HC Deb 18 December 1995 vol 268 cc1238-48 4.33 pm
The Secretary of State for Transport (Sir George Young)

With permission, Madam Speaker, I should like to make a statement on the franchising of passenger rail services.

The House will be aware that, on Friday, the Court of Appeal, considering an application for judicial review by Save Our Railways, found against the Director of Passenger Rail Franchising on whether the passenger service requirements for some of the first seven franchises had been developed in accordance with the instructions and guidance that had been issued to him by the Secretary of State.

The court ruled that the franchising director could proceed with the award of the first three franchises—Great Western, South West Trains and London Tilbury and Southend Rail—although it ruled that the PSR for LTS Rail was not consistent with the instructions. The court also ruled that the PSRs for the next four franchises were similarly inconsistent. In doing so, the court was overruling an earlier judgment of the High Court that had dismissed the judicial review.

The court's ruling comes after the franchising director made excellent progress in preparing the first franchises for award to the private sector. Indeed, the first three franchises are ready to be awarded soon.

We have, of course, given careful consideration to the implications of the court's judgment. I confirm that, as planned, the franchising director hopes to announce the award of the first three franchises later this week, and I welcome the court's agreement that he should go ahead with them.

The court has been concerned with the consistency between the franchising director's instructions and guidance and the PSRs. It is, in the court's words, a "limited legal problem". The court has not questioned the Government's policy. Indeed, the judgment describes the franchising director's approach to developing PSRs as

intelligible and in no way irrational". The franchising director has prepared his PSRs in a manner which my predecessors and I have consistently approved. We believed them to be consistent with the formal instructions and guidance that were given to him. The Court of Appeal has now examined the meaning of the existing instructions and guidance and concluded that the existing PSRs are not consistent with them.

I have decided, therefore, to clarify the instructions and guidance to the franchising director to ensure that they reflect beyond doubt the policy that we have always followed. Franchisees should have flexibility to adjust commercial services, but the franchise agreement should ensure that a core service level is protected so that service levels operated by franchisees are broadly similar to those operated immediately prior to franchising. My intention is to ensure that the work done in developing the PSRs so far can be relied on in the continuing franchising process.

I am pleased to tell the House that, while clarifying the franchising director's instructions, I intend to go beyond the requirements of the Court of Appeal judgment. I shall instruct him, when considering the award of future franchises, to take account of bidders' contractual commitments to, and future plans for, providing services over and above the PSR. In practice, bidders for the first franchises are offering significant commitments in addition to the minima required by the invitations to tender, and they have been taken into account by the franchising director when evaluating bids, but I have judged it right to require him formally to do so for the future to ensure the continuation of that policy.

In view of the uncertainty generated by the court's judgment, I hope that the House will welcome this statement of the Government's intentions. Our concern is to ensure that passengers should be allowed to enjoy as soon as possible the benefits that franchising will bring. The Government's policy has been clear and consistent and I assure the House that there will be no change as a result of last Friday's judgment.

Ms Clare Short (Birmingham, Ladywood)

Will the Secretary of State confirm that his statement amounts to an admission that the early franchises prepared by the franchise director, who is a creature of the Secretary of State, did not guarantee services as good as those currently provided by British Rail? Does he further agree that the courts found that five of the seven early franchises were in breach of his guidelines and undertakings to Parliament?

Will the Secretary of State clarify his statement in plain language? Is he admitting that, because the early franchises were not in line with his own guidance, he now plans to rewrite the guidance and reduce the minimum standards required to "a core service level"—which is a new concept—and to take into account non-contractual promises? Will his revised guidelines permit the four franchises that were ruled illegal by the Court of Appeal to go ahead without revision?

Does the Secretary of State agree that the first three franchises should now be withdrawn? First, the franchise for the London-Tilbury-Southend line was held to be illegal by the Court of Appeal, although for technical legal reasons it was not stopped; in honour, it should be stopped. Secondly, it would be wrong to let early franchises on the basis of guidelines that are different from those that will apply to later franchises. Indeed, I think that it would lead to litigation.

Finally, does the Secretary of State accept that even those who initially supported rail privatisation now believe that the method chosen by the Government is a disaster and will produce less investment and worse services in return for more public subsidy? Will the right hon. Gentleman now agree to halt the privatisation process and review progress? Surely he will agree that it is wrong for him to proceed on the basis of party dogma. His duty is to protect the national interest—and that requires him to halt the process of rail privatisation.

