Clause 34

Part of Crossrail Bill – in a Public Bill Committee at 11:00 am on 27 November 2007.

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Photo of Tom Harris Tom Harris Parliamentary Under-Secretary (Department for Transport) 11:00, 27 November 2007

Clause 34 deals with the consequences for franchises affected by the amendment of access rights held by the franchisee in order to facilitate Crossrail services. That may arise when, under clauses 28(2) or 33(2), the ORR directs amendments to access rights. If those amendments affect the carrying out of a franchise agreement, the parties to that agreement must use all reasonable endeavours to vary its terms. If they fail to agree, the Secretary of State can terminate the franchise agreement. The ORR can direct that compensation as payable and determine the amount. Amendment No. 18 and amendment No. 19, which would apply to the consequential changes, would remove the Secretary of State’s power to terminate the franchise agreements when agreement could not be reached between the parties and instead allow the ORR to vary the franchise agreement for the parties.

While I approve the spirit of the hon. Gentleman’s amendment, it is unsatisfactory for two reasons. First, it would place the ORR in a role completely outside its normal regulatory function. It does not regulate franchise agreements and has no experience in doing so, or in setting or writing the minimum specification for them. The hon. Gentleman suggested that it has expertise in that area. It does not.

Franchise oversight and construction lie with the Department for Transport, and lay previously with the Strategic Rail Authority. The functions of franchising and of overseeing access contracts are in practice well connected, but they are separate functions undertaken by separate bodies with separate responsibilities.

More importantly, the amendment would remove a necessary protection for the holder of the franchise. Agreement might not have been reached because the franchise holder considered that an amended franchise would not be a viable business proposition for him, so he would wish it to be terminated with compensation. In that case, it is far more satisfactory for the Secretary of State, who holds a franchising function, to terminate such an agreement with compensation and then refranchise the service. Therefore, following that explanation, I ask the hon. Gentleman to withdraw his amendment.