HC Deb 25 May 1993 vol 225 cc823-41
Mr. Cynog Dafis (Ceredigion and Pembroke, North)

I beg to move amendment No. 227, in page 4, line 19, at end insert— (h) to protect the interests of rail users living in rural areas or on the route of predominantly rural railway lines.'. The fact that the Bill is driven at least partly by the need to modify the United Kingdom's current economic difficulties by raising ready cash for current spending emphasises the need for a commitment to protect predominantly rural lines to be included on the face of the Bill. Hon. Members will be aware of the findings of the Transport 2000 report, which concludes that any savings resulting from privatisation will be heavily outweighed by extra costs of various kinds, leading among other things to the closure of most rural train services. Any proposal to close any line in Wales will be met by public fury. Such a response would be wholly justified.

Let me give an example. The Cambrian main line from Shrewsbury to Aberystwyth is classed as a rural line. In the Transport 2000 scenario, it would be a candidate for closure. The effect of such a closure would be disastrous. At Aberystwyth we have a centre of higher education and research of international significance. The education and research activity is not only important in itself; it is fundamental to the economy of the western seaboard of Wales.

The institutions that constitute the core of the economy of Aberystwyth and its hinterland—the University of Wales in the town, the Welsh agricultural college, the national library of Wales, the Institute of Grassland and Environmental Research and others—deservedly attract substantial public and private funding. For example, the University of Wales in Aberystwyth will receive £13,600,000 this year from the Welsh Higher Education Funding Council. The railway line linking all those institutions to the rest of Britain, including London and the south-east—which is the immediate source of a considerable amount of their funding—is literally vital. It is essential for journeys to conferences, seminars and committee meetings, to attend and deliver lectures and so on. It is essential for the rapidly expanding student body which patronises it extensively and economic development of other sorts through the Development Board for Rural Wales. Public funding is made available to provide factory space and so on and funding is provided through the Wales tourist board to enhance the area's attractiveness for tourism.

The money that is made available to the Aberystwyth-Shrewsbury line from the public service obligation grant —it is about £2.5 million per annum—and bodies such as the DBRW and local authorities is well spent. It needs to be seen not as a subsidy to prop up an unprofitable line but as essential investment. Without that funding, other public and private sector money would be money down the drain.

Not all rural lines are able to make such ambitious claims as the Aberystwyth to Shrewsbury line, but they have a highly significant role in their various ways. The closure of the Cambrian coast line from Meirionnydd to Pwllheli would be a bitter blow to the economy and communities of Meirionnydd, Dvyfor and Arfon.

Mr. Dafydd Wigley (Caernarfon)

Does my hon. Friend accept that the line to Pwllheli is absolutely vital not only for the local community but for the tourist industry, which is one of the main industries in the area? The area has high unemployment and is threatened with losing intermediate development status.

Mr. Dafis

My hon. Friend's point underlines the theme that I am pursuing—that is, that grants of this sort must be seen as part of public investment and part of the economic prosperity of the areas in which they operate. At the same time, the loss of the glorious heart of Wales line would be a serious deprivation to extensive rural communities and would eliminate the link between the Cambrian and Great Western lines. Those lines are important. But if they are important today, they will be more important in the future.

Tomorrow, European Standing Committee B will consider, among other things, a draft directive from the European Community introducing a tax on carbon dioxide emissions and energy. That is a straw in the wind indicating the way in which that wind is blowing. We are witnessing no less than the hesitant setting out on the difficult journey towards environmental sustainability. As to where that journey will take us, one can only theorise at this stage. But no one should underestimate the enormous implications of the need to achieve environmental sustainability. What is certain is that it must involve a massive shift in emphasis from private to public transport and from road to rail. In turn, that means that any area that lacks a railway in the future will be more severely disadvantaged than it is at present. We must not allow the difficulties and inefficiencies created by privatisation to undermine the key component in the economy of the future. That is why we need this amendment on the face of the Bill.

Finally, and perhaps most importantly, the Government's proposals for franchising announced yesterday—they were praised in some areas—are totally unacceptable to the people of Wales. What logic on earth can justify a structure that puts Fishguard with Penzance, Pwllhelli with Lowestoft, Barmouth with Yarmouth and Blaenau Ffestiniog and Holyhead with Carlisle? The proposals will fragment the Welsh railway service, leaving most Welsh routes peripheralised. It is no less than an attack on the national integrity of Wales.

Even at this late stage we demand that the Government adopt the imaginative and practical proposal of the Select Committee on Welsh Affairs that a Wales and the Marches railway be established and franchising—if, alas, it must come—be based on that structure. It is a well researched and firm proposal. It was studied and is supported by the Select Committee. That is the only way in which we can hope for an expanding rail service that is relevant to Welsh needs and—this is equally important and perfectly possible—an integrated transport policy for Wales. The Welsh Office is responsible for Welsh highways. It should also be made responsible for funding the rural railways of Wales. If we do not receive an undertaking from the Government to provide such a structure, we shall force a Division on the amendment.

8.15 pm
Mr. Malcolm Bruce (Gordon)

I am grateful to the hon. Gentleman for tabling the amendment because the issue is extremely important. The amendment draws attention to the importance of the rural rail network and the need to secure it. The hon. Gentleman understandably—because he comes from a Welsh constituency—talked especially about Wales. I apologise for not being here at the beginning of his speech.

I am sure that the Minister is well aware that there is considerable concern in the rural areas of Scotland about the future of the network. At the beginning of May, there was an event in Inverness that involved Liberal Democrat Members and people from all over the north of Scotland. More than 200 people were in the town house in Inverness demonstrating their support for the railway network in the north of Scotland and their concern for its future.

One of the people who spoke in support of the campaign that we were launching at that juncture was a member of the Conservative party and a councillor for Caithness and Sutherland. He expressed his extreme disquiet as to how on earth the fragile rail network in the north of Scotland could survive franchising, let alone full privatisation. There were representatives from the Scottish National party, the Green party and the railway development society at the event, as well as many representatives from the Liberal Democrat party.

All the lines that serve the north of Scotland lose money. It is difficult to see how on earth they can make money in a straightforward business sense for the simple reason that they cover long distances over sparsely populated areas where, although tourism is a major attraction and source of revenue, they are a permanent year-round link for people who live in the area. That is the real concern of the local community.

