Grand Committee Report of 28 February 2005

Official Report of the Grand Committee on theRailways Bill
(First Day)
Monday, 28 February 2005.
The Committee met at half past three of the clock.
[The Deputy Chairman of Committees (Viscount Allenby of Megiddo) in the Chair.]
The Deputy Chairman of Committees (Viscount Allenby of Megiddo): Before I put the Question that the Title be postponed, perhaps I may remind your Lordships of the procedure for today's Committee stage. Noble Lords must speak standing; and the House has agreed that there will be no Divisions in the Grand Committee. Unless an amendment is likely to be agreed to, it should be withdrawn.
If there is a Division in the Chamber while we are sitting, and I believe that that is likely to be the case today, the Committee will adjourn as soon as the Division Bell is rung and will resume after 10 minutes.
Over recent weeks there have been some failures in the sound system. If they should recur, we shall have to suspend the Sitting until it is mended.
Title postponed.
Clause 1 agreed to.
Schedule 1 [Transfer etc. of functions of the Strategic Rail Authority]:
Lord Rotherwickmoved Amendment No. 1:
Page 69, line 23, at end insert "and substitute the words "and otherwise encourage the adoption and implementation of" with the words "together with a timetable for implementation""
The noble Lord said: This amendment would require the Secretary of State to publish a timetable for implementation whenever he publishes the code of practice covering Train & Station Services for Disabled People, or a revision thereto. We also welcome the introduction of a power for Scottish Ministers to prepare and revise a code of practice on protecting the interests of disabled persons. However, we believe that it is imperative to learn the lessons of the SRA code of practice, Train & Station Services for Disabled People.
The code is not enforced, despite Section 6.5 of the Government's 10 Year Plan for transport which requires that no money be spent on public transport infrastructure that is not accessible for disabled people. Section 70(1)(b) of the Railways Act 1993 requires the SRA to,
"publish and otherwise encourage the adoption and implementation of … codes of practice",
for the promotion of rail users who are disabled. Paragraph 29(1) of Schedule 1 transfers this duty to the Secretary of State. However, this has not worked and
GC 2
we suggest that an approach similar to that adopted by Section 142 of the Greater London Authority Act 1999 is used instead. The relevant paragraph states that the Mayor's transport strategy shall contain the Mayor's,
"proposals for the provision of transport which is accessible to persons with mobility problems".
It also states that the Mayor's transport strategy has to contain a timetable for the implementation of the proposals designed to make transport more accessible for disabled people.
Moving on to Amendment No. 82, we welcome the requirement that the Disabled Persons Transport Advisory Committee, known as the DPTAC, be consulted, but believe that it is essential that its Scottish equivalent, the Mobility and Access Committee for Scotland, the MACS, with whom the DPTAC works quite closely, should also be consulted.
While we cannot accept the Minister's assertion on Report in another place that to sort out the whole of the devolution issue relating to MACS and DPTAC would be complicated, it is illogical that the DPTAC, but not the MACS, be consulted by the Scottish Minister on a code of practice applying only to Scotland. I beg to move.
Lord Davies of Oldham: I am grateful to the noble Lord for moving the amendment so clearly, and it goes without saying that we are totally in agreement with the sentiments lying behind it; namely, that we should do all we can to promote the interests of the disabled in relation to use of the railway. The noble Lord will recognise that in a very short time in the Chamber the Government intend to do exactly that in relation to the disabled in a further stage of the Disability Discrimination Bill.
Protecting the interests of people who are disabled is important on the railways, just as it is in all aspects of life. An opportunity to strengthen that protection looks like an opportunity which should be taken. I am sorry therefore not to be able to accept this amendment, but I have a fundamental problem with it, which is that I do not believe it strengthens the provision. In fact it would risk diluting what we already have in place.
First, it requires the Secretary of State to publish a timetable for implementation of the code along with the code itself. I do not think that is necessary or desirable, because the Secretary of State's code, as with the SRA's current code, will bite immediately and will be enforceable through licence obligations. Therefore, no timetable is necessary. In fact, any timetable, if it had such force, would delay what we are already giving effect to. The code covers both standards of service and physical standards.
Passenger train operators and station operators must take account of the code from the outset by providing appropriate standards of service for disabled passengers. For example, under the current code, all licensed operators must arrange for designated staff to have disability awareness or equality training. Likewise, operators must participate in a reservation system that provides effective assistance for disabled passengers at all

GC 3
stages of their rail journey. These are not matters to be implemented according to a government timetable. The requirements apply at this moment and will continue to do so.
The timetable for applying the physical standards in the code will be clear from the code itself. Under the existing code, it is expected that all new stations will meet the mandatory or recommended technical standards. Station operators will also be expected to ensure that existing stations meet these standards when facilities are renewed or enhanced, within the constraints of the site environment. So, for example, as part of any major refurbishment of a booking office in the future, if it has only one ticket window that must be designed so that wheelchair users can use it as easily as everyone else. Of course, it is not always necessary for access improvements to wait until assets are refurbished or renewed.
The SRA will be consulting shortly on a strategy for making the railway more accessible through both physical and customer service improvements. This strategy will be wide-ranging and will include proposed revisions to the SRA's code of practice.
As I say, I totally accept the well intentioned sentiments behind this amendment, but for the reasons I have given I honestly believe that the Bill is better without it. I can assure your Lordships that the Government will, of course, take this aspect of their new responsibilities for rail very seriously indeed because accessibility is a vital issue. As I attest in evidence, the Bill that is going through—
The Deputy Chairman of Committees: I am sorry to interrupt but a Division has been called in the Chamber. The time is 3.36 p.m. We shall reassemble at 3.46 p.m.
[The Sitting was suspended for a Division in the House from 3.36 to 3.46 p.m.]
Lord Davies of Oldham: I was interrupted by the Division on a very constructive note. I was saying how much I appreciate the good intentions behind the amendment but also expressing the view that I did not think we could accept it. However, I was able to reassure the Committee that the Government take this aspect of their responsibilities for rail very seriously indeed.
I have some sympathy with the principle behind Amendment No. 82. A similar amendment was debated in the other place, and appreciation was expressed at the important role of the Mobility and Access Committee for Scotland, which I shall now refer to as MACS. However, the amendment was resisted by the Government on the grounds that it is not really necessary. The Government continue to hold that view and I shall seek to sustain it today, although I understand why Members of the Committee would wish to ensure that MACS was mentioned in the Bill.
In Scotland, MACS fulfils a similar role to the Disabled Persons Transport Advisory Committee, which we usually refer to as DPTAC. However, equal opportunities law, including the Disability Discrimination Act 1995,—the Act that established
GC 4
DPTAC—is reserved to Westminster, so DPTAC does not have a role in Scotland. However, it works very closely with MACS; arrangements are in place to ensure that the work of the two bodies is complementary. While DPTAC will deal with issues which are reserved to Westminster, MACS will deal with issues that are devolved to the Scottish Parliament. Existing arrangements should ensure that DPTAC involves MACS, or that MACS takes the lead where devolved matters are concerned.
I am sure that when the Scottish Executive consults on the code of practice, it will involve as wide an audience as necessary. That will include MACS as the body that its Parliament set up to represent disabled people's interests in Scotland. A duty for the Scottish Ministers to consult DPTAC but not MACS should not adversely affect the existing role of MACS or the interests of disabled rail users in Scotland.
In the light of the assurances I have given concerning the operation of the provisions relating to codes of practice for Great Britain as a whole and for Scotland in particular, and understanding the legitimate concerns expressed by the noble Lord who moved the amendment, I hope that he will recognise that we share common objectives in this respect and will feel able to withdraw his amendment.
Viscount Astor: Perhaps I could ask the Minister a couple of questions while my noble friend decides how to respond. My noble friend's amendment was intended to be helpful, as, indeed, are all our amendments to the Bill. Whether the Minister thinks them helpful or not, of course, is a matter for him.
Clause 47 refers to the code of practice for disabled rail users in Scotland. It refers to Scottish Ministers with respect to revising and publishing a code of practice, and consulting before doing so. If I heard the Minister right, he said that the Disabled Persons Transport Advisory Committee deals with reserved matters and is an English institution. Here we fall down the hole in the middle of devolved government. Under the Bill, the Scottish Parliament is being asked to consult a Westminster body before preparing or revising a code that is relevant only in Scotland. It is being asked to do that when there is a perfectly acceptable equivalent Scottish body—that is, as the Minister said, the Mobility and Access Committee Scotland.
This does not make sense and the Minister has not addressed the issue. If MACS is responsible for these matters in Scotland, it is not good enough to say, "Well, I am sure the Scottish Parliament will talk to that body", if it does not say so on the face of the Bill. If it is to talk only to the body responsible for England, it makes a total mess of devolved government.
This is a complicated issue, as we know, because part of the Bill devolves certain responsibilities for the rail network to Scotland. It seems to me that if we are to do that, we ought to do it properly. Perhaps the

GC 5
Minister will address that concern and think the issue through a little further before he responds to my noble friend.
Lord Davies of Oldham: I always respond to an invitation to think an issue through a little further. I recognise the noble Viscount's wish to be helpful and, as I have indicated, the amendments to which he gives his support have been expressed in constructive terms.
The point we are seeking to establish is that the Scottish Executive would be consulting on the same issues as their English and Welsh equivalents—namely, what is best practice in meeting the needs of the disabled. DPTAC will be consulted on these issues and will be able to reflect its views on what ought to be best practice across Great Britain.
Of course MACS will have a role but, in this respect, direct consultation with MACS would merely add to what DPTAC will be doing in relation to the whole of the country. I am seeking to emphasise, as the noble Lord will recognise, that the real thrust of the amendments to which we object is that they would introduce a timetable and restriction, whereas we have a code in place in which consultations regularly take place and in which DPTAC has a statutory position, as identified accurately by the noble Lord, under Clause 47(3). The issues with which MACS would be concerned would be derivative from that experience.
I am not rebutting the amendment and suggesting that it does not contain a contribution to the debate on how to assist the disabled. But we have a code in place, an ongoing structure in which, quite clearly, there is a process for ensuring that the interests of the disabled are fully consulted upon. On that basis, I hope noble Lords opposite will recognise that they can safely not press the amendments.
Lord Rotherwick: I thank the noble Lord for that helpful answer to the first amendment. I naturally accept what he said. As to the second amendment, his reply seemed rather complicated and I am not quite there yet. I should like to take the matter away, read carefully what the Minister said and come back to it at a later time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Schedule 2 [Transfer schemes]:
Lord Berkeleymoved Amendment No. 2:
Page 74, line 7, at end insert—
"( ) A scheme may not transfer any property, rights or liabilities of or vested in BRB (Residuary) Limited."
The noble Lord said: Before speaking to the amendment, I declare an interest as chairman of the Rail Freight Group. I hope that that will suffice for today's sitting. This is a probing amendment to try to find out what will happen to former British Railways land that is currently administered by the Strategic Rail Authority on behalf of BRB (Residuary) Ltd.
Perhaps I need to go back a few years to privatisation, where BR land was divided between operational and non-operational land. The operational land was
GC 6
allocated to Network Rail and the non-operational land remained with BRB (Residuary). The theory was that BRB (Residuary) could then do what it liked with that land, because it had no further railway use. whereas Network Rail would look after the land that it received, as part of its regulated activities. Six or seven years ago we found a problem when the split was made between the two recipients of land. Unsurprisingly, in the haste, a few mistakes were made. It was discovered that a number of the sites that had remained with BRB (Residuary) were actually useful for rail use: possibly for a rail freight terminal, an extension car park at a station or anything like that.
The matter came to a head when we discovered one Christmas that British Rail was selling off a prime city centre site for aggregate receipt to the Battersea Dogs Home. I made the point that dogs did not need to be rail connected, whereas aggregates did. No one thought that that was funny, least of all the Daily Mail, and, of course, the sale went to the dogs' home, which offered a higher price than anyone else. Everyone in the SRA thought that that was sad and should not be repeated, so they set up a property advisory group, of which I had the honour to be a member.
Over two or three years we visited every site that the property board owned and marked them as either useful for railways in the future or no use at all. They included railway sites in the middle of nowhere that were not connected to any railway that would ever open again and were a liability, rather than an asset. Some land is still held by the Strategic Rail Authority on behalf of BRB (Residuary).
The sort of period for which we looked ahead in the property advisory group was 20 years. We said that a site should be retained by BRB (Residuary) Ltd if there was a likelihood that within that period it might be required for passengers, freight, maintenance or anything else to do with a railway. Network Rail also started selling off land when it should not have done and the regulator made it institute a procedure for consultation which is still used today and works well.
Can my noble friend say what will happen to such land when the SRA is no more? I can see two options: one is that the Secretary of State will keep hold of BRB (Residuary), in which case I hope that he will see his way to preserving the land that could be of use in future, in a similar way to the SRA, and issue some guidance to that effect; or, secondly, to transfer the land to Network Rail as part of its regulated—and I do mean, regulated—land holdings.
I have no preference either way. But if the whole lot was disposed of—as could happen, if I have read Schedule 2(2) correctly—that would be a great shame, because there are still some sites which could be of use in the future. I beg to move.
4 p.m.
Lord Bradshaw: I support the amendment and shall await the Minister's response with interest. Railways are a long-term business: you are not in it today and out in two or three years; you are looking to the future, which often is not easy to predict. To take an example

