Grand Committee Report of 3 March 2005

Official Report of the Grand Committee on the Railways Bill
(Second Day)
Thursday, 3 March 2005.
The Committee met at quarter past three of the clock.
[The Deputy Chairman of Committees (Lord Haskel) in the Chair.]
The Deputy Chairman of Committees (Lord Haskel): I remind the Committee that in the event of a Division in the Chamber, I shall adjourn for 10 minutes.
Schedule 4 [Reviews by ORR of access charges and licence conditions]:
Lord Berkeleymoved Amendment No. 16:
Page 88, line 36, at end insert ", and
(c) the compensation payable to any party as a consequence of changes to the matters set out in paragraphs (a) and (b) above."
The noble Lord said: In moving this amendment, I shall speak to the other amendments in the group.
On Monday, on the first day of this Committee stage, the noble Viscount, Lord Astor, in the clause stand part debate, raised a number of interesting issues about the generalities and indemnities when the network was changed. This grouping of amendments, along with the next two in my name, start to go into the detail of that question. The first group relates to compensation to operators that have contracts with Network Rail to run trains in a particular way on a particular part of the network when, due to enforced changes to the network capability—which might mean an advanced line changing or a 15 miles per hour speed limit on the whole of the West Coast Main Line—they are unable to fulfil their contract to other people or effectively enforce their rights with Network Rail. The amendment therefore relates to compensation when the Government change the rules.
In the past few weeks there has been an enormous amount of correspondence between the Rail Regulator and EWS Railway, which has been acting on behalf of the other operators, and officials in the Department for Transport. I pay tribute to everyone who has tried to find a solution to the problem. Those people have tried very hard and have probably come up with the best solution achievable—unless the word "compensation" could appear in the Bill.
I can see why Ministers might not want to see that word appearing in the Bill. But it was very convenient that last week the Crossrail Bill was published, with the
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word "compensation" appearing several times in exactly the same context. One example is in Clause 33, which says that the Office of Rail Regulation,
"shall determine the amount of compensation payable under subsection (5)".
I shall not go into the detail of that, but in a future debate I shall oppose that bit of the Bill because I believe that it is totally wrong. However, the word "compensation" does appear in that Bill, so at least there is a very timely reminder that compensation is not really that serious—although I do not believe that there needs to be a precedent.
I circulated some of the correspondence to help some of the Members of the Committee who I believed might be here today. That correspondence is all in the public domain anyway, and I do not intend to read them all out, as that would get pretty boring. However, I shall say a few words about the purpose of the amendments.
The Bill changes fundamentally the nature of the access charges review, which is not only how much the Rail Regulator decides that Network Rail should have for looking after the network and keeping it open but the basis on which it is done. Now the Secretary of State will advise the regulator of what he wants to buy from his high-level output—which is a subject that we shall discuss in more detail under the next group of amendments—and on the funding available. Of course, the regulator has to balance those two things. Even if he believes that there is not enough money for Network Rail to comply with its contractual commitments to provide a network on which the other parties to the contract with Network Rail, the train operators, can operate their trains, he has to try to provide the network for that.
As we have heard in previous sessions of this Bill, there is an iterative process—ping-pong. The regulator may ask the Secretary of State to give more money, change his output or do nothing. Ultimately, as the Bill stands, it is the regulator who has to make the decision.
The problem is that the freight operators—this applies also to the open-access passenger operators—have contractual relations with Network Rail and with the end customers. Freight companies may have got a contractual relationship with their customers. In the north west, one of the train operators is contracted to provide, not just so many 100 tonnes a week of limestone from Buxton, but also keep the company's stockpile half full at least. If that is not done by rail, it has to be done by road, which could clearly cost a lot more. So contractual relations are very important.
If Network Rail reduces the capability of the network through weight restrictions, speed restrictions, or closure for half of the day or night, the train operators are seriously at risk, which is what these amendments are about.
Various mechanisms have been proposed by the Rail Regulator and the Secretary of State, all of which would be very helpful. But the real problem is that these can be changed later. The regulator has said that a reasonable regulator would do that. We believe the present regulator: he is very good. So was the last one

