Clause 102 - Railways safety levy

Railways and Transport Safety Bill – in a Public Bill Committee at 3:45 pm on 6th March 2003.

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Photo of Don Foster Don Foster Shadow Secretary of State for Transport 3:45 pm, 6th March 2003

I beg to move amendment No. 94, in

clause 102, page 44, line 13, at end insert—

'(2A) The Executive is required to consult with all relevant parties with regard to the proposed budget for activity referred to in subsection (2).'.

As we draw towards the end of the Committee stage, we all seek to learn something. I have certainly learned a great deal from the performance of the hon. Member for Vale of York. With your permission, Mr. Benton, I have decided to try a little experiment; I shall try to move the amendment in the style of the hon. Lady.

For the delectation of the Committee, we are reminded that clause 102(1) inserts new section 43A in the Health and Safety at Work, etc. Act 1974, giving the Secretary of State power to make regulations to introduce a compulsory railway safety levy on the railway industry. The HSC will be able to propose such regulations to the Secretary of State after consultation. The clause extends to England, Scotland and Wales. Under that Act, the Health and Safety Executive is responsible for a range of regulatory work, including inspection activities, applied to the rail industry. Since October 1999, there has been a charge on the work on an hourly basis. Since October 1999, there has been an hourly charge for the work. Such charges cover only part of the cost of the HSE's work on railway safety. For example, they do not cover work relating to policy making or operational activities. The HSE annual report on railway safety listed those activities, for which charges were made.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport) 4:00 pm, 6th March 2003

Is it appropriate for the hon. Gentleman to introduce a clause stand part debate when we are discussing an amendment?

Photo of Joe Benton Joe Benton Labour, Bootle

Until now, no reference has been made to a clause stand part debate. The hon. Gentleman has dealt with the amendment.

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

Thank you, Mr. Benton. I am setting the scene for the current arrangements. We will then move on to how the Government propose to change the levy and why those proposals need to be changed along the lines of the amendment. The HSE annual report on railway safety listed the activities for which charges were made. It referred to approval of specific proposals by operators and suppliers, safety case acceptance that Her Majesty's rail inspectorate has a duty to accept, safety case exemptions in certain circumstances and safety case acceptances arising from field operations.

Ministers agreed that the impact of charging would be reviewed after two years. The HSE's annual report on the safety record of the railways in Great Britain during 2001 and 2002 says at paragraph 1.31 on page 8 that, because of concerns about the introduction of charging in Her Majesty's rail inspectorate and other HSE directorates, Ministers invited the HSE to review each new charging scheme after two years of operation. In June 2001, the HSE commissioned independent consultants, Deloitte and Touche, to review each of the four charging schemes operated by the HSE for administrative efficiency, the reasonableness of charge rates and the effectiveness of the queries and disputes procedure. HMRI is currently evaluating Deloitte and Touche's report, which it received in the spring of 2002. Sadly, the outcome of that review has not been made public, but the explanatory notes to the Bill state:

''The review revealed that the existing charging regime was seen as bureaucratic, and stakeholders could not easily budget for charges.''

I am sure that the Committee will want to know what caused people to be concerned about the proposal. I am extremely grateful to several trade unions for providing me with some examples of the charging regime that people have been worried about.

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

I shall be delighted to give way to the hon. Gentleman, who made such a fine speech in Westminster Hall yesterday when he attacked the Catholic church.

Photo of David Cairns David Cairns Labour, Greenock and Inverclyde

In your presence, Mr. Benton, I shall not respond to the hon. Gentleman's last remark. I was not attacking anyone.

Given that the hon. Gentleman has just paid glowing tributes to the positive engagement of trade unions, I think that he has departed from arguing in the style of the hon. Member for Vale of York.

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

The hon. Gentleman is right. I have made a slight departure from the hon. Lady's style. Nevertheless, the advice that I have received has been extremely helpful. It is worth bearing in mind that the

charges that are currently made by the HSE, which will be revised under the levy that is proposed in the clause and which I want to amend, are on an actual basis the recovery of full costs and the time spent by the HSE for conducting a relevant activity for a duty holder on a particular occasion.

The Committee will be fascinated to know that, from 20 October 2001, the charge out rate has been £130 per inspector hour. There exists, however, widespread consensus in the industry that the present system is unsatisfactory. Among the views of the membership of various trade unions about its introduction, it was said that there is less likelihood of the railway group company contacting the inspectorate and seeking advice and constructive discussions at £130 an hour. At meetings with the HMRI, people are always conscious of the meter running. Form filling and bureaucracy distract HMRI inspectors. The HSE charging officers failed to issue a 100 per cent. accurate invoice and that has necessitated queries and is time-consuming.