GC 7
local to me, a lot of land beside the railway going north of Oxford, part of which has been sold, is now possibly required for a guided bus way. There is just about enough land left—only just, because so much has been sold for housing—on the site of a coal-yard, which had appeared to be redundant. As congestion changes and the demand for access to cities changes, people's view of transport in the round changes as well.
I am most anxious that nothing is disposed of which might be of future use. I well understand the motives that guide people whose job is to sell things off. They see things in very short-run terms, because their task is to get some money to satisfy this year's budget. In fact, if you are engaged in any way in strategic planning, you realise that the decisions that you take today affect your children and grandchildren, and you ought to be very careful in sacrificing any opportunities to use, particularly corridors and especially those into large cities, and sites in cities that might serve as distribution depots in the future, when we might be short of oil and will need them.
We need to act very cautiously and preserve the opportunity to consider each case very carefully on its merits before somebody, guided by short-term motives or perhaps his end-of-year bonus, acts rashly.
The Earl of Mar and Kellie: I remind the Committee that there is a very good example of such a shortcoming at Marylebone station, which was reduced to four platforms from six. Two westerly platforms were built on and now two more are to be rebuilt but further out, so passengers will have to walk further. That in itself may not be too had for passengers, as they are going to sit on a train, but it is a good example of where an asset was lost.
Lord Davies of Oldham: I understand the motivation behind the amendment and recognise the point that the noble Lord, Lord Bradshaw, emphasised: these are long-term decisions affecting the railway and should therefore get proper consideration.
My noble friend proposed two possible solutions; we are taking the first one. The policy intention is to transfer ownership of BRB(R) from the Strategic Rail Authority to the Secretary of State without any alteration to its portfolio. BRB(R) would continue with its estate management and disposal role under its new ownership. It has disposed of land at a steady but not rapid rate since privatisation, and only after due consideration of a potential future transport use has been taken into account.
Once it comes into the Secretary of State's ownership we shall want to reassess the rate of disposal to see whether it can be speeded up when it is clear that disposal would be the right course to pursue. But we will not change the basic policy that the railway has first call on those landholdings where any possible need is foreseen. By "railway" I mean not just passenger transport but, to reassure my noble friend, freight interests also, both in the short and longer term.
I can give the assurance that the interests of all rail users, not least the interests of rail freight, will be protected in this important area. That will apply just as
GC 8
much when considering the use or disposal of land as it would in any other area. It will continue to be our policy not to dispose of land until the possibility of future use for transport purposes has been fully considered, while appropriate consultation will of course continue to be part of that process.
I hope that my noble friend is assured that we intend to follow the first solution he put forward.
Viscount Astor: Perhaps I may put some questions to the Minister. Many stations in this country have had money spent on them, but just as many have not. The latter are in a pretty poor state and need investment, and some car parks need to be improved, expanded and made secure if we are to encourage people to use trains. Insecure car parks make it very difficult to use the train because one's car will be broken into if it is left overnight.
Accepting what the Minister said about disposals, I believe it will effectively be the Secretary of State and the Department for Transport which will decide. He said that they will consult. It would be helpful to the Committee if he could specify with whom they will consult. Will it be the train operating companies or with other bodies?
The Minister said that if they decide that certain land is not necessary, after due consideration they will decide whether it might be sold. But what will happen to the proceeds now that a government body is helping in this? Will the proceeds automatically go back to the Treasury? Will the department have to make a call on it under a separate request, or will it automatically be there for reinvestment in stations, car parks or whatever? It would be helpful if the Minister could tell us.
If the money is to be raised by sales, we will all be concerned that it does not disappear into the Treasury, which will undoubtedly put forward a scheme. It is important to know whether we will have—not substitution, but another word which I shall think of in a minute.
Lord Berkeley: Hypothecation.
Viscount Astor: Exactly; I am grateful to the noble Lord.
It would be helpful if the Minister could answer those questions. I did not intervene earlier because it was important first to hear what the Minister had to say. I believe that the noble Lord, Lord Bradshaw, also has some questions.
Lord Bradshaw: When the noble Lord, Lord Berkeley, introduced the amendment, he said that there were two types of property, the first of which is with Network Rail and is regulated. Does anyone regulate the Secretary of State, or is he in fact a free merchant? We are talking about the "secretary of state" in small letters, not about Alistair Darling. Will a future Secretary of State have the right to act of his own volition, without regulation?
Lord Davies of Oldham: The answer to the last question is that the Secretary of State is answerable to the House of Commons for the actions he takes. He

GC 9
can be challenged on any of these decisions. Members have not previously been remiss in raising these issues when they disagree with the Government, or criticised an issue for which the Government are directly responsible.
On the more general issue, as I tried to indicate, the actual structure and operation of BRB(R) will not change under the new framework; it will continue its current practices. It will consult with operators and all other interests as before on the disposal of any assets. As has rightly been emphasised, the main criteria to be adopted in analysing these issues are the present, future and far future needs of the railways.
Proceeds will be taken into account in setting rail budgets, as they are now. Nothing will change in those terms. There is no appropriation of rail assets to raise money that will go elsewhere. They will be part of the general budgetary process for the allocation of resources to rail.
Viscount Astor: So the Minister is saying that the money would go back into the general transport budget and would not be ring-fenced or used only for improvements to the rail system.
Lord Davies of Oldham: It is not ring-fenced in quite those terms. The basis of my reply to the amendment and to the speech of my noble friend is my reassurance that although BRB (Residuary) comes under new ownership, as it were, its procedures, its processes and the way in which it goes about its actions will not change.
Lord Berkeley: I am very grateful to my noble friend for that response. Knowing that it will go to the Secretary of State is very helpful. I am tempted to suggest that it would be useful to have a short guidance note on how BRB (Residuary) is to operate in the future. Although it has consulted well, it has not always been able to arrange to sell land to the railways because it could not agree on the price. It might be helpful to look at issues such as price, how the land is sold, and the issues raised by the noble Viscount, Lord Astor, on where the money goes before we come back.
Lord Davies of Oldham: If my noble friend will allow me, I shall clear that up now. We would be quite prepared to see such a document developed so that people could see the transparency within which the framework of the BRB(R) is operating. I hope that my noble friend will recognise that this reflects past practice and will continue into the future.
Viscount Astor: Will BRB (Residuary) Ltd remain a limited company under the control of the Secretary of State or will only the assets be transferred to the Secretary of State?
Lord Davies of Oldham: It will be a limited company.
Lord Bradshaw: Will the Minister bear one thing in mind? If the assets pass to the Secretary of State I think that under Treasury guidance any value of the land will be discounted at the discount rate. That is at variance with long-term strategies because the discount rate
GC 10
quickly evaporates after about eight or nine years. Unless you can say that you will develop the asset within a reasonable time, it is sold because the value of having the cash in hand outweighs its future value. That is a very serious problem for transport planners.
The Deputy Chairman of Committees: A Division has been called.
[The sitting was suspended for a Division in the House from 4.12 to 4.20 p.m.]
The Deputy Chairman of Committees: I think we can continue.
Lord Bradshaw: The point I was making is that the Treasury and, indeed, the Department for Transport, will be motivated by the discount rate, which generally means that people have very short-term views. Usually the discount rate runs out after about eight years, which certainly does not take account of the long-term transport uses of a site.
The second point I wish to stress is that, as far as I can see, the land in the stewardship of Network Rail is subject to regulation by the independent regulator, whereas land in the stewardship of the Secretary of State is at the pleasure of the Secretary of State, whomsoever he may be. While I cast no aspersions on the present incumbent, there could be malevolent Secretaries of State in future and it is our duty as a Parliament to secure these assets from such a person.
Lord Berkeley: Before I withdraw the amendment, perhaps I may clarify for the noble Lord, Lord Bradshaw, that Network Rail has two plots of land: one is operational and regulated; the other is non-operational—it probably came about as the result of a property deal for an office block—and it can do what it likes with that.
My noble friend suggested that if we wanted to take this further we should draft guidance ourselves. Some Members of the Committee may get together before the next stage to consider what we can do in that respect. I am grateful for his response and, on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Clause 2 agreed to.
Schedule 3 [Transfer of safety functions]:
Lord Berkeleymoved Amendment No. 3:
Page 81, line 12, at end insert—
"( ) The limits of responsibilities of the Office of Rail Regulation are the railway boundary fence lines and station buildings but excluding depots.
( ) The Office of Rail Regulation shall publish detailed descriptions of where such boundaries are located."
The noble Lord said: In moving Amendment No. 3, I shall speak also to Amendments 4, 5 and 10. The amendments relate to safety and the consequences of the welcome transfer of responsibility for railway safety from the Health and Safety Executive to the Office of Rail Regulation.

GC 11
As to Amendment No. 3, I thought it might be helpful if the Committee knew the physical limits of the responsibility of the Office of Rail Regulation in regard to railway safety. Outside the stations, is it the fence lines and so far outside the bridges? What will happen with stations? In other words, are stations, the platforms and the buildings part of the regulator's new responsibility or not? Clearly when this is decided it would be nice if everyone knew the answer.
I remind the Committee that there is still a lot of baggage surrounding this issue. The last time the firemen went on strike, or would not provide cover, at Oxford station the passenger lift was closed because the firemen would not be able to provide rescue services if the lift broke down. I remember telling Ministers at the time that if the lift had been in a multi-storey car park it would have continued to work.
Someone produced a regulation saying that it is much better that people with mobility problems who could not get up the stairs should not catch the train, rather than taking the slight risk of being stuck in a lift. I know that a lift is quite warm, has nice glass windows and that there is nothing wrong with being stuck in it for an hour until some one comes —probably—but it would be nice to know the limits of the regulation.
On Amendment No. 4, there has been a lot of correspondence between the rail regulator, the Department for Transport and a few others about the organisation of the Office of Rail Regulation (ORR) as it takes on its new responsibility, and the relationship between its economic regulation and its safety regulation. The Minister wrote a letter to the chairman of Commons Standing Committee A, on 11 January, saying that Her Majesty's Railway Inspectorate (HMRI) will be kept as a separate organisation. The chairman of the ORR also wrote to the Secretary of State in December about that.
A lot is happening. My concern is to make sure that the original purpose of the move is achieved: to ensure that economic considerations were also taken into account when reaching safety decisions. Notwithstanding the organisation that has been proposed, it is important that the bodies are brought together so that any safety decision is taken on the basis of economics as well. We shall come on to more about that later.
Amendment No. 5 is a little different. On page 81, Schedule 3(2) provides that the Office of Rail Regulation can carry out research. I wonder how many other railway industry bodies will carry out research at the expense of either the taxpayer or the train operators, which ends up a taxpayer's expense as well. It is very nice to have research but sometimes it is perhaps a little self-perpetuating. Recently I was invited to attend a half-day seminar on the societal considerations in decision-making. Research has also been done on whether there should be seat belts on trains. You could continue researching such subjects for ever, but I do not believe that the bus or air industries spend too much time on some of those things. The Rail Safety and Standards Board carries out research, so why does the regulator also need to carry out research into safety?
GC 12
Amendment No. 10 addresses the issue of value of preventable fatality. When we discussed the Railways and Transport Safety Bill in this room a couple of years ago, my noble friend Lord McIntosh of Haringey very helpfully made an important policy statement. He said that the value of preventable fatality should be the same for road and rail, and the same per individual hurt, killed or seriously injured, regardless of whether there was a single fatality or multiple fatalities. That was very welcome, as clearly the Government recognised the importance of having one common standard. Whether you are killed by a car or a train, sadly the end result is the same. It is ridiculous to have two or more separate values, because it is a mechanism for saying "If that accident can be avoided by spending up to a certain value then the money should be spent, but if it cannot be avoided by spending that value, as it is a much higher value, then it probably should not be spent". That was a very valuable statement.
Since then, there have been many ministerial statements about how the railways are short of money and how much more the taxpayers have to put into it. It behoves the whole industry to look at the matter and say, "It might be nice to have but can we afford it?" if whatever is being considered is above the value of preventable fatality. I should like my noble friend to restate these values. I should hope that the industry would take heed of them and look upon them as a kind of comfort, because if it has done what it has been told and invested anything that was needed up to that value, that should be all right. But if the industry has not done something because the value was £5 million or £10 million or something, it would have a perfectly good defence if something subsequently happened.
4.30 p.m.
I want to refer briefly to the document published in February by the Rail Safety and Standards Board, How Safe is Safe Enough? My noble friend Lord Tunnicliffe is chairman of that body. Page 14 refers to the value of preventing a fatality and summarises the comments that I have made. It then puts a caveat on that by stating the value, but then saying:
"Explicit consideration of ethical responsibilities is a more appropriate way for dealing with these concerns".
I am worried, because you can talk about ethics until you are blue in the face and ask for even more money from government, which might not be justified. So I hope that my noble friend will clarify this matter and give comfort to the industry by saying that if it complies with that it should be all right. I beg to move.
Lord Tunnicliffe: I follow my noble friend Lord Berkeley by declaring my interest and hoping that that will suffice for the rest of the day. I am, as he kindly pointed out, chairman of the Rail Safety and Standards Board and am thus employed in the safety area of the railway industry.
I have no doubt that the intent of these amendments is an honourable attempt to address a big subject—regulation in industry and the conflict between the wider needs of society and the restraints and costs that industry bears. This is an important subject which we

GC 13
must debate at length. I have to ask my noble friend whether these clauses in this less than easy to manage piece of legislation are the right places to address that. The authors of the Bill are clear in the Explanatory Notes that the clauses concern the transfer of safety functions under the Health and Safety at Work etc. Act 1974. I do not believe that it is the Bill's intention to change or modify that Act. If that is the Minister's intention, I should be grateful if he would tell us.
Further on in the Explanatory Notes, paragraph 39, relating to Clause 3, makes it clear that the Office of Rail Regulation, in its dealings, will have a distinction between its general balancing function under its economic duties and its duties under the 1974 Act, which require it to discharge its safety duties in accordance with the provisions of that Act. I am not clear whether Amendment No. 4 is intended to diminish that clear division of duties, or whether it is meant to require the ORR to modify its overall supervision of the Act.
The 1974 Health and Safety at Work etc. Act, a much—derided piece of legislation, has in fact served this country well. In recent years it has come under stress and that needs to be addressed—not just in the railway industry. Certainly there has been regulatory creep in this area, as in many other areas of regulation. Getting to the bottom of where that regulatory creep comes from is difficult, and countering it is difficult.
Amendment No. 10 is a specific way of managing the 1974 Act which would be quite unique anywhere else. The intent of the Act—an honourable intent—is to reduce risk to exposed groups to as low as reasonably practical. It is the responsibility of those who own the risk to judge what level that should be. It is then their responsibility, if necessary, to defend that decision in court.
The situation would be changed in a very major way by this modification. It would transfer the responsibility for that judgment from the owners of the risk—which is what happens in all other industries—to the Secretary of State. It would be a big change in the way in which the 1974 Act is used, and I do not see it as the intent of the Bill to make that big change.
My noble friend Lord Berkeley has partly answered my next question, but we need to be clear. I think he is saying that the impact of the amendment would be to give individuals a defence in court. That is quite a big impact; it would be a defence to say, "I did not do this because the figure advised by the Secretary of State would have been exceeded". The present law is much less clear, asking the owner of the risk to take into account wider issues. In particular, present usage of the law takes the view that wider societal concerns are part of living in a society, and you must take account of them in interpreting the law.
What would this mean in practice? My noble friend does not give a figure in Amendment No. 10 or even, as far as I can see, hint at one, but he has hinted at one of less than £5 million to £10 million. Could he be a bit more specific about what sort of figure he would expect the Secretary of State to come up with, what implications that figure would have for safety activity
GC 14
and what the impact might be in terms of both cost and risk? Either we should address this complex list of issues and come to a series of conclusions or we should recognise that this debate is fundamental to a much wider issue about the management of safety in the United Kingdom and address it under those headings.
Viscount Astor: I rise—
Lord Bradshaw: I rise—
Lord Berkeley: Noblesse oblige.
Viscount Astor: If it will help the Committee, I shall degroup Amendment No. 85. I do not think that the noble Lord, Lord Berkeley, spoke to Amendment No. 87.
Lord Berkeley: I asked this morning for Amendments Nos. 85 and 87 to be degrouped, and they have been.
Lord Bradshaw: The noble Lord, Lord Berkeley, has raised some very interesting and fundamental points, as the noble Lord, Lord Tunnicliffe, has said. However, the speech we have just heard is the speech of somebody in the safety rather than the railway industry, and should be regarded as such.
Whether we like it or not, safety has a cost. That cost, as the noble Lord, Lord Berkeley, rightly said, in the case of the railway industry, is mostly visited, one way or the other, on the taxpayer. While I think we could accept that there may be a reason for expecting people making journeys by train to pay more money, because they expect a greater standard of safety, I do not believe, as the noble Lord, Lord Tunnicliffe, has said, that there is an open-ended and undefinable amount of money which, somehow, somebody will find out of thin air. It does not come out of thin air; it comes out of your pockets and mine.
The noble Lord, Lord Berkeley, is right to try to establish from the Minister—we shall no doubt hear from him in a moment—where the limits of the duties of the Office of the Rail Regulator lie and whether they cover station buildings, depots and so on. It is also extremely important that we take account of his duties as economic regulator.
That does not mean to say that we should disregard safety altogether and it does not mean to say that we should necessarily put it on a par with anything else. The noble Lord, Lord Tunnicliffe, should bear in mind that every day on the M 1 and the A34 people are tailgated by 44-tonne lorries. These lorries seem to be totally unregulated—if one of them were to smash into you no one would come to your help—whereas we seek to shackle the railway industry with a stranglehold of safety which circumscribes what it can do.
Even though it may be uncomfortable for the Minister, I am anxious for him to put some figures on what should be spent on railway safety and to give some justification for anything over and above that level which is spent anywhere else. This is a fundamental issue on which the rail regulator himself will need guidance. He is not a part of the safety

