Question proposed, That the clause stand part of the Bill.

My next point follows on neatly from the issues raised by clause 31. Under clause 32, the Secretary of State may, for the first time, make it compulsory by order for a train company to

''enter into a police services agreement''

with the British Transport police. I understand that that is quite a significant change. For the first time, failure to enter into such an agreement will become a statutory offence. We are told that the company will be subject

''on conviction on indictment, to a fine.''

The fine may be small or large. It would help to have guidance on how the fine will compare with those for offences under existing legislation.

To my limited knowledge, there is no such provision for constables under the Home Office remit. The issue is greatly exercising the minds of train operating companies. Clearly, it is in their interests to enter into a police services agreement. The Minister will understand that the railway industry is under extreme pressure, even without the current increased terrorism threat security alert and, as I have mentioned, trains and stations are something of a soft target. Also, companies are undergoing significant refranchising negotiations, and if they do not negotiate a successful franchise, they will no longer be players.

This is a very difficult time for train operating companies, and I wonder whether it sends the right message to make failing to enter into an agreement a statutory offence. The industry put that argument to me; I am not a great expert in the field, and if the Minister were to contradict me, that in itself would be helpful. The industry's understanding is that the clause will create a new statutory offence that is subject to a civil penalty in the form of a fine. A large fine would

make it even more difficult for train companies to operate.

Perhaps the Minister can envisage circumstances in which it might be difficult for a train operating company to reach an agreement with the police. In what time frame do we imagine the train-operating company will have to come to such an agreement? I am sure that the Committee would find it helpful to know the philosophy behind that. I think that companies have had to enter into police service agreements in the past. Have there been particular difficulties? Have the Government experienced intransigence?

Last year's annual report does not appear to state that this has been a problem that the Government have had to tackle. I wonder what message that gives to the train operating company and its passengers—my constituents and me—about the circumstances that may arise or have arisen to create difficulties that would prevent the conclusion of such an agreement. I share the concerns of the industry and the train-operating companies about why it has been felt to be necessary to make this a statutory offence. How much time will be allowed? What has been the thinking behind this decision?

I cannot speak for the train operating companies, although Committee members will remember that I have an interest in First Group, which still has a franchise and some buses. I should not have mentioned that because, knowing the Minister, he will now ensure that it does not have a franchise.

The clause could prove regrettable, and I wonder whether the Minister would like to take this opportunity to justify it. I am unaware of any circumstances that have created difficulties in the past. Why do we need the clause? I cannot see how it takes us forward. It would be putting it too strongly to say that it is getting the backs of the industry up, but it is another little niggling thing for it to worry about at what is already a very difficult time.

Taken as a piece, clauses 31, 32 and 33 demonstrate the Government's thinking about how the British Transport police will be funded. When we debated clause 31, we discussed the British Transport police authority entering into agreements with various train operators and other industry bodies. Clause 32 states that the

''Secretary of State may by order''

require various categories of person to enter into such agreements. Why is the word ''may'' used? I am aware that that word is part of parliamentary language, but can the Minister confirm that even if it is correct in the context, ''may'' should be interpreted as ''will'' because everyone will be required to enter into such agreements? The various rail industry bodies might extend the details of their agreements and pay the British Transport police more for a gold-plated service, but they will in any case be required to offer the basic service, so ''may'' is a strange word to use.

The hon. Member for Vale of York shares my concerns about the unnecessary complexity of these

arrangements and has rightly asked why an offence has to be created in the way that is described. I wish to suggest an alternative way forward that would avoid that problem, and to ask the Minister why the Government have not followed that route. Would it not be possible to impose as a franchise requirement on, for example, a train operating body the requirement that it has a police services agreement? That would remove criminalisation.

When we start to think about it, the whole scheme seems to be nonsense. When we come to address clause 33, we will probably discuss the arrangements for arbitration by the Secretary of State in relation to disputes that may occur: through nobody's fault—simply because there is a need for arbitration to resolve a disagreement—there will be periods when a police services agreement is not in place, yet during that period I assume and hope that the British Transport police will still operate in the premises and vicinity of the train operating company that still has to finalise an agreement. The reality is that the British Transport police will continue to operate even on occasions when the PSA is not in place. Will the Minister confirm that that is the case?

Clause 32 gives the Secretary of State power to make orders requiring certain railway operators to enter into police services agreements. Such operators will commit an offence and be subject to a fine if they provide railway services without having entered into an agreement. The British Transport police authority will be under a duty to take reasonable steps to facilitate compliance by those required to enter into police services agreements and the Secretary of State will consult with those on whom he is considering imposing a requirement before he imposes it.

The hon. Member for Vale of York asked about the fine. It will be limited to the statutory maximum of £5,000 unless the company is convicted on indictment, when the fine could be unlimited. The fine is to ensure that the train companies take the need to enter into the agreement seriously. Of course, without that, the British Transport police could not be funded.

Let me clarify the point about the existing situation. At the moment the rail regulator cannot grant a licence to operate a railway asset unless the operator has a police services agreement with the employer of the British Transport police—that is, the Strategic Rail Authority. Any company that operates a railway asset without a licence—unless there are circumstances that exempt them—could receive a maximum fine under the circumstances that currently apply.

The hon. Member for Bath asks why it should be made an offence not to have a police services agreement via the licence? The simple answer to that is that it is already an offence. The hon. Member for Vale of York used the expression ''not to worry'' as advice to the train operating companies. There is no need to worry, because the situation has not changed materially—but the Bill must set that out clearly. She asks why that has to be enshrined in law and if there have been any difficulties with setting up the agreements. I do not know of any difficulties that have been created up to now, but she will appreciate

that the law has to anticipate every circumstance. As an advocate herself, the hon. Lady will know that the law has to look towards any circumstances that may arise in the future, and not restrict itself to those of the past. That is why the matter has been contained in the law.

Again, the clause stand part debate shows why it is important to tease out information from the Minister. I cannot speak for the hon. Member for Bath, but I am not convinced that the provision is necessary. It could amount to more than a niggle to the train companies. Under current circumstances, they pay for the British Transport Police and are the main beneficiaries of its work. The provision could lead to difficulties in relations between the British Transport police and train operating companies. The Minister dismisses that concern, saying that the law must have regard not only to what has happened in the past, but to circumstances that may arise in the future. I submit that we ought to wait until such time as that has become an issue; there is not an issue at the moment.

For the first time, we will have a situation in which an operator will be required to enter into a PSA and if it fails to do so, it will commit an offence if it then provides railway services as defined in clause 72(2). That is highly regrettable, and I think that we shall return to the matter.

I must be going deaf—the remaining 5 per cent. of the Under-Secretary's argument has not reached me yet. I have not yet heard an answer to my basic question. Arbitration under clause 33 could be lengthy, given that the matter could be taken to the High Court.

Order. The Committee is discussing clause 32.

My point is that, during an arbitration period under clause 33, a PSA will not be in place, which is required under clause 32. Will the British Transport police continue to operate in those circumstances? I need a simple yes or no.

As there is an obligation under the licence for a police services agreement to be in place, negotiations would take place before the company could operate. If the company were already in operation, a PSA would exist. If discussions were taking place about a new agreement, the existing agreement would hold until the new one came into force.

Question accordingly agreed to.

Clause 32 ordered to stand part of the Bill.