Railways Bill
House of Commons, 6 April 2005.
Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)
Under the Order of the House made earlier today, any message from the Lords in respect of any Bill may be considered forthwith, without Question put. I have received a message from the Lords. The Lords agree to the Railways Bill with amendments, to which they desire the agreement of the House.
Lords amendments accordingly considered.
Clause 13 — Railway Functions of Passenger Transport Executives
Tony McNulty (Labour, Harrow East)
I beg to move, That this House disagrees with the Lords in the said amendment.
Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)
With this we may discuss Lords amendment No. 2 with Government motion to disagree, Lords amendment No. 3 with Government motion to disagree, Lords amendment No. 4 with Government motion to disagree, Lords amendment No. 5 with Government motion to disagree, Lords amendment No. 6 with Government motion to disagree and Lords amendment No. 7 with Government motion to disagree.
Tony McNulty (Labour, Harrow East)
I am sure that the House authorities are entirely in order in putting the provisions together in this way, but it makes it sound as if there was a good deal of disagreement with the other place. I want to put on record the fact that I commend the other place for the way in which it has scrutinised and ultimately dispatched the Bill—and with a good deal of agreement.
There is but one real issue on which we disagree in this set of amendments and it is about passenger transport executives and their ability to have co-signatory status. The existence of seven Lords amendments and seven disagreements with them does not mean that there was untold disruption or disagreement with our noble Friends in the other place.
I have said before and it has been explained clearly in the other place that the Government cannot accept these amendments. As the noble Lord Davies of Oldham said earlier today, they raise a matter of principle about which the Government are clear. There is a new role for the PTEs and it is required because the current system was built for a different time and does not fit in with the new framework set out in the White Paper.
Throughout our deliberations, all sides have made it clear that the context for the debate is the rail White Paper, not all of which has necessarily been picked up in the Bill. Central to the new structure set out in that document is the role of the Secretary of State in setting the strategic direction and the amount of national funding that will be invested in the railways. The system that the PTEs are seeking to retain is totally inconsistent with that principle and more reminiscent of another time.
The Government have listened carefully to the concerns raised here and in another place about PTEs. As I have said, we have moved considerably from our original position. In the original citation in the rail White Paper concerning this aspect of PTE functions, we were minded to remove all their ability to have co-signatory status. We have moved away from that and the PTEs, with the agreement of the Secretary of State, can have a role to play.
We considered the proposal made in another place for a 60-day window for PTEs to delay before the signing of a franchise. We are unconvinced that that would deliver anything other than costly delay and an opportunity for PTEs to seek to reopen negotiations at the eleventh hour. Potentially, each month's delay in completing a franchising process could cost hundreds of thousands of pounds of taxpayers' money. Clearly, that would be inconsistent with our strategy to deliver efficiency and value for money in the rail industry.
I want to make it very clear, to this House and to the other place, that we feel that we cannot compromise on co-signing or co-specification. Basically, the amendment would allow PTEs to dictate to the Secretary of State—who is responsible for rail across the whole country—what services should be provided in their areas. The right to co-sign puts the PTEs on an equal legal footing with the Secretary of State, despite the fact that the Secretary of State provides the overwhelming majority of funding, with PTEs merely contributing at the margins. Such a system would not make sense: it would merely encourage confrontation and retain the adversarial approach that has been prevalent since co-signatory status was introduced in 1993.
I wish to reassure the House that the provisions are not about removing the important influence and input that PTEs have into the rail services in their areas. That is why the Bill, as introduced, means that the Secretary of State will be under a duty to consult with the PTEs before issuing an invitation to tender for any franchise that includes services to, from or within a PTE's area. This will be a full and detailed consultation, giving the PTEs a clear opportunity to set out the needs and ambitions of their areas.
Once the baseline specification for a franchise, including services in PTE areas, has been set, the PTEs will also have the right to amend the services in their areas—that is, buying additional services, or reducing services and retaining the savings. That will give them much greater flexibility to make choices about the balance of transport in their areas than currently prevails and allow them to make rational decisions based on financial accountability.