GC 15
industry; he is an economist. I have the greatest respect for him as a person who is capable of moving this debate on.
It is all very well for the noble Lord, Lord Tunnicliffe, to talk about "as low as reasonably practical", but, when you analyse them, what do the words mean? They are as long as a piece of string and they are interpreted by different people in different ways. They give no guidance at all to the people who spend the money.
I warmly support the amendments of the noble Lord, Lord Berkeley, and I hope the Minister will give us some comfort.
Lord Snape: I had not intended originally to speak to this group of amendments. I am provoked to do so by some of the contributions that have been made, particularly that of my noble friend Lord Tunnicliffe.
I start by declaring an interest. I work for the National Express group and, before entering Parliament in another place many years ago, I worked in the railway industry. I endorse what my noble friend Lord Berkeley said—which was repeated by the noble Lord opposite—that when it comes to the railway industry, apparently, no expenditure is too great. That is partly the result, I suspect, of the attitude of the British press, which is irresponsible in these matters as in most others. It always demands action on the rare occasion of a railway accident. This is partly as a result of politicians of both major parties which have formed governments in my lifetime responding to such calls.
My former colleague the Deputy Prime Minister said after one particularly serious railway accident that money was no object in preventing something similar happening again. I was his number two for many years. Had I still been his number two his comment would have provoked one of the enormous rows that occasionally punctuated our largely amicable relationship. No matter how deep the tragedy, it is not sensible to respond in such a way.
I listened with interest to my noble friend Lord Tunnicliffe and I pay tribute to his work as chairman of the Rail Safety and Standards Board. But, again, as indicated by the noble Lord, Lord Bradshaw, standards of safety in the railway industry already far exceed, on a day-to-day basis, the standards appertaining to virtually any other mode of transport. Since 1974—and again I refer to what my noble friend Lord Tunnicliffe said—and the passage of the Health and Safety at Work etc. Act, and the inclusion of the railway industry under the provisions of that Act, we have got ourselves into a situation where it is cheaper not to run trains and, in some cases, to direct passengers on to other modes of transport.
The noble Lord, Lord Bradshaw, referred to the A34 and the motorway and being tailgated by a juggernaut. It is difficult to say exactly which organisation could do very much about that, but, when we compare railway safety with coach safety a couple of miles away from here, every single day continental coaches on Park Lane disgorge their
GC 16
passengers into the middle lane of a three-lane highway. Evidently that is perfectly acceptable. I am not sure how many of them have been run over over the years because they were looking the wrong way when they got off the coach.
That situation seems to be perfectly acceptable whereas we do not run trains in some areas because the platforms are shorter than the trains themselves and someone might inadvertently open the door and fall out. We have stopped running trains on some lines at night because we have not yet found the money or wherewithal to put up lights on platforms. It is inconceivable—and I speak as a former chairman of a bus company; I do not think that that is an interest that I need to declare—that we would stop running buses because the bus stop was, for example, not illuminated. Although certain members of the Health and Safety Executive might have wished that we stopped running them in those conditions, we declined to do so.
I think that the Minister should give us assurances on these amendments that an element of common sense will at last be introduced into the whole area of railway safety. I hope that he will also assure us that, on railway safety, the new regime will operate with a little more common sense than the previous one.
4.45 p.m.
On Amendment No. 10, I conclude by asking what other form of transport would subject itself to a regime that effectively says, "It doesn't matter how much it costs: we will prevent every single fatality"? It does not make sense. It means that rather than spending money on sensible things in the railway industry, it is cheaper not to run trains.
The Government have decided in other clauses in the Bill to encourage people not to run trains, although I am not suggesting for a moment that they are doing so for the same reasons. There will be a completely different debate when we reach those amendments. I suspect, however, that all Members of the Committee share the feeling that the combination of the excesses of safety and the Government's desire to save money mean that, under this legislation, the railway industry's future will be shared at least partly by Her Majesty's Treasury. That means that if we do not get some common sense particularly on amendments such as this one, we will not get any trains.
The Earl of Mar and Kellie: Continuing on this theme, my conclusion is that the duty of care placed on the railways is very much greater than that placed on the roads. Indeed, that is anticipated. During the early stages of the Stirling-Alloa-Kincardine Railway which is now being reconstructed, residents in Clackmannan were coming out with, "If any child is killed on the railway it must be closed". I noticed and pointed out to them—they were not amused—that they were not placing the same requirements on the road into Clackmannan—that the road should be closed if anyone was killed on it.

GC 17
I see new railway fences running past my house, whereas we do not expect the road to be fenced off. Somehow or other we need to get it firmly into everyone's minds that if they expect a higher duty of care from the railways, we must expect more money somehow to be made available for that care to be discharged.
Lord Tunnicliffe: Having been misquoted so extensively, I need to repeat one or two points. First, I would claim a unique record in fighting back the excesses of safety. I became managing director of London Underground in 1988. We were landed with the Fennell report and a cheque for £260 million to implement it. We rapidly worked out that we were spending money at the rate of about £10 million-plus a head. We fought back over 12 years to bring rationality to the industry and to London Underground in its safety expenditure, and I would claim that we succeeded. We created systems that proved accessible to the HSE. We spent money where it gave value for money and we did not spend it where it was not value for money.
No one feels more strongly than I that public money misspent on safety is money wasted. Every serious practitioner working under the Health and Safety at Work Act—which applies to virtually all employees in this country—applies exactly the same test as that of the railway. The significant exceptions are roads and aviation. Professional workers in the health and safety field are all committed to working within what is reasonable, practicable and value for money, not seeking an open chequebook for safety provision.
I opened my remarks by saying that I commend the thrust of these amendments in the overall debate about the proportionate response to safety issues. That debate is needed throughout our society. What I am saying is that the Bill states that it will uphold the Health and Safety at Work Act 1974 and I put it to the Minister that he will have to support that and not introduce in this Bill a politician who acts as a limiter. Otherwise we will need a railway safety Act to take account of the issues raised in this debate, which must include appropriate provisions to maintain public confidence in the safety of railway operations just as much as the public expects confidence in other areas.
Taking the roads as a particular example, and the apparent belief that buses are significantly more dangerous than railways, in fact, public confidence in bus travel is high because bus passenger safety rates are about the same as those for rail. At the moment we have a fairly universal standard of safety in the Act. I believe that there has been significant misapplication in many areas, and certainly one of those areas of misapplication has been the railways. The board of which I am chairman is just as committed to delivering value for money as it is to delivering safety. This whole issue should be addressed because I do not think that a single, limiting clause that seeks to bring in a politician where we need a broader debate is the appropriate way forward.
Viscount Astor: I start from the principle that it is much more dangerous to drive one's car to the local
GC 18
railway station than is the journey on the train. Anything that causes the train not to function so that people have to drive to work is not a good idea. Trains are a much safer form of transport. However, underlying this debate are the concerns of many noble Lords who spoke at Second Reading that, in the past, the Health and Safety Executive has been too heavy-handed when it comes to safety. It has been too nitpicking without having a clear overall strategy—or if there has been such a strategy, the executive has certainly not managed to disseminate it to the wider public.
I believe that, on rail safety, there are two issues to consider. The first is the track and the environment of the track, such as railway stations, while the second is the train operating companies. It would be helpful if the Minister could explain how safety will be dealt with by those two separate areas. Although I am no expert, I understand that the terrible disasters we have seen have been due in the main to track or signalling failures, and so it is in those areas that most concern has been expressed.
I turn to the amendments before us. I am a little confused by Amendment No. 3 in the name of the noble Lord, Lord Berkeley, because it excludes depots. I am not sure why it should do so. Perhaps he will explain the point when he winds up our short debate. His amendment later provides that:
"The Office of Rail Regulation shall publish detailed descriptions of where such boundaries are located".
I am not entirely sure of the point of doing that. Again, perhaps the noble Lord will address my query.
Amendment No. 4 is difficult because one understands and sympathises with the point he is making. The noble Lord, Lord Snape, had it right when he said that we should be looking for a bit of common sense here. As we all know, while we love all our Ministers, it is at times difficult to get them to act in a way that makes sense to everyone else. That is why we have legislation: it seeks to impose common sense on Ministers and officials. I do not know whether
the wording,
"taking into account his duties as economic regulator",
is right, but I am sympathetic to the thrust of the amendment.
Amendment No. 5 concerns research. I do not know what kind of research it is intended that the Office of Rail Regulation should undertake and I am not sure why research has to be dealt with in a special subsection. Is this something new? Perhaps the Minister could tell us what has happened in this area in the past. I assume that any regulator must have access to what is happening in the industry and would therefore automatically receive the results of research. Indeed, the regulator might commission research by another body or carry it out itself. As I say, I am not clear why it is necessary to provide in paragraph 2(2)(a) of Schedule 2 for the Office of Rail Regulation,
"to make such arrangements as it considers appropriate for the carrying out of research in connection with railway safely purposes".
I should have thought that that could be taken as read.

GC 19
The next amendment in the group covers the issue of maximum value for preventable fatalities. This is a very difficult issue and I do not know the answer because I have not thought it through as clearly as perhaps I might. How can the value be defined? The maximum value in such areas is something that we have left to the courts to define. We have tried to assume that the operator has made adequate safety provision and is therefore, in the light of that evidence, not culpable of anything. Perhaps it would be best to leave it that way. I have to say that I am nervous of allowing the Secretary of State to calculate,
"the maximum value for preventable fatalities".
The concept is difficult. The Minister may respond by saying that it is a very easy concept and that the Secretary of State wants to reach such a decision. I do not know and I await with interest the Government's explanation. None the less, I am not convinced by the noble Lord's amendment.
Health and safety matters are important. The noble Lord, Lord Tunnicliffe, was encouraged to his feet to defend the record in front of his noble friends, but of course he did refer to a "significant misapplication". I agree with him, and that has been a point of concern for us all. By and large, rail travel in this country is safe and it is the duty of us all to ensure that this Bill and the Government's proposals give the public the confidence to travel by rail without imposing such burdens on the industry that it is unable to fulfil its commitments.
Lord Berkeley: I rise briefly to respond. We have had an interesting debate—
The Deputy Chairman of Committees: The Minister has not yet responded.
Lord Berkeley: I am sorry, but I have not finished yet. I seek to respond briefly to the matters of fact that have been put to me. Of course I have not forgotten the Minister.
The noble Viscount, Lord Astor, asked first why I have sought to exclude depots in Amendment No. 3. The general feeling is that depots are like any other factory and do not form part of a railway. Given that, they should remain under the ambit of the health and safety authorities. Secondly, if a boundary is to be set up between the responsibilities of the health and safety authorities and the ORR, we need to know what it is and therefore it should be published.
I shall respond very briefly to my noble friend Lord Tunnicliffe. He asked what maximum value for a preventable fatality I would propose. Two years ago, in this room, my noble friend Lord McIntosh of Haringey proposed a figure of £1·25 million per fatality. However, I also quoted from my noble friend's own publication, How safe is safe enough? Allowing for inflation, the figure has now risen to £1·36 million. All I am asking my noble friend to do is to confirm what was stated in the Moses Room about two years ago.
5 p.m.
Lord Davies of Oldham: I was struggling for the Latin tag which says that out of the division of its enemies comes the safety of the state. I thought that out of the division of my noble friends comes the safety of the Minister. However, my Latin was not quite up to it. I appreciate that a very interesting debate has taken place on this side of the Committee with regard to safety issues, which we all recognise are of the greatest significance. They have been a major feature in the development of the railways over recent years. They have always been an important feature; that is why the railways have enjoyed the safety record that they have. However, we are also conscious of the fact that, since Hatfield, safety issues have conditioned the railways in a very pronounced way indeed.
I intend to deal in turn with each of the amendments in the group. By doing so I hope to retain some coherence in the debate, if only in terms of numerical order. I wish to address the significance of the points that were made.
I was grateful to my noble friend Lord Tunnicliffe for emphasising the importance of the Health and Safety at Work Act. We shall make all regulations under it and will continue to apply it to the railways. The Act is the foundation stone of safety. However, we recognise that changes in the railway structure now require us to address the issue of how the railway is to be rendered safe and the mechanisms by which that is done. I am grateful to my noble friend for emphasising that point.
We have started to work with the Office of Rail Regulation and the Health and Safety Executive on defining the Office of Rail Regulation's enforcement responsibilities. Our aim is to make the boundary of enforcement responsibilities as clear and straightforward as possible, retaining where we can the current split of responsibilities between Her Majesty's Rail Inspectorate and the rest of HSE. We hope soon to begin discussions with the industry on the drafting of these regulations so that we can take the rail industry's view into account from the start, and we aim to consult the industry on draft regulations this summer.
My noble friend Lord Berkeley is right to pick up on this as an important issue and one that needs serious consideration—which, indeed, it is receiving. However, as I believe my noble friend Lord Tunnicliffe emphasised, this is not a matter for the Railways Bill and an amendment to the Bill in this respect would not be appropriate as we shall be governed by the application of the Health and Safety at Work Act.
Amendment No. 4 concerns taking economic considerations into account in the exercise of safety duty. The effect of this amendment would be to require the Office of Rail Regulation to take into account its duties as an economic regulator in the exercise of its general safety duty to do such things and to make such arrangements as it considers appropriate for railway safety purposes.
Clause 3 of the Railways Bill specifically amends Section 4 of the Railways Act 1993 to provide that the Office of Rail Regulation's Section 4 duties do not