Sir George Young

I was pleased to see on Ceefax that the hon. Lady is reported to have welcomed Railtrack's current 10-year investment strategy. That strategy is possible at the higher level envisaged only because we are privatising Railtrack. At no point has the hon. Lady or the Labour party made a commitment to provide more resources for Railtrack, but more resources will be available as a result of privatisation.

The court specifically ruled that the franchising director should be allowed to go ahead with all three of the first franchises, as it would be detrimental to good administration if he were prevented from doing so. I hope that he will proceed; I think that when he does, and when the franchise bids are in the public domain, people will realise that much of the concern that has been expressed is unfounded.

I hope that the hon. Lady noted from my statement that, to deal with some of the concern that has been expressed, I am giving guarantees over and above those that were necessary to comply with the court's judgment. It is important to understand that the minimum PSRs are not the same as the timetable. I genuinely believe that, as we make progress with franchising, and as people see the quality of the bids and the range of services provided by the private sector, much of the concern of the past few weeks will be shown to have been unfounded.

Sir Alan Haselhurst (Saffron Walden)

Do not the Government's critics seriously underestimate the level of service that will be provided under the franchises? Will not the timetables prove less of a mirage than some of those published by British Rail? At present, services can be removed with relative impunity—as, for example, on the London to Cambridge line, which goes through my constituency. No guarantees whatever are given.

Sir George Young

My hon. Friend is absolutely right. Under the structure that we are introducing, passengers will be given guarantees that were not available to them before. First, key fares will be guaranteed and linked to the retail prices index or lower. Secondly, as my hon. Friend rightly pointed out, services specified in the contract will have to be provided for a minimum of seven years. That guarantee has never existed under a regime operated by British Rail.

I also agree with my hon. Friend's view that, now that we can make progress with the awarding of franchises, people will realise that a better service can be provided. We want to hear from the Opposition at some point whether they will confiscate franchises from the private sector even when they provide passengers with a better service at less cost to the taxpayer.

Mr. David Chidgey (Eastleigh)

The Secretary of State will know that, in our previous debate on this matter, it was made clear that the PSRs were based on the existing British Rail timetable. It appears from the right hon. Gentleman's statement that they will be based on something broadly similar to existing services. By what criteria will he be guided in future in ensuring that the PSRs are legal?

It seems that the right hon. Gentleman intends to proceed with the first tranche of three franchises with the current PSRs rather than with what would be preferred. If that is so, does he recognise that inconsistencies will be built in across the region between two levels of service? What action does he propose to overcome that inevitable disparity?

Sir George Young

I said in my statement that I planned to change the guidance and instructions, and explained the general lines on which that would be done. I shall, of course, place the new guidance and instructions in the Library so that hon. Members may inspect them.

I genuinely believe that the franchising director is approaching the matter in the right way. The country has been divided into 25 regions. The franchising director is inviting people to bid for services; he will then choose the best bid. I believe that, when we make progress with the policy, the hon. Gentleman will see that it is possible to run a railway that is better than that of the past 30 or 40 years, which has consistently declined. Our policy will unlock access to fresh investment that will not be constrained by being in the public sector, and will invite people outside British Rail to operate services. I think that it is possible to provide a better range of services, to market those services more efficiently, to introduce more creative fare structures and to reverse the historic decline in railway use—and I believe that our policy will do that.

Mr. Paul Channon (Southend, West)

The guidance that my right hon. Friend has announced will be widely welcomed both in the House and outside. It would be disastrous if the first three franchises were not awarded. Is my right hon. Friend aware that my constituents, who have lived with an inadequate British Rail service for half a century, are now looking forward to a better service, and look to him to ensure that the process goes ahead?

Sir George Young

I am grateful to my right hon. Friend for his support. I can confirm that the franchising director has said that there have been good quality bids in response to the invitations to tender. I hope that, in the near future, it will be possible to proceed with the franchise for LTS Rail; my right hon. Friend's constituents will then be able to see the quality of the service being offered, and the debate will move from the theoretical to the actual. People will be able to see for themselves exactly what services are being provided, and I am happy for our policy to be judged on that basis.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Is it not demeaning for a Secretary of State to have to rewrite the rules to bring the bids into line? Will the right hon. Gentleman tell us precisely how much each taxpayer will have to pay if the Government write off billions of pounds of debt, throw away the assets of the railway system and, on top of that, make taxpayers provide a larger subsidy than they provide now?

