HC Deb 25 May 1993 vol 225 cc813-23
The Minister for Public Transport (Mr. Roger Freeman)

I beg to move amendment No. 109, in page 2, line 28, leave out 'for the purposes of this Part'.

Mr. Deputy Speaker

With this, it will be convenient to discuss also the following amendments: No. 239, in clause 64, page 69, leave out lines 33 to 41.

No. 240, in page 69, line 41, at end insert 'or— (iii) the differential between the rates at which different classes of fare are charged for comparable services operated by the franchisee or franchise operator, and the Board;'.

No. 241, in page 69, line 41, at end insert 'or— (iii) the differential between the average level of fares charged by the Board or any subsidiary of the Board for any class or description of passenger or in respect of any class or description of passenger service and the average level of equivalent fares charged under franchise agreements'.

No. 242, in clause 65, page 71, leave out lines 12 to 20.

No. 243, in page 71, line 20, at end insert 'or- (iii) the differential between the rates at which different classes of fare are charged for comparable services operated by the franchisee or franchise operator, and the Board';'.

No. 244, in page 71. line 20, at end insert 'or- (iii) the different between the average level of fares charged by the Board or any subsidiary of the Board for any class or description of passenger or in respect of any class or description of passenger service and the average level of equivalent fares charged under franchise agreements'.

Mr. Freeman

This is a technical amendment, but grouped with it are others relating to important issues to which, with the leave of the House, I hope to respond later.

Amendment No. 109 is the only Government amendment in the group, and it is required to extend the role of the consultative committees beyond part I. The need for it is predicated on amendments made in Committee, to widen and emphasise the committees' important role.

The amendment will permit committees to discharge duties—for example, under section 56 of the Transport Act 1962 in respect of local railways such as the Tyne and Wear metro and the Manchester metro link. I am sure that the amendment has the broad agreement of both sides of the House, but I shall seek to say more later in response to points that I anticipate from my right hon. and hon. Friends.

I will first respond specifically to issues that were raised in relation to amendment No. 237. You said, Mr. Deputy Speaker, that broad comments would be in order. My right hon. Friend the Secretary of State and I considered that amendment, which was selected for debate but not for a vote. We assure the House, and specifically my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) and others of our right hon. and hon. Friends who associated themselves with his remarks, that we accept their arguments.

We undertake to reflect further on them and to bring forward an appropriate amendment in another place, which can be debated there and then return to this Chamber as a Lords amendment.

That amendment should embody four principles. First, a duty should be imposed on the franchise director in respect of fares, and clause 5 is probably the most appropriate point for that to be introduced.

Secondly, there should also be a duty in relation to fares exercised through the franchising agreement. My right hon. Friend understands that some services will run outwith the franchising arrangements, but, as my right hon. Friend the Secretary of State has already announced, it is the intention that existing railway services throughout Great Britain will be subject to franchises. Therefore, the agreements into which the franchising director will enter will cover all services.

Thirdly, that duty should cover not just services where there is a monopoly but also cases in which it is not possible to identify services as purely monopolistic. My right hon. Friend and I understand concerns that, even with those services subject to full competitive pressures, such as some InterCity services, the operator—perhaps unwisely and incorrectly—will seek to increase fares, and that would cause concern to passengers. In a competitive market, the operator would undoubtedly lose passengers. However, I confirm that third principle.

Finally, as to the criteria that the franchising director should use in including in agreements provisions relating to fares, we accept that the director himself should be under an obligation to care for the interests of passengers, using his own judgment of what is a reasonable level of fares.

I may be able to respond later in the debate particularly to amendments that are not in the Government's name but to which I anticipate I will be able to respond positively and favourably.

I repeat the assurance that we will return to the point with an amendment in another place that I hope will meet the four criteria to which reference was made in the debate. Although the amendment is not actually for debate, I hope that that will satisfy my right hon. and hon. Friends.

7.30 pm
Mr. Wilson

We have listened with interest to the Minister's comments. This is the third debate today in which Ministers have responded to amendments moved not only by Labour Members but by Conservative Members.