Equally, our proposals will not change the mechanism by which PTEs can secure certain rights, such as rights to information, or the right to insist on the train company's involvement in concessionary fares or integrated ticketing. Such rights and responsibilities will continue to be included in franchise agreements as long as the Government are confident that they are necessary and add value. That will remain the case whether or not PTEs are co-signatories.
Nor will the Government's approach reduce the PTEs' ability to maintain their constructive and beneficial relationships with the train operating companies. Centro, the West Midlands PTE, did not co-sign the Chiltern franchise, but it has managed to build an excellent, productive relationship with that TOC. The Government's approach does not attempt to limit local decision making as has been suggested but merely places that in its proper context.
Bill Cash (Conservative, Stone)
Does the Minister accept that the amendment's provisions in respect of bus substitution services also affect clause 29, which deals with station closures?
Tony McNulty (Labour, Harrow East)
I accept the inference that there is a relation between the two, but I struggle to see any connection with the Lords amendment or the Government's motion to disagree. However, I understand the hon. Gentleman's point, and suggest that he raise it again at another point in the debate.
The new arrangements for PTEs will create a more efficient, more accountable and less adversarial framework for delivering rail services in key metropolitan areas. I am by common consent a man of consensus who seeks compromise when it is available. To graft on to the post-Railways Bill rail industry a power that prevailed from 1993 only in the immediate wake of privatisation does not make sense and I need to say that as clearly as possible.
We are seeking modernisation of the relationship between the powers, local decision making and so on of PTEs and the train operating companies and others. That is not a denigration of local democracy in any way, shape or form. There is confusion about that. Hon. Members should be clear that we have sought compromise but there is no scope for it because the 1993 powers for co-signatory status simply do not fit in with the post-White Paper world.
This is a matter of principle, as my noble Friend Lord Davies explained clearly in the other place earlier today, on which the Government are unwilling and, indeed, unable to move. In that context, the House should be clear that to lose the Railways Bill because of this matter would be unfortunate, not least because of the level of consensus on the Bill in this and the other place.
Gwyneth Dunwoody (Labour, Crewe and Nantwich)
The speed at which my hon. Friend was moving caught me on the other side of the building. As he is a dear little pussy cat, rather like me, and one of the problems has been misunderstanding, could he make it absolutely clear that the Government have no intention of removing the link with local government and local decision making and that they just want the best solution for everyone concerned?
Tony McNulty (Labour, Harrow East)
I agree absolutely with my hon. Friend and endorse every word she said. This is not in any way, shape or form about impinging on PTEs' local decision-making process or a secret agenda—that was suggested at least once in the other place—ultimately to get rid of PTEs. It is about how in the commercial realm passenger transport authorities through PTEs relate to train operating companies and local rail services in their areas. Any decisions they make about much of what they already do are more readily contained in agreements with the ability to add to franchises. None of those abilities is taken away.
Peter Luff (Conservative, Mid Worcestershire)
This is one of those dangerous questions to which I do not know what the answer will be, so I hope that the Minister can help me, although that may not be helpful to my party. He may know that I am concerned about the impact that the specifications available to the West Midlands PTE can have on services in the peripheral area. The great power of the PTE sometimes means that local authorities such as Worcestershire and Herefordshire do not receive the services they would like to the conurbation because they are outgunned by the PTE. What impact, if any, would the amendment have on that?
Tony McNulty (Labour, Harrow East)
The short answer is none in any direct sense, but the wider position to which the hon. Gentleman referred of those parts of the west midlands region that are not part of the West Midlands PTE area would prevail. Nothing that we are doing in seeking to look at the co-signatory, co-specification status of PTEs vis-à-vis franchises would impact on that relationship which, I freely accept, may sometimes be not as satisfactory as those in Hereford, Worcester and areas peripheral to the PTE area would like. I am sorry, but the Bill does not solve that issue.
