§ Mr. Bernard Jenkin (North Essex)
I beg to move amendment No. 412, in page 113, line 4, leave out clause 200.
§ Mr. Deputy Speaker (Mr. Michael Lord)
With this it will be convenient to discuss the following amendments: No. 414, in clause 201, page 119, line 7, leave out "him" and insert "the Authority".
No. 415, in page 119, line 8, leave out from "State" to end of line 15.
913 No. 416, in clause 202, page 119, line 24, leave out "is reasonable" and insert—'shall be commensurate with the contravention and with the turnover and profitability of the relevant operator provided that the appropriate authority is satisfied that such an imposition will help fulfil the general duties set out in section 4 of this Act.'.No. 417, in page 127, line 1, leave out Clause 208.
§ Mr. Jenkin
I am pleased that we have an opportunity to discuss one of the most important clauses in the railway part of the Bill. What was the Railways Bill until it was included in the Transport Bill in the previous Session has been characterised as potential renationalisation by the back door. In deference to the swoons of the Under-Secretary who has tilted his head back and cast his eyes heavenwards in a manner reminiscent of a pantomime dame suffering from a hot flush, I acknowledge that he has addressed a principal concern about franchising and the possibility of the Strategic Rail Authority taking over and running rail franchises, making clear that those powers are to be used as a last resort. The hon. Gentleman will correct me if I am wrong, but I believe that the Bill clarifies the matter.
Clause 200—which was clause 17 in the Railways Bill and clause 198 in the Transport Bill before it was amended in Committee—entitled "Directions to provide etc. railway facilities", provides for an entirely new power. The regulator, following an application by the SRA, is empowered to direct a facility owner of an existing railway facility to provide a new railway facility, or improve or develop the existing one. The regulator carries out the SRA's direction.
There is no analogous power in the existing railway set-up. In principle, we do not object to the existence of the Strategic Railway Authority, but we have a fundamental objection to it having such powers, which are an expression of the Secretary of State's immature and socialist desire to interfere with the running of the industry and to play trains. It should not be necessary to have such a power over a sophisticated industry.
It would have been absurd if, for example, following the privatisation of British Airways, the Civil Aviation Authority had maintained a power, supervised by the Secretary of State, to direct it to provide certain services or purchase certain facilities. There is no such power over BAA plc. The Minister has frequently retreated to the original Railways Act 1993, but it contains no such power, even in relation to its implementation.
§ Mr. Jenkin
The Minister says that that led to problems. Certainly there are problems to be solved in relation to the railways. I hope that the Minister is prepared to debate whether direct intervention by the SRA, as envisaged in clause 200, or indirect intervention by the Secretary of State through his influence over the SRA, will help to solve those problems.
This would be a substantial change. It is worth pointing out that the power is constrained. It is surprising that only the SRA can apply to the regulator for provision, improvement or development directions under the clause. 914 The regulator must take into account the effect on the SRA's budget, so its views will be of considerable importance.
The clause puts significantly more power into the hands of the SRA than previously, and has the potential to undermine the original arrangements in clause 17 of the Railways Act 1993. That creates the danger of an investment bottleneck, as was said by a leading firm of railway solicitors.
§ Mr. Jenkin
I accept that the Minister for Housing and Planning is a little light-hearted as we reach the end of our consideration of a marathon Bill, which is accompanied by a telephone directory of Government amendments and new clauses. However, we are talking about the firm of Denton Hall.