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and the previous one, but we might get someone who is not so good. The Secretary of State is very good: we believe him. But that might change if there is a different party in power which hates railways or there is no money or whatever.
I do not think that the likelihood of any compensation being payable is very high, but that does not mean that there should not be something in the Bill which basically says that if the Government effectively changes what the network is about and its capability, it is reasonable for government to pay compensation to those affected, because they will be seriously and adversely affected, perhaps over many years.
I could go on reading my many more briefings on this, but I hope that I have summarised it in a reasonably clear and concise way. This is a very important part of the new structure of the railways, which would give background comfort to the open-access train operators: if things really got bad on the railways—we hope that they never will and that everyone is trying to make them better and get costs down—at least the train operators would be protected against something that is clearly no fault of theirs. I beg to move.
Lord Bradshaw: The noble Lord, Lord Berkeley, has raised a very fundamental issue, which applies throughout the privatised industries. In most of the industries there is a mechanism by which the regulator may make provision for "stranded" assets; that is, an asset in which someone has invested money and which, through no fault of his own, becomes useless or less useful and therefore he cannot derive any value from it.
As a totally theoretical example, one could take a power station from which the output is no longer required. There is a mechanism within the electricity regulation for people to compensate—to use the word of the noble Lord, Lord Berkeley—the company for the asset from which the output is no longer taken. That can be replicated across quite a lot of industries. The noble Lord said, "We hope that things do not go wrong on the railway", but almost every week lines are shut for engineering work and the network does not perform as it should. That has a deleterious effect on both freight and open access operators. It also affects franchise operators, but they get some compensation through the franchise arrangement.
The other thing that can go wrong is the economy. The economy has been successful for eight years. I give the Government a lot of credit for that. But if we were to enter a period of economic downturn, cutbacks may be made in expenditure in all departments, and freight and open access operators could be at risk of being adversely financially affected.
I support the amendments of the noble Lord, Lord Berkeley, at least until we have heard what the Minister has to say. This is a real problem, not a joke one. We are not casting aspersions on the Rail Regulator, for whom we have the highest regard but, in the end, if through the iterations between the Secretary of State and the rail regulator the sums do
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not add up and something has to give—we will talk later about closures—we want to know what is to happen, because that is the prospect that faces us.
Viscount Astor: I support in principle the amendment moved by the noble Lord, Lord Berkeley. I see that the Secretary of State will issue guidance to the Office of Rail Regulation. Obviously, the Office of Rail Regulation must be mindful of the guidance. That is helpful, but there is one problem: the guidance affects only the Office of Rail Regulation, not the Secretary of State, who issues it and can change it at any time. The problem is that it is all very well the office having guidance, but it may not have the funding to achieve what the guidance asks it to do.
The noble Lord, Lord Bradshaw, asked, "What happens when the sums do not add up?" That is the point. It does not matter what the guidance says; if there is no money to deliver it, what happens then? That is the fundamental flaw that runs through so much of the Bill, especially Clause 4 and Schedule 4. The Secretary of State—in effect, the Treasury—will have total control of the purse strings. It is the funding that will matter. The Office of Rail Regulation may want to take some decisions that require compensation. The question is: how will it get the money and what will happen? There is a grey area here and we cannot leave it at that.
The noble Lord, Lord Berkeley, said that the Secretary of State can give assurances, and so on. That is perfectly true, but Secretaries of State and Ministers change. There need not be a change of government. From my time in government, I remember giving what I thought was an absolute assurance, but I was then reshuffled to another department a month later and my successor totally ignored what I said. The people who had received the assurance were somewhat upset. So there does not need to be a change of government; it can happen within a government. A different Minister took a different view.
I support the principle, and the Minister might be able to say some helpful things, because we need some clarity on this issue. There is a concern that we are giving the powers for, in effect, commercial contracts to be freely entered into by those in the private sector, and government bodies are going to be amended without any form of compensation. Of course, they will be open to judicial review, legal challenge, and so on.
However, do we really want to set up a system where that will happen? After all, we know that in the forthcoming case on Railtrack—which will arrive in June, just too late to seriously embarrass the Government if the election is on time—we will probably find that the former Secretary of State will be questioned in the witness box for three days. There are 50,000 angry shareholders out there. The Government have had to release a vast number—some 20,000 or 30,000 pages—of documents on this case. That is not a satisfactory position to be in. We want to make sure that we are not setting up any form of legislative process that will allow something like that to happen again.
3.30 p.m.
Lord Davies of Oldham: I am grateful to those noble Lords who have contributed to this short debate and to my noble friend for highlighting the issue with his amendments. There is a slight note of "harbingers of doom" about, with regard to the overall position. I understand if the Front Bench spokesman opposite may wish to cast a pessimistic air about the future position of the economy, although on every occasion in the past when they sought to do so under a Labour Government they have been substantially rebutted. Even if one verged towards the pessimistic, it would be stretching things a great deal further to suggest that an access charge review might result in a reduction in the capacity, or capability, of the network. If it did, we clearly are not basing this Bill on such a pessimistic assumption—quite the opposite. We are about the expansion of the railway and investment in it; and this Bill is meant to be a facilitator of that commitment.
We are concerned that the legitimate commercial interests of freight operators should be protected. I am sure that my noble friend is aware that an exchange of letters took place recently between the chairman of the ORR and the Secretary of State. The purpose of the exchange was to address the concerns of the freight industry arising from the changes to the process of undertaking an access charges review, which is set out in the Bill in Schedule 4.
Let me make it absolutely clear; we are certainly keen to allay those concerns. There is an agreement that the contractual framework and the regulatory framework, as amended by the Bill, do provide sufficient protection. However, to reinforce those protections, and in the light of the representations made, the Secretary of State will issue, as part of his general guidance to the ORR, additional guidance related to the charges review. I have been keen to emphasise that in previous discussions on the Bill. It is envisaged that the guidance will cover the need to ensure that access charges reviews are undertaken in a transparent and consultative way; the need to take account of the provisions of all existing access contracts; the need to consider explicitly mitigation where necessary, and compensation where it appears likely that the quality or capability of the network could be worsened following a charges review. The Secretary of State will also ask the ORR to advise him during the preparation of the high-level output specification of any case where there could be a requirement for such a mitigation or compensation. In his letter, the Secretary of State also undertook to take account of expected demands for freight services and the interests of freight operators when preparing his high-level output specification.
That should provide the assurance that my noble friend is seeking in Amendment No. 16. It will be recognised that, throughout the rail review, the benefits of independent economic regulation were constantly highlighted by the industry. The issue fits firmly within that framework. The parties to the access contracts should use the remedies within them when there is a breach.
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We have a basic structure on how the matter works that commands the confidence of the industry. I recognise the point raised by my noble friend—and by opposition Members of the Committee who reinforced it—that there is some anxiety on certain aspects with regard to freight. The Secretary of State's response has been positive, and I hope that my noble friend will recognise that in respect of Amendment No. 16.
Amendment No. 19 probably arises from a misunderstanding. The process set out in the Bill envisages a series of iterations between the Office of Rail Regulation and the Secretary of State with respect to what outputs can be delivered for the funds available. Those will take place over a long period, before the Office of Rail Regulation issues its notice which starts the review process. The three months provided in the Bill is sufficient time for the Secretary of State and Scottish Ministers to provide the Office of Rail Regulation with information about their desired outputs and finances, as is of course required under the Bill. I hope that my noble friend will therefore think Amendment No. 19 unnecessary.
Amendment No. 23 is also unnecessary, as the list is permissive. The Secretary of State and Scottish Ministers would not be precluded from including such objectives and standards in the information that they provide to the ORR in advance of its access charges review. We are not concerned with being restrictive in those terms.
We have had the discussion on Amendment No. 26 before. The definition of railway services includes the carriage of goods and passengers.
Amendment No. 30 has the effect of giving any specification prepared by freight operating companies and their customers equal status to those prepared by the Secretary of State and Scottish Ministers. The appropriate place for the freight industry's aspirations to be taken into account is through the route utilisation strategies. There can be no doubt that they will use them. Although freight operators fund the network for the incremental costs of their operations and enhancements in the short run, it is ultimately government who fund the long-term costs of the network. My noble friend will fully recognise that.
My noble friend is aware that the Office of Rail Regulation is permitted to prepare and publish such model clauses for inclusion into track access agreements as it sees necessary. Amendment No. 34 would therefore introduce no new powers. I hope that, on his main amendment—Amendment No. 16, which has occasioned this significant debate—he will accept the reassurance that I have given. On the other amendments, he will recognise that the Bill and the arrangements proposed in respect of it meet the points made.
Lord Bradshaw: I offered congratulations to the Government on the way in which they have managed the economy. I did not say that the ship was about to go down, but that we are legislating against an uncertain future, and that a future government may be faced with a downturn in the economy and less money to spend on the railway.

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The other statement by the Minister that causes me some concern is his reference to the route utilisation strategies. Those that have been published so far are—being charitable—very poor. They show little in the way of imagination or proposals for the future. They seem to have been written by people who really do not know much about the railway. The strategies contain various impractical solutions, such as putting Gatwick airport passengers on already full trains from the south coast—into which they cannot get their luggage—with a view to having fewer trains into Victoria. I am sorry, but that is not the way to do it. There are ways, but that is not one.
The only thing that the strategies have come up with for the lines into Paddington concerned is to take a few first-class seats out of a few suburban trains. If we get Crossrail, that will not get us very far in the competition for access on that route. I say to the Minister do not put too much weight on route utilisation strategies which so far—I say this professionally—have not cut much ice or buttered many parsnips with me.
Lord Berkeley: Before I respond to the Minister I wish to respond to the comments of the noble Lord, Lord Bradshaw, on route utilisation strategies. I think that I agree with him about Gatwick. However, the Midland Main Line scheme was very good as it prevented the timetable blocking all four platforms in Leicester for most of the day, thus preventing rail freight trains going through, which resulted in Network Rail proposing £200 million-worth of flyover. Since the route utilisation strategy was not only done but implemented, the need for a flyover has evaporated. So some of the schemes are good.
The noble Lord tempts me on Crossrail. If the Crossrail Bill gets through Parliament, Crossrail will have sole use of the slow lines as far as Maidenhead and Shenfield, and so freight will be on the fast lines interspersed with the 125s. Anyone who lives outside those areas and travels on a 125 into Paddington or Liverpool Street will have approximately half an hour added to their journey times. That needs to be deprecated very strongly but that is not a matter for today.
My noble friend gave a very helpful response. I accept what he said about the exchange of letters between the Office of Rail Regulation and the Secretary of State. They are very helpful. I expect the railways to expand. I expect Network Rail to get its costs down and it has made a good start. However, that does not mean to say that we should not protect people against the very slight risk that something bad might happen. As other noble Lords have said, we need to think what might happen with a different government, a different Minister or Secretary of State and with a poor economy or whatever. That is the purpose of the measure. However, I shall reflect deeply on what my noble friend has said. I am very grateful to him for his comments. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
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[Amendments Nos. 17 to 19 not moved.]
Lord Berkeleymoved Amendment No. 20:
Page 90, line 39, at end insert "passenger and freight"
The noble Lord said: This is the other half of the pie, or whatever the correct metaphor is. It is about high level outputs. I think the Committee has established that it is the Secretary of State who provides the high level outputs which he wants to buy from the railway, passenger services and Network Rail. However, we have also established that the Secretary of State will include in high level outputs—I call it that for shorthand—the demand for freight alongside the demand for passenger services. That is fine but we do not know what will be included in the high level output.
On the first day of Committee we heard some slight hint that the high level output would come only just before a periodic review of Network Rail's access charges, which I believe means 2008. That is some time away and it would therefore happen only every five years. What would it consist of? What would be in the high level output? Would it comprise a timetable of every passenger route with every stopping fast train service on it? Would it effectively be a specification of route capability in terms of number of trains an hour, maximum axle load, times when the signal boxes are open, or would it be nothing at all and say that the existing timetable for passengers will be continued unless we want to change the Gatwick Express or something else? I should like to know in a little more detail what is planned to go into the high level output. The rail freight industry would like to know how the Secretary of State takes into account the needs of freight. In other words, his high-level output includes freight. Will he come up with his own view of the future demand for freight, or will he take the views of the industry into account? It would be nice to know.
Again, what about the weighting of the Secretary of State's passenger and freight views? He has at least two roles. He has to specify what rail should produce on behalf of passengers and freight, but he is also the creator of the passenger outputs—presumably not of the freight ones, but perhaps my noble friend will put me right on that. In this group of amendments, I am trying to secure some comfort that the Secretary of State will give the same weighting to the freight demands—current contractual rights as well as future demands—as he does to passengers in his specification to Network Rail and the Rail Regulator of what he wants bought.
3.45 p.m.
I shall give the Committee a quick example. A big port development is planned on the east coast. We cannot talk about it in detail, because its planning application has gone in, the public inquiry has been heard and the inspector is considering his decisions. One proposal from the developer is that he should contribute to an enhancement of the network to get more trains, and higher-gauge trains, from that port to wherever the traffic wants to go.