If one goes to the west highlands, there is no doubt whatever that the number of people travelling on the Kyle line—it is one of the most attractive and scenic routes in Britain and perhaps in Europe—bring an enormous amount of business to the communities of Kyle of Lochalsh and Skye which would not otherwise arrive if there were no railway. Many people simply would not go if they had to go by road. It is the attraction of the rail service that takes them there.

Obviously, the same argument applies to the West Highland line that goes from Fort William to Mallaig and across to Skye. Such services are absolutely vital. ScotRail recently announced that it will no longer take tanker freight on the west coast line and freight will now have to travel on a wholly inadequate road. A decision was made last year to change the basis on which freight would be accepted on the railway line that most directly affects my constituency—the one running between Aberdeen and Inverness. At one point, we were faced with the possibility of a substantial amount of timber traffic, whisky industry traffic and paper industry traffic being diverted from the railway line on to the A96. Ministers have acknowledged that the A96 is one of the busiest and most dangerous roads in the north of Scotland. A £100 million upgrade programme has been launched for it.

Yet the road is wholly inadequate for the extra traffic that would have to travel on it if the railway line was even run down—never mind closed—and freight could not be handled on it. The amendment is important. I shall be interested to hear from the Minister how a ScotRail franchise will fundamentally change the nature of the service in ways that will reassure the community in the north of Scotland. I can tell him that the community is not assured by the present state of the service or its future development.

The Minister will be well aware of the changes in the fare structure that were introduced last week. As a consequence, some regular travellers on the line between Inverness and Aberdeen in the constituency of the hon. Member for Moray (Mrs. Ewing) and in my constituency face fare increases of up to 60 per cent. If people cannot absorb such an increase, they will travel by car on a road which is already congested and, of course, deprive the railways of the revenue. One is left with the suspicion—I put it no higher than that—that ScotRail is about discouraging people from using the railways to the point at which it can justify cutting the service and perhaps ultimately phase out the lines which lose the most money.

The House will be interested to hear how the Minister believes that his proposals will not merely protect the lines but ensure that the service is developed and used in the way that local communities want. That requires several things. It requires a competitive fare structure that will attract people on to the network, services that connect with the main line inter-city services to the south, rolling stock that meets the needs of passengers, and reliability of service. None of those things is available now.

If the Minister's argument is that, by definition, franchising or privatisation must be an improvement, he must tell the House how and why. As far as I understand it, the main applicants for the franchises are likely to be the existing management of ScotRail. If the managers are not managing now, it is difficult to see how they will do so in the same basic scenario. They need investment, a proper transport policy and a commitment to a future for rural lines. Rural lines must be not only protected but developed and invested in. We must have a proper transport policy to secure their future and use them in the interests of the whole community.

I welcome the amendment tabled by the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis). If I do not receive assurances, I shall certainly join him in the Lobby.

Dr. Marek

The hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) has tabled a useful amendment. In Committee many amendments were tabled to clause 4, which deals with the duties of the regulator. Although amendments were tabled which encompassed amendment No. 227, a specific amendment to that effect was not tabled. As the topic is new, it has been chosen for debate. I welcome that. The hon. Gentleman has my support principally because the subsections of clause 4 will be many and varied.

Clause 4 will create a conflict of duty for the regulator. He will have to decide whether he should place more weight on one duty under clause 4 or on another. If amendment No. 227 is accepted, the Bill will say explicitly that an important part of the railway network must be considered by the regulator. It is even more important that the clause should include such a requirement in view of the map which the Government have produced for the franchise networks.

I shall not deal with all the networks. Let us examine one franchise network. The one called Central is a huge amorphous mass which stretched from East Anglia to the west coast of Wales. It is clear from the map that the lines in Wales will be peripheral to the organisation that will run the Central franchise. Such lines will not make a profit because the lines are a service to the people. They are part of the social railway, so they will depend for their existence on grant or subsidy from the Government. Subsidy is not a dirty word; it is there for good social reasons.

The lines in Wales will demand more subsidy than the lines in the west midlands or east midlands. As he will have to satisfy the shareholders, the franchisee will look for where he can make savings to increase profits. That will always be at the expense of the lines in Wales.

Mr. Elfyn Liwyd (Meirionnydd Nant Conwy)

Does the hon. Gentleman accept that a subsidy for socially necessary lines will be guaranteed for only three years under current Treasury rules? Does he share my anxiety about the future after that initial honeymoon period?

Dr. Marek

The hon. Gentleman makes a good point. It was put well by the late Lord Ridley—perhaps it was a deathbed repentance. What he said was right. Once the franchise has been granted, after three, four or five years the franchisee will say that the subsidy is not high enough. He may say that a recession or something else has occurred and that he needs more subsidy. But the Treasury will say —certainly with the Government's handling of the economy, bringing it to the brink of ruin—that there is a £50 billion public sector borrowing requirement and that it must cut the subsidy. What will happen after that?

Rural lines in Wales will be threatened with closure as a result of the Government's proposals. I have no doubt about that. It will happen because the lines in Wales will be peripheral to the franchise.

It will be worse than that. The inter-city lines will probably be truncated. I doubt whether we shall have any inter-city lines to Holyhead after the three-year period comes to an end or after four or five years. It is far more likely that the west coast main line inter-city service will operate along the main line proper, going to Liverpool, Manchester and perhaps Preston, but that feeder services will be run from Crewe to Holyhead. The same thing will happen on the Great Western main line from London to Cardiff. Perhaps services in Swansea will not be up to the present frequency. There will certainly be no inter-city services to Carmarthen or Fishguard.

I am depressed by what is happening and by the large franchises that the Government propose. They will not do Wales any good whatever. The centre of operations will be Birmingham. Wales will be an encumbrance to the franchisee. It will be something that the shareholders can do without. It will lose money. Evening services will be cut.

The Railtrack authority will not have so much incentive to keep the track bed in good condition, so the services will be slower. There is one thing that we can do. Opposition Members do not have the powers that Conservative Members such as the right hon. Member for Tonbridge and Mailing (Sir J. Stanley) and the hon. Member for Ashford (Sir K. Speed) have; those powers are welcome and they use them well. They have achieved a few concessions. It is all very well the Minister saying that the Central Rail Users Consultative Committee should be able to consider fares. He did not say that to me in Committee two months ago.

Mr. Alan Williams (Swansea, West)

Does my hon. Friend recognise that the concessions may have been won at our expense? In the past 48 hours we have had talk of capping to assuage the fears of some Conservative Members. The concept of socially necessary railways may be replaced by politically necessary railways.