Denton Hall is the firm of solicitors from which the much celebrated rail regulator, Mr. Tom Winsor, came. I hope that that leading firm of railway solicitors, which spawned the rail regulator, who is now such a champion of the Secretary of State's policies, will not be dismissed too lightly. The firm describes the clause asan investment bottleneck…operators will not be able to bring forward their own investment schemes without obtaining the SRA's approval at the outset.Why that is so deserves some explanation. The clause states:The Regulator may, on application—It is a huge power to be able to tell, for example, Railtrack, to spend or invest real cash. That might be desirable; indeed, I remember that, according to the Secretary of State, that was one of the Bill's great selling points. The right hon. Gentleman advertised the Bill as a way in which to force Railtrack to invest. That is one of the contributory factors that have directly undermined Railtrack's ability to invest. If it becomes the regulator's ability to compel Railtrack to invest shareholders' funds in projects that will not produce a commensurate return, shareholders will naturally think that the company is not worth investing in.
give to a person who has an estate or interest in, or right over, an existing railway facility a direction to improve or develop the railway facility.
- (a) made by the Authority, or
- (b) made by any other person with the consent of the Authority,
I am sure that the Minister is getting ready to tell me that there is a qualification—an obligation—on the regulator. I shall not go into too much detail because the clause is lengthy. If the railway facility provider—supposedly Railtrack—can demonstrate that it cannot earn a sufficient return from the investment, the rail regulator and the SRA cannot force the company so to invest. So, we face a curious situation: the clause compels Railtrack or any other railway facility provider to invest, but if it is not worth investing in that facility, compulsion becomes invalid.
One might ask why any company would not wish to invest in something from which it will earn a worthwhile return. The rates of return are set by the rail regulator in any case, so unless there is a falling out between Railtrack and the regulator—we hope that that falling out is being resolved, although the process is extremely lengthy; I 915 suggest that the Government bear some responsibility for that—or the company is perverse, it would want to invest in facilities that provide a return.
The power in the clause will not increase the amount of investment that will be made. The result will be that Railtrack and every railway facility provider will want to check with the SRA whether the project is one in which the SRA would want it to invest. That is why the clause constitutes an investment bottleneck.
In voting on the amendment, the House is offered the choice between a railway that is free to make investment decisions, which business people think will best satisfy customers and provide a return for shareholders, and a railway that is constrained and corralled by a successor state bureaucracy to the British Railways Board, which so constrained the development of the railway over 45 years of nationalisation.
Let us reflect on what happened before privatisation and what has happened since. Before privatisation, there was a relentless decline in the number of passengers carried on the railway. Since privatisation, there has been an explosion of marketing, innovation and investment and a huge increase in the number of passengers, which we are the first to accept creates its own problems. This Government are the first to celebrate the 1,000 extra daily services on the railway since they came to power, yet those extra services are as a result of releasing the railway from precisely such restriction and interference. The Government are in danger of again placing the railway under such constraints, which will finish up starving it of investment by driving away investors who do not have the patience or confidence to wait for the bureaucrats to make up their minds.
Let me hasten to add that I am not making any personal criticism of the chairman of the Strategic Rail Authority. However, his role should be much more that of a facilitator and a catalyst. There is a place for such a role in the industry if the Secretary of State and Ministers cannot themselves fulfil it, but to hand over such broad powers is a mistake and one reason why we fundamentally oppose the Bill's railway provisions.
I shall briefly refer also to amendments Nos. 414 to 417. Amendments Nos. 414 and 415 amend provisions in clause 201 on the objectives of the regulator and the Secretary of State. I am looking for amendment No. 417, and I cannot find it, but if I am not mistaken it deletes subsection(2)(b)—[Interruption.] I beg your pardon, Mr. Deputy Speaker, I am on the wrong track. We could well have desired to delete that part of the clause, but I will not go into further detail because I would not be in order. I shall turn to amendment No. 417 in a minute.
Amendments Nos. 414 and 415 relate to the guidance that the Secretary of State gives to the rail regulator. Section 4(5) of the Railways Act 1993, which set up the office of the rail regulator, states:The Regulator shall also be under a duty in exercising the functions assigned or transferred to him under this Part—(a) until 3Ist December 1996, to take into account any guidance given to him from time to time by the Secretary of State.It is important to point out that such guidance was relevant purely to the implementation of the Act and that the Secretary of State's power to issue it expired. The regulator thereby became an independent person, undertaking a fundamentally quasi-judicial role in the execution of his duties.