Sir George Young

The hon. Lady will not be surprised to learn that I do not agree with the thrust of her questions. All our experience has shown that, at the end of the day, the taxpayer does better when nationalised industries are privatised. We are familiar with the £50 million a week that the nationalised industries were costing us, and the £50 million a week that the privatised industries now bring in. I see no reason why our privatisation policy should not bring benefits not only to taxpayers but to passengers.

Sir Roger Moate (Faversham)

Does my right hon. Friend agree that, if the Opposition were truly interested in the travelling public and the railway industry, they would oppose any further delays and uncertainty? If we are to secure much-needed investment, the faster we get on with the franchising process the better. Will my right hon. Friend assure us that the next batch of franchises will be let very rapidly, particularly the franchise for the South Eastern Train Company?

Sir George Young

I am grateful to my hon. Friend for his support. I hope that, now that we have clarified the legal position, the franchising director will be able to make good progress with the next round of franchises.

What we must hear from the Opposition at some point is where the extra investment is to come from if it is not to come from the private sector. Is it to be secured by means of higher taxation or higher fares, or would Labour cut the level of service provided by British Rail?

Mr. Gerald Bermingham (St. Helens, South)

I welcome the good news—for those who have a railway in their area—that fares will be pegged. Will the Secretary of State confirm, however, that the secret of the process is the question of core services? "Core services" means scarcer services. The right hon. Gentleman appears to be doing to our rail services what Beeching did some years ago: he pulled down a three-storey mansion and replaced it with a cottage. Now that the cottage is to go, what will be left, particularly in the north-west?

Sir George Young

I am not sure that the hon. Gentleman has looked at the details of what is proposed by the franchising director. Every station and every line is guaranteed, and we have opened or reopened some 229 stations since we came to power in 1979. The Beeching decimation was a feature of a previous Labour Administration. I am determined to reverse that and to secure a prosperous railway that is built on the private sector, that is more customer-oriented and that is not wholly dependent on taxpayers' funds. I hope that the hon. Gentleman's constituents will be better served by the railway that I have just described.

Sir David Madel (South-West Bedfordshire)

Can my right hon. Friend confirm that the franchising director will look in particular for a commitment to improve industrial relations when franchise companies run the lines?

Sir George Young

The franchising director is responsible for deciding who shall pre-qualify for the bids, and I know that he will take into account the factor that my hon. Friend has outlined.

During the past few years, British Rail has been disrupted by industrial action. I hope that the more regional approach that we have promoted—whereby local employees deal directly with one of the 25 operating companies—will reduce the likelihood of national strikes. I believe that smaller units of management and a better relationship between staff and local management is a better way in which to promote good industrial relations.

Mrs. Anne Campbell (Cambridge)

If the Secretary of State were to respect the Appeal Court's decision, would he be required to give new instructions to the franchising director? Will he put rail privatisation to the test and allow a vote in the House—or is he too worried about the reactions of his Back Benchers?

Sir George Young

No vote is required in the House to change the instructions. I would welcome such a debate and a vote and would hope that the Opposition would come clean on their policy for British Rail. Do they believe in a publicly owned BR? If so, how would they pay for it?

Mr. Nigel Forman (Carshalton and Wallington)

Is my right hon. Friend aware that it is the inevitable complexity of some of the arrangements that causes uncertainty and concern among my constituents, and that he would go a long way towards reassuring my rail-travelling constituents, of whom I have a large number, if he were to give us some idea how the new policies would address the problems that are caused by the unreliability of services, the problems of signalling failures, which are all too frequent, and the fact that overcrowding is now a characteristic of all too many services on the Carshalton line?

Sir George Young

Overcrowding will be dealt with specifically in the franchising director's requirements.

The new regime introduces tough penalties for Railtrack if it fails to provide a path, and for the train operator if it fails to use a path that is made available to it. The new financial regime will provide a strong incentive for punctuality.

I think that everybody who looks at this matter objectively agrees that we are more likely to get the investment that we need if the railways do not operate within the constraints of the public sector, competing against hospitals and schools for investment. The best answer that I can give my hon. Friend is not to tell people, rather to show them by making progress with the policy so that they can judge for themselves the quality of service that can be provided.

Mr. Tam Dalyell (Linlithgow)

How many adequately remunerated lawyers are available to the franchising director and the Department? How in heaven's name did they manage to get it so wrong?