GC 21
apply in the exercise of its new safety functions. I believe that is the nub of the point my noble friend sought to make. It reflects the need to ensure that the transferred safety functions are not compromised in the pursuit of the Office of Rail Regulation's other duties, and to meet our requirements under EC legislation ( both the European Framework Directive on worker safety and the European railway safety directive) to ensure that existing safety standards are maintained. That is the absolutely cardinal point of the provision.
However, as the independent safety regulator, it will be for the Office of Rail Regulation to exercise its discretion in deciding how to enforce health and safety on the railway within this legislative framework. It is not the legislative framework of amendments to this Bill that my noble friend canvasses but, of course, the issue in relation to the Health and Safety at Work Act.
Amendment No. 5 concerns removing the research duty. A great deal of research is available to the Office of Rail Regulation. It will apprise itself of the benefits of that work, as it has done in the past. We believe that the duty to carry out research is essential to ensuring the ongoing development of independent safety research within the industry, and allows continuing developments in the field of rail safety to be given due consideration. It will be an important dimension of the work of the Office of Rail Regulation. The duty gives the ORR discretion over the research undertaken, which could be used to tackle issues such as how best to achieve safety improvements at minimal cost. On all sides of the Committee there is obvious concern to get the balance right as regards safety—on which we pride ourselves with regard to the railways, and where we want to reach the highest standards—and achieving that within a framework of appropriate and reasonable costs. As the independent safety regulator, we believe that the Office of Rail Regulation is best placed to make these decisions on the research which is necessary. That is why we have this provision in the Bill.
The principal railway safety functions of the ORR are set out in paragraph 2 of Schedule 3. These functions largely replicate those of the Health and Safety Commission in Part I of the Health and Safety at Work Act. We see absolutely no reason why the railway safety functions of the Office of Rail Regulation in this respect should be different in any way from the equivalent safety functions of the Health and Safety Commission. It could cause unnecessary and avoidable confusion. That is the basis and the framework within which research is to be considered.
The value of preventable fatality goes right to the heart of the balance between resource allocation and the safety standards to be met. I want to say how much we missed my noble friend Lord Snape at Second Reading and how delighted we are to see him back here in full form. When my noble friend prays for a little common sense I can only do my level best to respond to that, emphasising the "little" rather than the "common" in that respect. I have no doubt that he will upbraid me for that later.
GC 22
I think it is recognised that the Department for Transport, the Strategic Rail Authority and the Health and Safety Executive all presently use the same value for preventing a fatality (VPF) when assessing rail schemes. The same value is used by the department and the Highways Agency when assessing road schemes and road safety measures. The value itself is set each year by the department's highways economists and for this year—I believe that my noble friend Lord Berkeley referred to the very minor degree of inflation at the most marginal edge of the inflationary scale that occurs even under a Labour government—is £1.36 million.
The rail industry's own body, the Rail Safety and Standards Board, in its Railway Strategic Plan 2005 recommends that its member companies in the industry also use the £1.36 million value.
The Office of Rail Regulation does not presently have an official VPF figure, but accepts that it will need one given its wider responsibilities. I believe that the noble Lord, Lord Bradshaw, emphasised that point in a very cogent and effective way. The ORR is an independent body and should be free to set the value it considers appropriate. The ORR will discuss with the department how it will appraise rail schemes. What VPF figure to use will form part of those discussions. I expect the Office of Rail Regulation to appraise ORR schemes on the same or similar basis to the department and therefore that the same VPF is used. However, although I expect the ORR to use the same VPF figure as the department, I do not think that it would be right to constrain the ORR's discretion by setting out in statute that it must do so. There will be very strong reasons why a similar figure should be used. However, writing that in the Bill would make an absolutely mandatory requirement on an independent body rather than leaving it to reach a judgment on the matter after it had carried out full consultation. That is the basis of our position on that matter.
This has been a fairly wide-ranging debate and I may not have met each and every point but I hope that I have at least met the main arguments behind the lour amendments in the group that we are considering. I hope that my noble friend will feel able to withdraw his amendment.
The Earl of Mar and Kellie: The Minister referred to parity of VPF between road and rail within the Department for Transport. Is it the Government's intention to retain that parity or is it just an accident that there is parity?
Lord Davies of Oldham: It is not an accident that the same figure applies. However, I withdraw the phrase, "It is not an accident". That is exactly the wrong phrase to use in this context, but the noble Lord will understand what I mean.
Lord Bradshaw: Clause 3(4) discusses the Office of Rail Regulation and the need for it to take into account advice from the HSE. I believe that many of us had hoped that this Bill would be the vehicle to set railway regulation a little freer as regards the bureaucracy of the Health and Safety Executive. In a

GC 23
previous incarnation at Oxford University I did a great deal of research into compliance. I discovered that the industries which sought compliance through agreement were much more successful in gaining that compliance than those who sought to prosecute quickly. In fact, the quicker one was to prosecute, the less likely one was to secure compliance.
I believe that many of us wanted a rational basis for decision-making rather than the "shoot from the hip" kind of enforcement which we have. However, I am grateful for the explanations that have been given.
Lord Berkeley: I follow that intervention from the noble Lord, Lord Bradshaw, with a supplementary question to my noble friend on the same subject. It is my understanding that the Health and Safety at Work Act applies to the railways, as we know, but that it is administered by the Office of Rail Regulation. A few months or weeks ago there was a fear that the HSE would still wish to give guidance or directions to the ORR. However, my understanding is that that is not the case and the HSE, or the HSC itself, will have no role to play in any of the railway activities, including prosecutions in connection with the Health and Safety at Work Act, which we may discuss later.
Lord Davies of Oldham: I can reassure my noble friend on that matter. Of course, the HSE has extensive obligations but it will have no obligations specific to the rail industry, which is the point that my noble friend makes.
Lord Berkeley: In that case I am very grateful for my noble friend's responses, which I believe have answered all my questions. I feel not exactly comfortable but as comfortable as I would have expected to be. I should like to thank other noble Lords for their interesting contributions. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 4 and 5 not moved.]
Schedule 3 agreed to.
5.15 p.m.
Lord Bradshawmoved Amendment No. 6:
Before Clause 3, insert the following new clause—
"RAILWAY STRATEGY
(1) The Secretary of State shall formulate and keep under review strategies for the railway including—

(a) the resources available for the operation, maintenance and expansion of the services of the passenger railway in England and Wales, including investment plans;

(b) the resources available for the operation, maintenance and expansion of the services of the freight railway in England and Wales, including investment plans;

(c) a signalling and telecommunications strategy;

(d) a rolling stock strategy;

(e) a strategy relating to the shape, duration and other criteria for letting franchises for the passenger railway; and

GC 24

(f) a strategy relating to passenger services designated as community railways, which shall include plans for their maintenance, development and possible closure or substitution of any part of these by buses.

(2) To fulfil the duties of the Secretary of State set out in section 4 of the 1993 Act (general duties of the Secretary of State and the Office of Rail Regulation) these strategies shall be subject to public consultation and shall be presented to both Houses of Parliament before the end of the session after that in which this Act receives Royal Assent and must be subject to a resolution of both Houses.
(3) The strategies will be subject to an annual update and to the approval process laid out in subsection (2) on an annual basis."
The noble Lord said: I regret that I was not present for the debate at Second Reading, and I do not intend to make a Second Reading speech. However, I believe that this amendment goes to the heart of the Bill. Its purpose is, first, to oblige the Secretary of State to formulate a strategy for the railways that tells us both what the railways are supposed to be doing and what they should be aiming for; secondly, to inform Parliament of what he is telling the railways to do, and to do so regularly; and, thirdly, to submit himself to a parliamentary process. The House would then have the opportunity, perhaps once a year, to debate the strategy put forward and to make comments on it.
I have set out in the amendment the sort of areas I would expect to be covered in a strategy. Obviously they would include the resources available to the industry. That would cover the resources for passenger services and those for freight. The strategy would cover signalling and telecommunications, which is desperately needed. It would cover rolling stock, which is necessary because we appear to be entering a phase in which we have a lot of suitable rolling stock standing in sidings around the country, some of which I believe is not being used. Such stock is extremely expensive to store. Modern rolling stock is equipped with so many sophisticated bits and pieces that trains cannot just be stuck in a siding in the hope that, when they come to be used, they will work, because they jolly well will not. Such stock has to be maintained in warm storage.
That kind of thing would not have happened if the railways had been kept together, but such a strategy is now necessary so that we know what we intend to do with our rolling stock. In my view it is an absolute nonsense that people are using overcrowded, ancient trains while the modern ones are sat elsewhere in sidings because the leasing structure of the industry is such that it does not suit the owners to lease them out at affordable rates. The position is now an appalling mish-mash. We are no longer ordering new rolling stock, those who build it are being laid off and works are being closed, and yet in a short while we shall need new capacity.
It is a similar situation in signalling and telecommunications. People are being laid off and works are being closed, but we know that in a few years' time we shall need new equipment because our railway signalling stock will otherwise fall to pieces.
My views on the,
"shape, duration and other criteria for letting franchises for the passenger railway",

GC 25
are well known. I believe in long franchises. Taking Chiltern Railways as an example, if you let a long franchise, the franchisee feels sufficiently confident to invest its own resources in the railways. As a result we have seen the development of Marylebone station, to which my noble friend referred, and we see plans for new services and new rolling stock. However, as my noble friend Lady Scott of Needham Market pointed out in her speech at Second Reading, we can contrast that with the case of the Northern franchise. It has been let for too short a duration to allow new rolling stock to be considered. If I were able to invite the Minister to come with me to Leeds, he would see passengers riding in acute discomfort in what can only be described as clapped out, old trains with no prospect for years ahead of them being replaced. I would challenge him that if he were to inflict such conditions on people living in London and the south-east, they would be marching on his office, if not on Downing Street itself.
I believe that the public have a right to know what is being planned for their railway by way of a strategy for the future development of engineering resources and rolling stock resources, as well as a justification of the way in which rail franchises are being let.
I take as an example the recent two-year extension to the First Great Western franchise when it took over Thames Trains. However, a two-year extension means that the franchisee has only two or three months to change the train timetable because that process is now so lengthy and convoluted that by the time the next timetable revision comes along, someone else may be running the franchise. That cannot be what anyone had intended.
When we had the British Railways Board and the Strategic Rail Authority, they were under a duty to publish reports and plans. In the case of the Strategic Rail Authority, some of those plans were not very good, although those produced by the British Railways Board were clear on what it was doing with the money at its disposal. Many of the reports complained about how little money was available, but the board did make clear both what it was doing and what it was planning to do.
I know that this Government have scant regard for Parliament. The Bill was rushed through the first Chamber and has had very little scrutiny. It has now come to this Chamber and we are attempting to scrutinise it properly because that is our job. While I am not talking about Alistair Darling but about the post of Secretary of State in a future government, I am very bleak about conferring all these powers on one individual. The chance of future parliamentary scrutiny is very small unless something is put in the Bill at this stage. Along with a number of other noble Lords, I feel strongly about this. We believe that parliamentary scrutiny is an essential part of the process. Opportunity has to be given for people to ask questions, to say what they think and to make suggestions which may or may not be taken into account. The thought that the Executive can ride roughshod over Parliament by taking powers away from elected representatives is quite alien to our way
GC 26
of government. This goes to the heart of the Bill and Members on the Liberal Democrat Benches intend to stand firm on it. I beg to move.
Lord Berkeley: I rise to speak only to the amendment moved by the noble Lord, Lord Bradshaw, and not to the amendments grouped with it. I certainly agree with the need to produce strategies to cover the issues that he described to us. We might even have been able to combine our amendments if we had been able to get together, but that was not possible. However, they say much the same thing.
It is worth reminding ourselves of the purpose of a strategy. The main purpose is to provide a basis on which industry and local and regional government can plan for the future. It also behoves the Government, when they are putting something like £6 billion a year into the railways, to articulate their policies.
Freight operates in the private sector and is therefore exposed to full commercial risk. It needs to know what the Government are thinking about for the rest of the railway system. But given the current greater regionalisation of many more decision-making processes, I know that regional authorities, whatever form they take, need to be given strategies to influence what they put in their own ones. If there is nothing coming from central government the railways will be the worse for it.
Let me give an example. The Strategic Rail Authority had nine strategies, which are still extant, about which I received a Written Answer on 4 February. Clearly I am interested most in the one that affects freight, but there are strategies for the West Coast Main Line, network utilisation, network output and rolling stock. We may not have thought they were ideal—some Members of the Committee criticised them at the time—but at least they were strategies.
There are nine strategies. The Community Rail Development Strategy has been welcomed on all sides—I am sure we will discuss it again in the future—but what worries me is that suddenly at Royal Assent all these matters get chucked in the bin. That is why I suggest in Amendment No. 11 that until the Government produce their own strategy the SRA strategies should continue. I have tried to take the wording from either the 1993 Act or the 2000 Act and to put it in the place that I believe is most appropriate.
Another letter from the Minister for Transport to David Amess, the chairman of Standing Committee A, on 21 December suggests that the Government do not need strategies because they will develop anyway. The letter continues:
"one has to be careful about laying duties on the Secretary of State in respect of a single transport mode, given the importance of an integrated transport policy".
He may be right, but it is interesting that on 22 February, Mr David Jamieson, in a Commons Written Statement, announced a national motorcycling strategy. If we can have a national motorcycling strategy, why can we not have a national railway strategy? We either have strategies or we do not have them. So, unless someone in the Department for Transport has done a complete

GC 27
U-turn, I suggest that if we can have a motorcycling strategy we can have one for the railways. Preferably we should have many of them, as the noble Lord, Lord Bradshaw, said.
It is also interesting that the rail regulator takes into account strategies when someone is making a Section 17 application. For those who do not know the details, it means that if you want to run a rail service and Network Rail will not respond or will not give you a reasonable path or price, Section 17 is a means of requiring it to do so through regulator action. The regulator is required to take into account policy statements by the SRA. So the regulator needs a strategy as well, for many good reasons.
Amendments Nos. 35 and 36 relate to Scotland. It is interesting that Scotland "may" produce strategies; it does not have to. I believe that it should. Amendment No. 36, the last one in the group, requires Scottish Ministers to consult and to produce a strategy rather than "may".
To recap, strategies are not unique to rail. They are necessary for others to know the Government's policy, to influence investment and to avoid the stop-go process that has been so disastrous for railways and investors. We should not forget that £1.5 billion has been invested in rail freight since privatisation and we all want that to continue. We do not want stop-go year in, year out. I shall say more about that when we come to the issue of rail freight grants.
In the Minister's response to the Second Reading debate he said that strategies were a good thing but he seemed unwilling to write them down. I suggest that it might be better if they were, and I invite him to be courageous and to write them down. In the mean time, perhaps he will find a way of keeping the SRA strategies until his friend gets round to writing down his own.
5.30 p.m.
Lord Marsh: I should like to follow up a comment by the noble Lord, Lord Berkeley, at the beginning of the debate on this amendment, as I am slightly ambivalent on this. When I first looked at the amendment it made obvious sense; a strategic policy is obviously needed. The noble Lord, Lord Berkeley, asked what the purpose of the strategy was; that was fine, but it immediately crossed my mind: what is the purpose of a Parliament? Would anybody actually choose to have 1,500 parliamentarians discuss each year this strategic policy? Of course they would never finish the first strategy so we would be saved that. That worries me.
I had the distinction—if that is what it was—of moving directly from being Minister of Transport responsible for the railways to become chairman of the British Rail Board, reporting to Ministers. That was a very schizophrenic thing to do. But I spent six years with British Rail, and during that time—
The Deputy Chairman of Committees (Baroness Thomas of Walliswood): here is a Division in the Chamber. I am sorry to interrupt the noble Lord in full flow but I think that we should adjourn temporarily during the vote.
[The Sitting was suspendedfor a Division in the House from 5.31 to 5.33 p.m.]
The Deputy Chairman of Committees: With the Committee's agreement, I think that we might continue the sitting.
Lord Marsh: I am grateful to whoever it was who spiked the vote.
As I was saying, in the course of six years, we had seven changes in the investment policy, virtually all of them downwards. In six years I had five different Ministers, who came from two different governments, because there was an election in the middle.
Intervention into a massive organisation's guts—the strategy is the guts of the entire business—by Ministers has always been a problem. Morrison dealt with it by introducing for the state-owned industries the proposition of the general directive: you could give an order to an official of a nationalised industry only in terms of a general directive. Nobody ever discovered anything that was both general and worth doing, with the result that we left that, and because we are a very creative country we developed what was known as the "lunch-table directive". The Minister invited you to lunch, you both had your secretaries there because you did not trust the other one to report what you were saying honestly, and at the end the Minister said, "Come on, let's be sensible about the realities of this", and one then reached some sort of agreement.
It would be very dangerous to get to a situation—I am not quite sure whether it is intended—whereby parliamentarians and Ministers are involved in the running of the business as such. I am totally aware that it is crucial for any government to know where they are going in detail and to be able to talk to, and argue with, the management with whom they are dealing. It would be disastrous if they then started feeling that they must change things. To call for the production of such a very large strategic document and then present it to both Houses of Parliament to be debated every year, after it had been put out to the public also, would take up so much time and effort as to be pretty disastrous. I look forward to hearing the answer to that point.
Yes, the Government must know. No passenger railway system anywhere in the world makes a profit—or at least a big one—so government will have to go on picking up the tab. Government need to know what sort of trouble they are moving into. But they must not manage because if they do that nobody within the industry can be held accountable—that is another key objective. I seek an explanation.
Lord Snape: When I read both groups of amendments I thought that it would have been sensible for them to be tabled together, as my noble friend said earlier. Their aim and intention is the same, even if the wording is different, although I understand why it was