Although the Bill's structures are being left intact—Labour believes that the Bill is fundamentally flawed and that it will come to grief in the end—the statements that the Minister of State and the Secretary of State have made today, if acted on, will have a major effect.

The franchising director is being given extraordinary powers. We heard earlier that the franchising director will impose conditions for concessionary fares. That enormous responsibility is being transferred to the franchising director. We now hear—I make no complaint about it, but welcome it—that the franchising director will have the power to regulate fares on both franchised and non-franchised services.

That is all very well if it is loosely in line with what the right hon. Member for Tonbridge and Mailing (Sir J. Stanley) was saying last night or with the objections of other Conservative Members, including the hon. Member for Southend, East (Sir T. Taylor), but it leaves the question of where the money will come from. That is the next stage of the debate. The debate does not end when the legislation is enacted.

If we can take at face value the assurances that are being given—that fares will be controlled by the franchising director and that the existing structure of concessions for at least the three named categories will be imposed by the franchising director—we are certainly not talking about a free market in railways or market forces. We are talking about a substantially more regulated railway than we have at present. I do not complain about that, but it strikes me as odd logic in Tory policy, as constrained by the understandable objections of Conservative Members.

Whether it will work out like that is another question. The crunch will come—perhaps in 1995—when a franchisee says, "It's impossible. We entered this with good will, but the subsidy is not high enough. We need to raise fares by 25 per cent. to get a reasonable return." According to the Minister—I was pleased to hear it—the franchising director's duty will be to say, "No, you're not. You will increase fares by what I allow." Presumably he will take account of what the Government tell him, some of the political pressures prevailing at the time and a range of other circumstances.

I assure Ministers that every Opposition Member will ensure that the franchising director is known to the public as a creature of Government and not an independent spirit. The franchising director will have to take tough decisions. He will have to tell franchisees, "Yes, you can increase fares by 25 per cent.", in which case the opprobrium will fall on Ministers; or, "The rate of inflation is 5 per cent. so you are getting only 7.5 or 10 per cent."

At that point, the franchisee will say, "If I am getting only 10 per cent., I still cannot make ends meet, so I shall withdraw X number of services, and what are you going to do about that, Mr. Franchising Director?" Such situations will arise sooner rather than later.

It has been explained to the Minister time and again, primarily in the context of the Department of Transport's own document on bus privatisation in the mid-1980s, that the Government cannot create monopolies under a franchise system and have any realistic hope of controlling them. What the Government set out to do was to create private monopolies under the guise of franchises, and not control them.

For months in Committee and throughout our debates, we have heard that there will be no need to control franchisees because the invisible hand of the market will work wondrously for the Government. It has been argued that concessionary schemes or fares and a control mechanism for fares are not necessary, because the market will sort it all out.

Today, we have witnessed a spectacular reversal in Government policy, because such matters will now be controlled not by the market but by the franchising director. That is the beginning of the Government's troubles rather than the end of them. They have had to yield to the proper concerns of Conservative Members, which Opposition Members have been expressing for months.

The important point is that the Government have yielded. We now have it in black and white, and it will be written into the regulations and the record of our debates, that the franchising director will be responsible for functions and for setting fares.

The franchising director is the creature of Government. When the inevitable conflict arises between franchisee and franchising director, and the franchising director is faced either with the possibility of losing the franchisee or yielding to his demands, we shall return to this debate and say, "It is not the market's fault; it is not the franchising director's fault; it is not the franchisees' fault; it is the fault of the people who put all this in place to start with."

Sir John Stanley

I begin by warmly welcoming the significant policy statement that my hon. Friend the Minister of State made at the beginning of the debate. He said for the first time in our proceedings on the Bill that the Government have accepted the principle of reasonableness in relation to fares and franchised routes and that it should be written into the legislation.

Secondly, the Government have accepted—again, for the first time in our proceedings—that the franchising director should be responsible for fares. Thirdly, they have accepted the important point that the franchising director's duty on fares should apply not merely to the so-called monopoly routes but to routes generally—in other words, right across the country.