Sir George Young

The franchising director was successful on judicial review; Justice Macpherson dismissed the challenge, awarded him costs and refused leave to appeal. Last Friday, the Court of Appeal overturned that decision on what it described twice as a limited legal problem. It also identified at the end of the judgment a possible solution—that the Secretary of State could change the instructions. That is the solution that I have adopted.

Mr. Bob Dunn (Dartford)

As, for the first time, passengers will now have guarantees on services and fares, can my right hon. Friend tell the House how those guarantees will be monitored? Will he continue to drive on in the way he announced, because Conservative Members want to put the passenger first, whereas the Opposition wish to leave left-wing trade unions in control of a nationalised industry?

Sir George Young

The House will be refreshed by my hon. Friend's robust common sense.

The franchising director has all the powers that he needs to ensure the guarantees on services and fares. The operator will not be able to increase fares beyond a level approved by the franchising director, and there will be a clear contract outlining the services that the franchise operator has to provide. That will be part of the contract with the franchising director.

Mr. Dennis Skinner (Bolsover)

Will the Secretary of State admit that one of the key reasons why the exercise of privatisation is taking place is, among other things, to reduce the number of trade union jobs on the railways? Now that he has come up with a new proposal to rewrite the timetables—I presume that there will be fewer trains—how many fewer jobs will there be?

Sir George Young

The object of the policy is to get more people to travel on the railways and to improve the quality of service that they receive. I very much hope that the railways of the future will provide good, well-remunerated employment for those who work on them.

Sir Teddy Taylor (Southend, East)

I am a regular traveller on the very unsatisfactory London-Tilbury-Southend line, which has problems, including those of this morning. Is my right hon. Friend aware of the great danger that, after privatisation, every time a train is late or a light bulb is not working, privatisation will be blamed? Will he tell the whole story—I am sure that it will be a good one—and publish every three months details of what has happened, such as whether there are more passengers and whether the trains are more punctual? Will he tell the public and the House the whole story about the first lines to be franchised so that the public can see precisely what has happened and whether things are getting better, as I believe they will, or worse?

Sir George Young

I recall travelling on that very train service with my hon. Friend three or four years ago, when he took the opportunity to communicate to me some of his views on the Common Market.

I think that there will be intense public interest in the first franchised services when they become operational next spring. I welcome that publicity and am confident that those who win the franchises will respond to it, because they will have the same interest as the Government in showing that the new regime is a better way to meet the needs of the passengers. I welcome all publicity about the progress that will be made as our policy develops.

Ms Glenda Jackson (Hampstead and Highgate)

What confidence can the House and the country have in the Secretary of State's statement that he intends to issue new guidance and instruction, as the previous guidance and instruction was found not to be legal? Surely the door has been opened for an individual to take a passenger service requirement to court. As the Secretary of State knows, the taxpayer is paying £23,000 per day in legal fees alone associated with rail privatisation. Will he tell the House how much last week's legal adventure cost the taxpayer and how much he expects the taxpayer to have to find in the future?

Sir George Young

If the hon. Lady tables a detailed question, we will give her the information. I am confident that the action that I have outlined today—a potential solution outlined by the Court of Appeal—is the right way forward, and I believe that it will give a better deal to her constituents who travel by rail. I hope that, at some point, the hon. Lady and her party will come clean on how they would provide the level of investment now envisaged by Railtrack which is over and above that which would have been provided by British Rail.

Mr. Barry Field (Isle of Wight)

Is my right hon. Friend aware that, when the privatisation of British Rail was first announced, the Isle of Wight was at the top of the queue? Unfortunately, for reasons that nobody has been able to discern, it is now at the bottom. When my right hon. Friend sends the franchising director instructions, will he tell him where the Isle of Wight is, and remind him that it is the most simple of all privatisations? Can we please get on with it? Everyone on the Isle of Wight is extremely anxious to get the train out of the station and on to the track so as to give a better and more comprehensive service?

Sir George Young

I am delighted to hear of the appetite for privatisation among my hon. Friend's constituents. I shall ensure that the franchising director is aware of my hon. Friend's enthusiasm that that particular franchise should be brought forward.

Mr. Hugh Bayley (York)

When the Railways Bill was before the House, Ministers repeatedly assured the House that franchised services would be based on the BR timetable. The Secretary of State has now amended that to "broadly similar to". Will he tell the House whether that amendment would increase or reduce the minimum requirement for franchisees?

