Schedule 3 - Abolition of Rail Regulator: Savings, &c. Question proposed, That this schedule be the Third schedule to the Bill.

Railways and Transport Safety Bill – in a Public Bill Committee at 10:15 am on 11th February 2003.

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Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport) 10:15 am, 11th February 2003

Briefly, and having spoken out of turn, Mr. Hurst, I ask the Minister to explain whether the savings referred to in the title will be made through the abolition of the rail regulator. We have already identified one increase—the £200,000 extra for non-executive members. After adding up the wage bills of the chairman, chief executive and at least three other members of the board, plus pensions for retiring members, I have great difficulty in identifying where savings could be made, and I invite the Minister to do so. Has the Treasury said that those people will all be paid less than the existing rail regulator? On the face of it, that will not be so.

Paragraph 5(2) states that

''the Secretary of State may continue to make payments in accordance with arrangements made before commencement for or in respect of a pension for a person who held the office of the Rail Regulator.''

What pension provision does the Minister have in mind? More pertinently, paragraph 5(3) states:

''The Secretary of State may pay compensation to the last person who held the office of the Rail Regulator.''

That raises a curious spectacle.

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

To save my having to give a speech, perhaps the hon. Lady will ask the Minister to explain why there might be a need for compensation? He assured us that the new body will not come into force until 2004, which is when the contract for the existing rail regulator will come to an end. While she is at it, and to avoid doubt, the hon. Lady might ask the Minister whether all other employees who now work for the Office of the Rail Regulator will have their pensions continued. That seems not to be covered in paragraph 5.

Photo of Mr Alan Hurst Mr Alan Hurst Labour, Braintree

Order. I remind right hon. and hon. Members that Members are not expected to read newspapers or other documents for amusement during Committee proceedings.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I thought, Mr. Hurst, that you were talking about the hon. Member for Bath. I do not imagine that he can read a newspaper and answer a question at the same time, ambidextrous though he is.

I am sure that the Minister will have heard what the hon. Member for Bath said. I had difficulty with the paragraph because I wrongly linked the two schedules. I apologise for that and will make sure that I do not again get quite so vigorously ahead of myself.

In the response to my question on schedule 2, we were told that the present rail regulator's contract will run its course and that he will then go on his way. I am sure that he will take with him any pension provision to which he is entitled. The hon. Member for Bath raised the Transfer of Undertakings (Protection of Employment) Regulations 1981—another of those dreaded EU directives—which caused great consternation. Will the Minister tell us the implications for other savings? Will the Office of Rail Regulation remain where the current rail regulator is housed? From the discussion that we had on the increase in volume of staff and officials that the new Office of Rail Regulation is intended to have, it seems that a big property will be needed to house them and their egos.

This is a cheeky little measure and, mindful of the fact that the hon. Member for Bath believed that the rail regulator would serve the length of his contract and then go on his way, will the Minister tell me what compensation the Secretary of State may feel is due under paragraph 5(3)

''to the last person who held the office of the Rail Regulator.''

What would be the basis of such compensation? I do not believe that the outgoing chairman of the Strategic Rail Authority, Sir Alistair Morton, received such compensation. If a person serves the full term of their contract and their pension arrangements are

honoured, I cannot see that there should be a right to further compensation.

Presumably, such compensation would be in the form of a one-off payment. The paragraph states that it would be made to the last person who held the office, and we know who that is. The Government are being pretty beastly to the person concerned and have been fairly public about it. Is that why the Government believed that they needed to include the provision? Will there be a little amendment down the road to delete it? If the incumbent serves to the end of his contract—the Minister assured us this morning that he would—I do not see what reason there would be for compensation. I am sure that the Government regret being as beastly as they have been to the rail regulator, but that does not justify compensation.

I would like further guidance from the Minister. During the course of the Bill to set up the Office of Communications, concern was expressed by the staff of the five existing regulators. Incidentally, one would think that savings could be made by replacing five regulators with one, but we could not get a commitment from the Government on that. The hon. Member for Bath touched on the question of staff transfers—will the staff be invited to transfer their functions from the office of the rail regulator to the Office of Rail Regulation, and what will happen to their pensions in the event of their not transferring? Will they be given a new contract, or will they carry on regardless?