916 The Government have made a conscious and political decision to turn the regulator from someone dispassionate and relatively uninvolved in the politics of the industry into an active player in such politics. To give an example of such a change, it was not right for the rail regulator to issue a press release following the Paddington crash suggesting that he might remove Railtrack's licence if it did not prove to be a safe operator.
The regulator had no case for making such a suggestion. It was purely bandwagon-jumping in the aftermath of the horror of that crash. It was a populist move which demonstrated that the present regulator sees himself as some kind of new Labour people's champion, rather than a dispassionate regulator of the industry. He told me that he regards himself as the voice of the customer, rather than an interpreter of statute and an enforcer of conditions laid down in agreed rules.
Such politicised regulation should not exist, but the Bill provides precisely for it by restoring the authority of the Secretary of State to issue guidance to the regulator in perpetuity. That is why we have tabled an amendment. It is reasonable for the SRA to receive guidance from the Secretary of State. The amendments make it clear that the Secretary of State can issue guidance to the authority, but not to the regulator.
I shall speak briefly to amendment No. 416, which refers to clause 202 and the enforcement regime. It raises our third fundamental objection to this part of the Bill. The penalties that the regulator can apply are much wider than those in the Railways Act 1993. They can be imposed retrospectively, without limit. For example, the regulator is at present threatening Railtrack with a substantial fine—I do not remember the exact figure, but it is millions of pounds—in relation to a two-year period during which Railtrack has improved its performance by 9 per cent.
As a result of the Southall rail crash, the train operating company received a fine of less than £2 million, for an accident which resulted in people being killed. It seem extraordinary that although Railtrack improved its performance by 9 per cent., it will be fined many millions of pounds just because it has not reached the target set by the regulator.
Yes, I am sure that the regulator is within his powers, and yes, I am sure that that will raise a cheer from the populist press, but the regulator should ask himself whether such fines are in the interests of a better railway, or whether they are being imposed so that he can be the passengers' champion and play to the gallery.
We propose an amendment to clause 202, which extends the enforcement regime. Rather than leaving the scale of the penalty atsuch amount as is reasonable,we suggest that the fine should be of such an amount asshall be commensurate with the contravention and with the turnover and profitability of the relevant operator provided that the appropriate authority is satisfied that such an imposition will help fulfil the general duties set out in section 4 of this Act.The general duties in section 4 of the 1993 Act are to run a better railway.
Unless the fines are proportional and it can be demonstrated that they provide the incentive to make sure that the railway providers offer better trains, services and 917 facilities for passengers, what is the purpose of the fines? I do not see why the Minister should not accept the amendment.
Finally, amendment No. 417 proposes that clause 208 should be omitted from the Bill. One of the most iniquitous things that a regulator can do is to move the goalposts during the period of an agreement. The clause effectively gives the regulator powers to amend access agreements, which are the agreements between the train operating companies and Railtrack, unilaterally. Unless the operators have the certainty of their franchise contracts and their access agreements, commercial confidence in the railway's finances will be undermined.
Will the Minister explain how it can be just to give the regulator such wide powers? I can see that it would be convenient and provide more flexibility for the regulator, and might also be convenient for the operators, but it seems extraordinary that the regulator should have powers to change the access agreements by his own diktat.
This is an important group of amendments, dealing with the powers of the regulator and the directions of the Strategic Rail Authority, which go to the heart of some of the problems in the Bill. I hope that even at this late stage, the Minister will take on board some of the points that I have made in the hope of improving the Bill.
With all the extra regulatory and commercial uncertainty created, the huge shopping list of investment projects needed for the railway—£52 billion is specified in the network management statement—as well as the queue of investment proposals from the train operating companies and the refranchising procedure, the danger is that unless we can provide confidence and certainty for investors and a stable regulatory regime, the money will not be forthcoming and the burden on the taxpayer will once again increase.