With specific reference to the east coast service between London and York, will he confirm that the passenger service requirement will allow franchisees to drop the number of weekday trains from 26 to 17 a day? Will his new formulation allow such a large drop? Will he say what will be the minimum number of daily weekday trains between London and York under his new formulation?

Sir George Young

It is worth reminding the House that the Select Committee on Transport endorsed the broad approach that the franchising director has adopted in identifying minimum PSRs. The Select Committee stated:

We also have no objection in principle to the omission of profitable services form PSRs since it would be in franchisees' interests to provide them. The hon. Gentleman will find some reassurance in my statement because, when awarding future contracts, the franchising director will have regard not just to minimum PSRs but to the totality of services that are offered by those who are bidding for the franchises. It is important for people to understand that minimum PSRs are not the same as timetables. I hope that my statement goes some way towards removing concern.

Dr. Robert Spink (Castle Point)

Does my right hon. Friend agree that the franchising director's announcement later this week for the London-Tilbury-Southend line will enable the successful bidder to state the level of service that is intended? I suspect that it will be far in excess of the minimum PSR. Does my right hon. Friend further agree that the successful bidder will announce the future investment programme which, I suspect, will also be welcome news for my constituents—although Opposition Members who represent the vested interests of the trade unions may not be so happy?

Sir George Young

I entirely agree with my hon. Friend. Now that we have resolved the uncertainty, it is important to make progress and to put in the public domain the level of services that are being offered. When that happens, my hon. Friend's constituents will see exactly what is offered by those who have bid for the franchise. I hope that the franchising director will soon award the LTS Rail contract.

Mr. Kevin Hughes (Doncaster, North)

Does the Secretary of State agree that Doncaster is a major station on the east coast main line? At the moment, 33 northbound and 32 southbound trains stop at Doncaster, but there is increasing speculation that in April 1996 that number will be significantly reduced. In the light of last week's Appeal Court judgment, will the Secretary of State guarantee that those services will not be reduced?

Sir George Young

The hon. Gentleman is making the mistake, to which I referred a few moments ago, of assuming that the minimum PSR equals the timetable. The Select Committee has made it quite clear that it is legitimate to specify the loss-making services. The franchise operator has an incentive to provide the profitable services. There is no advantage in ossifying the timetable by specifying it in advance and giving a franchise operator no freedom or flexibility to grow the market and respond to it. If the hon. Gentleman is patient he will see that his fears about dramatically reduced services are unfounded.

Mr. Peter Luff (Worcester)

Does my right hon. Friend understand that his best Christmas present to the people of Worcestershire would be to put all the pressure that he can on the franchising director to ensure that the franchise for the Great Western main line service is announced this week? Does he understand my enthusiasm for winning for my constituents the improved services that franchising will bring and for the first ever guarantees of express trains between Worcester, Evesham and London since the Oxford, Worcester and Wolverhampton railway began services in, I think, 1853?

Sir George Young

I welcome my hon. Friend's enthusiasm and I share his hope that we may be able to make progress with the Great Western railway in the near future. I think that we shall see franchisees offering services above the PSRs and, of course, they will have incentives to attract more passengers to their trains. We want to reverse the historic decline in the use of the railways. The structure that we are promoting is the right one to do that.

Mr. Peter L. Pike (Burnley)

If the Isle of Wight is at the bottom of the list, will the Secretary of State put Lancashire and the north-west there instead, because that would certainly be welcome? Despite what the right hon. Gentleman says about PSRs, people believe that they will lead to a reduction in service provision. Will he guarantee that those who win the franchises will not be able to come back at a later date and ask for a reduction and a renegotiation of their seven-year contracts?

Sir George Young

They will have seven-year contracts with the franchising director. I invite the hon. Gentleman to wait. I hope that, within a few days, he will see for himself whether those who win the franchises offer services above the PSR—as I believe will be the case. The hon. Gentleman will also see whether they offer better services than British Rail. When that information is in the public domain, people will be able to judge for themselves whether our rhetoric or that of the Opposition is correct.

Mr. John Gunnell (Morley and Leeds, South)

Does the Secretary of State recall that, the last time a group of his hon. Friends rebelled on these issues, the Secretary of State gave commitments, one of which has been mentioned today, on the retention of timetables and the stability of fares, and about British Rail being allowed to bid for franchises? Is not it true that all the proposals have been watered down, that the Secretary of State is not honouring any of the commitments and that, overall, he will create a weaker service in the long run?

