I am advised that misbehaviour is the ground on which the current regulator may be dismissed under section 1(3) of the Railways Act. It is a commonly used expression. Unless the hon. Lady is playing for time, in which case we shall just have to sit here and be bored, I assure her that such common phrases are used in many regulations made by Governments of both parties.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

That is helpful. I regret that we could not have had this discussion between 3.30 pm and 5 pm last Thursday when the Minister had to be in another place.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

In that case, I do not know why we did not discuss these matters then.

Photo of John Spellar John Spellar Minister of State (Department for Transport)

I can enlighten the hon. Lady. I understand that Divisions were expected in the House and the Opposition Whip suggested that we adjourn.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I understood that an agreement was made on how far we would get, and that we would adjourn at 5 pm.

Photo of Mr Alan Hurst Mr Alan Hurst Labour, Braintree

Order. Whatever we did on Thursday afternoon, we are discussing the matter now.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I am delighted to be doing so, Mr. Hurst, and I am most grateful to the Minister for his helpful remarks.

Paragraph 3, on staffing, states:

''The Office shall appoint a Chief Executive.''

Does the Minister envisage the excellent present rail regulator duly occupying that post, and will the Secretary of State make such a recommendation? I hope that the Minister will confirm that he would welcome that. It would be nice to hear him say that the present regulator has done a good job and is a man of integrity, and that he is not being removed because of a personality clash with a past Secretary of State. Perhaps the Minister's silence speaks for itself.

Paragraph 3 further states that, before appointing a chief executive, the office should

''consult the Secretary of State, and . . . obtain the Treasury's approval of the terms and conditions of appointment.''

What reward will the chairman and chief executive receive for fulfilling those functions? What will be the total cost of the Office of the Rail Regulator? I shall talk about that in more detail when we come to paragraph 11, but the chairman and chief executive alone will cost more than the present rail regulator. The Better Regulation Task Force report does not say that the chairman and the chief executive should cost the taxpayer more money. How do the Government square that in the overall scheme?

Paragraph 4(1) states that the office may appoint ''other employees''. I assume that the office may appoint employees in addition to the chairman and at least four other members appointed by the Secretary of State. That raises the question of how many employees the Government envisage the office encompassing. Will it have the same composition as the rail regulator's team? Will many more people be needed to service the office given that it will have a chairman, a chief executive and at least three other members? If so, what will be the cost to the Exchequer? Will it be announced in the Budget for 2003–04? The arrangements may not have been agreed with the Treasury, given that paragraph 4(2) states:

''The power under sub-paragraph (1) may be exercised only if the Office has the approval of the Treasury as to . . . numbers, and . . . terms and conditions of employment.''

Photo of Don Foster Don Foster Shadow Secretary of State for Transport

On a point of order, Mr. Hurst. The schedule has 97 lines. The hon. Lady has occupied the crease for half an hour and covered 33 of them. Might I be able to take a break for about an hour until she finishes? What would your advice be?

Photo of Mr Alan Hurst Mr Alan Hurst Labour, Braintree

Order. It is for Members to decide how they address questions.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

Thank you, Mr. Hurst.

I ask the Minister to address my remarks, because I want to know when he expects to raise these issues with the Treasury and when the House will be told the overall budget. I would prefer to be told today, before we leave schedule 1. It is right and proper that we should ask such questions now, and I am surprised that the Liberal Democrat spokesman is not concerned about the cost and the size of the Office of Rail Regulation.

I am told that service as an employee of the office is employment in the civil service of the state, so I repeat my earlier question: how many employees and officials do the Government expect the office to have?

Paragraph 6 states:

''The Office may establish one or more committees (which may include persons who are neither members of nor employed by the Office).''

What will be the composition of those committees? Will there be remuneration committees and pension committees? Will committees examine the way in which the office functions? How will they function in terms of the five principles of the Better Regulation Task Force? How many people do the Government expect to service the committees? How many officials of the Office of Rail Regulation will be required to man them?

Paragraph 7 seems a good provision. It tells us:

''The Office may delegate a function to . . . the Chief Executive or another employee, or . . . a committee.''

Will that happen in the context of regulations introduced outside schedule 1? I am concerned that we do not know in more detail what the office's constitution will be.

Paragraph 8 seems perfectly normal and proper.

Paragraph 9 states:

''The Office may do anything which it thinks necessary or expedient for the purpose of or in connection with the performance of its functions.''