8.30 pm
Dr. Marek

That is very likely, but I do not want to be rude to the Minister at this stage because there is a possibility that he will accept this amendment. He has been very good off and on this afternoon. I shall try to catch your eye later on, Mr. Deputy Speaker, if he proves not be as helpful as he has been.

Wales suffers from this peripherality problem in the north, the centre and the south. He should do something about it, and one of the things he could do is to accept the amendment of the hon. Member for Ceredigion and Pembroke, North.

Mrs. Margaret Ewing (Moray)

I am a co-signatory of this amendment and I believe that many hon. Members are grateful that it has been called so that we can discuss the issue of rural railways.

I wish first, on behalf of all my colleagues on the nationalist Bench, to place on record our great respect for Robert Adley, who was the Chairman of the Transport Select Committee. Those of us who were here in the 1970s remember him well. We will very much miss his independent spirit, his approach and his kindness to all hon. Members, as well as the respect in which he held every point of view. I speak very personally, since Bob was a neighbour of mine in London, living directly opposite me in Pimlico. I shall miss him as a very kind personal friend.

Turning now to amendment No. 227, as I have said, many of us welcome the fact that there is an opportunity to discuss at Report stage our great concerns about the future of railways in rural areas. Many of us can speak about aspects in our own constituencies and I, of course, will do that. But I hope that the Minister will bear in mind that those of us who speak on behalf of our rural areas are also taking on board the importance and significance for all other rural areas of the United Kingdom.

I wish to refer in particular to the Inverness to Aberdeen railway, which has already been mentioned by the hon. Member for Gordon (Mr. Bruce). Inverness is, of course, the capital of the highlands of Scotland and Aberdeen is the oil capital of Europe. There are 109 track miles between those two centres and they are a very vital 109 miles. The stations along that line—not only in my constituency, but in the constituencies of the hon. Members for Inverness, Nairn and Lochaber (Sir R. Johnston) and for Gordon—Nairn, Forres, Elgin, Keith, Huntly, Insch and Dyce, are all extremely significant to the economy of our communities.

Two of the stations within my constituency, Forres and Elgin, may have particular memories for the Minister in his previous capacity in the Ministry of Defence, because they are vital to the two RAF bases of Kinloss and Lossiemouth, serving not only the personnel on those bases, but their families and friends. They are vital to the whole life of our communities. There are the commuters who travel daily, perhaps westward to Inverness or eastward to Aberdeen, for their jobs. Many people are attracted to our area because of its beautiful environment, the hospitality of our people and the fact that it is a very pleasant area to visit. It is vital that our tourist industry is sustained if we are to compete with other areas.

This is also an extremely important line for students in my constituency who travel to Inverness college or to Aberdeen, to one of the two universities there, or to some of the other colleges.

I refer particularly to something that has happened recently. From Keith, in my constituency, a student who formerly paid a fare of £7.25 daily is now expected to pay £11.50 daily—an increase of 60 per cent. Many of these people are mature students and perhaps single parents, who may be turned away from training and education opportunities.

I therefore argue strongly that we should think carefully about those who use the line and ensure that they are asked to pay only economic fares, making it possible for them to promote their careers and their future.

The same applies to our pensioners, who are now expected to pay an increase of 50 per cent. Yet, for pensioners, the opportunity to visit Inverness or Aberdeen is vital to their social lives.

Mr. Alex Salmond (Banff and Buchan)

It is worth emphasising to the Minister, in case he is not aware of it, that, because of the accommodation crisis for the two universities in Aberdeen, students live in a very large area served by the railway line in my hon. Friend's constituency, and also live in my constituency, where there is no railway at all. They are forced to travel each day as they cannot be offered accommodation by the unversities because of the exceptional pressure on rents and properties in Aberdeen.

Mrs. Ewing

I certainly agree with my hon. Friend. That is a point that should be emphasised, because all the stations along this line serve a very substantial rural hinterland. They do not serve the town or village alone; they serve a large number of people who travel by bus or car to the stations to travel on to Aberdeen or Inverness.

We should not forget the businesses in our community. I never cease to remind the House that my constituency contains 43 whisky distilleries—some of the biggest money-spinners that the Exchequer has in the United Kingdom. It is very important to that business that we have good communications, not least because the whisky industry attracts many tourists who want to follow the whisky trail and spend money in our communities.

We have agriculture, fishing and timber and their associated processing industries. They need to be able to compete on a level playing field with the rest of the European Community. If there is any threat to the Inverness-Aberdeen line, a substantial part of the economy, not only of the north-east and the highlands of Scotland, but of the United Kingdom, will be threatened.

At the moment ScotRail appears to have decided to de-man our stations in the rural communities. It seems that in Forres and Keith there will be no cover in the evenings for people either boarding or alighting from the trains. This is particularly important for women and students, young people who are perhaps afraid to get off the train because of the surrounding conditions.

I ask the Minister seriously to look carefully at assuring the future of this line, the safety, and the level of fares that will make it an economic line, and at guaranteeing that there will be no rundown of the service.

The current fears in my constituency are perhaps epitomised by an article in the Banffshire Herald, under the headline: ScotRail fares shock for Keith young people", in which ScotRail says that, having always thought that it was an independent organisation, it now has to folllow national rulings on fares and manning levels.

These fears are now being exacerbated by the prospect of a franchising system which would make this line one of those threatened, and I make a strong plea that it be given special consideration.

Mr. Wilson

This is an important debate and it is noticeable that rural Wales and rural Scotland are well represented here, while the voice of rural England is largely notable by its absence. I would think that there are large parts of England where rural services are threatened and it might have been prudent, from a sense of self-preservation, at least to listen to what is being said, even if not supporting the amendment in the Division.

There is no doubt that, if the Bill goes ahead in its present form, a substantial number of rural services will disappear within a relatively short time. That is because there will not be the money in the system to sustain them. It will not be in the system that is at present run by Regional Railways and, as my hon. Friend the Member for Wrexham (Dr. Marek) said, there will be particuarly serious implications for InterCity services to the peripheries, for reasons which we discussed last night.

I was interested in the point made by the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) about the Welsh franchises. He is absolutely right; it is an extraordinary dog's breakfast and the Welsh are right to take such an attitude towards it. I was also interested in his point that the Welsh Select Committee had made a powerful and well-considered argument in favour of a Welsh railway entity similar to that which exists in Scotland. Scottish regional services have been categorised as a franchise.