That represents three very significant policy shifts, which I welcome, but all three points were embodied in amendment No. 237, which my hon. Friends and I tabled and which was debated yesterday. The slightly niggling, gnawing question at the back of my mind is the revised wording of amendment No. 237 that my hon. Friend the Minister will propose. I have much faith in my hon. Friend and I wait with interest to see what he proposes. I earnestly hope that the amendment will not water down the clear impression that he has given the House today about the important policy points that he has now accepted.

Mr. Prescott

It was indeed a significant statement by the Minister of State because it finally did away with the pretence that the market will apply. Previously, supply and demand determined price, but now the franchising will do so. The hon. Member is concerned about reasonableness, so does he believe that, if the franchise operator is not prepared to work at a price because he believes that he cannot make the required profit, it is reasonable to expect good old British Rail to operate at the same price?

Sir John Stanley

I am speaking to the amendment in relation to fares, but my answer to the hon. Gentleman is that British Rail is working on a different financial basis. Routes that remain in British Rail's hands will have access to Government subsidy, which may not be the case for franchised routes.

I deal now with this group of amendments, in particular the four tabled by my colleagues and I—Nos. 239, 241, 242 and 244. It may be helpful if I explain that the four amendments have a single common purpose and then why we have tabled four. The common purpose is to ensure that the new statutory bodies created under the legislation to look after the interests of the consumer have the ability to deal with the central issue of fares.

The four amendments should be regarded as two pairs —Nos. 239 and 242 should be taken together. Amendment No. 239 deals with the central committee and No. 242 with the regional committee. They would remove any inhibition or limitation on the ability of the consultative committees to consider fares. The second pair of amendments—Nos. 241 and 244—are slightly more narrowly drawn and would enable the consultative committees, both central and regional, to consider the differential between the level of fares on franchised and non-franchised routes.

The second pair was tabled against the possibility that the first pair was not selected because the first pair was debated in Committee and therefore risked not being selected. As both pairs have been selected, I shall speak to amendments Nos. 239 and 242, the first pair, which would provide much the best arrangements for consumers and ensure that nothing in the Bill could in any way constrain the ability of the consultative committees to consider fares.

We are debating this policy from what I regard as an eccentric start in the initial print of the Bill. The Bill sweeps away all existing consultative committees and replaces them with major new committees—the national body with the singularly grandiloquent title of the Central Rail Users Consultative Committee, and its nine satellites, the regional consultative committees. They are the bodies, above all others, to which the consumers will have to look to safeguard their interests in all aspects of rail travel.

I find it extraordinary that, the new bodies having been created, they are debarred from involvement in the issue that is possibly of most concern to consumers or the rail travelling public—the level of fares. On Second Reading I drew attention to clause 65(2) which achieves that. It states: Nothing in subsection (1) above shall entitle a consultative committee to investigate any matter relating to…arges made for any service or for the use of any railway facility". We are left in the extraordinary position of creating new bodies to look after consumers' interests, but debarring them by law from having any involvement in the scrutiny of fares.

To their credit, my right hon. Friend the Secretary of State and my hon. Friend the Minister of State have gone some way to modify the situation. They did so in Committee and have now conceded that the consultative bodies should have some involvement in fares. However, although the principle is conceded in the Bill, it has not been conceded in relation to all fares. The consultative bodies can examine special and discounted fares, but not the generality of fares. We are faced with the absurd situation in which it is possible for the committees to examine fares for the disabled but not the able bodied, and fares for the very old or the very young but not the middle aged, and here I declare an interest. The types of fares that can be considered are divided into fish and fowl—ome can be considered and some cannot.

The purpose of amendments No. 239 and 242 is simple. They would sweep away the remaining prohibition and enable the important consumer protection bodies to consider the generality of fares. I urge my right hon. Friend and the Minister of State to accept them. My right hon. Friend has conceded the principle and I hope that he will now be bold and brave, accept the logic of what happened in Committee and allow the consultative bodies to examine all fares without limitation.

7.45pm

. David Rendel (Newbury)

It is pleasant on what is only my second speech in the House to be able to agree with much of what has been said by Conservative Members. I believe that this group of amendments goes to the heart of privatisation. To my mind, whether or not one agrees with it, privatisation passes power from the community to the shareholder. Some of us will support that and some will not but, whatever we think, when power is passed from the community to the shareholder, it is crucial that the watchdogs that look after community interests should be strengthened, not weakened. I believe that that is why the amendments have been tabled.