I also have a difficulty with paragraph 6, which states:

''Section 15 is without prejudice to any function, property, right or liability of the International Rail Regulator.''

I presume that the Minister will confirm that the international rail regulator will continue in his position. I am surprised, however, that the Bill is silent on the nature of the relationship between the new Office of Rail Regulation and the international rail regulator. However, Mr. Winsor is lucky, as it seems that he will receive a big sum of compensation.

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

The essence of this fairly mundane and boring schedule is to ensure continuity and a seamless transition. The revision on compensation is just for completeness and to cover all circumstances and eventualities. It does not mean that compensation would necessarily be paid or that anyone would not serve out their term of office.

Photo of Don Foster Don Foster Shadow Secretary of State for Transport 10:30 am, 11th February 2003

I understand that legislation must cover, as the Minister puts it, all eventualities. However, can he tell us what eventuality might lead to compensation, given the clear assurances that he gave us earlier that the Office of Rail Regulation will not be brought into play until the end of the current regulator's contract?

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

I cannot envisage those circumstances in the current position, but it is normal for legislation to contain contingencies for all possible eventualities.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

Is it not the custom sometimes to give assurances—possibly private assurances—to someone on a contract that their contract is likely to be

renewed? If a decision were made to change that position, compensation might, in some sense, be appropriate.

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

I think that my hon. Friend will be aware that the appointments are on a fixed term. The term of any period of office is covered within the legislation.

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

If we are going to consider any eventuality, will the Minister take the matter the other way round and tell us what he envisages would happen if for some reason Mr. Tom Winsor, the current rail regulator, decided to leave his post before the end of his contract? Would, for example, the Office of Rail Regulation then be established earlier? I hope that the Minister would agree that no compensation would then be payable to that individual.

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

I do not think that it would be especially helpful to go through all possible circumstances. Needless to say, paragraph 5(3) enables the Secretary of State to pay compensation, should that be appropriate. In other words, the provisions are designed for the sake of completeness, not the circumstances that we envisage.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I listened with care to the right hon. Gentleman. He said that the rights are covered in legislation. Which legislation is that? Will he talk about the savings to which the schedule refers?

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

I actually said terms of office, in answer to the question of my hon. Friend the Member for Luton, North (Mr. Hopkins).

All other employees will retain their existing pensions rights, because they are currently civil servants and will continue to be so following their transfer from the rail regulator to the Office of Rail Regulation. I am advised that savings in the context of the title of the schedule is not a financial term, but relates to the legal position of the regulator following transfer. Sometimes there are dangers that English and legal jargon are different languages that need to be translated into one another. However, I am advised that that term relates to the legal position of the regulator following transfer.

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

Just to tease the Minister a little bit, I tell him that he cannot say that the term relates to something—he must tell us what it means. Could he tell us what ''savings'' means in legal terms in the context of the schedule?

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

I am sure that it means savings in the normal, legal sense of the term, as applied in the title of the schedule. The schedule is fairly mundane. It merely tidies up the Bill's provisions, and I commend it to the Committee.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I am sorry, but I find the matter extraordinary. Savings to me are savings. I am a Scot and I know what savings are. If one saves money, one saves money; if one spends money, one does not save. I find it extraordinary that the term should be included in the Bill. My experience is limited and humble, and I bow to the years of experience of the hon. Member for Bath. I do not see why the term is in the Bill. No

wonder we have such difficulty applying Acts of Parliament when they say something that patently is not meant.

Reverting to paragraph 5(3), my mind has not been put at rest. Assuming that the present regulator serves his term of office, I see no grounds for compensation: the Minister has not given an adequate explanation. The hon. Member for Bath went further in raising a worst-case scenario of the present rail regulator going off in a huff and resigning before the legislation comes into force. The Bill will have to run its course through both Houses of Parliament and receive Royal Assent. It cannot be hurried along because due parliamentary process is necessary. The Government have not explained adequately what might happen in the interim. It seems odd to put a person in place to perform the functions of the rail regulator for only a year or nine or six months. We shall let the matter rest for the moment, but we shall return to it in due course.

Question put and agreed to.

Schedule 3 agreed to.