It is worth drawing attention to the contrast between what happened in Scotland and what happened in. Wales. In Scotland there was no argument from the Select Committee or anyone else in favour of franchising the entire Scottish service. That is confirmed by the fact that, whereas the ludicrous approach which characterises the Bill has been applied in Wales, in Scotland the rationale for turning ScotRail into a private railway is not because there is any intrinsic merit in it but because that approach has been built round an expression of interest. The Government are so desperate to get interest in management buy-outs that when one emerged in Scotland it was seized on and used as a justification for their approach.

I have no doubt that if the legislation takes its logical course, there will be rural closures. Some of the reasons have been mentioned already and I shall not repeat them. It is clear that there will not be enough money in the system. I shall briefly dwell on two additional reasons that have not been mentioned in the debate.

One of the buzz words of the legislation has been transparency. I would not wish to misquote the Minister, but I think that he said in Committee in a very grand manner that transparency was an important principle of Conservatism. I remarked that transparency is something that one can see through. When applied to the legislation, transparency is an immensely dangerous concept for rural rail services.

The opposite of transparency is cross-subsidy. At present, we have a sensible arrangement whereby we have loss-making lines and profit-making lines and a balance between them because we are operating a social railway and the social ethos and commitment is accepted. However, in the brave new world that the Minister is trying to create there will be transparency. There, for all to see, will be the costs and the revenue attached to each line. As soon as the figures emerge, the threat to the existence of the heavily loss-making lines will be multiplied overnight by many factors.

The Government will be able to say from day one, "Is not it absurd that we are paying this level of subsidy per passenger when there is a bus service? Why not substitute the bus service for the railway?" That argument will be advanced from an early stage. Because the operators will have a vested interest in getting rid of the services, every trick in the book will be deployed to create a level of usage and therefore a ratio between a usage and a subsidy that will appear so absurd that they will be able to withdraw the service. Transparency is an important factor and a serious threat, particularly to rural services.

Another reason of which I have become aware when travelling around Scotland, England and Wales is the fact that in rural areas and remoter parts of the country geographical conditions often produce particularly difficult and expensive problems in maintaining the railway. That is quite logical when one thinks about it. I pay tribute to the engineers and the genuine entrepreneurs —as opposed to the chancers who rip off public assets today—who built the railways, the viaducts and the infrastructure in rural areas. However, that infrastructure is difficult to maintain.

When the Bill becomes law, the costs that attach to each line will be set against that line and not against the system. I have discussed the effect of that in a local context in the south-west of England, the north of Wales, the Lake District and, of course, Scotland.

The classic example was the floods in Scotland in January when two bridges were washed away. From the day after the incident happened, ScotRail and British Rail were on the scene. There were no questions asked about whether the work should go ahead on the two bridges in Perthshire and the line brought back into operation as quickly as possible. British Rail was bringing back into operation lines which had and always would be loss making but on which rural services were dependent. To do that, without any doubt or delay, it spent £1 million.

8.45 pm

What would happen in future is very much open to question. It will not be British Rail that will be charged with the responsibility or the decision about what to do with the loss-making routes and the reopening of the bridges; it will be Railtrack, which will be under commercial instruction to get an 8 per cent. return on profits. Where that £1 million would come from to restore the bridges is in itself questionable. If it were found, it would be set against the costs of that particular line and no other. However, Railtrack could decide not to spend £1 million and to close the line.

I am sure that hon. Members representing all rural parts of Britain can identify similar problems in their own areas where viaducts, embankments and bridges are extremely expensive to maintain and where, without exceptional expenditure, the lines will close.

There are two additional reasons why rural railways will be very much under threat. No assurance that the Minister can offer tonight will change the picture as they are intrinsic factors which will create grave doubts for many of the lines. The Minister cannot tell me tonight that in the same circumstances Railtrack would have spent £1 million to bring a loss-making railway back into use as Railtrack will have a commercial imperative laid upon it by the Government.

It is an important issue. Everything running through the Bill concerns rural areas, but I am happy to discuss them in a specific context, as we did in Committee, and to emphasise what is obviously a concern to me in Scotland, but also applies throughout Britain—that rural rail services are endangered and the Bill presents the gravest threat to them since the existing network was established and settled more than 20 years ago.

Mr. Freeman

The hon. Member for Cunninghame, North (Mr. Wilson) says that he is at least one of the voices that speaks for rural Scotland. I speak for rural England and, frankly, many of my right hon. and hon. Friends have been infuriated by the fact that the hon. Gentleman believes that if he repeats often enough the false assertion that rural railway lines will close, it will happen. It will not happen and I want to explain concisely but clearly to the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) why his rural railway services are not under threat.

First, we have given a commitment that subsidies for our socially necessary services will continue. The level of support from central Government and from local authorities will vary depending upon the profitability of the railway services. That subsidy is now running at the rate of about £1,000 million per annum. It fell in the middle of the 1980s when fare revenues were rising. Broadly speaking, at the beginning of the 1980s, they were at the same level as they are today. We have given a clear commitment that central Government—the taxpayer—will support socially necessary services.

I have been debating that point with the hon. Member for Cunninghame, North for four months, week in, week out, and he is still not convinced that the change in the public service obligation grant this year compared with last year does not represent a threat to rural railway services or to Network SouthEast services.

The railways must adjust the frequency of their services in response to demand. The change in the public service obligation provision for this year compared with last year—it is the only year for which we have made a proper forecast; there are indications of how the external financing limit for British Rail might be split in future years, but we will not fix the PSO grant until just before the beginning of the financial year—has occurred for the good reasons of an increase in fare revenue, a diminution in costs and a change in the level of investment in rolling stock.

Mr. Salmond

The Minister is making the obvious point that railway revenue is cyclical—that in time of recession the revenue goes down and that during better economic circumstances it goes up. That is one of our fears. The Minister is saying that, in time of recession, the railways need more support than they require in different economic circumstances. Yet the Government are not engaged in a process of making radical cuts and reassessments of whole areas of public spending. Is he now saying that the railways will be immune from the assessment that is currently being made?

Mr. Freeman

The hon. Gentleman is misinformed because if he casts his mind back a couple of years he will see, if he studies the figures fairly, that the PSO grant was increased in mid-year for two years running as a result of the recession—[interruption.] Yes, it was increased by upwards of £500 million.

Mr. Alan Williams

How can the Minister give such assurances when the axe-wielding Chief Secretary is wandering around saying that absolutely nothing is sacred?