There are two main failings in the suggestions about the way in which the consultative committees will work. As I understand it, the consultative committees can comment on such vital issues as whether the snow in winter is or is not of the right sort for the rail service, but they cannot comment on issues that most users might think rather more important. I am thinking in particular of fares, which have already been mentioned, and the possible cutting of services.

I shall deal first with the cutting of services and wish to comment in particular on the fact that one of the main worries in my community is that the fast, long-distance trains running between London and the west country, some of which currently stop in our community, may not do so in the future. The franchisees may decide that it is more profitable to run such trains straight through to the west country without stopping at stations such as Reading, Thatcham and Newbury. Clearly, that would be to the disadvantage of the people whom I have come here to represent, and I have no doubt that the same problems face other communities. It is therefore important that the consultative committee that will look after the interests of my constituents and others has the opportunity to comment and to ensure, if possible, that such cuts do not happen.

The second issue of prime importance is the level of fares. If there is no train at all, one cannot use the rail service, but, if the train is too expensive, one may also not be able to use the rail service. Therefore, the question of fares is crucial to all rail users. Clearly, the user representatives should be able to comment on the comparisons between charges made by various franchisees and British Rail for the same service. That is why my colleagues have tabled amendments Nos. 240 and 243, and I shall speak to them on their behalf.

If we cannot make such comparisons between the levels of charges in different parts of the country, we will lose a significant right in terms of the representations that can be made to the powers that be.

The right of committees to comment is also being circumscribed, and I believe that it should be strengthened. In particular, their reports must not be restricted in any way; they should be published openly and be as widely available as possible. That is what gives the committees the powers that they need. If the amendments are not accepted, the watchdogs that we now have are in danger of being emasculated. They should be strengthened; they should not be turned into the Government's poodle.

Mr. John Horam (Orpington)

I welcome what my hon. Friend the Minister for Public Transport said about fares, and I hope that he will elaborate further in his concluding remarks. I also welcome what my right hon. Friend the Secretary of State said about concessionary fares and travelcards. We all know how important those are in London, and I am very pleased with the concessions the Government have made today.

My question arises from my hon. Friend the Minister's introductory remarks, in which he referred to yesterday's debate and elaborated three new principles that he wanted the franchising director to take into account. My question is simple: what is the standing of the franchise agreement? I presume that all the details of any particular franchise agreement will be fully in the public domain and the public will know exactly what it will contain. The logic of the Government's position, as I understand it, is that any franchise agreement will initially be based on the existing services, schedules and performance targets for an area. Therefore, surely there can be no commercial secrecy about exactly what is involved in the agreement. It will be a matter of open record, against which the performance of the franchisee will be judged. That is an important consideration, and I should like my hon. Friend to comment on it and to tell me, for the record, whether I have understood it correctly.

Dr. Marek

Amendment No. 237 was tabled by the right hon. Member for Tonbridge and Mailing (Sir J. Stanley). It is important that when the Government table an appropriate amendment in another place—as they said they would—the phrase "reasonable to consumers" is always borne in mind. It is vital that the word "passengers" or "consumers" should accompany the word "reasonable", because we can use that word in all sorts of other senses.

If the Government now accept that principle—I welcome that prospect—it cuts the ground from under their feet regarding their argument in Committee, when they refused to let the consultative committees talk about fares, except in a restricted sense. It is true that the Government moved a little, but they should now think again. Fares will no longer be left to the open market and, therefore, be outside the vires of any consultative committee, because the franchising director will now decide an upper limit for what is reasonable. Therefore, it should be within the powers of the consultative committees to pronounce on the subject.

I hope that the Government do not resist the amendments. If they do, they will have to explain carefully why, having resisted them in Committee on the ground that the market rather than any consultative committee would decide such matters, they have now accepted the amendment tabled by the right hon. Member for Tonbridge and Mailing which says that the franchising director rather than the unfettered market will decide. The Government will have either to accept the amendments or use a completely new and different argument as to why they should not be accepted.