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We are talking about five-year investment or something. The developer will want to know that, if he contributes to that enhancement—if we can call it that—when it is done and his port is developed he will be able to run trains on that line, rather than having the line given over to more passenger trains or even a competitor's traffic. He is investing in the railway, and wants to be certain that his investment can earn a reasonable return.
It is important that we understand how the process will work. I am trying to say with Amendment No. 25 in particular that the Secretary of State should take into account the words in the White Paper about freight and,
"act in a way best calculated to enable those persons to plan for the future with a reasonable degree of certainty, and … the need to balance the competing interests",
in a proposed new paragraph that we debated on Monday in an amendment that I withdrew. However, the principle is there anyway. With that introduction, I beg to move.
Lord Bradshaw: The noble Lord has put his finger on something rather important. I remember when I was responsible for what was called the rules of the plan and the rules of the route. You had to start by taking all the main railway lines in Britain and saying which ones would be closed at such times and which would be open, so that there were always routes open to wherever you wanted to go. Then you constructed the timetable from that and made provision for trains in some sort of order of preference.
The point to which the noble Lord drew attention is that, in giving guidance to the regulator, the Secretary of State will have to exercise judgment over a number of competing factors. He will have to be pretty explicit, and will have to do it without a lot of professional railway knowledge; on his own admission, that is a quality singularly lacking in the present department. I know very well that, given a certain amount of capacity, you can use it well or badly according to the amount of professionalism that you exert. I suppose that that is the case in many industries—the more professional the outlook, the better the outputs are likely to be.
I am very curious and wait to hear what the Minister says on how the high-level outputs will be derived. They will have to be derived pretty quickly. When one looks at the time scale for the next regulatory review, one sees that we are already on the way there. The high-level outputs do not come at the end, but right at the beginning.
Very soon, people will be knocking at the door of 76 Marsham Street or perhaps they will go to a nearer address in Whitehall and say, "Well, where are the high-level outputs so we can get on undertaking the regulatory review". I am looking for a somewhat explicit answer from the Minister to that question.
Lord Davies of Oldham: Once again, I am grateful to my noble friend for his amendments. He will forgive me if I am fairly dismissive about a number of them so that I can concentrate on the one that the noble Lord,
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Lord Bradshaw, says is of significance; that is, Amendment No. 24. I will be dismissive of Amendments Nos. 20, 21, 27, 28 and 29 because my noble friend is well aware that when we talk about railway services, we mean the services for the carriage of passengers and goods by railway. I recognise that the purpose of the amendments is to draw attention to a proper regard to the interests of the freight industry, on which I applaud him. But I have nothing much to add except that, of course, we recognise that freight is integral to the concept of the railway services that we provide.
Therefore, the real point is the one that my noble friend addresses in Amendment No. 24, to which the noble Lord, Lord Bradshaw, spoke; that is, the way in which those objectives are met as regards freight. Probably, the noble Lord, Lord Bradshaw, would want me to discourse a little more than that across the whole range of the railway, but I shall stay with freight. The direct question asked by my noble friend was reinforced by the noble Lord, Lord Bradshaw; namely, what about the high-level output statement? What will it contain?
First, it will say what the Secretary of State wants to buy from the railway as a whole. But, of course, it will take account of freight and, particularly in terms of axel weights and loading gauge and so forth, the capacity of the network, which will be developed in discussion with Network Rail with a government view of the demand on the railway system, and, of course, taking account of the freight utilisation strategy.
I noted an element of disparagement about the utilisation strategies a moment ago, which, perhaps. I did not address as bullishly as is sometimes my wont. Utilisation strategies have an important and very significant role to play. The freight utilisation strategy was discussed with Network Rail at a meeting on Tuesday. The intention is that it will cover demand for rail freight paths across the network, strategies for alternative routing and integrating freight services that cross more than one of Network Rail's strategic routes, which is the agenda that my noble friend would have sought had he been present at the meeting. He may have been, but I will not go into that! Certainly, he will recognise the significance of those points and will be aware that they cover the issues on which he is most concerned.
It is envisaged that the development of the freight utilisation strategy will be linked to the development of a study for long-distance passenger operators who face similar but separate issues. The noble Lord, Lord Bradshaw, is in order because they obviously interlink. In particular, the strategic question of paths across the country has the greatest significance to passenger services and freight.
To my noble friend, I say that I recognise the thrust of his amendments. I want to be not dismissive but accepting of the fact that he was keen to emphasise that some of his amendments were directed to ensuring that freight was four square with passenger services in terms of the overall consideration of the Bill. I give the fullest assurance on that. I want to indicate that steps

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are already being taken to respond to exactly the points that he makes about the necessity for recognising the major requirements that must be taken into consideration in the developing of the railway in terms of meeting the needs of freight.
Lord Berkeley: I am grateful to my noble friend for that response about the passenger and freight balance. A third issue arises in Amendment No. 25 and other amendments but I shall not go into too much detail. It is important to keep the network open for trains to run. Previously, many of us have said that Network Rail and Railtrack before it preferred to close the network. First, it was easier to dig it up and relay the track or the signalling and, secondly, the safest railway is one on which no trains run.
That is something of an exaggeration, but during the past few years we have noticed longer possessions for maintenance. That sometimes mean that the last passenger trains in the evenings do not run and are replaced by buses. We have already discussed weekend closures and the West Coast Main Line and thereafter.
I want to recall for the benefit of the Committee that in September a number of us, some officials and some of my rail freight members went to Canada to look at the Canadian National Railway and its infrastructure. I was struck by the CN's total commitment to keeping the railway open for trains. It regularly changed a set of points, with signalling, in four hours, but we in this country take four days. There is a great deal to learn from the need and ability to keep the railway open.
It is much easier to close it for long periods of maintenance and one can produce all kinds of statistics showing how much more efficient it is. However, running trains, passenger or freight, and the needs of the customers must be balanced. I hope that the Secretary of State in his high-level outputs will make the point to Network Rail that its job is to keep the lines open as well as maintaining them safely and properly. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 21 to 30 not moved.]
Lord Berkeleymoved Amendment No. 31:
Page 94, line 5, leave out "determine" and insert "advise the Secretary of State or Scottish Ministers"
The noble Lord said: I am sorry to be hogging the Committee's time today, but this is a different issue. It relates to when we have reached the end of the road and the money for the railways and the Secretary of State's output do not tie up. At page 94, the Bill provides that it is for the Office of Rail Regulation to determine what is to be achieved from the output, given the money available.
In other words, given what money is available and the efficiency the ORR appears to believe Network Rail should deliver, it will decide on the closures, speed restrictions and whatever else will be necessary. It will be the Office of Rail Regulation which will therefore say, "Sorry, mate, all lines north of Edinburgh will be closed"; or, "All lines west of Plymouth and Swansea
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will be closed"; or, "There is a 50 mile-an-hour speed limit on the West Coast Main Line because there is not enough money".
If the provisions are accepted—we hope that that will never happen but we must look at the consequences—some of the decisions will affect passengers and some freight. I look back and reflect on an issue raised by the noble Viscount, Lord Astor, on the first day of Committee in respect of Railtrack and the then Secretary of State. The last Rail Regulator, in his periodic review, maintained that the Strategic Rail Authority did not provide him with the necessary information on which he would price how much money Network Rail needed for the output. So he blamed the SRA until I had to do it myself. That is where this review all started.
4 p.m.
It looks to me as though we are going to repeat this if we are not careful. In other words, the regulator will get the political blame for network closures. I find that rather unfair on an independent regulator. As I put down in Amendment No. 32, the Rail Regulator should appraise the different options that he considers would deliver the output with the money that the Secretary of State is providing. He should then advise the Secretary of State of the various options that he considers possible or feasible, and it should be for the Secretary of State and Ministers to take the decision about closures. That seems to me to be equitable. It is a political decision. The Secretary of State can ignore it, or he can even provide more money if he wants to at the last minute. It seems wrong that an independent regulator should have to take what is potentially a pretty serious political decision. I beg to move.
Lord Bradshaw: The amendment goes to the heart of the Bill. There is a lot in the Bill about closures and a simplified closure procedure. We have to take this seriously, because while we may hope that there will not be many closures, once we have given our agreement to the passage of this Bill it can and will be used to bring those closures about.
I am most anxious in that respect, and I am sure that the noble Viscount, Lord Astor, joins me in that. We must make sure that decisions about railway closures are made by politicians and not sloughed off either to the Office of Rail Regulation—which is something that we all know about but I guess the general public do not know much about—or to local authorities. Neither the PTEs, nor the other local authorities, are anxious to have decisions on closures hung around their neck. The Office of Rail Regulation can give advice and can appraise the options, as the noble Lord, Lord Berkeley, said, and it can present alternative recommendations; but in the end the decisions on closures must be made by the Secretary of State. I hope that would follow a proper procedure that allows some input from Parliament. Many important closures would need the consent of Parliament.
This is a serious matter, although in amendment form it looks pretty minor. The sorts of closures that I have in mind are the obvious ones, where lines will be