If we lose the Bill, we will lose the biggest devolution of Executive functions to Scotland since the Scotland Act 1998. We would have continued uncertainty and unnecessary expense in the rail industry for those who depend on it and uncertainty in the financial and commercial markets for investors. The substantial stakeholder involvement throughout the process, from the rail White Paper to the Railways Bill, has been marked by considerable agreement in the rail industry, not only about the direction those documents give us and the certainty it affords, but that there should be a degree of consolidation afterwards, without constant changes to relationships and structures. To have the Bill fall on that item, for it all to come a-crumbling down and start again, would be a matter of regret, not least—if I may return to my opening statement—because this place and the noble Lords have dealt with so much of the Bill in fine order.
I am sure that Members do not want that to happen, so I hope that they will join me in disagreeing with the Lords in this amendment and sending that message back, with thanks for all they have done so far but a gentle disagreement on this issue.
Greg Knight (Conservative, East Yorkshire)
First, may I associate the official Opposition with the Minister's opening remarks? We, too, thank the other place and congratulate the Lords on the way that they dealt with the Bill. The concordat between the Front Benches ends there. I do not agree with the conclusions that the Minister reached about passenger transport executives, as I shall make clear.
Passenger transport executives were created in 1968 by the late Barbara Castle and although they are children of a Labour Government I pay tribute to their work up and down the country over the years. The Lords amendment to which the Minister takes exception seeks only to keep the status quo. I cannot understand why he finds it so objectionable. It seems bizarre that a Government who have been urging us all to embrace regional government and devolved powers want to take away some of the powers and influence of PTEs.
In the past PTEs may, on occasion, have delayed the decision-making process. We accept that, as did Members of all parties in the other place who supported the amendment, because it contains a 60-day limit during which the concerns must be dealt with. Such a delay is not a long period, but it would allow PTEs to have their say and reflection to take place. PTEs should continue to be co-signatories.
The Minister referred to the history and I can confirm that it was the last Conservative Government who, in 1993, gave PTEs that power, even though I think that every PTE was Labour-controlled. That goes to show that the Conservative party, when in office, is willing to be fair and to give people a platform for dissenting views, even if they are members of a different political party. It is bizarre that a Labour Government are trying to take that power away from mainly Labour PTEs.
Members on both sides of the other place spoke in favour of the amendment to which the Minister is asking us to disagree. I hope that the vast army of Labour MPs who are no doubt watching our proceedings on their office monitors as they enjoy their last week as Members of this place will join us in the Lobby to speak up for, and vote for, local democracy.
Many local people give much of their time and energy in the interests of rail services in their region. That local democracy is worth supporting. Of course, we accept that some PTEs are better than others, but overall we believe that they have been a force for good and that the Minister is not being entirely straight with the House when he uses the threat that agreeing with the Lords would put the future of the Bill at risk. The Minister has got the decision wrong. He should think again, so I urge my right hon. and hon. Friends to vote no to give him the extra thinking time that he so clearly needs.
John Thurso (Liberal Democrat, Caithness, Sutherland and Easter Ross)
May I say at the outset and by way of very short preface that this is a good Bill? It contains a great many things with which I agree, not least the point that the Minister raised of devolution to Scotland. It is an important piece of devolution that will allow my colleague in the Scottish Executive to deliver good transport solutions on railways for the Scottish people. Therefore, I am with the Minister in the statement that he made that the Bill should not be lost.
I am pleased with some of the compromises. Indeed, I also associate myself with the remarks regarding the way in which the other place has worked on the Bill that have been made by the other two Front Benchers. I am pleased that the Government have seen fit to compromise, where sensible, both in the compromises that have already taken place and the one that may be promised later today. As the right hon. Member for East Yorkshire (Mr. Knight) just said, that does not mean that we should roll over and agree to the Government's view on Lords amendment No. 1. The Government have got this wrong and it would be worth their while thinking again.
I am sorry that the Government have chosen to reject Lords amendment No. 1 and its consequential amendments because the proposal made by my noble Friends and supported by Lords on both sides of the House, not least by those on the Government's Back Benches, is reasonable and seeks to address a deficit in the Bill.