That is a very wide-ranging power. For the sake of clarity, the Minister might like to say how that provision compares with the equivalent provision in the Railways Act 1993.

I am surprised that the Minister has not used the Bill to respond to the specific request by the former Select Committee on Transport, Local Government and the Regions that the Government clarify once and for all the specific relationship between the rail regulator—now to be the Office of Rail Regulation—and the Strategic Rail Authority. I should have thought that schedule 1 was the right and proper place to set out what that formal relationship would be. Why has that not been done? The power in paragraph 9(1) seems very wide. Subject to what the Minister says, I should like to express our concerns about that. On paragraph 10, how long does he think that a vacancy would be allowed to remain before the place was taken?

Paragraph 11 relates to money. It states:

''The Office may with the approval of the Secretary of State make to or in respect of members of the Office, employees or committee-members payments by way of or in respect of—

(a) remuneration;

(b) pension;

(c) allowances;

(d) expenses.''

What will be the overall budget for the Office of Rail Regulation? The Government have been deeply embarrassed by pension provision for the Lord Chancellor, and Opposition Members want to help the Government to avoid similar embarrassment in future. I should like to know for certain what pension provision has been made in respect of paragraph 11(b). Will a committee on the remuneration of pensions be set up in the Office of Rail Regulation? If so, who will man it? Will it be comprised of all the board members, or of non-executive directors? If they are non-executive people, will they be remunerated? Again, what budget will there be for that?

It is appalling to have schedule 1, particularly paragraph 11, before us when we have not been told what the budget will be. The cost of Network Rail is running at £20 billion and rising, but the Government have not yet placed that figure on the balance sheet. Under the Office of Rail Regulation, they will increase expenditure over that currently spent on the rail regulator. Will the Minister be so good as to tell us the budget?

Paragraph 13 says that there is scope for further spending. It states:

''If the Secretary of State thinks that special circumstances of a person's ceasing to be a member of the Office make it appropriate to pay him compensation, the Office may pay him compensation of an amount approved by the Secretary of State''.

Will that amount be capped? Will we be told what relationship it has to the salary? Can we at the very

least be told what the salary and pension provision will be?

I assume that the provisions on conflict of interest are similar to those in the Railways Act 1993. I hope that the Minister has had sufficient time to gather his thoughts and respond to those pertinent points.

Photo of Don Foster Don Foster Shadow Secretary of State for Transport 9:30 am, 11th February 2003

I shall try to keep us going until 11.25 am, but I am not convinced that I will be able to, because schedule 1 contains paragraphs and sub-paragraphs that are so familiar to many of us who have served in the past on Committees that have discussed bodies such as the new rail body that it seems ludicrous to go through them in such great detail.

I would have been interested had the hon. Member for Vale of York (Miss McIntosh) addressed the concerns that she and I have previously raised about the establishment of the Office of Rail Regulation. The schedule could have afforded an opportunity to slim down regulation in the way promised by the previous Secretary of State and recommended by the Select Committee on which the hon. Lady serves.

The hon. Lady will remember that, when we last debated this matter, I specifically referred to the recommendation of the former Transport, Local Government and the Regions Committee that the role of the regulator should be reviewed. She advised me to have a look, if I had not done so already, at the minority report that she produced, as she rightly said, with considerable help from the Clerks, for which she was very grateful. I have now had an opportunity to read the report, but I see nothing in it that counteracts that recommendation about reviewing the way in which regulation takes place. I had therefore hoped that we would hear the hon. Lady's views on that issue today.

Instead, she acted as a referee in advance of Mr. Tom Winsor's seeking to become chief executive. I have never heard such glowing eulogies for someone in advance of their even applying for a post. I hope that Tom Winsor will consider whether the hon. Lady would be an appropriate referee should he apply for that job.

I shall apologise profusely if I am doing the hon. Lady an injustice, but I was disappointed with her apparent failure to do much research in advance of her speech. Her analysis of some of the paragraphs showed that she had not bothered to check the current arrangements in respect of the Office of Rail Regulation or legislation on other regulatory boards. She missed a few tricks. She said that bankruptcy was perfectly normal, but I am surprised that she had not discovered that one could question the Government about whether they had taken fully on board the Enterprise Act 2002, which provides that bankruptcy does not necessarily bar someone in all circumstances. I must tell the Minister that that is not covered. Will he therefore assure members of the Committee that the Government are taking recent legislation on bankruptcy fully into account?