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closed, and where the shop will be shut. We would certainly want a full appraisal. I will come on to the economic, social and other debates in a later amendment. We do not want the sort of closure that I referred to last week, of the stations in Staffordshire, which have been closed by what I can only describe as double-dealing and subterfuge. The SRA has gone forward and put a bus service on, which did not work very well. It has not really replaced the rail service. Lo and behold, not many people are using the bus service, although not many people used the train service either, because it was not very good. It was not the best train service that could be run; it was what happened to be running. Now, we find that the SRA is proposing that those stations should he closed. It has been done in a very underhand manner. In fact, what it does is strangle the demand, put people off, drive them away and then say that no one is using the service. To my mind, that is not the right way to close the service. In fact, it is a dereliction of public duty for which it should be severely reprimanded. Has the Minister any comments on that?
Lord Snape: All Members of the Committee have heard of the artful dodger; in my opinion, this is another example of the artful drafter. Back in the 1980s, under a previous administration, the business of setting up regulators to run various industries really got under way. One great benefit, from Ministers' point of view, was that if they were asked any difficult questions in Parliament, their reply could be, "Not me guv; it is someone else's responsibility". This is an example of a fundamental problem for the future of the railway industry being shuffled off from ministerial responsibility to someone else.
I agree with both previous speakers that Secretaries of State must face their responsibilities for the future of the rail industry, especially concerning rail closures. Even if my noble friend were readily to concede to the persuasive blandishments of my noble friend Lord Berkeley, that would not in itself solve the problem because, as the noble Lord, Lord Bradshaw, said, there arc various ways of closing the railway without going through the bother of the existing statutory procedures. Even if the amendment were accepted, or incorporated into the Bill later, we would not get away from the fact that it is possible to run down portions of the railway as the noble Lord described.
An example that comes readily to mind is that for years, the former BR board wanted to get rid of trains between Stockport and Stalybridge. Rather than go through the formal closure, it ran what was known as a parliamentary train once a week in one direction and then professed surprise that no one travelled on it. That is an artful way of getting rid of bits of the railway that you do not really want.
But at least under the present system, the Secretary of State can be cross-examined about those matters. Under the clause as drafted. the "Not me guv" clause, the Secretary of State will not be held responsible. He will say, "I am sorry. These decisions are not taken by me; they are taken by professionals". I could write the speech now. I could not possibly deliver it as well as my
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noble friend, but I could write it now. No doubt it is being drafted by those wise counsels who assist Ministers in such matters.
Having said that, I appreciate the dilemma faced by those running the rail industry at present, let alone under the Bill. For my sins, I used to chair a bus company. I remember that in the last year that I did that job, we withdrew a bus that went to Warwick University, in Coventry, at 8.30 in the morning where the average occupancy was five. The bus company felt that that double-decker bus would be better deployed somewhere else, rather than carrying five passengers to Warwick University. Picking up the points made by the noble Lord, Lord Bradshaw, even if there were an intensive service between Stoke and Stafford or along the Trent Valley, which is the other area on which the SRA recently pronounced. there would be a whole series of packed trains running up and down. I am sure that the noble Lord would agree with me.
So I have sympathy with the view being expressed that to use resources properly—noble Lords may feel that resources should be increased—it is sometimes necessary to redeploy them, especially during morning and evening peaks, to an area where they would be better used. That does not take us away from the fundamental point about the amendment and the clause, which is that, if my noble friend does not accede to the eminently reasonable calls from my noble friend Lord Berkeley and the noble Lord, Lord Bradshaw. we will store up a whole heap of problems in both Houses. Regardless of the contents of this Bill. I do not believe that noble Lords, or those characters down the corridor, can or will sit silently while stretches of the railway are run down in the way my noble friend outlined or while services are withdrawn.
I hope that the Minister will accept that this is a fundamental issue, look again at the wording of this clause and even go so far as to accept this amendment.
Lord Faulkner of Worcester: I, too support the amendment. The curious thing about the original clause is that while the Bill may be a little opaque, the Explanatory Notes are absolutely clear. Paragraph 220 states:
"Where the ORR considers that the public financial resources are not sufficient to meet Ministers' desired output specifications despite revisions made by them, the ORR will determine how much of what is wanted by Ministers should be achieved using the available resources".
In other words, Ministers can say whatever they like, but the ORR has the final word over what bits of the railway will close if it believes the money is not there.
As my noble friend Lord Snape said, the Minister can therefore say, "I didn't want that to close"; or, "I felt that it should be, but those guys in the ORR have done the job for me". I therefore have great sympathy with the amendment and believe that these should be political decisions and that Ministers should be accountable.
On the Stockport/Stalybridge line, which I know quite well, it is such a collectors' item. Not only is it one train a day in one direction once a week, but in every

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timetable the direction of the train changes. Instead of going from Stockport to Stalybridge, it goes from Stalybridge to Stockport.
Viscount Astor: I have some sympathy with the Minister today; he is under a bit of pressure. As the noble Lord, Lord Snape, said, if he was in another place, he would be under more pressure because every Member of Parliament in the West Midlands would be jumping up and down complaining about closures. Mainly, they would be Members of another place from this side because, as we know, that will soon change.
The noble Lord, Lord Faulkner, pointed out one of the most revealing aspects of the clause. It is that the Secretary of State will be saying to the ORR, "I want this", but he will not give it the money. The ORR will therefore be in the position of saying, "Thank you very much. We know what you want but we can't deliver it". A circular system of blame will therefore allow responsibility to be shuffled backwards and forwards between the two, each one saying, "Not me, guv, it's his fault".
That is where the Bill constantly falls down. It is not a question of independence of the Office of Rail Regulation; it is a question of jurisdiction. The jurisdiction is limited by lack of available resources. That is the fundamental issue and why Amendment No. 32 is so important. If we leave the Bill as it is, lines will be closed and everyone will blame each other, but at the end of the day we will all know that there is only one reason: the Treasury has cut the funding.
Lord Davies of Oldham: There is nothing I like more than sympathy from the Opposition Benches. It is a major reinforcement, particularly when the Opposition forecasts exactly what more than 400 Labour MPs will be saying after the forthcoming election. But there we are, we must bow to wisdom elsewhere.
I want to stay in order and address myself overwhelmingly to the amendment. There was a danger of the debate straying from the significance of the amendment. It is about a fundamental issue—the relationship between the Secretary of State and the Office of Rail Regulation—but subsequent contributions came down to the supreme importance of the Stockport and Stalybridge railway. I am considerably more ignorant on that issue than several of my noble friends, which is why I shall not vie with them on it.
4.15 p.m.
I want to concentrate first of all on the strategic issue because, after all, that is what the amendment is about. That is the nub of the real debate. Let us be absolutely clear about this situation. I find it difficult to accept the concept of dog-in-the-mangerish activity going on which is so obscure that no one will be aware of where responsibility lies. The chairman of the ORR is absolutely clear that this will be a transparent process.
The nature of a disagreement between the ORR and the Secretary of State will be quite clear. In any case, the issue to which the amendment is addressed is that fundamental position in which two attempts have been
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made by the ORR to say quite clearly, publicly and transparently, "We do not consider that the resources which are being made available are sufficient for us to meet the needs of the railway as envisaged by the Secretary of State". At that point action is taken. It is hard to think that there will be a difficulty regarding who is responsible in those circumstances. The discussion will be public. People will be able to make their observations on where responsibility lies. However, the principle to which we adhere is that it ought to be the ORR which makes these judgments.
The trouble with the amendment is that it would take the matter away from the independent body and transfer it to the Secretary of State. Is that what the industry wants? The industry considers that the independent economic regulator ought to arrive at the final determination of what can be delivered. It is that judgment it wants, not the judgment of the Secretary of State. That would not give the same level of assurances which those contributing to the railway want so that they can plan their businesses with a reasonable degree of assurance and protect the interests of providers of railway services in respect of the price and quality of facilities. They will have made their case to the independent ORR and will regard it as answerable.
We all recognise that from time to time both in this House and in another place there will be major debates about the future of the railways. The Secretary of State will be held to account. Inevitably, public spending round allocations to the Department for Transport, and that part which relates to the railways, are the subject of considerable discussion. However, we are discussing the judgment on whether the resources that are made available meet the needs of the railway to provide services, and whether that judgment ought to be the Secretary of State's or the ORR's. It seems to me obvious that the ORR is the independent voice. The endgame envisaged in my noble friend's amendment is that whereby on two occasions the ORR has made representations to the Secretary of State and told him that it is at crisis point and that he is not providing sufficient resources to meet the relevant objectives. Is anyone suggesting that, should that situation occur, the Secretary of State will not be held to account?
I am not quite sure why the noble Viscount, Lord Astor, referred to Members of the other place challenging closures, when we all recognise that we are making substantial progress with the railways against a background in recent years of very real difficulties. We have sought to improve the management of the railways through this Bill. But if we were at the crisis point envisaged by the amendment, does any Member of the Committee suggest that the Secretary of State would not be in the firing line or answerable in those terms? Of course he would.
We want to protect within the framework of the Bill that which has the confidence of the industry in terms of independent assessment and judgment on what is to be provided, against the demands of the Secretary of State. If that judgment reaches the crisis point that we are discussing, of course the Secretary of State would be responsible, as I am sure all Members of the