I listened with great care to the Minister's comments. He is always reasonable and he dealt with us very reasonably in Committee. I understand his argument, but he has not persuaded me. I do not understand why, when we are seeking to give people the right to consider decisions locally, it was not possible to find a way in which that expression could be put into the Bill.
The arguments have been well rehearsed in the House throughout all the debates on the Bill and pretty well rehearsed in the other place during most of its stages there. The issue is simple: PTEs in England have a responsibility—I would say, a right—to deliver sound transport solutions in their areas. Rail must be a key part of those solutions and, prior to the amendment made in their lordships' House, the Bill removed from PTEs their involvement in the rail process, taking that entirely to the Secretary of State for Transport—apart from an ability to consult—thus removing rail from the responsibility of PTEs.
Lords amendment No. 1 is reasonable, because it seeks to reintroduce into the Bill some way in which PTEs can fulfil that duty and recognises the Government's right desire to ensure that decisions are made timeously and expeditiously. The Lords put into the amendment a 60-day limit, thus permitting a reasonable compromise between no involvement whatsoever and a far too lengthy system, which is precisely what the Government wish to avoid.
The Minister talked of months of delay in the process. All the processes that I have seen for franchise letting tend to take many months and I really do not think that any franchise process would take less than three to five months to undertake. To give at the beginning of that process a notice that there are 60 days in which a PTE can become involved would not necessarily disrupt that process.
The Minister also said that the proposal would not fit in with the post-White Paper world. I do not accept that. As he knows, I support the provisions of the White Paper and am happy that they should be legislated for, but I do not see why the Lords amendment could not be accommodated in some way. I therefore have to say to my right hon. and hon. Friends that we should vote in favour of the Lords amendment or, at the very least, give the Lords an opportunity to make the Government think again.
Bill Cash (Conservative, Stone)
I am interested in the provision because it pertains, among other things, to the question of station services and bus substitution services, which are a direct matter of concern in my constituency. I accept that the Minister has not yet taken over the responsibilities of the Strategic Rail Authority, but we had a constructive meeting last Saturday with the SRA about Stone and Norton Bridge stations, the famous station at Wedgwood and the one at Barlaston that are on the line that is now subject to closure. However, the SRA cannot now make any assumptions about what is in mind for those stations.
The problem is that enormous inconvenience will be caused to my constituents if the stations on that line are closed. There is a petition and strong campaign—with which, as you might imagine, Madam Deputy Speaker, I am fully associated—to keep the stations open. I am glad to say that there was a constructive atmosphere at the meeting last Saturday, but the matter needs to be sorted out.
Bus substitution services would come within the framework of clause 13. If a franchise agreement were issued, the Secretary of State would have to consult the executive about a range of matters including station services. I note that station services are defined in clause 13(9) as
"services provided in connection with any such service for the carriage of passengers by railway".
That is an issue of grave concern to my constituents. When the Secretary of State takes over the role, I will want to know for sure that there would be no question, when he consults the executive in that area, about his sticking with what the SRA has clearly indicated at that important meeting: the stations at Stone, Norton Bridge, Wedgwood and Barlaston would be kept open. It is an important matter for my constituents, not least because the service is part of the community in that area.
I looked up this afternoon the private Act that gave rise to the creation of this railway in 1846. It has been pivotal to the community for the whole period since then. In a positive and constructive sense, we would also like to look forward, as I said at the meeting, to cross-country trains—
Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)
Order. I have been fairly generous with the hon. Gentleman, but I hope that he will now confine his remarks to the amendments.
Bill Cash (Conservative, Stone)
Yes, indeed, Madam Deputy Speaker.
The amendment says that the statement to the Secretary of State should specify
"any minimum level of quality with respect to the operation of any station within the area in question which may be required by any such franchise agreement."
In that context, a minimum level of quality would include that stations are kept open. I am anxious to ensure that that happens when there is the transfer from the SRA to the Minister. Of course he will then be directly accountable to the House for the exercise of those functions.