GC 29
not possible. As the Minister reminded me, I was not present at Second Reading. Members of the Committee will be relieved to know that, like the noble Lord, Lord Bradshaw, I have no intention of making a Second Reading speech—
Lord Berkeley: Because you all went on holiday.
Lord Snape: I shall ignore that interjection. I had arranged to attend a family function at the other side of the world. It was a choice between offending the Whips or Lady Snape, and there was only ever going to be one winner.
One of the problems of your Lordships' House is that listening to the debates does not half confuse you about your intentions—of course there are no such problems down the corridor. I must admit that I had intended to say how much I supported the thrust of the amendments. Indeed, in legislation appertaining to the railway industry, going back to the 1947 Act, although one did not use such avant-garde words as "strategy" in those days, it was the Secretary of State's duty to report regularly to Parliament about the direction of the industry.
As one of those who lobbied the noble Lord, Lord Marsh, during his term of office as the chairman of the British Rail Board, I can understand his view that the less Parliament has to do with the running of the industry the better. He will not remember this, but at one time, after I had thanked him with my, I hope, customary courtesy for giving us his time, he said, "Oh, I have another lot coming in an hour". I hope that including the sentiment of amendments such as this will relieve the noble Lord's successors of this non-stop trail of Back Benchers and occasionally Front-Bench Members of both Houses going to see about the 8.08 from East Grinstead or whatever.
I fear that, unless my noble friend accepts at least the sentiments behind these amendments, instead of going to see his successor chairman of the rail board, people will go to see either my noble friend or the Ministers in the department. I am not sure whether he looks forward to that immensely, although I know that he is a very affable type. He and the Secretary of State accept the responsibilities inherent in this legislation, but unless he is prepared to go along at least with the sentiment behind these amendments, he might find himself with a very worn-out carpet.
Again, the clincher is the argument used by the noble Lord, Lord Bradshaw: with an industry such as the railways, although it may sometimes be unpalatable to those responsible for running the industry, and although its day-to-day running should not he subject to parliamentary scrutiny, at least regularly—perhaps not annually, as suggested by the
noble Lord, Lord Marsh, as that would be too often, but every three years—it should be the Secretary of State's responsibility to produce a report for both Houses of Parliament to debate.
The Earl of Mar and Kellie: At Second Reading I think I committed an error in determining that we should not discuss anything at all about how the
GC 30
railways should operate in Scotland after the passage of the Bill. I was reminded on Saturday, when I met people from the Strathclyde Passenger Transport Executive, that the Bill is an example of executive devolution to Scottish Ministers rather than the ceding of parliamentary powers to the Scottish Parliament as a modification of Schedule 5. Therefore, I suspect that we may have slightly more right to talk about how Scottish Ministers should perform in the future than I originally stated. I have ordered a substantial slice of humble pie for later on to make up for that.
I am interested in Clause 5. Whereas Ministers have said until now that they were not certain about having a strategy and that they definitely did not want to publish one, Clause 5 states that:
"The Scottish Ministers may prepare a strategy for carrying out their functions".
Subsection (3) states:
"Where the Scottish Ministers prepare or revise such a strategy, they must publish the strategy".
That seems unfair—to use a good Scots word. Should we really be imposing that duty on them when it is not a duty in the rest of the United Kingdom?
Viscount Astor: My name is attached to the amendment because I thought that it was a good idea, for a number of reasons. First, the Government have published, almost annually, a new strategy or had a review of their rail policy. Let us not forget that the Government that created the SRA are abolishing it a few years later. That is not unique; previous Conservative governments have always reviewed rail, but this Government seem constantly to be reviewing it.
So it is a good idea that they should publish what they are doing. I am sure that the Minister will regard that with a degree of horror, because it means that they will have to think more closely about their three-year spending plan and how much money the Treasury will give—it should not be forgotten that the Bill is all about giving control of rail spending to the Treasury. They will have to concentrate a bit harder on their plans, which governments do not like doing; they do not like being tied down. Of course, the Minister will say that they have published their 10-year plan and will publish an annual report. But we are asking for something more than an annual report, because this is such an important industry and such a large responsibility.
I am afraid that the Government will have to publish, because they brought it in hand. If they had left responsibility with the SRA, they would not have needed to do that. They wanted to accept responsibility for it, so that means accepting full responsibility, and that means publishing. I listened closely to the noble Lord, Lord Marsh. I have sympathy for his point that such a report should be laid before Parliament and debated. I am not sure that it is necessary, looking with hindsight at the amendment tabled by the noble Lord, Lord Bradshaw. But the House, at the next stage, should insist on a report being published so that it can be subject to parliamentary scrutiny if it wishes. That is important.

GC 31
The noble Earl, Lord Mar and Kellie, made an interesting point about Scotland. I should be very interested to see what the Minister says about it. The noble Earl is absolutely right that Scottish Ministers can,
"prepare or revise such a strategy",
and that,
"they must publish the strategy or revised strategy".
It is extraordinary that we are imposing a policy on Scotland that the Government are not prepared to accept themselves. I think that that is a clinching point.
5.45 p.m.
I do not think that the amendment as it stands is quite right, but I think that the intention behind it is absolutely right. We will certainly support the noble Lord should he come back with an amendment at another stage. However, I am always prepared to listen with care to what the Minister says when he replies. I hope that he takes the point that support for the amendment comes from all sides of the Committee.
Lord Davies of Oldham: It certainly has not escaped my attention that support for it comes from all sides. In fact, in my other duties, I was already doing some numerical calculations. Nevertheless, that may not mean that the argument is as persuasive as has been contended on all sides. I shall try to identify why I have reservations about it.
I think that all the arguments have been along the line that the Secretary of State should be under an obligation to produce and publish strategies, and that line looks persuasive. After all, the Strategic Rail Authority was under such a duty. As my noble friend indicated when he referred to the Parliamentary Answer, there were eight strategies between May 2001 and November 2004. The SRA was under a duty to prepare those. As the Secretary of State is taking over the SRA's strategic role, there seems a certain logic in placing the Secretary of State under a similar duty. I think that that is the burden of the main thrust of the argument being presented to the Committee.
There are, however, some very real differences between the position of the Strategic Rail Authority and that of the Secretary of State. The first and obvious difference is that the Secretary of State regularly produces strategies. What does the Committee think the aviation White Paper was if not a strategy for airport expansion and flights? We have a cycling strategy, to which the noble Lord, Lord Berkeley, I think, referred.
Lord Faulkner of Worcester: There is a motorcycling strategy.
Lord Davies of Oldham: Yes. I recall meeting the motorcycling group when it was so insistent that we should produce such a strategy. Strategies have their role to play, and the Secretary of State would not be discharging his responsibility if in crucial areas of transport policy he did not develop strategies. However, he is different from the Strategic Rail
GC 32
Authority, which is a creature of statute. The Secretary of State is not in that position. He is responsible for. national transport policy—for devising it, promulgating it and endeavouring to ensure that it is followed. Ensuring that the policy is strategic should, of course, be part of that role.
The Secretary of State's role occasionally requires him to produce a strategy for a certain part of his responsibilities. He could not discharge his role without taking a strategic approach and making that strategy known. He is answerable to Parliament and the electorate for the way in which he addresses strategic issues. One of the major planks of the reforms proposed in the White Paper on rail last July was that the Government should take a direct strategic lead on rail matters. Much in the Bill is necessary to enable that function to be carried out. If it were not for that intention, we would not be debating these provisions today.
The Bill contains only what is essential. There is no need to place a duty on the Secretary of State to be strategic because that is at the very heart of the Government's intention. He cannot fulfil his responsibilities unless he thinks strategically and occasionally develops strategies in respect of all his functions, including rail.
The SRA existed solely for rail issues. The Secretary of State covers all modes of transport. The Government have not been slow to produce strategies on various areas of transport. I think the Committee will recognise that our strategic approach to rail must sit within the wider context of our multi-modal strategy. The Secretary of State's ability to achieve that must not be constrained. He has to look at the relationship between one dimension of transport and another.
I challenge perhaps those Members of the Committee who are most assertive in these matters, who will no doubt have an opportunity of contributing again, by saying that I do not think there is a precedent for a legislative requirements for the Secretary of State to publish national strategies on such an extensive part of his responsibilities. The reason why there is no precedent is that we do not need to instruct a Secretary of State to take a strategic look at his responsibilities. He cannot be fulfilling them unless he does exactly that. Saying that the Secretary of State shall have a strategy is tantamount to saying, "The Secretary of State shall do his job". I recognise that there may be many occasions when Members of the Committee feel unable to resist the opportunity to take that stance. However, it should not be placed in legislation.
The rail industry does not need glossy strategies but a strategic direction. The Bill provides for the Secretary of State to give that clear strategic direction when it is most needed—in the run-up to an access charges review. Schedule 4 to the Bill requires the Secretary of State at that stage to give notice to the Office of Rail Regulation of what he wants the industry to achieve and the funding which he is able to make available over the review period to achieve those ends. That is the culmination of every other aspect of the Secretary of State's strategic role. Whatever else he

GC 33
does—of his own volition or because he is required to do so by the Bill—must not cut across that crucial element of his role.
I recognise that noble Lords will say, "Five years is not enough". If we conceive, as we do, that there is a clear strategic commitment in the Bill over a five-year period, although that may be a reasonable norm for setting charges, it is a rather short time for some aspects of industry planning for the railway. There is a strong case for setting the specification in a longer-term context. There could also be a case for explaining the implications of that specification to a wider audience. That could be of value to local authorities and others as a basis for looking ahead.
I am prepared to commit that when the high-level output specification is set out, the Government will also explain clearly to everyone—those in the industry, in Parliament and the wider public—the implications of the specification and the Government's long-term strategy for the railway. I readily accept that that would be useful and of interest to a wide audience. But whatever we produce must be clearly related to the high-level output specification. We cannot have conflicting messages between our long-term strategy and the specification for the charges. That is my general case on the issue of strategy.
I turn to the detail of the amendments, which have been moved in detail.
Viscount Astor: I am very grateful to the Minister for giving way. Before he goes into the detail, perhaps he could answer the point made by the noble Earl, Lord Mar and Kellie, about Scotland. Under Clause 5(3) Scottish Ministers,
"must publish the strategy or revised strategy in such manner as they consider appropriate for bringing it to the attention of those likely to be affected by it".
Why is it necessary to place that duty on a Scottish Minister when the Secretary of State does not have such a duty? I would be very grateful for an explanation.
Lord Davies of Oldham: Of course I accept the obligation to address those remarks, but I said I would deal with the detail of the amendments which cover this aspect. I merely sought to assure the Committee that I would deal with all those points.
The first amendment sets down the need for detailed and precise strategies which the Secretary of State ought to produce. I see no need to set that down in the Bill in the topics that must be covered by government strategies. That would only restrict the Secretary of State rather than being a commitment to developing the strategies, which we all recognise is an important part of his role.
The amendment tabled by my noble friend Lord Berkeley would preserve the Strategic Rail Authority strategies until new ones are prepared. In the Bill there are a number of places where a transitional provision has been included to ensure the transfer of responsibility from the SRA to its successors. Obviously we are obliged to do that.
GC 34
The reforms that we are putting in place are about a new approach to the planning and management of the railways. That does not mean that every policy will change overnight but it means that there must be flexibility to make changes without a requirement to produce a string of new strategies just to cancel out what was previously in place. Surely that would be bureaucracy gone mad. I assure my noble friend that we recognise the importance of continuing strategic thought on railways, but he will recognise that we expect some flexibility and that the Bill needs the flexibility of merely continuing what has occurred thus far.
The question of consultation arises in both amendments. It is not necessary to include a requirement for consultation about strategies on the face of the Bill. Obviously the Government would seek to take pride in the degree to which they consult on such issues and on the preparation of strategy, or any aspect of the Government's role, we will consult those with whom it is appropriate to consult. It might be the devolved administrations, to which I shall refer in a few moments in response to the contribution of the noble Earl, Lord Mar and Kellie. It might also be other funding bodies, such as Transport for London and the PTEs, the travelling public or all of those. We will continue to have consultation processes; we just do not need to spell that out in the Bill.
I take sustenance from the contribution of the noble Lord, Lord Marsh. He indicated that, with the greatest respect to this House and the other place, there is a great danger that the amendments would produce a straitjacket that would be very restrictive. There would be obvious constraints on parliamentary time. The noble Lord was emphatic in highlighting the problem of potentially 659 contributions to such a strategy; I am more concerned about how much parliamentary time it might take for 659 views to be expressed.
Closely linked with that question is the issue of the annual report. The concept of an annual review is not really appropriate to the production of a strategy. On the one hand, a strategy should always be under review so that it can be amended but, on the other hand, the aim of the strategy should surely be to look to the longer term. One would not expect that it will require frequent revision, which seems to be implied by the concept of an annual report. The great danger is that it would lead us into the very short-termism against which we have been counselled on all sides in terms of the argument for an effective strategy.
The noble Viscount, Lord Astor, was rightly eager that I address the Scottish position. The amendment tabled by my noble friend Lord Berkeley would place on the Scottish Ministers a duty to prepare a railway strategy for Scotland and to consult appropriate people when doing so. The Bill gives Scottish Ministers the power to prepare such a strategy. Under the amendments, the SRA's strategies would continue to be in force as an interim measure. Of course it is important that Scottish Ministers should have a power to prepare the strategy, but it seems a little odd that we should constrain them first by the Strategic Rail Authority's strategies being continued, whether they