The only extra money that the Government are spending on transport is not the result of any increase in the Chancellor's largesse, or the result of all the extra taxes being paid by motorists. It is because of the falling subsidies on the railway that the Chancellor has allowed Ministers at the Department of the Environment, Transport and the Regions to keep a small amount of that money to spend on other transport projects, inadequate as it is. If we had not privatised the railway, the Secretary of State would not have even that money to spend.
If we do not want to start diverting resources in large measure back to the railways because legislation such as the Bill has choked off the supply of private investment, the Minister should listen to what the industry is saying, which is what I have expressed from the Opposition Dispatch Box this evening.
§ Mr. Hill
The hon. Member for North Essex (Mr. Jenkin) made a serious speech, to which I shall respond seriously and in detail. I hope that the House will forgive me if I speak at some length.
Amendments Nos. 412 and 414 to 417 would amend the powers and duties of the rail regulator. Amendment No. 412 would remove the regulator's power to give a direction to improve an existing facility or to provide a new one, provided that he is satisfied that there will be adequate reward. Amendments Nos. 414 and 415 would remove the Secretary of State's power to give general 918 guidance to the regulator. Instead, the regulator would be required to have regard to the Secretary of State's general guidance to the Strategic Rail Authority. Amendment No. 416 seeks to put additional conditions on penalties imposed by the regulator and the SRA. Amendment No. 417 would remove the regulator's power to direct parties to amend an access agreement to permit more extensive use of facilities.
Before dealing with the amendments in detail, I shall dispose of the bottleneck argument that the hon. Member for North Essex presented. If I understand the hon. Gentleman correctly, he argues that a bottleneck in investment might develop. However, the Strategic Rail Authority's strategies will be published and its views will be well known to the industry. Fears of a bottleneck are therefore groundless; such a notion is far fetched. I hope that I shall be able to develop that point in more detail and allay the other anxieties that the hon. Gentleman articulated.
I shall deal with the amendments in turn and explain why they are not desirable. First, let us consider amendment No. 412. Clause 200 enables the Rail Regulator to give a direction to a person who is in a position to act to improve an existing facility or provide a new facility. That power can be exercised only through an application from the SRA or a third party, with the consent of the authority. As we said in Committee, that power will ensure that improvements can be made to the network when they are in the public interest.
§ Mr. Hill
If the hon. Gentleman will contain himself and allow me to develop the argument, I shall give way in due course.
There may well be circumstances in which the SRA considers that there is a strategic need for a new or improved facility, but where the person in control of the facility has a short-term view and does not wish to make the investment or has other priorities. In such cases, the clause will provide the balance between the interests of facility owners and the long-term strategic needs of the railway.
An improvement may be sought by a third party, who applies directly to the Rail Regulator, but he must have the consent of the SRA. That will ensure the existence of a genuine interest, which is wider than the commercial interest of one party, and accords with the wider aims of the authority.
I repeat that clause 200 is not designed to replace the normal commercial judgments and investments of facility owners such as Railtrack or English, Welsh and Scottish Railway. It does not preclude voluntary arrangements between a facility owner and someone who wishes to agree terms for an enhancement. The clause provides the element of compulsion necessary to ensure that an investment occurs. That power is to be used sparingly by the SRA as a last resort.
In most cases, we would expect funding bodies such as the SRA to come to voluntary contractual agreements for enhancements that are not commercial, and to make requests to the regulator only as a last resort.
§ Mr. Jenkin
Two phrases expose the flaw in the Minister's argument. He assumes that the industry will 919 take a "short-term", myopic view, when all the evidence suggests that, under privatisation, the industry is taking a longer view than under nationalisation.
Secondly, the Minister claims that the power will be used "sparingly". However, its existence means that all railway operators will be looking over their shoulders and wondering whether every investment that they make is acceptable to the SRA. They have limited funds for investment. If they invest in the wrong facility, will they also be required to invest in a different facility? The increase in investment that the railway needs will be achieved only by setting the industry free from such restraint.