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Committee recognise. Therefore, I recognise the value of the debate. But I hope that my noble friend will recognise that the amendment would not add anything to the debate; in fact, it might even detract from it.
Lord Bradshaw: The process the Minister has described of iteration between the Secretary of State and the ORR may happen. But if I was the Rail Regulator. I would say to the Secretary of State, "Look, you have given me X amount of money, but it is not enough. Now you have a choice—you can close X, Y and Z services or you can reduce speeds and maintenance across the whole network". We can return to this matter on clause stand part, but what I am driving at here is that the decision about what is done must belong to the Secretary of State.
The independent economic regulator can say how much the money will buy, but it will not be exact, because he will come to a point of choice between doing this, that and the other. At that point, the politician must come forward and not hide behind the regulator, who is a very good regulator but is a functionary. He is not answerable to Parliament, as the Secretary of State is. I refer back to the discussion during our previous sitting, when the Minister cast doubt on whether there would be a regular debate in Parliament, in rejecting other amendments.
Lord Berkeley: I am grateful to all Members of the Committee who have taken part in this little debate and for my noble friend's response. My amendments would come into play only when we reached the crisis point, as the Minister said. I am not proposing any change in who determines what should be downgraded or closed; clearly, there is agreement that it should be the ORR that does that, independently. But on line 5 of page 94, the Bill states that,
"it is for that Office"—
that is, the Office of Rail Regulation—to determine what is done. It may be that in the spirit of transparency Ministers will have a hand in the decision, but the Bill clearly says that a decision is for that office to determine in a crisis. I am suggesting that the regulator should provide advice to Ministers on a proper appraisal, but it is for the Ministers to make the political decision.
Anyway, I shall not repeat what I said earlier. We have had an interesting debate. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 32 to 34 not moved.]
Schedule 4 agreed to.
Clause 5 [Railway strategy for Scotland]:
[Amendments Nos. 35 and 36 not moved.]
Clause 5 agreed to.
Clause 6 agreed to.
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Clause 7 [Notification of assistance from Secretary of State for freight services]:
Lord Berkeleymoved Amendment No. 37:
Page 7, line 12, at end insert—
"( ) In making or modifying a scheme or its funding. the Secretary of State shall take into account the long-term needs of investors."
The noble Lord said: This is my last amendment for some time, as the noble Lord will be glad to hear. Clause 7 refers to rail freight grants, which are very welcome. Clause 8 reflects Scotland. The two are good clauses, because not much rail freight is in receipt of grant, and is basically dependent on how much environmental benefit the Government wish to buy at any one time.
My purpose in tabling the amendments was to draw attention to the fact that there was an announcement at the beginning of February about merging water grants, rail freight grants and some assistance to the road freight industry. It was welcome in one sense; there is clearly strong logic for merging the two types of grant in the same way and having the same appraisal methodology for water or rail. I do not know why that has not been done before; it is good that it has been done. I am not sure how road assistance will come into that, but we need not discuss that now.
Along with that announcement was the budget that would be applied to the grants in the next three years. For the next two years, the budget was about the same as for this year. It includes water and rail freight and an allowance for the Channel Tunnel. Rail freight in the Channel Tunnel receives about £25 million a year support. That is not a historical anomaly, but is part of the original financing of Eurotunnel and we had probably better not get too far into Eurotunnel's problems today. Suffice it to say that that £25 million ends this May, November 2006 or some time in between, depending on negotiations between the Department for Transport and EWS Railway. The fact remains that, after 2006, it finishes. If the current revenue to Eurotunnel is to be retained—it is a big if— some money will have to be found if someone wants to run rail freight services through the tunnel.
The consequence of all that is that, to the people outside, the budget put to rail, road and water freight efficiency measures will stay the same for the next two years but is cut to a third in the third year. Grateful though the industry is for grants and the environmental benefits that they bring, to have them continuing for two years the same and then cut to a third is not the way to encourage long-term investment in the industry if it is thought that the industry will make use of grants. People will not invest if it will not use it.
This seems a slightly odd way to go about such matters. I know that the Treasury has three-year spending rules and all that, but I want to make the point that a little consistency—even if it had to be

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downwards—would be much more helpful than such a sudden cut-off in the third year announced. On that basis, I beg to move.
The Earl of Mar and Kellie: At the previous sitting, I announced my confusion between executive devolution and the transfer of parliamentary powers. As predicted, the appropriate amount of humble pie has been consumed. As we are now obviously dealing—certainly under Amendment No. 38—with franchising and financial assistance in relation to Scotland, I want to raise a point. If the Scottish Ministers want to change any of the arrangements in Scotland, they have to come back to this Parliament to get them changed. The Scottish Ministers seem to be doing work on behalf of the Secretary of State.
Getting parliamentary time for exclusively Scottish business at Westminster has always been difficult; after all, that was one justification for devolution. Why has it been chosen only to transfer the powers as executive devolution to the Scottish Ministers, and not really to grasp the nettle by the—I am not really certain what the metaphor is.
Noble Lords: Oh!
The Earl of Mar and Kellie: Why was the lesser course of transferring parliamentary powers by the modification of Schedule 5 to the Scotland Act—it listed all the reserved matters—chosen, not a proper transfer of parliamentary powers?
4.30 p.m.
Lord Davies of Oldham: I thought under the previous amendment that we had adumbrated some rather fundamental principles. If I am to revisit the devolution legislation at this stage I will be in some difficulty. I hear what the noble Earl has said, and I will endeavour to give a response. I also heard very clearly what my noble friend said in moving his amendment. First, he will recognise that the Committee is not quite the place to discuss the question of the levels of investment decisions. There are places where we intend to do that. In Committee, we are looking at whether the structure in the Bill is appropriate to meet the needs for rational and intelligent decision-making in this area.
My noble friend will appreciate that we took the trouble, through the sustainable distribution fund, to announce our position on that as early as possible and to make that position clear. He will recognise the great demands on Ministers with regard to their budget at present. We also need to ensure that we run the railway more effectively. Therefore, there are certain areas where the best allocation of resources may not be external. It may be that more appropriate and clear direction ensures that past problems that may have been neglected are now approached.
I want to talk overwhelmingly about the nature of the amendments—I do not really believe that they are necessary. I reassure my noble friend, as I said on the previous amendment, that we recognise the
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importance of long-term investment in the industry. not only by operators but by their customers as well. It is to encourage that investment that we have sought to establish clear policies on long-term access contracts in the recent railway White Paper, which I know my noble friend will have appreciated, which will provide a framework of greater stability and certainty for investors in rail freight. We also appreciate that to plan for the long term the industry requires forward knowledge of any proposed changes to the Government's grant programmes. That is why we met and fulfilled this point with our recent announcement of the new sustainable distribution fund.
On the question of devolution, which the noble Earl, Lord Mar and—
Lord Faulkner of Worcester: Kellie?
Lord Davies of Oldham: Yes, I was rather more wondering about what the next part of my sentence was going to be than the completion of the noble Earl's name. I apologise to him. I assure him that under the proposals, we are seeking to give to Scotland proper jurisdiction over its railway and, in this instance, proper regard to past achievements. Going on past evidence, Scottish Ministers are well apprised of the need to take into account the importance of the rail freight industry. In recent years there has been a clear policy of rail freight growth. For instance, the proposed re-opening of the Stirling-Alloa-Kincardine line, which the noble Earl will know well, and through the enhancing of the loading gauge of the railway lines between Elgin, Aberdeen and Mossend. Those are instances of Scottish Ministers already having a track record of addressing themselves to the issues of investment in rail freight. They can set up their own schemes separately which are different from schemes in England and Wales; and, of course, Scottish Ministers, as the noble Earl will recognise, are answerable to a vigorous Scottish Parliament. So I do not believe that he should express worries on that score, with regard to the nature of the devolution.
The noble Earl will recognise that the railways present a complex problem with regard to the devolved authority, for the obvious reason that part of the network can adequately be allocated to the responsibility of Scottish Ministers, while the main lines running through England come under a different framework. So it is not an easy settlement. But I hope that the noble Earl will appreciate now, as he did on Second Reading, that the Bill goes a very considerable way to giving to Scotland jurisdiction over that which Scottish Ministers can do best, with their answerability to the Scottish Parliament. I wish to allay his fears on that front.
As for my noble friend Lord Berkeley, I understand his disappointment about the recent allocation. These are not easy decisions to arrive at. But let me assure him that the framework of the Bill will guarantee that we have a structure in which those issues are teased