GC 35
would or not. We want to give them the power, but, in the spirit of devolution, we also want them to make up their minds about how they employ this power.
I do not think that we are miles apart on this issue; the noble Earl, Lord Mar and Kellie, made direct reference to this. It is a matter of whether Scottish Ministers should have the flexibility to decide when it is right to prepare a strategy or whether we should compel them to prepare one. The Bill opts for the former position, while the amendment of my noble friend opts for the latter.
6 p.m.
The Earl of Mar and Kellie: I am not complaining about the idea that Scottish Ministers may prepare a railway strategy. That is eminently sensible. However, I am complaining about the fact that they must publish it when the Secretary of State is not taking that duty upon himself in the rest of the United Kingdom.
Lord Davies of Oldham: If the Secretary of State develops a strategy, he will publish it. We are merely extending the principle that if and when a strategy is prepared by Scottish Ministers, it must be publicly available. I hear the noble Earl's comment that this looks like an added demand upon Scottish Ministers, and I shall bear in mind his strong representation on that. But if I am to defend as strongly as I can the strategic role of the Secretary of State, the noble Earl will accept that I recognise some differences regarding the dimension of the work which my right honourable friend is obliged to deal with, the extent of the railway for which he is responsible, and the devolved position as far as Scottish Ministers are concerned.
I have listened carefully to the debate. No one is conceivably against the necessity for strategic thinking with regard to the railway. The crucial issue is the extent to which we write on the face of the Bill that degree of rigidity when I maintain that the Secretary of State could not conceivably fulfil his responsibilities to the industry, the travelling public and the nation as a whole if he did not have strategic concepts and was prepared to produce a strategy—eminently debatable and discussed in Parliament—at the appropriate time.
Lord Berkeley: Before the noble Lord, Lord Bradshaw, decides what he will do with the amendment, I should like to ask my noble friend a couple of questions for clarification. He has argued long and hard that the Department for Transport does not need a strategy for the railways because it is a strategic authority. Which other parts of its responsibility in transport have strategies? We have discussed air, motorcycles and buses; I believe there was to be one of walking, but I cannot remember whether it was ever published. If we can have strategies on all those, why cannot we have one on the railway?
My noble friend said that when the Bill gets Royal Assent, the Strategic Rail Authority's strategies will be taken up by the transition grouping in the department. He did not say whether they would continue until the transition grouping had decided what to do with them.
GC 36
I understand from the rail regulator's office that the high-level output specification is not actually required until 2008. That is four years away. I can see a four-year gap without any strategies, with local authorities, investors and so on, not knowing whether the SRA's existing strategies are still in force or whether the transition people will come up with a new one. And what will the high-level output specification contain when it comes? A lot of questions need resolving to ensure continuity over the change process.
Lord Bradshaw: I thank Members of the Committee who have taken part in this debate.
Lord Berkeley: The Minister has to respond first.
Lord Davies of Oldham: I am quite happy to respond. My first response to my noble friend is a reiteration of points I have already made. We have a strategy for aviation; which Act of Parliament requires the Secretary of State to produce it? We have a strategy for buses and for walking; where is the legislation that compels those strategies to be produced? Of course there is no legislative compulsion. It is a question of the Secretary of State responding to the needs of the community and recognising that we cannot develop transport policy without making quite clear our strategic position and long-term objectives. I am in no way, shape or form against the concept of the strategy. I am merely saying that it is not necessary to put such a requirement in the Bill, and it is not helpful for us to add to the Bill that which is unnecessary.
Lord Bradshaw: Again, I thank Members of the Committee who took part in this debate.
The Minister says that we have a strategy for aviation and for motorcycling. The difference is that we put lots of money into the railways; we do not put lots of money into the airlines and into motorcycling. Putting £4 billion a year into the railways is, in my view, quite a lot of cash—a lot more than goes into the other industries. The same could be said of the bus industry, which is largely self-financing.
Ministers are like rabbits dazzled in a pair of headlights—the bright one says "survival" and the strategy one is rather dim. What motivates people is questions such as "When is the election?" and "What do people think of me?". Those questions are foremost in their minds.
Let us turn our attention to the industries involved. If you are a manufacturer of rolling stock or signalling equipment, or if you are going to make a commitment to large-scale investment, you need something against which to make your decisions. I take entirely the point of the noble Lord, Lord Marsh, that during his time—and during mine—changes of policy were frequent. I have also been a recipient of the lunchtime directive. Often the reasons you were being asked to do things were nothing to do with strategy and everything to do with survival.
A lot of public money is spent on the railways. We, as taxpayers, and as representatives of taxpayers, have some responsibility to debate the way in which it is proposed to spend that money. I take the point of the

GC 37
noble Lord, Lord Marsh, that an annual debate might be too frequent but there should be an obligation to provide strategies. The supply industry, regional government and the PTEs need strategies. The freight industry needs strategies, because it needs to know the background against which it is putting cash in. I believe there is a need because the Secretary of State is taking these powers unto himself. There is no intermediate body which can produce these strategies and it should be incumbent on him to produce them.
I will take counsel with the noble Lords, Lord Marsh and Lord Berkeley, and the noble Viscount, Lord Astor, and others, but I should point out to the Minister that this is a point of principle. There is a point in each Bill where the Government come up against the massed forces of Parliament saying, "We are not prepared to put up with this. You are taking powers to control vast amounts of expenditure by a Secretary of State". It is like going into a grand hotel and running up a huge bill—but the Secretary of State is not even required to produce one. We have reached a very important point in the Bill and it is one to which we will return.
I give an assurance to all noble Lords that I have taken careful note of what has been said and I will seek to bring about as large a consensus as possible. But, as a responsible Parliament, we should not pass over the expenditure of all this money to a Secretary of State—and I stress "a" Secretary of State—without some kind of comeback on how that money is spent. As the Minister said, these strategies may come this year, next year. three years down the line—we do not know—and so there is no compulsion whatever.
I will withdraw the amendment for the time being—it is up to the noble Lord, Lord Berkeley, what he wishes to do with his—and return to it at another stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [General duties under s.4 of the 1993 Act]:
Lord Berkeleymoved Amendment No. 7:
Page 3, line 3, leave out from "in" to end of line 6 and insert "the performance of services for the carriage of goods or passengers by rail;
(a) otherwise to protect the interests of users of services for the carriage of goods or passengers by rail;"
The noble Lord said: In moving Amendment No. 7, I shall speak also to Amendments Nos. 8 and 12. To some extent, due to the vagaries in the way in which the Bill has been produced, I feel that we are taking a step backwards and upwards because the duties as originally in the 1993 Act probably come before strategies.
My reasons for bringing forward the amendments go back to the 1993 Act, where the rail freight industry fought very hard to have the words "and freight" included in the duties. It is a part of the reason why rail freight has been so successful in the past 10 years. However, 10 years on, a great deal of education is still necessary within bodies such as Network Rail—or Railtrack, as it was—OPRAF, which became the SRA,
the rail regulator and sometimes the Department for Transport to enable them to understand that freight is
GC 38
different. It is in the private sector, it only goes when the customer wants it to, it is extremely reliable—only 5 per cent of delays to passenger trains are caused by freight—and, most importantly, it is fully exposed to commercial risk. So it needs the continuing protection that these duties and my amendments provide.
Amendment No. 8 seeks to go a little further than the two previous Bills, reflecting the fundamental change that is proposed for the railways, with tighter government control of both passenger services and of Network Rail. The White Paper recognised this in July last year. It stated:
"The Government will therefore ensure that long-term access agreements are put in place to provide the stability needed to secure commercial contracts",
for rail freight. An enormous amount of good work is being done in Department for Transport working groups, and I have the honour of being a member of a number of those.
Strategies come up many times in the Bill covering different areas such as closures, what is to happen when the network is reduced and so forth. That is because the Government have two roles: those of specifying and of funding the network. We have already talked about specifying a high-level output for passengers and freight and I shall come back to that in a moment. However, the Government also prepare a passenger strategy themselves, so we must ensure that the way the freight strategy is prepared is compatible and given equal weight.
As a slight aside, there has been a lot of debate about whether the 43 references to "railways services" in the Bill apply to both passengers and freight. I am advised that the expression applies to passengers and freight because of Clause 57(2), which states:
"An expression which is given a meaning by any provision of the 1993 Act for the purpose [either] of that Act … has the same meaning in this Act".
It therefore covers the carriages of passengers, goods, light maintenance, station services and network services. Thus freight is included. That is why I have tabled later amendments to exclude freight because it does not seem appropriate.
I turn briefly to the amendments. It is a bit odd that the only duty the Government are giving themselves is to make the trains run on time. That is a good thing, although freight already runs on time. But is that sufficient? I prefer the old duties and that is why I have set them out in Amendment No. 7. It is important to have the phrase,
"the performance of services for the carriage of goods or passengers by rail",
in the Bill.
6.15 p.m.
Amendment No. 8 has been tabled because it is important to strike a balance between those who carry goods and those who carry passengers outwith a franchise agreement, because passenger franchisees are protected. Paragraph (ii) provides for open access passenger operators. Some of them have been quite successful—they would not be around otherwise since

GC 39
they receive no subsidy—and they too need some protection. Paragraph (iii) covers "investors or likely investors" who, as I quoted from the White Paper, need the comfort of knowing that they will have access to the tracks in order to realise their investment.
Given the proposed new structure of the railways, I think that these amendments are important. While I have no problem with the structure, freight has to be seen as independent and fully exposed in the private sector, as should open access passenger operators.
The final amendment in the group, Amendment No. 12, is very small. Given my definition of "railway services", which I hope my noble friend will confirm is correct, it seems odd to have the words,
"after the definition of 'the passenger transport market' insert … 'railway service performance",
followed by a list of other provisions that clearly refer to passengers. I suggest, therefore, that the word "passenger" should be inserted. If my noble friend says that I am wrong about that, I am sure that he will correct me. I beg to move.
Lord Bradshaw: I support the amendment in so far as it would help to protect the interests of those carrying freight on the railway. I feel that the Government are somewhat in thrall to the operators of heavy lorries. That was demonstrated during the fuel crisis and by several things since then. Those operators are possibly enjoying a rather easy ride when compared with rail freight, but I believe that most people who drive motor cars or use the roads would dearly love to see more freight moved by rail. Indeed, that is one of the most popular statements a politician can make, especially at a time when politicians are finding it difficult to find anything popular to say. It is important that the interests of freight are borne very much in mind and not subjected to the Government's possible financial priorities for giving preference to the interests of passenger service operators.
I want to draw the Minister's attention to some information provided by the North Staffordshire Rail Promotion Group. While I shall not burden the Committee by reading out the whole document, it is clear that the small stations represented by this group have had their rail services completely thrown to the wind in order to meet the requirements of Network Rail on the one hand and Virgin's West Coast Main Line on the other. Trains have been withdrawn and bus services provided in their place. Statements were issued to the effect that train services would be restored, but that has not happened. Large service gaps have appeared that have lasted for months and, lo and behold, no one uses the railway any more. Following that, the SRA has issued a statement saying that the bus services seem to be a fair substitution. At one station even the footbridge to the far platform has been taken away, so it is no wonder that people are not using the railway.
What most presses Ministers when trying to reduce costs, to get engineering work done and to make the franchises attractive should not be allowed to badly
GC 40
affect rail freight, which is very important and is already suffering a lot of disadvantage when compared with road freight.
Lord Davies of Oldham: I agree with a great deal of what the noble Lord, Lord Bradshaw, has said about ensuring that there is no unfair discrimination against rail freight and that it should be encouraged. Moreover, my noble friend who moved the amendment is a doughty champion of the industry. Let me give him the obvious assurance that the Government recognise that rail freight has a vital role to play and must be able to do so more effectively.
In considering his strategy for the railway and the desired outputs which he will notify to the Office of Rail Regulation prior to an access review, the Secretary of State will of course take into account the needs of freight operators and of all passenger operators, franchised and otherwise. The freight and passenger operators use the same tracks and it would be extremely foolish for the Secretary of State to imagine that he could specify for the one without due consideration of the other. Officials in the department are currently discussing with the rail freight industry how best to feed information on its requirements into this process. I know that my noble friend is aware of those developments.
The rail freight strategy must develop from rail planning processes, the result of which will be a clearly defined role for freight set in the context of the Government and the industry's long-term plans and drawing on the industry's own planning and assessment of its needs. That is what the rail freight industry wants and we intend to see that that is what it gets.
My noble friend half conceded the point in moving his amendment, but when the Bill refers to the interests of users of rail services, it refers to all users: passenger operators, freight operators and their customers. I shall address a little later the point where it appears that only passengers are in mind, when I shall give him a specific response. First, however, I want to emphasise that we recognise the important role played by rail freight and confirm that it lies within the framework of users as defined in the Bill.
The second amendment tends to take us over some of the same ground as the first. The effect would be to spell out the need for the Office of Rail Regulation and the Secretary of State to balance the interests of all rail users. Of course we intend to do that. We cannot plan sensibly for passenger railway services without giving due consideration to the requirements of the freight railway. The fact that the Bill does not spell out the requirement to strike this balance does not mean that it will not be struck—quite the opposite. I want to give an assurance that it will.
I am conscious that my noble friend's third amendment identifies what look like the specifications solely or chiefly related to passenger transport. When one refers to performance in securing reliability, including punctuality, and journey times being as short as possible, it may look as if one has the