It is pointed out that the SRA effectively pays the charge anyway, as the train operating companies factor in the hourly rate in their franchise negotiations with it. The charging system has necessitated the introduction of a monitoring and tracking system for invoices, which is an extra cost and distraction. It is interesting to note that in 2001–02 the Health and Safety Executive costs for enforcement of railway safety legislation were £6,240,000. Yet it received only £5,251,000 in income, which leaves, the Committee will have worked out, a deficit of £411,000.

With all those concerns to consider, the Government, after consultation through the Health and Safety Executive—the review not being made public—decided to present the current proposal. We understand that regulations to require the payment of a levy need primary legislation, because levies cannot be imposed under regulations made under section 43(2) of the Health and Safety at Work, etc. Act 1974, which provides vires for the existing charging regime. We now have a proposal for a levy system.

Many people—increasingly, I feel like one of them—wonder why we need any complex system, and why the Government could not simply pay directly for the costs incurred by the Health and Safety Executive in the relevant work. After all, even the proposed levy system will be paid for from the taxpayers' pocket. The train operating companies who will pay the levy will in the end raise their charges; either the travelling public will pay or the money will come through the SRA contribution to the train operating companies, which, again, comes from the taxpayers' purse. There are questions to be answered about whether even a levy is a sensible approach.

However, because I am a magnanimous man and because I knew that the Committee would listen to erudite arguments from the Minister explaining why a levy is better than a direct grant, I decided to table a small amendment to improve the Government's proposals. As the Committee will know, the

amendment would insert into the clause the following provision:

''The Executive''—

that is the Health and Safety Executive, for anyone who is still with us—

''is required to consult with all relevant parties with regard to the proposed budget for activity referred to in subsection (2).''

In case anyone is lost, subsection (2) of course refers to

''activity undertaken by the Executive in reliance on section 117 of the Railways Act 1993 . . . or . . . activity undertaken by the Executive, under or by virtue of any other enactment, in relation to a transport system to which that section applies.''

The amendment—this is going on for some time and the Under-Secretary is beginning to look worried—would mean that the budget for the work done by the Health and Safety Executive, which will form the basis for calculating the levy, would have to be discussed with all those affected by the levy. It strikes me that those who pay for the work should have the opportunity to scrutinise the executive's budget.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I have been paid a great compliment. They always say that imitation is the greatest form of flattery, but I do not think that the hon. Gentleman came close. Our response, like the Liberal Democrat response to some of our amendments, is that we should like to support the amendment in principle, but whether we shall do so depends on where in the country we live.

I have some general points to make on clause stand part about why the safety levy is probably not the best way to proceed. The hon. Gentleman seems to have proved that his amendment is a probing one, since he does not seem to have carried the Committee with him.

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

The hon. Lady is well aware that if I am desperate to get an amendment through, I simply use the time-honoured formulation—she knows which one I mean.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

If the amendment were to fail, which I am sure would be a source of great disappointment to the hon. Gentleman, whom would the Health and Safety Executive be required to consult? I imagine that the purpose of the amendment is to find out who will set the budget and what the budget will be.

Photo of Mr David Jamieson Mr David Jamieson Parliamentary Under-Secretary, Department for Transport

I was interested to listen and watch the hon. Member for Bath speaking in the style of the hon. Member for Vale of York. He did a good job, having obviously been closely observant during the hours that we have spent in Committee so far. Alas, I am not going to speak in the style of the hon. Lady since I shall speak only to the amendment and get to the point.

I believe that the intention behind amendment No. 94 is to impose a legal obligation on the HSE to consult all relevant parties before setting the detail of the railway safety levy. Clause 102 is an amendment to the Health and Safety at Work, etc. Act 1974. That Act already requires the HSE to consult on regulations that it wishes to propose to Ministers. The legal requirement to consult would also apply to regulations imposing a rail safety levy, so the HSE will have to

consult all relevant parties. I hope that that answers the hon. Lady's point. I am not really sure what is meant by the reference in the amendment to budget activity, but I am sure that the hon. Member for Bath will appreciate that the setting of detailed budget allocation is not a matter for consultation.

Under the existing hourly charging regime, the HSE has established charging review groups, including one for railways. Their role is to act as a consultative forum on charging issues. For example, they comment on proposed increases of fees and the quality of invoices and they also take an interest in such matters as efficiency savings. I anticipate that the HSE will establish a similar consultative forum if the current charging regime is replaced by a levy.

The hon. Gentleman alluded to the issue of whether it is right for the HSE to charge for its work. Charging for certain of the HSE's activities in various industries, including the railway industry, was introduced by the Government in 1999. In the Government's view, it was right that those whose activities caused safety risks should bear much of the cost of their regulation. The levy will establish a more efficient and less bureaucratic mechanism than the existing charging regime and allow the HSE to recover some of its operational cost from the railway industry. Although the hon. Gentleman's amendment suggests a change in drafting, it does not alter the effect of the provision in relation to consultation on proposed regulations and I, therefore, invite him to withdraw it.