Sir George Young

I am not aware of having broken any undertakings given by any of my predecessors. I have developed a policy that was worked on by a number of Secretaries of State and I have taken it forward. I hope to have the good fortune to be Secretary of State while the benefits of the policy come into the public domain.

Mr. Nick Ainger (Pembroke)

Does the Secretary of State accept that, on the first three franchises, he got off on a technicality? As he has announced that the PSRs for the franchises that he is holding back will be "broadly similar" to the current timetable, has not he now established a two-tier franchise, with the first three franchisees being penalised far more than the others? In relation to the Great Western PSR, there is a 100 per cent. cut to the existing timetable, and the line between Swansea and Paddington has had, on average, a 20 per cent. cut. Are those timetables "broadly similar"?

Sir George Young

If the hon. Gentleman looks at the Appeal Court judgment he will find a response to his question about GWR.

Mr. Ainger

It is a technicality.

Sir George Young

The hon. Gentleman speaks about a technicality, but the Court of Appeal spoke about a "limited legal problem". It stated:

We confine our attention to the much more limited legal problem defined above. In approaching that limited legal problem the court must steer very well clear of any involvement in making or evaluating substantive decisions. The answer to the hon. Gentleman's question is that, if these matters reach the public domain, he will see for himself whether GWR plans to provide the basic minimum or whether it plans to provide much more than that. If we can make progress, the answer to the hon. Gentleman's question will shortly be in the public domain.

Mr. Nick Harvey (North Devon)

The Secretary of State drew great comfort from the court's finding one aspect or another of his policy not to be irrational. Does he see that it would be wholly irrational for the rest of the country to be served by franchise holders who guaranteed to provide services that were equivalent to the old BR timetable while those who served the south-west were at liberty to reduce them considerably? If the much-derided British Rail is capable of providing 14 services a day form Taunton to London, why should the new franchise holder be asked to guarantee to provide only eight? Will the Secretary of State make it a matter of policy to put the south-west on the same footing as the rest of the country regardless of whether there is a technical hitch with that part of the court case?

Sir George Young

If the hon. Gentleman waits he will see whether South West Trains or Great Western Railways are putting in only the minimum PSR. If, as I expect, they put in more than that, the hon. Gentleman's question falls.

Mr. Brian Wilson (Cunninghame, North)

The Secretary of State's quite extraordinary inability to answer the questions asked by my hon. Friends the Members for York (Mr. Bayley), for Doncaster, North (Mr. Hughes) and for Pembroke (Mr. Ainger) and by the hon. Member for North Devon (Mr. Harvey) reveals the fraudulence of his statement. Does he not understand that the courts have told him that it is unlawful to propose passenger service requirements that are 20, 30, 50 or 100 per cent. below the existing timetable? He cannot tell the House that the import of his new guidelines is that it will be impossible to present passenger service requirements at the same unsatisfactory levels. Will he answer my hon. Friends' question about whether the door is still open for the kind of passenger service requirement that the courts were concerned with? Will he recognise that this will be remembered as the day that the passenger service requirement was redefined as a "core service level"—three weasel words that will be understood throughout the country even if they are not understood by the right hon. Gentleman's Back Benchers.

The Secretary of State also evaded the question asked by my hon. Friend the Member for Burnley (Mr. Pike). Will he say clearly whether, when the ballyhoo about the franchises has died down, it will be open to franchisees to come back and demand either a reduction in service or more money from the franchising director as long at the Tories are in office?

Sir George Young

I invite the hon. Gentleman to read my statement again. I made it clear that I was going beyond the steps necessary to meet the Court of Appeal's decision. I hope that I gave him some reassurance that the timetable was not the same as the PSR.

The approach that the franchising director has adopted was described by the Court of Appeal as

an intelligible and in no way irrational approach. It is a broad approach that was supported by the Select Committee. The Court of Appeal pointed out that it was open to the Secretary of State to amend the instruction. I have told the House that that is what I propose to do.

The important thing is to move this debate on from the theoretical to the practical to enable the franchising director to award franchises and to enable people to see the quality and frequency of service that is being offered. People will judge for themselves. I suspect that, in 18 months' time, or whenever the election is, Opposition Members will fight shy of saying, "We are going to cancel all this and give it back to British Rail." When we hit an election, when the services are up and running, people will find that they are popular and better, and the Labour party, as it has done before, will do a U-turn.