Mr. Freeman

If the economy is running at such a level that fare revenues are up—and obviously every extra pound that BR can attract from fare revenues largely goes straight down to the bottom line, because once one runs a train, most of one's costs are already sunk—less public support is needed to run an existing level of service. We have given a commitment to support socially necessary services. Next, we have said that we intend to franchise all railway services in Great Britain, including all the rural railway lines to which reference was made.

The hon. Member for Ceredigion and Pembroke, North referred to the franchise map. That map is based on the existing route structures of British Rail. Ministers did not decide how to arrange the provision of railway services in Great Britain. BR did that. We have simply said that we think it is sensible to build on the existing management structure of BR to franchise the services. So the hon. Gentleman should be directing his concerns to BR, not to Ministers, because we have said that we believe it to be sensible to proceed with the minimum reorganisation of BR's management structures.

Under the closure procedure, in the circumstance of a franchisee—or, indeed, BR—finding that there is not sufficient patronage, even with subsidy and the franchisee running services that were in the timetable immediately before the franchise, and there is need to close a station or a particular railway service, we have the toughest closure provisions in western Europe in terms of the procedures that must be followed, involving the rail users consultative committees and ultimately an appeal to the Secretary of State.

Mr. Ieuan Wyn Jones (Ynys Môn)

The possible closure issue is of particular concern. Does the Minister appreciate the valid point made by the hon. Member for Wrexham (Dr. Marek) about instances of a reduction in service, for example, a change from InterCity to regional use? That danger exists in north Wales. We fear that in three or four years from now, the InterCity service might be reduced or removed along the north Wales coastline and we shall be left with Regional Railways. What assurances can the Minister give that that will not happen?

Mr. Freeman

There are many complaints about the prospect of reductions in service. The InterCity service to Holyhead is part of the InterCity network and is part of the west coast main line railway services. When we come to franchise the west coast main line, it will be done on the basis of the services that then prevail. I am certain that that will include Holyhead, so the Holyhead services will be included in that franchise.

I accept the point made by several hon. Members about the potential for the development of lines, particularly for tourism, not only in rural Wales but in Scotland. We expect franchisees to take risks and decisions to expand railway services, particularly in the summer, because BR as a state monopolist is not a risk-taker. It has a precise overdraft and is therefore somewhat constrained. I am not criticising BR because that is the nature of a public sector body. But the private sector franchisee will take risks and will exploit the market where additional services can be provided. On the basis of discussions with potential franchisees operating in Wales and Scotland, I am certain that that will happen.

Mr. William Cash (Stafford)

Can I take it from what my hon. Friend said that the west coast rail link will go through? He suggested in a recent letter to me that the matter was open to certain tenders, options and the rest. I am delighted to hear that the west coast rail link will go through. Does he agree that many people who are now coming from Shrewsbury and other rural areas will make great use of that west coast link? It will be a highly cost-effective arrangement which will ensure that people get the kind of treatment that the Bill is designed to provide.

Mr. Freeman

I am grateful for my hon. Friend's support. I confirm that the west coast main line service will be franchised.

The argument of the hon. Member for Wrexham that he needs the amendment does not stand up. He will see that clause 4(1) says that both the Secretary of State and the Regulator shall each have a duty … to protect the interests of users of railway services". That applies to all railway services—rural, suburban and InterCity. Why should one write into the Bill a provision just for rural railway services?

Mrs. Ewing

Why not?

Mr. Freeman

Because once we started doing that, we should have to add every category of railway service that is comprised of BR's services. I hope that, on that logical basis alone, the amendment will not be pressed to a Division, and I suspect that it will not be.

Mr. Salmond

I had a feeling of déjà vu as the Minister was speaking. My mind went back to the debates of about five years ago when we were discussing the privatisation of the steel industry. Ministers were then assuring us that privatisation would make no difference to the future of the Ravenscraig steel plant. We were accused of scaremongering. Indeed, Ministers adduced a host of reasons to suggest that privatisation would assist the future of Ravenscraig.

We found what we suspected: that privatisation was used as an excuse for the Government to wash their hands of responsibility for the future of the steel industry. The privatisation process was used—[Interruption.] Perhaps the voices of rural England behind the Minister are finally entering the debate. Conservative Members may like to enter the debate rather than mutter from a sedentary position. That particularly applies to the hon. Member for Harlow (Mr. Hayes).

Mr. Jerry Hayes (Harlow)

What on earth has that got to do with the amendment?

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. Mr. Salmond.

Mr. Salmond

I know that the hon. Gentleman gets a little sleepy because of his commitments to late night television, but even he should be able to grasp the significance of a comparison between the two privatisations.

My point was that Ministers subsequently used the steel privatisation as an excuse or pretext for washing their hands of the future of the industry. I suspect that the same will apply in the case of the railways. The Minister tells the House that there is no need to write protection for rural railways into the Bill, but that argument carries little credibility. He argues, weakly, that we should respect his assurance that the Government will subsidise the railways by way of a counter-cyclical effect on the privatised railways lines. These are times of economic stringency when everything else is up for grabs. The Treasury is threatening to introduce highly unpopular charges in the NHS and even mortgage tax relief has been targeted—

Mr. Deputy Speaker

Order. The Chair has now decided that the hon. Gentleman is straying too far from the amendment.

Mr. Salmond

The Minister argued that the railways would be immune from the process of cost-cutting—a difficult argument to sustain, and it carries no conviction and swayed no sentiment. We believe that the privatisation process will be used as a pretext for the Government to wash their hands of the future of the railway system, and that system will be most at risk on the rural lines of Scotland, Wales and England.

9 pm

Mr. Dafis

The justification for the amendment is clear. It is generally recognised that rural lines are especially vulnerable because of their infrastructure costs—viaducts, and so on—and because they serve scattered populations. But they are certainly crucial to people who live in areas remote from population centres.

This vulnerability is explicity recognised in the recent report, "Transport 2000". The amendment would certainly be useful and it is necessary, we think, to mention in the Bill the responsibilities of the franchising authority for rural lines. The Minister is not prepared to accept the amendment, so I am afraid that I will have to ask the House to divide on it.

Question put, That the amendment be made:—

The House divided: Ayes 172, Noes 299.