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out, challenged and worked through effectively. On mature reflection, he will see that his amendments are not really necessary to the Bill.
The Earl of Mar and Kellie: I thank the Minister for his kind words, but I wish to stand firm on the point that the Bill proposes a Great Britain structure for the railways and does not allow the Scottish Ministers to deviate from that. The structure of the railways will not be different in Scotland but will merely be operated differently, within the constraints of the Bill.
Lord Davies of Oldham: I understand the noble Earl's point, but I am not sure that I can go a great deal further than I have already gone this afternoon. I have no doubt that the noble Earl will be persistent in his argument, hut he will recognise that there has been widespread approval of the arrangements that we have made for the development of the railways in Scotland. On that basis, I am obliged to rest my case.
Lord Berkeley: I am grateful to Members of the Committee who contributed to the debate. My impression of what happens in Scotland is that the rail freight industry believes that Scotland is the best place to be. I see nothing in Clause 8 that would make that worse, but perhaps the noble Earl will come back at the next stage with amendments giving total independence to Scotland on railway matters. I should be happy to support such amendments, provided that the capacity and capability of the network was maintained suitable for freight. But that is another issue.
I am grateful to the Minister for his comments about the rail freight grants and so on. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clause 8 agreed to.
Clause 9 [Notification of assistance from Scottish Ministers for freight services]:
[Amendment No. 38 not moved.]
Clause 9 agreed to.
Clauses 10 to 12 agreed to.
Clause 13 [Railway functions of Passenger Transport Executives]:
Lord Bradshawmoved Amendment No. 39:
Page 12, line 10, at end insert—
"(IA) An Executive that has been consulted under subsection (1) in relation to a franchise agreement where the services to be provided under the agreement are or include services for the carriage of passengers by railways within the passenger transport area of that Executive may, before the expiry period of 60 days following the date on which that consultation began, make a statement to the Secretary of State specifying—

(a) the services for the carriage of passengers by railway which the Passenger Transport Authority for the area in question considers it appropriate to secure to meet any public transport requirements within that area, so far as relating to the provision of services of the same description as those to be provided under the franchise agreement in question;

(b) any minimum level of quality to which any services so specified are to be provided;

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(c) any requirements with respect to the fares to be charged to persons using any services so specified; and

(d) any minimum level of quality with respect to the operation of any station within the area in question which may be required by any such franchise agreement.

(IB) Where a Passenger Transport Executive for an area in England submits a statement under subsection (1A) the Secretary of State shall ensure that the services, and any minimum levels of quality or requirements with respect to fares, specified in that statement are provided for in any franchise agreement into which he may enter in respect of the services in which the Executive have an interest.
(1C) The Secretary of State need not do anything under subsection (1B) if or to the extent that it would—

(a) have an adverse effect on the provision of services for the carriage of passengers or goods by railway (whether inside or outside the area in question); or

(b) increase the amount of any expenditure of the Secretary of State in respect of railways under agreements or any other arrangements entered into with any franchise operator, any franchisee, or any servant, agent or independent contractor of a franchise operator or franchisee, and the Secretary of State considers that the Executive would not fund that increased expenditure."

The noble Lord said: This is another major issue to which we must turn our attention. The passenger transport executives were set up by a predecessor of the present Minister, Barbara Castle, in 1968. Since that time they have been very loyal supporters of the railways, and much more generous in their level of support than have been central government. Very often they have purchased rolling stock, opened stations and developed services which, had it been left to London, would have perished. They contribute very substantially to the railway network.
Strathclyde Passenger Transport Executive has the busiest urban rail network outside London's, and Strathclyde residents make more rail journeys than residents of south-east England. The use of the west Yorkshire network has increased by 40 per cent since 1997. Merseyrail is the most reliable train operator in the country. We hope that the Secretary of State will see his way clear to granting vertical integration to those operators, so that they can run the network wholly. In addition, one in three commuters into Glasgow and one in five into Birmingham take the train. As an example of what can be done when railways are modernised, on the line from Shipley into Leeds, the rush-hour traffic has increased by 75 per cent—and that does not mean 75 per cent of nothing. I do not mean that it has gone up by three people rather than two; I mean that there are a lot more people, and that the trains are full.
What the Bill proposes is that the PTEs shall cease to be co-signatories of franchise agreements. I am not saying that they should be co-signatories of agreements in which they have only peripheral interest. But when they have major interests and are joint, or in some cases the only, funders of services, they should be allowed to be the co-signatories of the franchise, as they are now. I cannot see that there is any justification for the Secretary of State, in presenting this Bill to Parliament, to take away from those PTEs the power to be co-signatories.