There is a power to close stations in clause 29 and subsequent clauses. If stations were closed, it clearly would not be possible for meaningful consultation to take place under clause 13 between the Secretary of State and the executive of an area, which is why I support Lords amendment No. 1. Proposed new subsection (1A) would specify that there would have to be a statement on the minimum level of quality of the operation of a station in an area that could be required under a franchise agreement.
In a nutshell, I am simply concerned that Stone station and the other stations that I mentioned remain open, that the service of the railway operators to my constituents is maintained and that positive and constructive development of the railway line to Birmingham, Manchester and the locality is continued. I do not in any way resile from the fact that I believe that we will win the general election, but none the less I look to the Minister who has present responsibility for the matter—although not, I hope, for much longer—to maintain the stations for the benefit of my constituents.
Clause 35 — Closures Eligible to be Treated as Minor Modifications
Tony McNulty (Labour, Harrow East)
I beg to move, That this House agrees with the Lords in the said amendment.
Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)
With this it will be convenient to take Lords amendments Nos. 9 to 13, and 15 to 17.
Tony McNulty (Labour, Harrow East)
I do not wish to detain the House. These are either technical amendments that are fully endorsed by the other place or amendments that follow on from the recommendations of the Delegated Powers and Regulatory Reform Committee and, again, are endorsed by the other place. I commend them to the House.
Lords amendment agreed to.
Lords amendments Nos. 9 to 13 agreed to.
Schedule 4 — Reviews by ORR of Access Charges and Licence Conditions
Tony McNulty (Labour, Harrow East)
I beg to move, That this House disagrees with the Lords in the said amendment.
Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)
With this it will be convenient to take Government amendments (a) to (e) in lieu.
Tony McNulty (Labour, Harrow East)
As with the first group of Lords amendments, in disagreeing with them, we are offering sufficient wording in lieu to meet not just the concerns expressed in the other place but anxieties raised in this Chamber and in Committee.
In the other place and in Committee concerns were highlighted, particularly by the right hon. Member for East Yorkshire (Mr. Knight), about adverse effects on train operators' businesses if an access charges review results in the reduced capacity of the rail network. An amendment was tabled to address those concerns. While the operators' contracts provide for mitigation and compensation for any adverse effects arising from a change to the network's capability, there is no explicit requirement for either the Office of Rail Regulation or the Secretary of State to consider those matters during an access charges review. Both the Secretary of State and the ORR have given public undertakings that issues of mitigation and compensation for adverse effects will form part of an access charges review. However, the other place and some hon. Members do not consider those undertakings to be sufficient, and wish such matters to be enshrined in legislation.
The Lords amendment addresses that concern, and would confirm in statute a commitment already given in the written undertakings. It makes it the duty of the ORR to notify the Secretary of State when it appears that such adverse effects are likely, and to advise the Secretary of State of the mitigation and compensation that would be required, and of the costs of those measures. The amendment gives the Secretary of State the opportunity to revise his specification, or budget, or both, to mitigate those adverse effects. It also requires the ORR, in conducting an access charges review, to have regard to any adverse consequences for train operators, and in particular any need for mitigating measures, or compensation, or both. Of course, such adverse consequences may not arise from an access charges review, but the amendment ensures that if they ever do arise, both the ORR and the Secretary of State will be obliged to take full account of the consequential need for mitigation or compensation.
It is not possible to concede everything that is proposed in the Lords amendment, because it would allow legislation to interfere in matters already treated wholly and properly within contracts. Further, it commits the Secretary of State and Scottish Ministers to find additional public money to fund any shortfall in adequate compensation, leaving the determination of what is adequate with the ORR. The amendment from the other place therefore undermines two important points of principle, to which we have adhered during the passage of the Bill: the primacy of the contract, and Ministers' ability to control their own budget.
By offering the words in lieu, we recognise the concerns expressed in the amendment from the other place and raised by the right hon. Member for East Yorkshire and the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) in our proceedings, without impinging on the contractual relationship. We think that that is the right and proper approach. I am grateful to their lordships for raising these issues. The words offered in lieu do what they require of us, but in a way that preserves the primacy of the contract. I commend to the House the Government motion to disagree and our words offered in lieu.