Mr. Mark Wolfson (Sevenoaks)

I warmly welcome the commitment by my hon. Friend the Minister to give the franchising director the clear additional powers over fares, and I look forward to the amendment that will return to the House following the debate in the House of Lords on the issue. Yesterday when we debated the issue I said in an intervention that in rail privatisation we lacked an individual who was comparable with regulators in other privatisations, in his role concerning price control. I hoped that Ministers would respond to what was said yesterday and increase the opportunity for the franchising director to play a full part in the setting of fares, and I entirely welcome the movement from Ministers today.

I also wish to support the other two amendments tabled by my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley), which deal with the involvement of the national and regional consultative committees and their ability to comment on and to have an input into fare levels. My right hon. Friend was right to say, especially in view of the amendments made in Committee to allow the consultative committees to have a say on special fares of various kinds, that it was illogical that they were not allowed to comment—indeed, they were positively disbarred by law from commenting—on the fares that most people would pay. I therefore support the amendments and I look to my right hon. and hon. Friends to respond positively to the pleas of the House.

Mr. Peter Bottomley

We are discussing Government amendment No. 109, which would leave out the words for the purposes of this Part from subsection (2). Yet subsection (4)(a) states that subsections (2) and (3) above and subsections (6) to (8) below do not apply. I do not ask my hon. Friend the Minister to answer my question now, but will he consider whether that really means what the Government want it to mean? Subsection (3) seems to refer to the fact that there shall be one consultative committee for Scotland and one for Wales, whereas subsection (4) says that the London Regional Passengers' Committee shall be treated as the consultative committee for…London', and will not therefore be appointed by the regulator. That is a slightly technical point, and maybe the Government have got it right, but I should like them to check before the provision goes to another place.

I have tried to avoid making this point too often in the House, but as the representative of people in my constituency who use the trains in London, I must emphasise that the rail service into London is one of the most vital services for people in Eltham, as for many others, especially in south London. My constituents are interested in their existing services being, maintained, and preferably not deteriorating, as is happening on Sundays. They also hope that there is a reasonable prospect of services improving. Better rolling stock—that is coming. More reliability—that may come. More capacity—that will come if the Thameslink 2000 improvements outside London Bridge and Borough market take place. Those prospects may not fall entirely within the amendments, but my constituents are keenly interested in them.

I have a slight worry on the fares issue. I appreciate that one does not want to constrain franchise holders too much, but I ask myself why, if they will be able to go in for market pricing, I bothered to help write into Bills governing fares at the Elizabeth bridge at Dartford on the M25 provisions to stop exploitation there. Why did we devise a complicated system for approving fare increases on the Severn bridge, for example, where market pricing would have allowed scalping? I do not believe that the franchise holders will want to go in for scalping on rail services, and my right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) has done well to bring the issue directly to the attention of my right hon. and hon. Friends. I hope that the assurances given will be satisfactory to him. They will be greatly reassuring to my constituents. We look forward to seeing how far amendments Nos. 239 and 242 are duplicated by the Government's proposals in another place.

8 pm

Mr. Freeman

I shall seek further advice on the point made by my hon. Friend the Member for Eltham (Mr. Bottomley). I hope to communicate information to my hon. Friend during the evening. If he is not satisfied with the response, he will doubtless have an opportunity to raise the matter a little later in our proceedings. If he is satisfied, I shall write to him on the point.

Mr. Peter Bottomley

indicated assent.

Mr. Freeman

I am grateful to my hon. Friend.

My hon. Friend the Member for Orpington (Mr. Horam) spoke of the status of the franchise agreement. I have given a commitment on behalf of my right hon. Friend the Secretary of State that we shall publish a further draft of the objectives of the franchising director while the Bill is still before Parliament. My right hon. Friend gave that commitment again earlier today. We have also said that a further draft of the model franchise agreement, an earlier draft of which was tabled in Committee, will be available to Parliament. Certain amendments to that model franchise agreement were suggested in Committee. The hon. Member for Cunninghame, North (Mr. Wilson) suggested that that might be appropriate before the ScotRail franchise was proceeded with. I accepted in Committee that it would be helpful to look at the headings in a typical franchise agreement, although the specific franchise agreement for a particular route will contain commercially confidential information. Undoubtedly, much of that information will become available because the agreement will deal with punctuality, reliability, the safety of services and the cleanliness of trains. That information will be in the public domain.