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The only reason that I can think of is the desire to centralise decision-making in the country. While people talk about regional government but at the same time take away people's power to do things, I believe that they speak with forked tongues, and that by their acts you should judge them. This measure is definitely a centralising one, which does not have the support of my colleagues in this House—and I do not believe that it has the support of a lot of other people, either.
The view has been expressed that PTEs have been the cause of delays to the franchising process. But when those views are really investigated, there is found to be very little substance to the claim. Once or twice PTEs have played difficult, but I am sure that the Minister will recognise that in negotiations there is always a time when any party will play difficult to secure a little more advantage.
In this situation, the passenger transport executives will cease to be co-signatories unless the Secretary of State consents. We believe that that is objectionable. We do not believe that the passenger transport executives have done anything to deserve this. It goes with the idea of devolution that they should be co-signatories.
I wait to hear what the Minister has to say, but we feel strongly about this matter. Unless he has something comforting to say, we are likely to return to the matter.
4.45 p.m.
Lord Snape: I apologise for missing the first few sentences of the speech of the noble Lord, Lord Bradshaw. We have reached the amendment quicker than I anticipated. I endorse what the noble Lord said because I, too, cannot understand why PTEs have been excluded from the process. I hope that my noble friend can give us some comfort that their valuable local knowledge and experience, and the money that they have invested in their local systems, will give them the right to be heard in the franchising process.
At our previous meeting, I declared an interest as an employee of the National Express Group and I do so again. I was part of the team which made a presentation to the Central Passenger Transport Executive before we were granted the concession to run Central Trains. Somewhat arbitrarily and to our surprise, it has been decided that Central Trains will soon be no more. That is not a point for the Committee nor one I want to raise today, but all of us were impressed by the quality of the questioning we received at that presentation. Undoubtedly, local authority members from the West Midlands are best placed to make decisions on the future train services in their area.
A similar situation exists around the other metropolitan areas. I remind the Committee in passing that, one way or another, the PTEs have survived the creation of metropolitan county councils by a Conservative administration; the abolition of those county councils by a Conservative administration; and all the vagaries of the problems of the railway industry
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in between. As a former railway worker, I believe that many of the passenger trains which now run around our major conurbations would not run at all were it not for the efforts of the passenger transport executives.
Following the end of steam in the 1960s, BR showed a marked distaste for running local passenger services, other than in the Greater London area. Understandably, once the cheaper coaching stock that was used in the days of steam had gone to the breakers yard and had been replaced by diesel multiple units, it was felt that because of the pressures of the peaks around our major cities that was an expensive use of resources. It was expensive to deploy diesel multiple units which would be used to their maximum capacity for perhaps only four or five hours of 24.
In the late 1960s, BR made it plain that for that particular reason it was, to say the least, considerably disenchanted with the idea of continuing to run local passenger services. The PTEs across the country and around all the conurbations raised the money locally and made the input locally and made it possible for these services to continue. Frankly, I found it amazing that they should be left out of the franchising of trains immediately affecting their constituents—these are local elected authority members.
My right honourable friend the Deputy Prime Minister spent considerable time—alas, with no conspicuous success—up in the north east trying to persuade people that it would be good for them to have devolved government. While he was up there, failing, alas, to persuade those people of his case, behind the scenes at Westminster the opposite appears to have been happening so far as the future of the railway industry is concerned. Far from local authority members being consulted or involved in the future franchising of what they rightly regard—gven the effort and the money they have put in—as their railway services, they are to be excluded from that process. Like the noble Lord, Lord Bradshaw, I believe that this is a fundamental point in the Bill. I always listen with great interest to my noble friend, to whom I address Dennis Skinner's comment, "You could make a three-course dinner out of a pan of boiling water".
Noble Lords: Oh!
Lord Snape: I am not regarded as a great admirer of my honourable friend, but I believe that is a fairly apt comment in this case. My noble friend has done extraordinarily well with a very thin brief. I hope that as well as his fine words he can offer us some degree of comfort on this fundamental matter.
The Earl of Mar and Kellie: Unfortunately, I shall continue the devolution discussion. Recent conversations with Strathclyde Passenger Transport Executive(SPTE) indicate that it accepts that the Transport Minister, my honourable friend in the Scottish Parliament, Nicol Stephen, is entitled to make whatever arrangements he wants. Those arrangements stipulate that there should be four regional transport authorities in Scotland.

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However, Strathclyde Passenger Transport Executive points out—this point relates to an earlier amendment—that if Scottish Ministers in the future wanted to alter the relationship between the Scottish Executive, the West of Scotland Transport Authority and SPTE, they would be forbidden from doing so by the Bill. If Scottish Ministers decided that they wanted to give co-signatory powers to SPTE in the future, they would not be able to without coming back to Westminster—hence the point that I made with regard to the other amendment.
Viscount Astor: A lot of metaphors have been used this afternoon. The Minister appears to be able to cook up a meal. I shall speak while his soufflé is slowly rising. As the Committee knows, a soufflé rises largely due to hot air. Of course, that is not something which the Minister ever produces.
I have sympathy with the amendment moved by the noble Lord, Lord Bradshaw, for a number of reasons. He made an interesting point to which he might refer again. He talked about Merseyrail and said that he was in favour of vertical integration. I did not realise that vertical integration in the railway industry was part of his party's policy. However, clearly it must be. We learn something every day.
As we know, this whole Bill is about giving power to the Secretary of State. The reason that PTEs are important has been explained by all noble Lords who have spoken, and I shall not repeat what they have said. They are an important part of the system. I draw the Committee's attention to Clauses 22 to 25. Those clauses will give the PTEs some responsibility but will not necessarily give them the finances to deliver that responsibility. Therefore, they will be faced—in the same way that the ORR is faced—with difficulties regarding closure and lack of funding. I do not want to jump too far ahead, but that is why this amendment is necessary. If the amendment is not accepted at this point, when we get further on in the Bill the PTEs will not have the remit that they require. Perhaps the noble Lord, Lord Bradshaw, agrees with me. I support the amendment.
Lord Faulkner of Worcester: I shall speak very briefly. I simply want to say again what I said at Second Reading when I described the PTEs as having an excellent record in keeping alight the flame of rail travel when the railway was in a period of great retrenchment in the 1970s and 1980s. If you look at the way in which services have been developed in the seven PTE areas and compare what happened in cities and towns of comparable size—for example, Kingston upon Hull or Bristol—where there were no PTEs, it is interesting that you find in those areas that virtually all local passenger services disappeared under the Beeching closures. However, because of the existence of the PTEs and the approach to an integrated service in Leeds, Birmingham and so on, the services were maintained and developed.
I am conscious that the Government have made some move already on the issue because of the outcry raised in the other place. I am sure that my noble friend will tell us that the Bill now allows PTEs to be co-signatories to franchises, but only with the Secretary of
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State's consent. He needs to go a bit further and—this is the point of the amendment tabled by the noble Lord, Lord Bradshaw—restore the position, so that local people are able to specify their local services. They are democratically accountable and are the people who should be able to say, "This is the sort of rail service that we want in our area".
Lord Berkeley: I want to follow my noble friend's comments about local delivery. I remind the Committee that the Secretary of State for Transport said in another place, when he introduced the railway White Paper last summer,
"local transport decisions are best taken by people who know what is needed locally".—[Official Report, Commons, 15/7/04; col. 1548.]
I fear that the kind of situation that we have stems from the inability of governments of all parties to let go at the centre, on the basis that they believe everything that they do to be perfect and everything that local authorities do to smack of something less than perfect.
Then you get the Deputy Prime Minister going round and supporting devolution, as my noble friend said. It is a good idea that Scotland has some devolution, and so has Wales. I support the noble Lord, Lord Bradshaw, on this one. There is no reason why the PTEs should not have control of their destiny. As many Members of the Committee have said, they have done a jolly good job.
I also mention briefly the comments of the noble Earl about Strathclyde PTE in Glasgow. Legislation is going through the Scottish Parliament, but it is not so far advanced as this Bill. As he says, there will he a grey area if provision is not made for the equivalent of Clause 13 to apply to Scotland so that SPT can give advice if the structure in Scotland changes.
5 p.m.
Lord Davies of Oldham: I am grateful for the debate. I shall do the Committee the service of spending some time on my reply, partly because the arguments are fundamental and partly because, if I give a satisfactory reply at this juncture, I may be able to foreshorten some of our debates on some of the detail a little later. That may be a vain hope, almost as vain as me being able to produce a three-course meal from a pan of boiling water, but this is my attempt at a banquet. Those who cannot stand my cooking ought to leave, because it will be a fairly protracted response.
I shall deal first with the noble Earl's specific point on Scotland. He will know that a Transport (Scotland) Bill is going through, which enables Scottish Ministers to share their transport functions with the Scottish Transport Executive. That is their business and their potential solution to the situation as they see it.
We have been working with the Scottish Executive in developing this Bill. Although we recognise that it will potentially lead to differences in the future positions in Scotland and in England, that is what devolution is largely about and it is what will be created. I want to reassure the noble Earl on that point,