GC 41
passenger in mind, but my noble friend is better placed than anyone to recognise how freight would also benefit from both of those objectives being realised.
I recognise that the reference to overcrowding refers, by definition, only to passengers.
Lord Berkeley: That would rather depend on whether the passengers think that they are in cattle trucks or not.
Lord Davies of Oldham: I have heard one or two passengers indicate that they have not noticed the difference between themselves and freight, but I always thought that that was rhetorical exaggeration, as they were breathing into my left ear and I was trying to establish contact with my right. We all know the problems of overcrowding on suburban services at times.
I want to reassure my noble friend that the list, which includes the word "overcrowding" is not exhaustive. One should not take this reference as an indication that the only concept is that of passengers. Freight is included as well.
I want to reassure my noble friend about the Government's commitment to rail freight. I am happy to emphasise the assurances I have given that the interests of rail freight will be fully taken into account alongside those of the passenger railway. They are subscribed to by all in government concerned with the future of the railway. On that basis, I hope that he will withdraw his amendment.
Lord Berkeley: I am very grateful to my noble friend. He has given some good assurances with which I am content. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
Lord Berkeleymoved Amendment No. 9:
Page 3, line 34, at end insert—
"( ) The Secretary of State shall publish in support of his strategies a common appraisal methodology covering road and rail passenger and freight transport to form the basis for prioritising investment and operations of the railway.
( ) Before publishing his appraisal methodology, the Secretary of State shall consult those persons who appear to him to be representative of investors, operators or customers of the railways.
( ) The Secretary of State shall publish annually forecasts of passenger demand."
The noble Lord said: It is clear that appraisals of different modes of transport—road, rail, maybe air, passenger and freight—will have a much higher profile in the new structure of the railways. This is a probing amendment to see how the Government envisage taking it forward.
Clearly, it is down to the Government to carry out appraisals and produce methodologies which I hope the whole industry will support. As this will be applied so widely, whether it is to do with priority between different types of passenger train, between passengers and freight. whether it concerns grants or even how the regulator decides to close which part of the network—
GC 42
I am sure we shall come to that later—it is important to have an appraisal methodology which covers all aspects of the transport we are talking about and in which everybody must have confidence. It will make life much easier.
I have a few worries about the current situation. I have had one or two disagreements with the Strategic Rail Authority over the years about how it appraises passenger and freight, whether it uses user benefits or non-user benefits, and the values it applies. The discussion has started and I am looking for some comfort from my noble friend that it is intended to take this forward, to complete it and to consult as widely as possible so that there is something everyone can buy into. I beg to move.
6.30 p.m.
Lord Tunnicliffe: Will my noble friend Lord Berkeley confirm what I think I heard him say; namely, that the common methodology would apply to railway closures as well'?
Lord Berkeley: I believe that it could apply to railway closures. I have not looked into it in any great detail, but it is something that surely should apply to railway closures and to railway re-openings as well; in fact, to everything. My noble friend has made a very good suggestion which perhaps needs further discussion. It exemplifies an even wider use for this methodology than I had thought of, so I am every grateful.
Lord Davies of Oldham: I have some sympathy with the amendment and the intent behind it. I can give my noble friend the assurances he seeks. The department has already published guidance, known as the New Approach to Appraisal, set out on the department's website. This document provides generic appraisal guidance covering all forms of transport and was widely consulted on prior to publication. It is subject to regular review and incorporates the latest developments and discussions in this field. We regard it as a document that could benefit from re-evaluation in the context of the points made by my noble friend.
I assure my noble friend that the department is very serious about appraisal methodology aimed at producing good quality value for money assessments to help prioritise spending decisions. In addition to the generic multi-modal guidance set out in WebTag, rail-specific appraisal issues are currently addressed by the SRA Appraisal Criteria. The passenger and freight constituent elements of this document were subject to consultation before its publication. We recognise that some updating and further work are required, but I assure my noble friend that the matter is in hand.
Lord Berkeley: I am very grateful to my noble friend and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 10 to 12 not moved.]
Clause 3 agreed to.
[Amendment No. 13 not moved.]
Lord Berkeleymoved Amendment No. 14:
After Clause 3, insert the following new clause—
"NETWORK RAIL'S DUTIES AND OBLIGATIONS
The Secretary of State or Scottish Ministers as appropriate shall ensure that the content of section 3 of the Railways Act 2005 shall be included in any agreement between the Secretary of State or Scottish Ministers and infrastructure managers in respect of purposes and compliance with strategies."
The noble Lord said: This is an amendment to probe how the Government think they will get Network Rail to do what they want it to do. There is to be something that we are told is called a binding agreement. We have to wait to see whether it is binding and whether it is an agreement. It will be interesting to see what is in it. However, we must recognise that Network Rail has many more responsibilities. We need some assurance that Network Rail will comply with the spirit and letter of the duties and strategies—whether or not we have them—to be provided.
Network Rail is in the private sector and therefore I understand that Ministers will not answer Written Questions on it. However, it is the monopoly supplier of infrastructure. At present its performance is very variable. I give an example mentioned at a meeting I hosted in Telford last week. A big slate company run by McAlpine wants to remove waste from a tip at Blaenau Ffestiniog—it is horrible waste comprising hundreds of millions of tonnes—and take it to Manchester and Birmingham as secondary aggregates. It has been trying for seven years to get permission to run trains down the Conwy Valley line. Network Rail's estimate for returning that line to freight use—it carried nuclear waste trains until about 10 years ago—has varied from £6 million to £256 million and has gone down to £20 million and up to £66 million. Apart from indicating appalling estimation, it also suggests that Network Rail does not know what work has to be done on the line and whether it is for it or someone else to pay. But here is a customer who has been waiting to use rail freight for seven years and still cannot get an answer.
In addition to the regulator's work and the constraints that he can put on Network Rail, I would like to see something in the binding agreement which requires Network Rail to do what it is funded by the Government to do. The amendment probably is not correct, but I should like my noble friend to explain what will be in the agreement, when we are going to see it—I assume that we are going to see it—and what the Government will do if Network Rail does not perform in accordance with the agreement. I beg to move.
Lord Bradshaw: This is an appropriate amendment because Network Rail will be spending a very large part of the taxpayers' money to which we have referred. Some of us were naïve enough to believe that we would see a diminution in the activities of Network Rail following Hatfield, when large amounts of new rail were wheeled into position, when it received machines to measure the quality of track and high-output track re-laying machines which took a great
GC 44
deal of the muscle work out of laying track. However, there seem to be more and more occupations of the railways. The ability to travel at weekends is now severely restricted and people making any kind of journey find themselves on a bus for a considerable part of it.
Having taken Network Rail into their ownership, the Government definitely owe people a statement as to when things will get better. We may have to wait a little longer but it would be nice to know that we are not in for years and years of line closures. These are not the kind of occupations of the track that I was used to when I was a railway manager and had to allow the paper trains through on a Saturday night and put in 10 hours or so to do what you could before you had to operate with passengers again. Now, we shut the railway on Saturday morning and we are jolly lucky if it is open on Monday morning.
These so-called high-productivity machines, working in absolute occupation of both tracks—if staff are not at risk there is no need to protect them—do not seem to be delivering the results that I would expect if I were a Minister and footing the bill or if I were a general manager and responsible to my customers on the railway.
There is a great disjoint between what the customer wants and what Network Rail is providing, and both passengers and freight suffer as a consequence. The inability of freight and passenger operators to offer a reliable service severely impacts on the results of their business; you find that people who are unable to travel often do not come back. It is important to find out from the Secretary of State what Network Rail will do and what we can expect in the future.
Viscount Astor: I have one question for the Minister arising from what the noble Lord, Lord Berkeley, said about the responsibilities of Network Rail.
The noble Lord, Lord Berkeley, implied that the Secretary of State would not be directly answerable for the performance of Network Rail. As I understand it, the Bill will abolish the SRA and, therefore, that Network Rail will, in effect, come under the direct responsibility of the Secretary of State.
I have no idea how it is going to work. I think it would be helpful to the Committee if the Minister could say whether it will be the Secretary of State who answers questions in Parliament on the performance of Network Rail and any details about Network Rail. There is certainly some confusion. I should be grateful if the Minister could cast a light on it.
Lord Berkeley: I apologise to the Committee. I omitted to speak to Amendment No. 15, which is very short.
It may or may not be known that the Strategic Rail Authority is one of 116 members of Network Rail—not of the board, but of Network Rail. The seat is currently occupied by the chairman of the SRA, David Quarmby. When he gets abolished with the SRA, I would like to know who will take his place. Will it be Mr Darling, Mr McNulty or my noble friend Lord Davies of Oldham? Is the person who

GC 45
will sit on that board of 116 people—I am one of them; I declare an interest—supposed to hold Network Rail's corporate governance to account? This amendment seeks elucidation from my noble friend.
Lord Davies of Oldham: If I may, I shall deal with the second amendment first. It is a slightly easier one.
The SRA's right to special membership of Network Rail passes to its successors in title—in this case, the Secretary of State, who will be appointing a special member.
Lord Berkeley: Then it will be Mr Darling.
Lord Davies of Oldham: The noble Lord may make such a comment from a sedentary position; I could not possibly do so.
I turn to the more substantial point which I think is in Amendment No. 14. The combined effect of Clause 4 and Schedule 4 is to ensure that strategies are given effect through access charges reviews. The delivery of what the Secretary of State and Scottish Ministers want to be achieved by railway activities during an access charges review period, and what they are prepared to fund, will be linked to the infrastructure manager's licence which is reviewed and enforced by the Office of Rail Regulation. So we think we have a structure that renders this amendment unnecessary.
I think that my noble friend was indicating that this is a probing amendment. I think that the noble Viscount, Lord Astor, also said that he would welcome greater elucidation on this. I begin by saying that the binding arrangement will be a combination of regulatory requirements imposed, monitored and enforced by the Office of Rail Regulation and a reporting requirement. The great majority of the binding arrangement will be in the form of a regulatory regime which is very much like the current processes.
At the outset of a periodic or interim review, the Government will decide the high-level outputs they wish to buy. The Office of Rail Regulation will determine the consequent intermediate outputs that Network Rail will be obliged to deliver and the income that it needs to do that. The intermediate outputs and their delivery will form part of the Secretary of State's reasonable requirements, and that is a reasonable requirement under condition 7 of Network Rail's licence enforceable by the Office of Rail Regulation.
So of course the actors have changed; that is what the Bill is about. However, I think that my noble friend will also recognise that certain aspects of this follow on from what is currently in place. As the noble Viscount, Lord Astor, would speedily emphasise if I did not cover that point, Network Rail is a private company and the Government cannot direct it. But it is, of course, regulated by the Office of Rail Regulation, mainly through the conditions of its licence. These will be changed to reflect Network Rail's enhanced role and the licence will require it to deliver the Secretary of State's reasonable requirements for the rail industry through the process I have identified. I hope that satisfies the Committee.
6.45 p.m.
Viscount Astor: Perhaps I may press the Minister a little further. He said that Network Rail will be a limited company. However, in effect, the Government will be the shareholder. Therefore the Government will have 100 per cent of the votes and will be able to appoint or elect, whichever way one wishes to describe it, the board. The noble Lord wishes to intervene.
Lord Berkeley: Perhaps I may clarify this matter. According to a Written Answer I received about six months ago, the Government are not the shareholder. The owners of Network Rail are the 116 members—the number varies but it is about 116—and the key issue is that their liability is capped at £1.
Viscount Astor: I am grateful. So, in effect, the Government accept the liabilities of Network Rail, I believe is the correct way of putting it. Therefore, if they accept the liabilities of Network Rail, they must also accept the responsibilities for it. I was trying to elucidate from the Minister whether, by accepting those liabilities on to their books, the Government are responsible for Network Rail and feel that they must be accountable in Parliament for its performance and answer any questions about it.
That is the point I was seeking to make. I apologise if I was somewhat opaque in my question and I am grateful to the noble Lord, Lord Berkeley, for his help.
Lord Bradshaw: I found the Minister's answer absolutely incredible in regard to the outcome of the regulatory review. When I was a manager on the railway, I had regulatory reviews at 9 o'clock on Monday morning and if the issues were not resolved by Wednesday I was out of a job. That is how it was run. Are we going to wait four years for the outcome of a regulatory review to clear up the present mess? That really is quite incredible.
The Government may not have liked railway privatisation but they have had eight years to get to grips with it. The situation which now occurs every weekend on the railway is really quite intolerable. The Government have got to get to grips with this. You can construct all kinds of fancy words about what will happen in 2008 or whenever, but the passengers want something to happen now.
I have got no time for the fiction about Network Rail being in the private sector when it is in fact funded by the public. The Minister has got to do better because the customers want better. The railway I ran actually considered the importance of its customers. The Evening Standard did not let you exist as a divisional manager at Liverpool Street if for about three successive days there was chaos; you had to do something about it. It seems that now the urgency has gone; the business just drifts on and on to years in the future.
I found the answer of the Secretary of State extremely disappointing. We have got to have a mechanism for holding to account the people in Network Rail for the railway they are producing. It really is not good enough for its customers, The

GC 47
Minister will no doubt tell me that people are using the railway in greater numbers. But that is because the roads are so congested that they have no alternative; it is not because the rail services are so good.
Lord Davies of Oldham: I will be brief. I listened very carefully to the challenge laid down by the noble Lord. However, I emphasise that we are dealing with a Bill and with the structure envisaged by it. I hear what the noble Lord says about the failings, as he sees them, of the proposal. But he will recognise that many of the conditions that will operate as regards the future of Network Rail's work are not in the Bill because they do not require legislative change. They require what I think the noble Lord is driving at: clarification of the relationship and the demands made upon them.
That is an important debate. There will be many occasions on which we can have it but I hope that noble Lords will forgive me if today I confine myself to the amendments tabled, to which my response was, I hope, satisfactory. However, I recognise the strength of feeling of the noble Lord opposite.
Lord Berkeley: I am grateful to all Members of the Committee who have spoken on this group of amendments. We have had a good debate; although we have not answered the question there has been a lot of food for thought. I am certainly grateful to know that my right honourable friend Mr Darling will be sitting around the table with Network Rail and listening to all those lovely votes that we have. I am grateful to my noble friend for his response and on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 15 not moved.]
On Question, Whether Clause 4 shall stand part of the Bill?
Viscount Astor: I oppose the Question that Clause 4 stand part of the Bill because this issue is extremely important to us and it is one to which we shall return. I have taken this approach because I want to hear the Government's response before we decide what amendment to table.
Clause 4 is one of the smallest clauses in the Bill. It is perhaps one of the most contentious and could be one of the most objectionable. The reason is that it concerns the jurisdiction of the Office of the Rail Regulator rather than the independence of the regulatory authority.
Independence is all very well but what matters just as much is the jurisdiction of the authority—what it actually does. The Secretary of State has insisted that the Office of the Rail Regulator will remain independent. We accept that; it is not an issue. Of course we know that, after the possibly unlawful decision of the previous Secretary of State to apply for Railtrack to be put into administration in October 2001—and, indeed, the threats made to the previous rail regulator in relation to his independence—the independence of the economic regulation of the railways is not now in dispute but, rather, its jurisdiction.
GC 48
Its jurisdiction is undermined by the Bill to the jeopardy of private investment in the rail industry and, indeed, of investment in other independently regulated industries. That affects the reputation of the British Government in their dealings with the private sector. So I hope that the Minister can say how she intends to square what the Government are doing with the Statement that the Secretary of State made to Parliament in February last year.
The Deputy Chairman of Committees (Viscount Simon): A Division has been called in the House. The Committee will adjourn for 10 minutes and resume at three minutes past seven.
[The Sitting was suspended for a Division in the House from 6.53 to 7.03 p.m.
Viscount Astor: This is about the power to carry out an access charges review—an assessment of the financial needs of Network Rail for the confident and efficient stewardship of the network. It is the regulatory authority's most important function. It gives Network Rail, the freight and passenger train operators, the rolling stock lessors and suppliers and the infrastructure maintenance and renewal companies the necessary certainty and security that the provider of the national infrastructure, Network Rail, will have enough money for the competent and efficient operation, maintenance and renewal of the infrastructure for five or more years at a time.
In carrying out an access charges review, the Office of Rail Regulation is required to apply an important list of statutory criteria, such as the promotion of efficiency and economy in the industry, the interests of freight and passenger users of the railway and the growth and development of the industry. Importantly, it is not allowed to apply political criteria—I accept that—as it is recognised that the application of short-
term political considerations are detrimental to private sector confidence and the medium and long-term needs of the railway.
Indeed, it is the establishment of independent economic regulation, free of political controls, that in every privatised industry, including railways, is essential to private sector confidence and investment, which finally assures the industry and its investors that there is an acceptable future. The Government have accepted the principle of the independence of the Bank of England, but they are not prepared to do so in the case of the railways with the regulator, because, under this legislation, the Office of Rail Regulation and the rail regulator which it replaces had the right to make that assessment and set access charges accordingly. Under the franchise agreements between the agent of the Government, the SRA, and the private sector passenger train operators, the train operators were entitled to indemnities from the Government against any increase in access charges which may be determined by the independent regulatory authority.
Those indemnities are extremely important parts of the bargain which the state made with the private sector; they are not limited in amount and they provide that the state will keep the risk associated with the