It was great to hear the hon. Lady saying that paragraph 8 seems to be perfectly normal and proper. We can all sleep well in our beds knowing that. The

hon. Lady did not check other regulations, but one might have hoped that she would at least check the words on the papers before us and get those right before being critical about them.

The hon. Lady asked a long series of questions about the definition of misbehaving, which is fair enough. We could all come up with a list of what might be deemed to be misbehaviour that could lead to dismissal, such as dancing naked on top of the new office premises to which the Office of Rail Regulation might move.

Given her words on absence, I was surprised that the hon. Lady did not notice the next few words of paragraph 2(a):

''has been absent from meetings of the Office without permission of the Office''.

The issues raised about someone who might legitimately be ill and absent for three months are perfectly adequately covered by the words ''without permission''.

I am bitterly disappointed that we have spent 30-odd minutes discussing the subject, but have got no nearer to discovering what it is that the hon. Lady wants to know. We do know, however, that she is interested in discovering whether what the Government are doing is, as she described it, a vindictive move against a particular individual. Some Members may have conspiracy theories, but I have seen praise on the record for the work of Tom Winsor from senior members of the Government, the previous Secretary of State and the Department of Transport. I share the hon. Lady's view that, broadly speaking, Mr. Winsor has done a good job. One is bound to question some of the decisions taken, and I do not necessarily agree that everything that he has done has been perfect. Nevertheless, he has done an extremely good job.

We know, and the hon. Lady has reminded us innumerable times, that the Better Regulation Task Force recommended that replacing an individual with a board would ensure that several things were likely to be done better. As she knows, because she has referred to the report in this and in other speeches, that would ensure wider expertise, continuity in decision making, greater transparency and greater accountability.

The hon. Lady, clearly not having done her homework, asked the Minister what was happening to other regulators. She should be aware that every other regulator either has a board or is in the process of moving to have one. The rail regulator is the one remaining regulator that has not moved into that form of organisation. It makes eminent sense to move in that direction, for the very reasons that the hon. Lady gave.

The hon. Lady asked one legitimate question about costs, and she chided me for not showing an interest. I wish to disabuse her of that notion. If one thinks something will be better but will cost significantly more, one must judge whether it will provide value for money. I will listen with interest to the Minister's response to that. However, I hope that for the rest of

our deliberations Members who intend to speak will do their homework, and make clear their key areas of concern and suggestions for change. I hope that we will not have to listen to lengthy questions about the meaning of such words as ''behave'' because of a belief that there is a hidden agenda or that someone is being vindictive.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

The hon. Gentleman says that he shares my concern about finances. Is he aware that the extra cost for the appointment of additional non-executive members of the regulatory board of the Office of Rail Regulation will be in the region of £200,000? Maths is not my strongest point, but if we tot up the cost of the non-executive directors plus the cost of replacing one individual with at least five, the costs will come to more than £1 million extra each year. We need to know what the costs will be and when the Government will receive the say-so from the Treasury.

Photo of Don Foster Don Foster Shadow Secretary of State for Transport

The hon. Lady rightly says that the changes could prove expensive. I hope she will receive an answer to her legitimate question. Maths is not my strong point either, so I shall not check on the back of my fag packet whether her calculations are correct.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

We are talking about relatively trivial sums compared to the vast sums of money poured into the railways since privatisation. Does the hon. Gentleman agree that if just one VAT inspector, for example, is employed, he or she makes many times his or her salary every year? Good regulation may require more staff to be appointed who may make many times their own salaries in return?

Photo of Don Foster Don Foster Shadow Secretary of State for Transport

The hon. Gentleman is right. It is worth reflecting that the Better Regulation Task Force made this proposal. One must assume that better regulation will lead to more efficient and effective running of the railways and the commensurate financial saving to which he referred.

I chide the hon. Gentleman a little, however. If the hon. Lady is right and we are talking about millions of pounds, he should not suggest that that is a small amount of money. After 10 years of operation, the cost would be £10 million, and I could suggest a few branch lines that could have benefited from that money. We need to be careful not to give the impression that £1 million here or there is not much money. However, if expending such a sum leads to savings well in excess of it, there would clearly be great benefit in doing so. That is why we need to hear the answer from the Minister.

I genuinely believe that the Government are proposing the right way forward. However, I regret that the opportunity has not been taken to meet the pledge given by the previous Secretary of State to slim down regulation or to follow the advice of the former Transport, Local Government and the Regions Committee to review regulation with a view to slimming it down. I need to hear from the Minister categorical details about the costs and whether the Government have rightly taken into account recent legislation on bankruptcy.