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

I am grateful to the Minister for his response. He tells me that all is well because the Health and Safety at Work Act, etc. 1974 requires the HSE to consult on regulations, but, slightly earlier, he said that he did not understand what was meant by the reference in the amendment to ''proposed budget for activity.'' I am unsure how he marries the two positions.

The issue is simple and, no doubt, I could have put it much more succinctly. Those people who are required to pay the levy should be consulted on the budget that will determine its magnitude. If the Minister can assure me that the requirements to consult under the 1974 Act include consultation on those aspects of the budget of the Health and Safety Executive or the Health and Safety Commission in relation to the work that this Bill covers, I will be happy to withdraw the amendment. However, I am still waiting for a clear assurance from the Minister that these issues are covered.

Photo of Mr David Jamieson Mr David Jamieson Parliamentary Under-Secretary, Department for Transport

Those will be matters for the charging review groups to address.

Photo of Don Foster Don Foster Shadow Secretary of State for Transport 4:15 pm, 6th March 2003

I am unsure whether that was the assurance that we sought. However, we can have further discussions to seek absolute clarity on that before we move on to further stages of the Bill.

Photo of Mr David Jamieson Mr David Jamieson Parliamentary Under-Secretary, Department for Transport

They will also be consulted on the overall level of charges. Is that of any help to the hon. Gentleman?

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

That is enormously helpful. Having at long last received that clear assurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Mr David Jamieson Mr David Jamieson Parliamentary Under-Secretary, Department for Transport

I beg to move amendment No. 82, in

clause 102, page 45, line 11, leave out from 'information)' to end of line 13 and insert

'after ''27A above'' insert '', by virtue of section 43A(6) below''.'.

This is a technical amendment, which is intended to ensure that information obtained for the purposes of the railway safety levy is subject to the provisions relating to relevant information in section 28 of the 1974 Act. Section 28(1) defines ''relevant information'' as information that is obtained by or furnished to any person under certain provisions of the Act or health and safety regulations. This amendment will ensure that information provided to the HSE for the purposes of the railway safety levy, which could be commercially sensitive, for example, will be subject to the same restrictions on disclosure as other relevant information obtained by the HSE during its work.

Amendment agreed to.

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

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

A charge for work done by the HSE under the relevant Act has operated since October 1999. It has been charged for on an hourly basis, and it has proved to be uniformly unpopular. The Government have had the benefit of a review, and the production of the provisions that they are now proposing gave them an opportunity to come up with a system that is more popular. It appears that the industry would wish the charge to be a straight grant in aid.

I imagine that it is the view not only of the unions, which seems to have caught the attention of the Liberal Democrats, but the entire industry—the employer organisations and the TOCs—that if there is a problem and if the system is universally unpopular, regrettably the railway safety levy is not the answer. In the view of many, the principle that lies at the heart of such a scheme is flawed.

Does the Minister not agree that if the system had been funded by a direct Government grant it would have been easier to administer, more efficient and more effective, and that there would have been fewer transaction costs and less bureaucratic hierarchy? Will he take this opportunity to confirm that the Government received extremely adverse comments about their review from the train-operating companies, the unions and others, as the hon. Member for Bath noted. Those results were not made public. It appears that the Government put on to their website only comments that are supportive of any consultation or review that they have conducted. The Committee can now conclude that when the results of such a review or consultation are not as flattering and helpful as the Government would like, they are not published for the public to see.

Everybody accepts that the HSE has to be paid. However, it appears that the following view has broad support at every level of the industry: the HSE needs

more direct funding, not schemes that many believe would cost the taxpayer more by creating a larger and less transparent bureaucracy that had greater administrative costs. It is incumbent on the Government to listen to the worries that have been forcefully put across by the industry—the TOCs, the employers, unions and employees—rather than introducing a new system that is less popular than that introduced in 1999.

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

I am surprised that the hon. Lady suggests direct Government funding for anything, because one does not expect that from the Conservative party. There is a view, especially among trade unionists, that direct funding by Government would be preferable, although they accept that the levy system is the second best option. The railway industry is heavily subsidised in general. Given that the money will come out of Government pockets in any case, although it will go round the houses to become a levy for the HSE, would it not be easier to use direct funding, which would save money that is trimmed because it passes through more hands? I wanted to register the trade union view that direct funding by the Government might be better than a levy system, although I would not support a radical change.

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

I share many of the hon. Gentleman's worries. May I pay tribute to the Transport Salaried Staffs' Association? It has put together commendable and detailed briefings on the issue and it makes a powerful case along the lines that the hon. Gentleman suggested.