§ Mr. Hill
The hon. Gentleman is wrong to assert that the powers are being introduced on the assumption that the industry will have a tendency towards short-term decision making. No such assumptions are made. The powers are designed to take account of circumstances in which it is deemed that a short-term approach is being adopted. They constitute a fall-back, and will be used sparingly. We have no reason to believe that the relationship with the industry will not be voluntary and co-operative.
As a check, I confirm that the final decision belongs to the Rail Regulator. He will operate under the duties in section 4 of the Railways Act 1993. They include the duty to act in a way which he considers will not make it unduly difficult for the holders of network licences, such as Railtrack, to finance their activities.
§ Mr. Hill
Let me develop the argument. With respect, the hon. Lady is relatively new to the arguments. I was delighted to embrace the proposals in the Bill that she introduced under the ten-minute Bill procedure. However, it was on a different matter in relation to which I acknowledge her expertise. I want to develop my argument on return on investment, an important issue that the hon. Member for North Essex raised.
In all cases, the rail regulator must be satisfied that there will be adequate reward for the improvements or new facilities. That will depend on the facts and circumstances of the case. It means that the regulator will take a view that the facility owner will not be out of pocket. It does not mean that the facility owner will be remunerated in advance. We have made it clear that the rail regulator will be able to take account of indirect receipts and other benefits that are likely to accrue to the facility owner.
An independent economic regulator is best placed to decide whether compensation for any direction is adequate. The regulator is developing a framework for enhancing expenditure, including a policy statement that relates to enhancement. It will relate primarily to work on Railtrack's network. The regulator intends the policy statement to cover all sorts of enhancements, whether they are initiated by operators, funders or Railtrack, and whether they are undertaken by Railtrack or others.
The regulator envisages that the framework will establish the way in which he will assess the adequate reward for an infrastructure operator to improve facilities, including the appropriate rate of return and taking account of the risks.
920 It is right for Railtrack, its customers and funders, such as the SRA, to understand in advance the treatment of enhancement of the network under Railtrack's financial regulatory framework. When the regulator publishes his final conclusion later this year, it will reduce the uncertainties that Railtrack has encountered in the past, give the company an incentive to improve, enlarge the network and thus serve the public interest better.
Amendments Nos. 414 and 415 would have the combined effect of removing the Secretary of State's power to give "general guidance" to the Rail Regulator. Instead, the regulator would be required to have regard to the Secretary of State's general guidance to the SRA.
I assure the House that the Government want to ensure that the Rail Regulator can continue to act as an independent economic regulator. However, clause 201(6), which is similar to the time-limited provision in the 1993 Act, does not undermine the Rail Regulator's independence.
As we explained in detail in Committee, subsection (6) does not permit the Secretary of State to dictate to the regulator how he should perform his functions. However, the regulator does not operate in a policy vacuum. It is right, given the extent of public subsidy and the enormous public interest in the railways, that he should have regard to the general direction in which the Secretary of State wants railway policy to develop, as part of an integrated transport system.
I repeat the assurance that any guidance will be at a general and high level. For example, I envisage guidance on the part that the Government expect the railway to play in their wider policy of integrated transport. The guidance may cover the Government's aim of a safe, growing and improving railway. It may also cover such matters as the policy balance that the Government support between a franchised railway and an open access one.
The guidance will not enable the Secretary of State to dictate Railtrack's rate of return—we would not wish to do that. That would be entirely inappropriate. The regulator is constituted as an independent and economic regulator, and that is how he will remain under the Bill.
The general guidance power in the Bill will not, as the hon. Member for North Essex asserted, politicise the regulator. He will have a duty to have regard to general guidance but he will remain independent. It is still for the regulator to decide what weight to give to the Secretary of State's guidance and to balance that against his other duties under section 4 of the Railways Act 1993. For those reasons, we think that it is entirely proper for the Secretary of State to be able to give guidance direct to the regulator. We see no reason for accepting amendments Nos. 414 and 415, which would substitute an indirect influence via the Secretary of State's guidance to the SRA. The SRA and the regulator have very different functions. It is wrong in principle to require the regulator to have regard to the Secretary of State's guidance to the SRA, when that guidance may and will cover matters in which the regulator has no role.