I know that my hon. Friend the Member for Orpington is a member of the Public Accounts Committee. It will not be surprising if the Public Accounts Committee takes a great deal of interest in the early franchises. I look forward to supplying information from the Department of Transport on the subject of franchising which is appropriate and needed by Parliament.

My right hon. Friend the Member for Tonbridge and Mailing (Sir J. Stanley) spoke to amendments Nos. 239 and 242. He understands that they are important amendments because they would permit the consultative committees to comment on any aspect of fares. Under the Bill at present, the ability of the consultative committees to comment is related to the structure and relativity of fares, but not to specific fares on specific lines. The thrust of the amendments is to give the consultative committees that right. The committees are, of course, very interested in fare levels and proposed fare increases, and they have not hidden their views under a bushel. They have obviously expressed their views.

We are happy to accept the text of amendments Nos. 239 and 242. They do not cover the London regional passengers committee. I understand that my right hon. Friend the Member for Tonbridge and Mailing may not have been able to pick up the fact that we have dealt with the LRPC at a different point in the Bill. The reason for that is that the appointments and the size and responsibilities of that committee are different. I give my right hon. Friend a clear assurance that, because we have accepted the text of the two amendments, we shall re-table them in another place with the appropriate extension to cover the LRPC, which will make the amendments effective. I cannot be clearer in the assurance that I give my right hon. Friend and my other hon. Friends—

Hon. Members

indicated assent.

Mr. Freeman

I am grateful for hon. Members' assent. My understanding is that because amendments Nos. 239 and 242 provide a wide power, amendments Nos. 240, 241, 243 and 244 are not so necessary.

Sir John Stanley

indicated assent.

Mr. Freeman

I am grateful to my right hon. Friend for indicating that he will not seek to press those amendments to a Division.

I hope that, with those assurances, the House will be content. We welcome the role of the consultative committees. This is the first occasion on which I have had a chance to debate with the hon. Member for Newbury (Mr. Rendel). The hon. Member for Cunninghame, North (Mr. Wilson) will assure the House that in Committee we repeatedly gave assurances about the role of the consultative committees. Indeed, we reached agreement with the chairman of the Central Rail Users Consultative Committee about its appropriate powers. I am sure that the chairman and the members will welcome this further extension. We satisfied them on all other counts that they would have a vital role to play under the general aegis of the regulator. They have a role to play in the closure procedure, and they will now have an important role to play in fares. That is to be welcomed.

I hope that, with those comments, the House will accept Government amendment No. 109 and that in due course, when we come to consider the other amendments to which my right hon. Friend the Member for Tonbridge and Mailing spoke, my assurances will be accepted. I hope that the House will accept Government amendment No. 109.

Sir John Stanley

With the leave of the House, Mr. Deputy Speaker. I am most grateful to my hon. Friend the Minister for accepting the important amendments Nos. 239 and 242, which substantially enhance the consumer protection afforded by the Bill. I also accept that I failed to spot the fact that buried away in schedule 11 were the special arrangements for London. To that extent, the amendments were defective and we need to add equivalent amendments for London. I know that my hon. Friend will put that right in another place. I speak for all my hon. Friends in expressing our appreciation to him for wisely accepting the amendments. I am grateful.

Mr. Wilson

By leave of the House, Mr. Deputy Speaker. I welcome what the Minister has said on the issue. It is perfectly true that considerable progress was made in Committee on the consultative committees. it is logical that, among the other matters that the consultative committees consider, they should also be able to speak on fares. The matter goes further than that. The job now is to encourage them to speak on fares and to take a lively interest in them, especially in the light of what has been said about the role of the franchising director, arid about his ability to control fares and to ensure that the market does not operate.

It is strange that, now that the hubbub has died down and less attention is being paid to what is going on here than was the case earlier, what the Minister has told us tonight about the controls on fares and about the role of the franchising director is probably the most important announcement made today.

Amendment agreed to.

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