Sadly, you were not in the Chair when we discussed the funding of the British Transport police, Mr. Benton. At that time, I expressed concern that a complex funding mechanism was being proposed in the form of the police service agreements. I argued that direct funding would make more sense because that is how Home Office police forces are funded. In the same way, the clause would set up an unnecessary and cumbersome funding mechanism. As the hon. Gentleman and many trade unions have rightly pointed out, the money will come from the taxpayer anyway but it will be provided in a circuitous manner.

There is an additional argument, on which the Under-Secretary should reflect. If the funding regime uses either an hourly charge or the new levy system—I acknowledge that that is a better funding scheme than the hourly rate—there will be a relationship between the customer and the provider, which is my worry about the police force. We should examine the relationship between the regulated and the regulator. If there is a move away from clear direct funding of the regulator, which is the funding used for many other regulatory functions, there is conflict between the customer-provider relationship and the more appropriate regulated-regulator relationship.

Photo of Mr David Jamieson Mr David Jamieson Parliamentary Under-Secretary, Department for Transport

It has been the practice of the Health and Safety Executive since 1999 to charge the railway industry for its safety-related rail work. That is consistent with its practice when dealing with other industries that have similar requirements, such as the

nuclear and offshore industries. At present, the HSE uses a system of hourly charges to charge for its safety-related railway work. That is inefficient and over-bureaucratic for both the HSE and the railway industry.

Clause 102 will give the Secretary of State the power to make regulations to introduce a compulsory railway safety levy on the rail industry that would replace the hourly charging system. Subsection (1) does that by inserting new section 43A into the 1974 Act. The Health and Safety Commission will be able to propose such regulations to the Secretary of State after consultation. The new section specifies the purposes for which the railway safety levy can be applied and refers to the matters to be determined by regulations.

The regulations will cover the detail of the scope and application of the railway levy and will be subject to full public consultation, to answer the hon. Member for Vale of York. The optimum time for preparing and consulting on such regulations is being considered, but I can confirm that regulations will not be introduced before the Bill has received Royal Assent. We must get the detail as correct as possible before introducing any regulations.

I listened carefully to the points made by the hon. Member for Luton, North (Mr. Hopkins). We must embrace some of those arguments when the regulations are introduced. Clause 102(2) amends section 28(1)(a) of the 1974 Act, which relates to restrictions on the disclosure of information. As I said earlier, information provided in relation to the levy introduced by the clause will be subject to the provisions in that section.

The hon. Member for Vale of York mentioned the consultation. Nearly 50 responses were received and HSE officials reported back to the HSE on 14 January. The paper outlining the detail and a summary of the responses should soon be posted on the HSE website, but the HSE has also placed a copy in the House of Commons Library. In short, the responses were split roughly 50–50 between those in favour of the principle of the levy and those against. We will consider those views when we draft the regulations.

Photo of Anne McIntosh Anne McIntosh Shadow Minister (Transport)

I am grateful to the Under-Secretary for his explanations. The timing is regrettable: we are debating whether to empower the Government to insert a new provision into the 1974 Act, without having the time to review the consultation and its responses. If we are to do justice to the scrutiny of proposed new section 43A, the Committee should have more time. In saying that I simply rehearse arguments that were advanced in the responses by all sectors of the industry: it is not a party political point.

The Under-Secretary wasted this opportunity to explain why the Government are rightly turning their back on the present hourly charging system, which is expensive to administer and inequitable. If everybody is united in condemning it, there must be something wrong with it. The Government had to act. The system had been in force for two or three years. There is sufficient evidence to show that it is expensive and inequitable. The Under-Secretary said that the

provision would introduce a new compulsory system and that the safety levy would be imposed on train-operating companies.

I say this in a purely dispassionate and apolitical way: we seem to suffer the highest rail fares of any European country, even in standard class, and there is a concern that the cost of imposing the safety levy will be passed on to passengers. The Under-Secretary has lost the opportunity to explain to the Committee why this system was chosen. It is arguably the most bureaucratic to administer and it will increase the cost of travelling by rail at a time when the industry would argue that the sectors with which they are trying to compete—air and sea travel—will not have to face similar costs. I regret that the Under-Secretary did not use this opportunity fruitfully to argue that this is the

best way forward. I am not persuaded that it is the best way.

Question put and agreed to.

Clause 102, as amended, ordered to stand part of the Bill.

Photo of Joan Ryan Joan Ryan Government Whip, Assistant Whip (HM Treasury)

On a point of order, Mr. Benton. On behalf of the Committee, may I say that we have been fortunate to have the benefit of your guidance this afternoon and the pleasure of your company at very short notice? We are grateful for that.

Further consideration adjourned.—[Joan Ryan.]

Adjourned accordingly at half-past Four o'clock till Tuesday 11 March at five minutes to Nine o'clock.