Greg Knight (Conservative, East Yorkshire)
I am grateful to the Minister for the out-of-Chamber discussions that we were able to have on the matter earlier today. There is an important point at issue which, as the Minister said, we raised twice, once in Committee and once on report, because we were concerned not about the threat to the independence of the Office of Rail Regulation, but about the scope of the powers—the jurisdiction. It seemed to us that that was at risk.
We were deeply concerned that the Bill could undermine the sanctity of contracts entered into voluntarily. That was why my party in the other place tabled the Lords amendment that is before us, in an attempt to protect investors against any Secretary of State putting the network into decline, making changes to access contracts and reducing the value of contractual rights. The amendment would provide protection for existing contractual rights. It was our view that if the Government were indeed acting in good faith, they should not have any difficulty in accepting the Lords amendment. Whatever budget is set for our rail network, it must surely take account of existing legal commitments. The amendment would therefore come into effect only in certain limited circumstances.
We accept that the Minister has been responsive to the concerns that we expressed and, dare I say it without his blighting his career, has shown his reasonable side. The amendment in lieu is not perfect. It is not ideal, but it is a move in the direction that we were urging the Government to take, and it is an acknowledgement of the force of the arguments that we adduced in Committee and on Report. It would be churlish of us to reject the Minister's overtures. We do not reject his welcome hand of compromise. We accept his suggestion that the House should adopt the amendment in lieu. I give him this pledge: next month, when I am sitting on the Treasury Bench with my colleagues, we will think of at least part of his time as Minister with affection.
John Thurso (Liberal Democrat, Caithness, Sutherland and Easter Ross)
I concur with the comments of the right hon. Member for East Yorkshire (Mr. Knight). The amendment in lieu that the Minister proposed in his new reasonable guise gives sufficient assurance and should be accepted. The matter should no longer be a point of conflict between us. I concur that the primacy of the contract is at the heart of the matter. The concern shared by the right hon. Member for East Yorkshire and myself was that, as drafted, the Bill could override a previously written contract. We agreed with the principle that the Minister advanced, but had a different interpretation. The words put forward by the Minister are not all that I would have wished to see, but they are certainly acceptable, and therefore I believe that the House should agree to them.
Gwyneth Dunwoody (Labour, Crewe and Nantwich)
I am slightly worried that the Minister might have been altogether too reasonable. Although I do not naturally recognise him in that guise, perhaps he will reassure me that the clause, rewritten as it is, does not underwrite all the financial obligations of the contract holders, and, as usual in the privatisation of British Rail, leave the taxpayer having to underwrite any changes that may come about. Is it not truly absurd to have the situation that has obtained hitherto where the regulator, who has had no responsibility to the taxpayer or anybody else, has been able to agree certain basic charges and changes without any regard to the cost in the long run?
Tony McNulty (Labour, Harrow East)
I can certainly give my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) that assurance. As I said, the Lords amendment far more readily offered an open and blank cheque in those terms, and took away from Ministers the ability to control budgets, as ultimately they should, as well as impacting on the primacy of the contract, which is why I am grateful for the agreement of both Front-Bench spokesmen. Without pursuing the point, the words that we have offered in lieu far more readily and in a neater and more efficient way address the concerns raised, with the caveat from my hon. Friend, rather than the existing words, and in that context, I commend them to the House.
Lords amendment disagreed to.
Government amendments (a) to (e) in lieu of Lords amendment No. 14 agreed to.
Lords amendments Nos. 15 to 17 agreed to.
Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments Nos. 1 to 7: Mr. Greg Knight, Mr. Khalid Mahmood, Gillian Merron, Mr. Tony McNulty and John Thurso; Mr. Tony McNulty to be the Chairman of the Committee; Three to be the quorum of the Committee.—[Gillian Merron.]
To withdraw immediately.
Reasons for disagreeing to certain Lords amendments reported, and agreed to; to be communicated to the Lords.