Amendments Nos. 414 and 415 would lead to uncertainty. The regulator might find difficulty in knowing what was general guidance of which he must take account, and what was detailed franchise-specific guidance to the SRA, which he would need to ignore.
§ Mrs. Laing
I assure the Minister that I am not new to this subject. I remember every minute of the arguments that were advanced during consideration of what was the Railways Bill, which became the Railways Act 1993. The Minister was then only a member of the Select Committee on Transport, and he was quizzing the Conservative Government on what that measure meant. I have listened carefully to what the hon. Gentleman has said in the past five minutes or so. Does he agree that the general direction of everything that he has said during that period is to reverse the principles of the freedom that the 1993 Act gave to the railways and to take power back to the Secretary of State and the Government? The Bill is anti-commercial.
§ Mr. Hill
No, I do not agree. What is more, I think that the hon. Lady should understand that the premise of the Railways Act 1993 was to deal with a limited no-growth railway, and to privatise it. The thrust of the Bill is to take into account the success of the railway. I concede that it has been successful in many respects under privatisation and as a result of it. I think that we all acknowledge that there has been a great deal of innovation in the industry and a greater focus on customer care. However, there remain, as the hon. Member for North Essex must concede, several problems that are associated with the railway. For example, there are issues involving overcrowding and unpunctuality. By means of the Bill, we need to create a proper and flexible framework that will allow for an expanding railway. The intentions and purposes behind the Bill are entirely positive and supportive of a growing railway. I hope that my response reassures the hon. Lady.
There are some matters that the Secretary of State may wish to include in guidance to the regulator which would not be appropriate to include in his guidance to the SRA. For example, guidance to the regulator may include the Government's high-level objectives for the railway, whereas objectives for the SRA are already prescribed in clause 182.
I reiterate that I reject any suggestion that the regulator has become a politicised figure. He is independent and he will remain so. The Government have great confidence in the abilities and activities of Mr. Tom Winsor. However, I turn to the epicentre—
§ Mr. Jenkin
Does the Minister think that the regulator was right to issue the press release just after the Paddington crash?
§ Mr. Hill
Given the commencement of the Cullen inquiry, it would be unwise now for a Minister to make any utterance on that issue from the Dispatch Box. I hope that the hon. Gentleman will forgive me for not responding directly to his intervention. I hope also that he will understand the circumstances in which I decline to do so.
I move on to what I detect is the epicentre of the hon. Gentleman's anxiety, and that is his contention that no analogous power exists within the existing railway or 922 other structures. It is true that no other regulator is subject to guidance from the Secretary of State. However, no other regulated industry receives more than £1 billion per annum in financial support from the Government. There is no equivalent in other regulated industries of the SRA. Railways are different from other regulatory models. A model that suits gas and electricity is not inevitably the right one for railways.
We have the right answer for the railways—[Interruption.] I hear the hon. Member for North Essex say from a sedentary position, "Renationalisation by the back door." During our many hours together in Committee and in the Chamber while considering the Bill, I have grown to become quite fond of the hon. Gentleman. That has not always been easy but, over time, it became possible. However, I shall have to confide to my diary my worries about a distinct tendency on his part to having bees in the bonnet. I dare hardly mention EUROCONTROL, of which we have heard far too much during our proceedings. We have heard from the hon. Gentleman that he regards clause 200 as evil. I believe that those are his words. I thought at the beginning of the debate that we had made progress and that the hon. Gentleman had abandoned his anxieties about renationalisation by stealth or the back door, but alas we have not. Although he tries to repress that attitude, deep down it is there, and from time to time it bubbles up. That is a pity, and I am worried about the hon. Gentleman.