GC 49
uncertain condition of the assets of Network Rail. It was on the basis of that indemnity that the private sector came into the railway industry and it is a fundamental part of the relationship between the Government and the private sector. It should not lightly be interfered with.
When, in December 2003, the last rail regulator decided on a £7.4 billion increase in Network Rail's income for 2004 to 2009, the Secretary of State publicly welcomed his decision and confirmed, as he had to, that the Government would honour the indemnities in its contracts with the private sector companies. But the Treasury was not happy about the fact that the decision of the regulator in an access charges review flowed straight back to it; in essence, the Treasury was not pleased about the fact that the SRA inherited from its predecessor indemnities which committed the state to pay to private sector operators amounts which are determined by an independent authority. Nor is the Treasury happy with the fact that the same SRA has continued its policy of full and unlimited indemnification of private sector operators.
So what do the Government now propose to do? Of course they cannot and would not dishonour their contracts of indemnity with the private sector operators, as these are enforceable by law. The Government are doing the next best thing, to limit the jurisdiction of the independent regulatory authority—in effect, to cap the indemnities by legislation—and that is what Schedule 4, subparagraph 1G seeks to do. It provides that the ORR may raise access charges at an access charges review only to the limit imposed by the Government—by the Treasury, in effect.
The limit is stated to be the public financial resources available, as defined in subparagraph 1D(11). That is a serious interference in the contracts which the state has made with the private sector—a unilateral watering down of a valuable provision which the Government now find uncomfortable. It is a change without compensation to private sector operators whose contracts are being interfered with. Therefore, it could be a breach of Article I of Protocol 1 of the human rights convention. The Secretary of State has stated that the Bill conforms with that convention.
The Government are prepared to interfere with private contracts to which they are a party and that raise serious issues, not just for railways, but for any other contract with government, because the state has voluntarily made a contract with the private sector and undertaken to pay money in certain defined future circumstances. The Government are seeking to change that.
After the Secretary of State announced the rail review on 19 January 2004, which is to be implemented by the Bill, he gave assurances in another place that,
"the Government also rules out any change to the rights of third parties, which will be protected. There is no question of weakening the effectiveness of economic regulation".
He continued:
"maintaining fully effective and independent economic regulation is critical for retaining investor confidence".
And he promised:
GC 50
"There will be no diminution in the regulatory protection of the private sector investors in the railway".—[0fficial Report, Commons, 9/2/04; cols. 1237–38W.]
Our concern is that Schedule 4 does not respect the principles or honour the assurances. It interferes in the jurisdiction of the Office of the Rail Regulator by diminishing the rights of private sector operators. This is of concern to those in the industry and must be a concern to others who have contracts with the Government.
While the independence of the Office of the Rail Regulator is not compromised by the Bill, his jurisdiction is compromised because, in effect, he is subject to a cap on government expenditure. That concern flows through the Bill. We need to address it and get some clear answers from the Government. We have an independent regulator who, in effect, has an expenditure cap which will influence his decisions. I accept that there will not be a political influence on his decisions, but the Government will be an economic and financial influence.
We are concerned about what Clause 4 and Schedule 4 do in funding the industry and its relation to private sector contracts.
Lord Bradshaw: The noble Viscount, Lord Astor, has put his finger on the core of the Bill—that is, what happens when there is not enough money to fund the railway. You have contracts with various people and the rail regulator could be put in a position of saying that if there is not enough money to go around, who will suffer? Will it be the private investor, who is expecting to do something but will not be able to because there is not enough money to pay for it? Will it be the passenger, who will ultimately be deprived of service? There will be a great lottery regarding that. It will probably not be the person who least deserves the service; it will be the customer of the next franchise to be let. The noose will tighten where it is most expedient, so it will tighten on the person who is next in line.
Then there are decisions about closures or bus substitutions. Or will we have a railway which is underinvested? That is the alternative—to say to the industry that there is not enough money, therefore you will not carry out the renewals or you will run the service down in some other way. There is a real problem here, arising mainly because of Network Rail's failure to get to grips with costs. I know that the Government want Network Rail to do that, but, as I said in the previous debate, we have yet to see evidence of it happening. I would dearly love to see evidence of it, but I do not.
The situation is not getting better—indeed, it is probably getting worse. While one can talk about decades of underinvestment, we have to remind ourselves that in 1993 the railway was in reasonably good order. The West Coast Main Line had no speed restrictions when it was handed over. To talk about decades of underinvestment and to repeat the newspaper headlines is no substitute for the truth.
It will be a real problem if the rail regulator is constrained financially. Where is the shoe going to pinch and what parliamentary accountability is there?

GC 51
Will somebody just decide that a certain service will be degraded or subject to bus substitution? Is this at the heart of the Bill? I think it is.
The Minister owes a further explanation, not just to us in the House but to a large proportion of the public who have not had that explanation because the matter was so inadequately debated in the other place.
7.15 p.m.
Lord Snape: The Minister will have to satisfy some very real fears, specifically in the railway community, about the future. This clause should be sub-headed "The Treasury's Revenge". The Treasury has never forgiven the previous regulator for demanding as he did: "This is the amount of money needed to run the railways and therefore you will produce it". The Treasury was determined that such a situation would not arise in the future.
Much of the concern about the financial straitjacket in which the industry may well be placed has been expressed with reference to the future of fairly lightly used branch lines, but in many ways the situation is much worse. I suspect that the corset, if you like—the pressure—will be applied right across the industry. It will perhaps be late-night services during the week, on which a small minority depends but which are nevertheless essential from those passengers' point of view, that will be marginalised and eventually withdrawn completely. Under Clause 4, nobody can do much about the situation.
The noble Lord, Lord Bradshaw, mentioned that the mantra expressed by people in the railway industry—some of whom should perhaps know better—and outside it is that we are talking about decades of underinvestment. In certain areas we are, but, as the noble Lord said, we are also talking about a few years' mistaken investment by Network Rail and its immediate predecessor, Railtrack.
I do not wish to detain Members of the Committee or bore them with stories of my time in railway signal boxes; I am sure that my colleagues would not forgive me if I did. But on Saturday I passed through my home town of Stockport, where over the past five years the line has been closed repeatedly at weekends, sometimes for up to four months. That is not a little-known branch line; it is part of the West Coast Main Line connecting London and Manchester. After new signals and points had been put in it was decided that they had been put in the wrong place and that the transposition of the line envisaged at that time was inherently dangerous. Those new points have now been removed. Unfortunately, now that the line has reverted to its traditional direction of travel, the old points have not been replaced.
We have the ludicrous situation of having spent literally millions of pounds and caused enormous dislocation to the lives of people living in the south Manchester area. Trains leaving Manchester stay on the up fast line once they have passed Slade Lane junction, some five miles from Stockport—I am sorry; I knew that I would come down to anecdotal
GC 52
material—regardless of what else happens, because the points that would have transferred them to another line have been taken away some years ago. That is all paid for by public money; it is vastly expensive.
A new signal box whose interior was designed by Ansaldo is being built to control the Stockport area. Unfortunately, because of the rethink, it does not control the area and will not do for some years, so signal boxes built by London North Western Railway in the 1880s have been refurbished and are located right next to the brand new signalling centre. This expensive new infrastructure controls one junction, at Cheadle Hulme, which used to be controlled by 25 levers, installed by the London and North Western Railway. Across the track, within spitting distance, if one wants to put it crudely, is a brand new signalling centre that does not work.
There is no point in people complaining to the Treasury about underinvestment when all of us who know anything about the industry, or have been involved in it, know full well that a lot of money has been wasted. To that extent, I am not helping my noble friend. I started off on one tack and now have convinced myself that I am barking up the wrong tree.
There is a serious long-term problem. The clause enables the Treasury to run the railway. I suspect that, in their hearts, many noble Lords on these Benches have no wish to go back to the days of operating a railway at the behest of the Treasury, which in itself never comes under any public scrutiny so far as concerns its efficiency and suitability to operate the railway.
I hope that my noble friend the Minister can reassure us. If she can, I shall have her promoted instantly.
Lord Berkeley: I cannot equal the view of my noble friend Lord Snape about the signalling at Stockport, except to say that I have it on good authority that every engineer carrying out the re-signalling work—the third one—was supervised by a Bechtel engineer. The waste of money was terrible. It is an issue that we have debated before.
The schedule is a serious matter and the noble Viscount, Lord Astor, has done well to raise it. If we do not accept that the schedule should remain in the Bill, it will not be necessary to move the next three groups of amendments.
The noble Viscount alluded to the fact that the Government and the regulator together can change the shape of a railway in such a way that those operating on it can lose a great deal of money because inefficiencies are brought in. Branch lines may be closed and there may be permanent 50 miles per hour speed limits on the West Coast Main Line, the Great Western and the Great North Eastern, for example. Would not that be fun? Politicians here would have a lovely time. However, the regulator could decide to do that and it would be no different to the previous occasion when Mr Winsor was blamed for everything.

GC 53
If that happens and an operator—a freight operator, an open access operator or anyone else—suffers consequentially, at the moment there is no provision for compensation. One of my amendments will provide for that and I shall discuss it in more detail when we get to it.
I thought it would be interesting to refer noble Lords to the Crossrail Bill, which was published last week. I have a copy here. I remind the Committee that compensation is payable by the Government to those affected by Crossrail. If it cannot run its trains in accordance with its contractual rights, they receive compensation. The Crossrail Bill will need a great deal of scrutiny but compensation is not a dirty word when it comes to allowing Crossrail trains to run. The issue of compensation being on the face of the Bill in Schedule 4—if the schedule remains—will need to be considered.
Viscount Astor: I should say to the noble Lord, who has great experience of these matters, that it is not a matter of looking forward to compensation. I contend—I wonder whether he agrees—that the current indemnities available to the industry under Clause 4 and its schedule could fall and there would be nothing the operators could do about it.
Lord Berkeley: I agree with the noble Viscount. That is exactly my point. Now is not the time to rehearse it in detail, but there need to be indemnities and, whatever we think of the future and whether the costs will come down, we have to think the worst. People and companies could lose a lot of money and there need to be indemnities and some methodology whereby once the regulator has made his final decision or recommendation, it is passed back to the Secretary of State to take the political decision about which lines should close. It is unfair that an independent regulator should be asked to say, "I close the West Coast Main Line and not the East Coast Main Line", or whatever, but that is a debate for another day. I apologise for not being in my place at the start of the noble Viscount's speech but I support the general tenor of his remarks.
Baroness Crawley: I thank noble Lords for their contributions. In answer to my noble friend Lord Snape, I should say that I fear my promotion could be a long way off.
Let me go through the points raised by noble Lords, starting with the noble Viscount, Lord Astor, who was very exercised by the issue of jurisdiction. The jurisdiction is not being changed because the Office of Rail Regulation continues to perform the same functions. The Secretary of State is entitled to specify high level outputs and the money that he has available. He has always had the right to provide guidance to the ORR. The Bill ensures that that happens without fail. The ORR will have a clear statement for each review of access charges of what the Secretary of State wants delivered. The ORR then performs its independent function of undertaking the review looking at the issue of jurisdiction and the whole issue of the access charge reviews being free of political control.
Every regulated industry needs to take account of public policy established by government, for example, environmental objectives in the energy sector. For rail,
GC 54
the level of public subsidy—which we have discussed this afternoon—makes it even more important that Ministers give a very clear statement of what they want achieved in the public interest. This does not in any way undermine private participation and investment in the industry.
Concerns were raised about the capping of public investment. It has never been the case that an independent regulator has the function to determine public expenditure; that is Parliament's function. The access charge review process ensures that the ORR sets charges independently, taking account of the cost of contractual commitments. The new process adds to the current arrangement, adding in the stage that makes it more transparent and more accountable.
The noble Viscount, Lord Astor, mentioned breaking contract with the private sector. Both Network Rail and the Association of Train Operating Companies have welcomed the Bill. I shall not delay the Committee now but I have copious quotes from both regarding their welcome of the Bill.
The private sector likes the new structure for industry. My noble friends Lord Snape and Lord Berkeley—
Viscount Astor: Before the noble Baroness leaves that point, I am sure that many in industry welcome parts of the Bill, rather like the curate's egg. However, my question concerned indemnities given to train operating companies and whether, through the capping of funding, those indemnities could be changed. It would be very helpful if the noble Baroness could give the Committee a clear statement on that. I accept that I may have read the Bill wrongly—I am no expert on reading Bills—but it would be very helpful to know exactly what the position is.
Lord Berkeley: While my noble friend is considering her response to the noble Viscount, Lord Astor, I wish to refer to open access passenger operators. Freight operators are very concerned about this point for the reason that the noble Viscount, Lord Astor, mentioned. There is no indemnity and there is no compensation. They do not want the network to be reduced in scope or anything like that, but if it is they consider that they have a justified need for reimbursement unless Network Rail can find an alternative solution. Network Rail and ATOC may have welcomed the Bill but they are all effectively in the public sector anyway so they would welcome it as they would get compensation. However, I am afraid that the private sector does not feel that way.
Baroness Crawley: I shall write to the noble Viscount, Lord Astor, but I am assured by the officials that companies' contractual rights will be maintained. However, I am very happy to write to the noble Viscount in more detail on the specific point to which he referred.
I say to my noble friend Lord Berkeley that ATOC states in its press release:
"Train operators want to move to the new streamlined arrangements as quickly as possible which will make it easier for the whole rail industry to progress the many things which need to be done to continue the improvement in punctuality and customer service".
7.30 p.m.
Lord Berkeley: I think my noble friend is referring to ATOC members.
Baroness Crawley: Yes.
Lord Berkeley: Freight companies are not members of ATOC in that respect. I think that that is where the misunderstanding has occurred.
Baroness Crawley: I accept that. Both my noble friends Lord Berkeley and Lord Snape talked about the revenge of the Treasury. There is no hidden agenda for cuts—
Noble Lords: Oh!
Baroness Crawley: I repeat: there is no hidden agenda for cuts in the railways. Decisions by Ministers on what can be afforded and the implications of potential service reductions will always be difficult. The provisions in the Bill do not make it easier or more probable that there will be cuts in subsidy or service.
Regarding freight rights, the ORR has made clear—and a letter has been copied to my noble friend Lord Berkeley—that it will take account of compensation and litigation required in freight companies' contracts. With that, I hope that noble Lords will withdraw their objection to Clause 4.
Viscount Astor: The noble Baroness has gallantly stepped into the breach left by the noble Lord, Lord Davies, who has gone off to do more important things this evening. We are grateful for her further response and for her offer to write to me on some of the issues that she was not able to cover in full. I quite understand her difficulties. One matter on which I agree with her is that there is no hidden agenda by the Treasury. It is too obvious to hide.
Indemnities are an important issue and we need to consider that train operating companies are indemnified against actions for which they are not responsible that affect the track and their operating ability and capacity. We need to know whether that will be continued by those existing indemnities. Perhaps that is one of the issues that she can write to me about.
The difference in the response from the noble Baroness to an earlier response by the noble Lord, Lord Davies, was interesting. On page 93 of the Bill, new paragraph 1G(1) states:
"The Office of Rail Regulation must conduct an access charges review in the manner that it considers is most likely to secure that the implementation of the review will make the best and most practicable contribution to the achievement of … what the Secretary of State wants to be achieved by railway activities in Great Britain as a whole".
GC 56
It then moves on to Scotland. In other words, at one point the Secretary of State will have to put pen to paper and tell the Office of Rail Regulation what he wants. That is the very thing that, in an earlier amendment, we were asking him to publish. He is prepared to give it to the rail regulator, but not to us.
Can the noble Baroness write to me to say by what method the ORR will know what the Secretary of State wants? Will there be a nice cosy meeting, such as those that the noble Lord, Lord Marsh, had when he ran the railways? Will it be an interview without coffee, as they say in the City, when you know that you are not going to get very much? How will it work? Will it be a lengthy proposal? Will it be a series of negotiations? Will it be published? How will we know the criteria on which it will be judged? Those are issues that we need to understand more clearly before we move forward.
I am not asking for answers from the noble Baroness now; I am grateful for the response that she has given as far as she could give one. However, it would help if she could write to me on these issues, with copies to the Committee, before Report. That would give us a better understanding of how the interface will work. This is one of the crucial issues of the Bill. It is linked with publishing the Secretary of State's criterion for the future. The crucial issue facing the railway industry is defined by Clause 4 and Schedule 4.
I hope that noble Lords opposite who have supported me at least in principle will continue to do so in the future. Of course, they have rather good experience of being able to do so, after the great fights over dumping Clause 4. It may be something that they will find easier to do in the future. I am grateful to them for their support.
Lord Bradshaw: When the noble Baroness replies, will she let us know what the guidance will be? There are two sorts of guidance: there is a specific sort that says, "I want this much of that and that much of that", so that you actually know what they want, and then there is a vague sort that says, "So much money is to be cut, but you are not to cut any services", which will lead to a general decline. It is very difficult to cope with indemnities, which are actually very slight declines; they cause loss to your business but do not amount to real action.
Clause 4 agreed to.
Baroness Crawley: This may be a convenient moment—I hope it is—to adjourn until Thursday at 3.15 p.m.
The Deputy Chairman of Committees: The Committee stands adjourned until Thursday at 3.15 p.m.
The Committee adjourned at twenty-three minutes before eight o'clock.