Division No. 282] [9.1 pm
Adams, Mrs Irene Eastham, Ken
Ainger, Nick Ewing, Mrs Margaret
Ainsworth, Robert (Cov'try NE) Faulds, Andrew
Ashdown, Rt Hon Paddy Foster, Don (Bath)
Ashton, Joe Foulkes, George
Austin-Walker, John Fraser, John
Banks, Tony (Newham NW) Gapes, Mike
Barnes, Harry George, Bruce
Barron, Kevin Godman, Dr Norman A.
Bayley, Hugh Godsiff, Roger
Beith, Rt Hon A. J. Golding, Mrs Llin
Benn, Rt Hon Tony Graham, Thomas
Bennett, Andrew F. Griffiths, Win (Bridgend)
Benton, Joe Grocott, Bruce
Betts, Clive Gunnell, John
Boyce, Jimmy Hain, Peter
Boyes, Roland Hanson, David
Brown, Gordon (Dunfermline E) Hardy, Peter
Brown, N. (N'c'tle upon Tyne E) Harvey, Nick
Bruce, Malcolm (Gordon) Heppell, John
Burden, Richard Hinchliffe, David
Caborn, Richard Hogg, Norman (Cumbernauld)
Callaghan, Jim Hood, Jimmy
Campbell, Mrs Anne (C'bridge) Hoon, Geoffrey
Campbell, Menzies (Fife NE) Howarth, George (Knowsley N)
Campbell, Ronnie (Blyth V) Hughes, Kevin (Doncaster N)
Campbell-Savours, D. N. Hughes, Roy (Newport E)
Canavan, Dennis Hughes, Simon (Southwark)
Cann, Jamie Illsley, Eric
Chisholm, Malcolm Ingram, Adam
Clapham, Michael Jackson, Glenda (H'stead)
Clarke, Eric (Midlothian) Jackson, Helen (Shef'ld, H)
Coffey, Ann Jamieson, David
Connarty, Michael Janner, Greville
Cook, Robin (Livingston) Johnston, Sir Russell
Cox, Tom Jones, Barry (Alyn and D'side)
Cryer, Bob Jones, Jon Owen (Cardiff C)
Cunningham, Jim (Covy SE) Jones, Lynne (B'ham S 0)
Cunningham, Rt Hon Dr John Jones, Nigel (Cheltenham)
Dafis, Cynog Jowell, Tessa
Dalyell, Tarn Kaufman, Rt Hon Gerald
Darling, Alistair Kennedy, Charles (Ross, C&S)
Dewar, Donald Khabra, Piara S.
Dixon, Don Kirkwood, Archy
Dunnachie, Jimmy Leighton, Ron
Dunwoody, Mrs Gwyneth Litherland, Robert
Livingstone, Ken Purchase, Ken
Lloyd, Tony (Stretford) Redmond, Martin
Llwyd, Elfyn Reid, Dr John
Loyden, Eddie Rendel, David
Lynne, Ms Liz Robinson, Geoffrey (Co'try NW)
McAllion, John Robinson, Peter (Belfast E)
Macdonald, Calum Rogers, Allan
McLeish, Henry Rooney, Terry
McMaster, Gordon Ross, Ernie (Dundee W)
Madden, Max Ross, William (E Londonderry)
Maginnis, Ken Sedgemore, Brian
Mahon, Alice Sheldon, Rt Hon Robert
Mandelson, Peter Shore, Rt Hon Peter
Marek, Dr John Simpson, Alan
Marshall, David (Shettleston) Skinner, Dennis
Marshall, Jim (Leicester, S) Smith, Andrew (Oxford E)
Maxton, John Smith, C. (Isl'ton S & F'sbury)
Michael, Alun Smyth, Rev Martin (Belfast S)
Michie, Bill (Sheffield Heeley) Spearing, Nigel
Michie, Mrs Ray (Argyll Bute) Spellar, John
Milburn Alan Steel, Rt Hon Sir David
Miller, Andrew Stevenson, George
Mitchell, Austin (Gt Grimsby) Stott, Roger
Molyneaux, Rt Hon James Taylor, Matthew (Truro)
Morris, Rt Hon A. (Wy'nshawe) Thompson, Jack (Wansbeck)
Morris, Estelle (B'ham Yardley) Trimble, David
Mudie, George Tyler, Paul
Oakes, Rt Hon Gordon Vaz, Keith
O'Brien, Michael (N W'kshire) Walker, Rt Hon Sir Harold
O'Brien, William (Normanton) Wallace, James
O'Hara, Edward Wareing, Robert N
Olner, William Wigley, Dafydd
Parry, Robert Williams, Rt Hon Alan (Sw'n W)
Patchett, Terry Wilson, Brian
Pendry, Tom Winnick, David
Pickthall, Colin Wise, Audrey
Pike, Peter L. Wray, Jimmy
Powell, Ray (Ogmore) Young, David (Bolton SE)
Prentice, Ms Bridget (Lew'm E)
Prentice, Gordon (Pendle) Tellers for the Ayes:
Prescott, John Mr. Alex Salmond and Mr. Ieuan Wyn Jones.
Primarolo, Dawn
Ainsworth, Peter (East Surrey) Bright, Graham
Aitken, Jonathan Brooke, Rt Hon Peter
Alexander, Richard Brown, M. (Brigg & Cl'thorpes)
Alison, Rt Hon Michael (Selby) Bruce, Ian (S Dorset)
Amess, David Budgen, Nicholas
Ancram, Michael Burns, Simon
Arbuthnot, James Burt, Alistair
Arnold, Jacques (Gravesham) Butcher, John
Arnold, Sir Thomas (Hazel Grv) Butler, Peter
Ashby, David Butterfill, John
Aspinwall, Jack Carlisle, John (Luton North)
Atkins, Robert Carlisle, Kenneth (Lincoln)
Atkinson, David (Bour'mouth E) Carrington, Matthew
Atkinson, Peter (Hexham) Carttiss, Michael
Baker, Rt Hon K. (Mole Valley) Cash, William
Baker, Nicholas (Dorset North) Chapman, Sydney
Baldry, Tony Churchill, Mr
Banks, Matthew (Southport) Clark, Dr Michael (Rochford)
Banks, Robert (Harrogate) Clifton-Brown, Geoffrey
Bates, Michael Coe, Sebastian
Batiste, Spencer Congdon, David
Bellingham, Henry Conway, Derek
Bendall, Vivian Coombs, Anthony (Wyre For'st)
Beresford, Sir Paul Coombs, Simon (Swindon)
Biffen, Rt Hon John Cope, Rt Hon Sir John
Blackburn, Dr John G. Cormack, Patrick
Body, Sir Richard Couchman, James
Booth, Hartley Cran, James
Boswell, Tim Currie, Mrs Edwina (S D'by'ire)
Bottomley, Peter (Eltham) Curry, David (Skipton & Ripon)
Bottomley, Rt Hon Virginia Davies, Quentin (Stamford)
Bowden, Andrew Davis, David (Boothferry)
Bowis, John Day, Stephen