Photo of John Spellar John Spellar Minister of State (Department for Transport) 9:45 am, 11th February 2003

I rise nearly an hour after the debate started, which might or might not have something to do with the fact that we have just received a brief visit from the Opposition Deputy Chief Whip, the hon. Member for West Derbyshire (Mr. McLoughlin).

It is wrong to personalise the move. As the hon. Member for Bath said, we have consistently commented on the valuable work undertaken by the current regulator, and I cite the interim review in particular. I was interested in the commendation of the regulator by the hon. Member for Vale of York. Perhaps if she had taken more note of his powerful strictures on the management, or mismanagement, of Railtrack, she might have made more prudent decisions, at an earlier date, about her Railtrack shares.

On cost, as has rightly been pointed out, the explanatory notes make it clear that the extra cost of appointing additional non-executive members will probably be less than £200,000, an increase of less than 1.5 per cent. in the rail regulator's budget, which will be covered, in part, by the industry, although I accept that that may be offset indirectly by increases in public subsidy.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

The Minister says that much of the cost will be passed on to the industry. The industry is concerned, however, that its representation, especially on the British Transport police authority, will be reduced. It seems grossly unfair that the industry should pay more when it will have less representation.

Photo of John Spellar John Spellar Minister of State (Department for Transport)

It is not a question of representation. The purpose of the rail regulator is to provide a proper environment for regulation. I heard nothing in the hon. Lady's contribution to suggest that the Opposition oppose the recommendation of the Better Regulation Task Force that regulators should be overseen by a board. As the hon. Member for Bath said, the rail and water regulators are the last of the economic regulators to become corporate bodies. If the hon. Lady wishes to make that case, she must state definitively that the Opposition do not believe the model proposed is the right one and that the process should be stopped and reversed in relation to other regulators.

I do not know what the overall budget cost for the Office of Rail Regulation will be, because the ORR will set its own budget. No salaries have yet been set for the chairman and chief executive because it is too early. They will have to be agreed with the Secretary of State at a later date. The Bill's provisions on bankruptcy take into account the Enterprise Act 2000, which introduced bankruptcy restriction orders and interim orders. The grounds for dismissal from office are set out in paragraph 2(c) of schedule 1 in relation to England and Wales. I have already explained the bankruptcy provisions that relate to Scotland, and I am pleased to put that on the record for the benefit of the hon. Member for Bath.

It will be for the office itself to decide whether to delegate its functions to a committee. No further regulation is appropriate because the Bill provides for the necessary powers. The office and the Strategic Rail

Authority have their own powers and are able to come to some arrangement, concordat or agreement about the relationship between them, which is more appropriate than to provide for the relationship in statute.

We do not expect there to be a significant increase in staffing as a result of the regulator being replaced by a regulatory board. The management of the office will be the responsibility of the Office of Rail Regulation, as it is of the single regulator at present. To summarise, a clear principle arising from the Better Regulation Task Force has been applied across the regulatory regime. Unless the hon. Member for Vale of York can come up with an overwhelming argument as to why the fundamental argument is wrong, which would entail reversing the creation of regulatory boards rather than an individual regulator across the industry, the Committee should reject her arguments and vote for the schedule.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I posed some questions to the Minister, some of which he has answered. Their purpose was to find out why the new format is considered to be better. I do not say that we do not agree, but my hon. Friend the Member for Westmorland and Lonsdale clearly wants the Government to prove that it is an improvement, not merely a reaction to frustration with the regulators and the wrath that that has incurred in the Government.

I fear that the Minister is being economical in describing how far the reform is to go. We were told on 12 June 2002 that further reform could be required if the board of the Office of Rail Regulation failed to establish a constructive relationship with Network Rail. The Secretary of State described the guiding principles under which the Government have conducted their considerations and continued:

''The Government will need to continue to keep the effectiveness of the regime under review as the rail sector develops. The implementation of EU Directives already requires the Government to review the regulatory framework and adjust it in accordance with the Directives as necessary (the implementation of the First Railway Package of Directives is due by March 2003).''—[Official Report, 12 June 2002; Vol. 386, c. 1263W.]

We had the opportunity to set out in schedule 1, for the benefit of Parliament, exactly what the cost would be. We have to justify such things; we cannot give the Treasury a blank cheque. However, we have not progressed, despite a comprehensive debate. The schedule could have gone further, so I register my disappointment and my wish to return to the matter.

Question put and agreed to.

Schedule 1, as amended, agreed to.