There is one further point about the regulator and guidance from the Secretary of State. Under the Utilities Bill, my right hon. Friend the Secretary of State for Trade and Industry will have the power to issue guidance on any of the Government's social and environmental policies. In a limited respect, there are parallels to the relationship between the Secretary of State and the regulator as set out in the Bill.
Amendment No. 416 concerns penalties imposed by the SRA and the regulator. It goes to the heart of the purpose of penalties by seeking to spell them out in detail. It seeks to make them proportionate and to fulfil wider purposes. The amendment is not necessary because the objectives that lie behind it are already contained within the concept of reasonableness. That is the form of the drafting, and it captures the aim more succinctly and more comprehensively than the amendment.
The test of reasonableness covers proportionality, which the amendment specifies as being commensurate with the contravention. It also covers turnover and profitability. If a penalty is imposed that is disproportionate in terms of the company or the contravention, it would not by definition be reasonable and would not be within the power of the appropriate authority to impose.
The regulator and the SRA will have to publish their policies towards calculating the amount of a penalty and to have regard to the published policies when imposing a penalty. Such policies might include one on having regard to the need to secure compliance, the consequences of the breach and the deterrence of future breaches. We cannot specify what level a penalty will be in advance because that will, and must, depend on the breach. It can be a heavy one only if the breach is serious and where there has been harm. In a lesser breach the penalty would be less.
923 I should mention the last part of amendment No. 416, which refers to penalties fulfilling the general section 4 duties. These duties are the manner in which the Rail Regulator or the SRA must exercise their regulatory functions. As they are not objectives in themselves, that is not appropriate. However, the wider purpose of the enforcement regime is, of course, to enforce the obligations which companies have entered into and to protect the interests of rail users, so some of the spirit of this is in the regime in any event. However, in exercising their respective functions, the regulator will be subject to his section 4 duties and the SRA will be subject to its clause 184 duties.
The hon. Gentleman asked why there is no upper limit on financial penalties. The important point is that the penalty imposed must be reasonable in all the circumstances of the case. A serious contravention could attract a considerable penalty whereas a minor contravention could attract only a minor penalty. The concept of proportionality is central to the provisions on imposing financial penalties. Furthermore, companies will be able to appeal to the courts on the imposition and the amount of any financial penalty. The courts may quash the penalty or substitute a lower one if they consider the amount to be unreasonable. I say again that the penalties must be of a reasonable amount. Railtrack is appealing to the courts on penalties at present, but, again, I am not able to comment.
Amendment No. 417 would remove the regulator's power to direct the parties to an access agreement—perhaps between Railtrack and a train operating company—to amend an access or network installation contract to permit more extensive use of the railway facility or network installation in question. Clause 208 is necessary because, for the first time in many years, the railway is growing. The hon. Gentleman and I agree about and rejoice in that. We need to be absolutely sure that the mechanism exists to require facility owners to provide additional access rights where there is spare capacity.
Section 22(6) of the Railways Act 1993 provides that the regulator may not require amendments to be made to an access agreement to give additional access rights, and he may not undermine the intention of that provision by entertaining a new application for additional rights. Hence the need to be absolutely sure. I emphasise that this is not additional regulation. Clause 208 makes it clear that the regulator's powers in relation to applications for access apply equally where someone who already has access wants more.
At present, section 22(6) of the 1993 Act prevents a holder of access rights from using section 17 to secure rights to run more trains on reasonable terms. That is nonsense, and it shows how Conservative Members failed to legislate for a growing railway in 1993.
§ It being five hours after the commencement of proceedings on consideration of the Bill, MR. DEPUTY SPEAKER, pursuant to Order [9 May], put forthwith the Question already proposed from the Chair.
§ Amendment negatived.
§ MR. DEPUTY SPEAKER then proceeded to put forthwith the Questions necessary for the disposal of business to be concluded at that hour.