Boyson, Rt Hon Sir Rhodes Deva, Nirj Joseph
Brandreth, Gyles Devlin, Tim
Brazier, Julian Dickens, Geoffrey
Dicks, Terry Kellett-Bowman, Dame Elaine
Dorrell, Stephen Key, Robert
Douglas-Hamilton, Lord James Kilfedder, Sir James
Dover, Den King, Rt Hon Tom
Duncan, Alan Knapman, Roger
Duncan-Smith, Iain Knight, Mrs Angela (Erewash)
Dunn, Bob Knight, Greg (Derby N)
Durant, Sir Anthony Knight, Dame Jill (Bir'm E'st'n)
Dykes, Hugh Knox, David
Eggar, Tim Kynoch, George (Kincardine)
Elletson, Harold Lait, Mrs Jacqui
Emery, Rt Hon Sir Peter Lang, Rt Hon Ian
Evans, David (Welwyn Hatfield) Lawrence, Sir Ivan
Evans, Jonathan (Brecon) Legg, Barry
Evans, Roger (Monmouth) Leigh, Edward
Evennett, David Lennox-Boyd, Mark
Faber, David Lester, Jim (Broxtowe)
Fabricant, Michael Lidington, David
Fenner, Dame Peggy Lightbown, David
Field, Barry (Isle of Wight) Lloyd, Peter (Fareham)
Forman, Nigel Lord, Michael
Forsyth, Michael (Stirling) Luff, Peter
Forth, Eric Lyell, Rt Hon Sir Nicholas
Fox, Dr Liam (Woodspring) MacGregor, Rt Hon John
Fox, Sir Marcus (Shipley) MacKay, Andrew
Freeman, Roger Maclean, David
French, Douglas McLoughlin, Patrick
Fry, Peter Madel, David
Gale, Roger Maitland, Lady Olga
Gallie Phil Major, Rt Hon John
Gardiner, Sir George Malone, Gerald
Garel-Jones, Rt Hon Tristan Mans, Keith
Garnier, Edward Marland, Paul
Gill, Christopher Marlow, Tony
Gillan, Cheryl Marshall, John (Hendon S)
Goodlad, Rt Hon Alastair Marshall, Sir Michael (Arundel)
Goodson-Wickes, Dr Charles Martin, David (Portsmouth S)
Gorman, Mrs Teresa Mawhinney, Dr Brian
Gorst, John Mayhew, Rt Hon Sir Patrick
Grant, Sir Anthony (Cambs SW) Mellor, Rt Hon David
Green way, Harry (Ealing N) Merchant, Piers
Green way, John (Ryedale) Milligan, Stephen
Griffiths, Peter (Portsmouth, N) Mills, Iain
Grylls, Sir Michael Mitchell, Andrew (Gedling)
Hague, William Mitchell, Sir David (Hants NW)
Hamilton, Rt Hon Archie (Epsom) Moate, Sir Roger
Hamilton, Neil (Tatton) Monro, Sir Hector
Hampson, Dr Keith Montgomery, Sir Fergus
Hanley, Jeremy Moss, Malcolm
Hannam, Sir John Needham, Richard
Hargreaves, Andrew Nelson, Anthony
Harris, David Neubert, Sir Michael
Haselhurst, Alan Newton, Rt Hon Tony
Hawkins, Nick Nicholls, Patrick
Hawksley, Warren Nicholson, David (Taunton)
Hayes, Jerry Nicholson, Emma (Devon West)
Heald, Oliver Norris, Steve
Heathcoat-Amory, David Onslow, Rt Hon Sir Cranley
Hendry, Charles Oppenheim, Phillip
Higgins, Rt Hon Sir Terence L. Ottaway, Richard
Hill, James (Southampton Test) Page, Richard
Hogg, Rt Hon Douglas (G'tham) Paice, James
Horam, John Patnick, Irvine
Hordern, Rt Hon Sir Peter Patten, Rt Hon John
Howard, Rt Hon Michael Pattie, Rt Hon Sir Geoffrey
Howarth, Alan (Strat'rd-on-A) Pawsey, James
Howell, Rt Hon David (G'dford) Peacock, Mrs Elizabeth
Howell, Ralph (North Norfolk) Pickles, Eric
Hunt, Rt Hon David (Wirral W) Porter, Barry (Wirral S)
Hunt, Sir John (Ravensbourne) Porter, David (Waveney)
Hunter, Andrew Portillo, Rt Hon Michael
Hurd, Rt Hon Douglas Powell, William (Corby)
Jack, Michael Rathbone, Tim
Jackson, Robert (Wantage) Redwood, John
Jenkin, Bernard Richards, Rod
Jessel, Toby Riddick, Graham
Johnson Smith, Sir Geoffrey Rifkind, Rt Hon. Malcolm
Jones, Gwilym (Cardiff N) Robathan, Andrew
Jones, Robert B. (W Hertfdshr) Roberts, Rt Hon Sir Wyn
Jopling, Rt Hon Michael Robertson, Raymond (Ab'd'n S)
Robinson, Mark (Somerton) Temple-Morris, Peter
Roe, Mrs Marion (Broxbourne) Thomason, Roy
Rowe, Andrew (Mid Kent) Thompson, Sir Donald (C'er V)
Ryder, Rt Hon Richard Thompson, Patrick (Norwich N)
Sackville, Tom Thornton, Sir Malcolm
Sainsbury, Rt Hon Tim Thurnham, Peter
Scott, Rt Hon Nicholas Townend, John (Bridlington)
Shaw, David (Dover) Townsend, Cyril D. (Bexl'yh'th)
Shaw, Sir Giles (Pudsey) Tracey, Richard
Shephard, Rt Hon Gillian Tredinnick, David
Shepherd, Colin (Hereford) Trend, Michael
Shersby, Michael Trotter, Neville
Skeet, Sir Trevor Twinn, Dr Ian
Smith, Sir Dudley (Warwick) Vaughan, Sir Gerard
Soames, Nicholas Walker, Bill (N Tayside)
Speed, Sir Keith Waller, Gary
Spencer, Sir Derek Ward, John
Spicer, Sir James (W Dorset) Wardle, Charles (Bexhill)
Spicer, Michael (S Worcs) Waterson, Nigel
Spink, Dr Robert Watts, John
Spring, Richard Wells, Bowen
Sproat, Iain Wheeler, Rt Hon Sir John
Squire, Robin (Hornchurch) Whitney, Ray
Stanley, Rt Hon Sir John Whittingdale, John
Steen, Anthony Widdecombe, Ann
Stephen, Michael Wilkinson, John
Stern, Michael Willetts, David
Stewart, Allan Wolfson, Mark
Streeter, Gary Wood, Timothy
Sumberg, David Yeo, Tim
Sweeney, Walter Young, Sir George (Acton)
Sykes, John
Tapsell, Sir Peter Tellers for the Noes:
Taylor, Ian (Esher) Mr. Timothy Kirkhope and Mr. Robert G. Hushes
Taylor, John M. (Solihull)
Taylor, Sir Teddy (Southend, E)

