§ Mr. HarveyI beg to move amendment No. 185, in page 24, line 28, at end insert—
'(2A) Before preparing such invitation to tender, the Franchising Director shall obtain from the Board, or the body or person already providing services for the carriage of passengers at the time that such services are designated as eligible for provision under franchise agreements—(2B) When issuing an invitation to tender, the Franchising Director shall include in the invitation all the information referred to in paragraph (i) above, but not the information referred to in paragraph (ii) above.'.
- (i) the historic costs and revenue, the nature and frequency of the service provided, the prices charged for travel by means of those services for the carriage of passengers by railway; and such other incidental and supplementary information as is in the opinion of the Franchising Director necessary to form a true and fair view of the balance between historic costs and revenue;
- (ii) the projected costs and revenue, the nature and frequency of the service to be provided, the prices to be charged for travel by means of those services, for the carriage of passengers by railway if they were to be provided, or to continue to be provided otherwise than under the proposed franchise agreement; and such other incidental and supplementary information as is in the opinion of the Franchising Director necessary to form a true and fair view of the balance between the projected costs and revenue (in this part referred to as the "projected balance")
Mr. Deputy SpeakerWith this, it will be convenient to discuss also the following amendments:
No. 186, in clause 25, page 26, line 18, after '(1)', insert 'Subject to subsection (1A) below:'.
No. 187, in page 26, line 28, at end insert—
'(1A) No franchise agreement shall be entered into if—(a) in any case where the agreement would be subject to conditions requiring payments to the Franchising Director under paragraph (a) above, any payment to be rendered to the Franchising Director under the agreement would be less than the projected balance; or845(b) in any case where the agreement would be subject to conditions requiring payments by the Franchising Director under paragraph (b) above, any payment to be rendered to the franchisee under the agreement would be greater than the projected balance.'.No. 238, in page 26, line 32 at end insert—'(2A) A franchise agreement shall include provision requiring the franchisee or franchise operator to provide the Franchising Director with such information as he may reasonably require under subsection (2A) of section 23 above.'.
§ Mr. HarveyI respect the fact that the late hour means that I must be brief, but it is a pity that we have reached the amendment at this late stage because my colleagues and I believe that it is important.
Earlier today we debated the circumstances in which the Government might sanction the possibility of the franchising director not granting a franchise and, indeed, allowing British Rail to continue to operate the services. I think that it was the late Lord Macmillan who, with reference to privatisation, coined the expression "selling off the family silver". During earlier privatisations, some people felt that the services being sold were undervalued and there were remarks to the effect that if one put a £10 note up for sale at a flyer, it would find some buyers. However, I think that this is the first privatisation in which there has been any suggestion that the Government might pay people to take the family silver away. The amendment would prevent that.
The amendment builds on what I would call not commitments but agreements in principle, accepted by the Minister in Committee. On 2 March we discussed what information British Rail might make available to the franchising director when he was considering how franchises should be awarded. The Minister said:
The hon. Member for North Devon says that we are talking of achieved and prospective business plans. When the franchising director comes to consider what British Rail would need to operate the service for the next 12 months or, indeed, for the next 10 years, that is a perfectly reasonable point. I accept the logic of what the hon. Gentleman says—that the franchising director should be able to extrapolate and, indeed, in discussion with British Rail, look at what the costs will be as well as what they have been during the previous six months. I have no difficulty in accepting that".—[Official Report, Standing Committee B, 2 March 1993; c. 503.]On 4 March, he said:On the … issue of franchises, we propose that the franchising director should compare the offers received from the private sector with the cost of providing a British Railways Board operated service. I have already agreed with the hon. Member for North Devon that prospective bids should be compared with prospective costs. That was a valuable debate. The franchising director will have to make a judgment based on value-for-money tests."—[Official Report, Standing Committee B, 4 March 1993; c. 553.]I deal briefly with the theme of value for money.The Secretary of State repeated today that if bids were not lower than British Rail operating costs, the possibility of British Rail continuing to operate services could be considered. At a time when the Chief Secretary to the Treasury is floating various grisly possibilities about how to attack the budget deficit, it is unacceptable that any franchise should be awarded at a cost to the taxpayer which exceeds the cost of British Rail continuing to operate a service.
846 The amendment would codify and formalise the circumstances in which the British Rail cost or, as suggested in the amendment, the projected balance between anticipated costs and revenue should be the benchmark against which private sector bidders would have to make their tenders. I hope very much that the Government will be able to accept that notion, given that they have already accepted the component parts.
§ Mr. FreemanPerhaps I may bracket amendment No. 238 with amendment No. 185 and say that I find myself in broad agreement with the hon. Member for North Devon (Mr. Harvey). The House needs to endorse a policy whereby the franchising director can collect a good deal of information from British Rail and, in due course, from franchisees, not only about their historic costs but about their prospective costs. I am happy to give the hon. Gentleman an assurance that we shall incorporate the substance of the amendments into the objectives to be given to the franchising director.
The amendments are perfectly sensible, but I caution that there are certain instances in which it is appropriate to disclose prospective costs to private sector bidders. For example, if a line has been electrified British Rail, or a franchisee, will have information about what I hope would be the declining costs of running railway trains along it. It is important that such information be shared in the invitation to tender process. I stand by the commitment that I gave on 2 March. The point made by the hon. Member for North Devon was sensible, because the franchising director must consider prospective costs and extrapolate them in comparing the bids received.
With regard to value for money, I should not like to accept amendment No. 187, or No. 186 which is related to it, because although the point of principle is clear, the franchising director will know what costs British Rail incurs in running a particular service. BR will run a shadow franchise and the costs will be clear. Therefore, when the director considers other offers from the private sector, including management-employee buy-out bids, he must be careful that against the benchmark of British Rail costs he makes a proper judgment of value for money. If he does not, he will be accountable to the Public Accounts Committee through the Comptroller and Auditor General.
There may be some circumstances in which, because of the timing of expenditure, the franchising director needs to take a view, and I would not want to impose on him too inflexible and rigid a system. If the hon. Gentleman is prepared to accept my assurances that I shall take amendments Nos. 185 and 238 on board, perhaps he will respond by not pressing amendments Nos. 186 and 187.
§ Mr. HarveyI accept what the Minister says about amendments Nos. 186 and 187 being perhaps too inflexible, and I am grateful to him for his undertaking on amendments Nos. 185 and 238. I accept the need to give some information to bidders, but I ask that it should not be an automatic matter of course that all potential costs are made known to them—only those that the franchising director considers necessary for the purpose of developing the services in question. If we can reach an understanding on that point, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.