Question accordingly negatived.

Mr. Gary Waller (Keighley)

I beg to move amendment No. 248, in page 5, line 2, after '1996', insert ', or such later date as may be appointed by order made by the Secretary of State,'. The amendment would enable the period during which the regulator is obliged to take account of advice issued by the Secretary of State to be extended by order. It would create some additional flexibility in the process of introducing competitition. I suppose that the Secretary of State's advice cannot be predicted, but it could cover the factors that the regulator will have to take into account in determining his policy on access to the rail network. My hon. Friend the Minister for Public Transport will recall that the Bill, as originally published, did not make provision for the Secretary of State to issue any advice to the regulators.

Clause 4(4)(a), which requires the regulator to take such advice into account until 31 December 1996, was introduced by the Government in Committee. Ministers justified their amendment on the ground that the success of the first round of franchising would depend on franchisees being offered some degree of exclusivity. I presume that the Secretary of State's advice to the regulator will require him to take that objective into account when he considers access agreements between the franchising director and Railtrack. That advice will counterbalance the requirement for the regulator to promote competition, in the light of the Government's acceptance that, at least initially, competition will need to be qualified.

9.15 pm

The amendment is needed if certain eventualities are to be met. First, there is the possibility that the first round of franchises will not have been let by 31 December 1996. It appears that the Bill, as drafted, would not enable the Secretary of State to require the regulator to accept that, beyond that date, competition must be qualified. I wonder whether the Government are confident that potential conflicts between franchising and open access services will have been overcome by that date. Secondly, there is the possibility that, in the light of developments, the Government will come to the same conclusion as the Select Committee—that open access and franchising are not compatible. The Bill does not seem to provide any mechanism to deal with that eventuality.

The amendment would not require the regulator to have regard to advice issued by the Secretary of State beyond 1996; rather, it would provide a degree of additional flexibility for safeguards to be brought into effect if the Secretary of State considered them necessary. Until the franchises are working, it will not be possible to be certain whether, and to what extent, it will be necessary to regulate competition. Clearly, my hon. Friend the Minister believes that some constraints will be needed in the first round of franchises to encourage franchisees to go into the market. That can certainly be achieved through guidance. To set, at this stage, a date governing the regulator's duty to take guidance into account offers an unnecessary hostage to fortune. That is why I move the amendment.

Mr. Freeman

I should like to respond concisely to my hon. Friend, for whose comments I am grateful. He is certainly a doughty supporter of rail interests, not only as a constituency representative but as someone speaking on behalf of the Association of Metropolitan Authorities.

My hon. Friend was quite right in saying that the purpose of the amendment which was accepted in the Standing Committee was to empower the Secretary of State to give guidance t6 the regulator for a limited period—up to the end of December 1996. The aim was to make sure that the first franchises were let satisfactorily. That will probably mean what we call moderation of competition, which is the denial of certain open access rights.

I cannot recommend that the amendment be accepted, as it is inevitably a compromise between fettering the independence of the regulator and ensuring that the initial franchising is a success. I think that we have got the balance right.

Mr. John Gunnell (Morley and Leeds, South)

The system will operate for only 32 months before the clause, as drafted, takes effect. Does the Minister believe that the franchising process will be completed in that time? Everything said so far suggests that the matter will be proceeded with gradually. Although the publication of the franchise maps has taken the process forward a little, it is unlikely that 32 months will be sufficient. Given the Minister's arguments in Committee, increasing flexibility would seem to be entirely sensible.

Mr. Freeman

I appreciate that two and a half years is a relatively short time, but we expect to let a significant number of franchises by then. Completing the pattern for the whole of Great Britain will clearly take considerably longer.

As to the franchises that are let subject to the views of the regulator acting on guidance from the Secretary of State, one is looking at a period of anything up to 10 years after the given date, during which time the franchisee will have some degree of exclusivity. That will almost certainly apply in the case of Network SouthEast services, for operational reasons—because additional services cannot be run into London stations during peak hours. I suspect that it would not be possible at peak hours to thread in open access services.

I cannot commend my hon. Friend's amendment to the House because if we are to encourage the development of open access services that are not under the franchise regime, at some stage they must be given the right to compete for train paths and to challenge for the right to provide rail passenger services.

I probably have not convinced my hon. Friend, but when we drafted the amendment for the Committee stage, we faced a difficult choice as to where the cut-off point would be. If we had extended it to 10 years, that would have stifled independent railway operation. If we had limited it to six or 12 months, that would not have been effective in launching the first round of franchises in this Parliament.

Mr. Gunnell

Does not the Minister accept the Transport Select Committee's view that open access will mean paying a higher subsidy to secure franchisees in the first place?

Mr. Freeman

It is extremely important to get the first franchises off the ground properly. We will learn from experience and, because it will be a gradual, market-led initiative, the franchising director, from his own experience, will undoubtedly modify or amend some of his policies.

We are determined that the first group of franchises will operate successfully and that the quality of services available to the travelling public will improve. The cut-off point is a matter of judgment, but I believe that the Government have got it right and I ask my hon. Friend not to press his amendment to a Division.

We will certainly take on board my hon. Friend's comments on behalf of the AMA about non-statutory guidance to the franchising director and discussions with the regulator. However, the regulator must be independent, and it is most important that after December 1996 he will be able to operate entirely unfettered. Notwithstanding that, I know that my right hon. Friend the Secretary of State will maintain close contact with the franchising director.

Mr. Waller

I find it difficult to understand why my hon. Friend feels that the regulator would be compromised by the option, in the light of possible future uncertainties, to extend the period during which he can be given advice on a statutory basis and heed that advice. Nevertheless, I listened carefully to my hon. Friend's remarks about non-statutory guidance to the regulator. Given his other assurances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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