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and I hope that I have given him a more polite answer than I was able to give him on the previous amendment.
On the more general issues, I need to develop the arguments in some detail because they are fundamental arguments that go right to the heart of the Bill. Of course, there is considerable validity to the points that have been made. I recognise the work of the passenger transport executives. I also recognise the point that my noble friend Lord Snape made, supported by my noble friend Lord Faulkner, that their democratic credentials add lustre and strength to that position.
Therefore, it is no ready matter when we seek to reach different arrangements for decisions with regard to rail that break with those features. I am obliged to establish —I think that my noble friends will give me a reasonable hearing—that there are elements of imperfection in past performance as regards passenger transport executives.
Much more fundamental is the point that the noble Lord, Lord Bradshaw, made; namely, they have a long history and achievements to their credit, but that is against a background of a different way of controlling the railways from that envisaged in this Bill, which is why we are at our point of difference at this stage.
I shall try to develop the arguments on why the Government consider that they have got the argument right. With the rail White Paper and the Railways Bill, the Government are attempting to build a structure that works for the future, but which does not merely embellish the past. The passenger transport executives largely seek to maintain a status quo that does not fit with the ambitions behind the Bill, although, to give them fair credit, they have approved of the objectives that the Bill seeks to realise.
The powers that the PTEs seek to retain were not introduced by the Transport Act 1968, although it is true that they have been in existence for a long period of time. The Act that created PTEs is legislation that a number of noble Lords praised at Second Reading. But the powers that they seek to retain are not the 1968 Act powers, they are the powers under the Railways Act 1993, which has been subject to rather more criticism than the original 1968 Act.
The system introduced in 1993 with regard to PTEs might have been appropriate for the structures that that Act introduced, but this Bill takes the railway system forward from that. What was appropriate then is not, in our view, appropriate now. The current procurement arrangements mean that the PTEs are able to specify the level of services, fares and quality of stations and services in their areas. My noble friend and the noble Lord, Lord Bradshaw, testified to the virtues of that position.
When a PTE makes such a specification, the PTE must, of course, be a co-signatory to the resulting franchise. For a franchise to be let, the PTE must co-sign it, which gives the PTEs a powerful lever. As my noble friends and the noble Lord, Lord Bradshaw, have indicated, that has been of advantage in the past.
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That lever could have been used in their negotiations with the Strategic Rail Authority. Of course, at times they can indulge in an element of brinkmanship with the Strategic Rail Authority.
At best, the SRA is forced to undergo lengthy and complicated negotiations to ensure that a franchise is let on time and that the PTEs do not lever in extras into the franchise. That adds time and complexity to a procurement process which, in the White Paper, we said we intended to streamline. We do not think that there is any gain to anyone from a protracted process.
We recognise that there have been improvements in recent years. The SRA has got better at negotiating with the PTEs. But, in some respects, this is a conflictual system of two parties coming to a negotiation. We think that we can make better progress through partnership, which is what we are offering and what this Bill sets out to do.
It is important to note that we are not suggesting that anything that the PTEs have done has been wrong or underhand. They have been playing the system for the best possible deal for their areas, which is their job. My noble friend, with his great commitment to local authorities, local government and local decision-making applauds that. I recognise why he should.
Lord Bradshaw: I would like to lay to rest this canard of the PTEs playing very hard. which I know that the SRA has complained about. The SRA has got the power legally, I believe, to strike out deals that a bid by the PTEs make to increase services, unless the PTE finds the money. In the West Midlands, Centro has underwritten the cost of additional rolling stock that was introduced last year and Metro has done that in the past in West Yorkshire.
It might irritate the SRA that someone wants a bit more than it is prepared to give. The negotiations can be tough because it costs a lot of money to buy new rolling stock, so people will not roll over too easily. But it is the essence of negotiation. If some people in the SRA have got a bit impatient with the process, that is no reason to change the law. There is only one example that I can find, and I have researched this fairly well. Strathclyde PTE threatened to delay the signing of the interim Arriva Trains Northern franchise because it included the withdrawal of a through service between Glasgow and Leeds. It thought that that through service was extremely important because there is a community of interest between Glasgow and the north Midlands Main Line area.
Lord Snape: This is an intervention.
Lord Bradshaw: It is an intervention, but I am dealing specifically with what the Minister needs to raise. I do not believe that the instance quoted by the Minister is valid when you get down to brass tacks: a bit of brinkmanship, yes; irritation, yes; but real effect on the franchises, no.
Lord Snape: While my noble friend absorbs that, perhaps I may make a much briefer intervention, although I hope it is no less valid. I wrote down my noble friend's comment that the PTEs have been guilty, according to the SRA, of lengthy and

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complicated negotiations. This Bill takes care of that because we are shooting the SRA. Basically, we are shooting one protagonist and gagging the other. That might be my noble friend's idea of democracy. Sure as hell it is not mine.
Lord Davies of Oldham: I knew that my noble friend would be rising to be helpful. Perhaps I may answer the more significant points. It is not the case that this activity has been cost-free, as the noble Lord, Lord Bradshaw, has indicated. It is not just a question, as my noble friend indicated, that there might be some element of delay in negotiations. Delays are costly and frustrate investment and development of the railway services. But it is not just delay, it is also cost.
Why should I worry about cost? I should not worry at all if it were the case that the PTE was bargaining for an extension of services and then stumped up its fair share of those costs. But, of course, that is not the case.
I heard the noble Lord, Lord Bradshaw, suggest that PTEs have been guilty of that. I am not accusatory about the PTEs in those terms. Therefore, I do not use such loaded terms. But I am indicating that things have developed in the past in ways that are difficult to justify. Even under the canons of local democracy, to which my noble friend subscribes, it is difficult to justify that when a regional franchise is operated, it is delayed until the passenger transport executive ensures that new and expensive rolling stock is brought into play rather than allowing replacement rolling stock, which could have been used at a cost of —20 million, to which the passenger transport executive made not a penny contribution and to which the national taxpayer met the whole cost. That is an illustration to counter the noble Lord's suggestion that there have not been areas where we have the right to be concerned about what is an exercise, at times, of power which. probably, is in excess of the responsibilities that the authorities bear.
Lord Bradshaw: Can the Minister tell us who that was and when?
Lord Davies of Oldham: I will do that. It was when the franchise OPRAF was forced by the West Yorkshire passenger executive in 1997. I have got several other instances, but it does not greatly advance our case if we produce a string of individual cases. It is not my role to blacken the name of passenger transport executives, working under the framework of legislation that exists at the time and making the best fist of it. I am not denying their legitimacy in any way, shape, or form. Some of their "successes", I might have subscribed to myself had I been a local member of such a body.
I am talking about new legislation and a new framework into which I hope we can fit a better arrangement than the one that I described. The current arrangements encourage confrontation. They work against the spirit of the Bill, which is based on a White Paper that was clear that it is the Secretary of State who is responsible for the strategic direction of the railway and in control of the amount of national funding that will go into the railways.
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It is equally clear that we also seek to streamline procurement arrangements and reduce costs. I think that every Member of the Committee would subscribe to that objective. But the current arrangements mean that it is not the Secretary of State who determines the strategy and amount of national funding that is invested in the PTE areas; it is a system based on confrontation. It works against the Government's ambitions and produces some very odd results.
I am spending some time on this issue because the noble Lord, Lord Bradshaw, indicated that this is a great centralising measure. We do not believe that that is the case. First, we are determined that the current system can be defined as devolution as regards PTEs. Devolution allows local and regional bodies to make rational decisions in the light of funding available and local priorities. The current PTE system does not do that. It encourages them to negotiate as hard as possible for the best advantage for their areas and not have to stump up for the costs.
Of course, I recognise why the PTEs have got friends in many significant places. They have put ther case vigorously, as Members of the Committee. on their behalf, have done today. We emphasise that PTEs do not have a view across the whole of the network and a sense of the right level of service given. After all, there is only a finite budget for the railways. It must be recognised that a better deal for the PTEs has often meant a slightly worse deal for other areas of the rail network. It is not the responsibility of the PTEs, nor are they in a position, to make a judgment about such trade-offs. That problem besets the Secretary of State. In the future system as envisaged by the Bill, he will be fully responsible for that.
5.15 p.m.
I argue that devolution for the PTEs, the nub of the argument, does not meet the realities of the railways which we are seeking to create. Few lines and services run wholly within the area of one PTE. In the one area where that is so, we are going for devolution. The noble Lord, Lord Bradshaw, referred to the railway on Merseyside and we are agreeing that Merseytravel should play that role. That is one of the few systems in the country where the whole service is in one area.
We could not give the PTEs total control over the whole of the network. Clearly, that would not make a great deal of sense. The rail system is a national resource and the Secretary of State is taking on responsibility for ensuring that it is run as effectively and cost-efficiently as possible, devolving where we can. My noble friend Lord Faulkner argued that point and I confirm that with regard to Merseyside we are meeting it where we can.
The system we propose is better than the current system. The Secretary of State will, in consultation with the PTEs, set the baseline specification for franchises, including services within, to and from the PTE areas. This will make use of their valuable knowledge and experience. From his strategic position, with oversight of the whole network, the Secretary of State will be in the best position to set out

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what is the best way to apportion funding across the network. That is what his job is and I cannot understand the argument that the Secretary of State, or any future Secretary of State, will ignore the advice of the PTEs. If what they are suggesting is sensible to the benefit of the network and fits within the resources available, why would not a Secretary of State seek to comply with the pressure of PTEs? On the other hand, if what the PTEs are suggesting is not sensible, it is his duty to take a different line.
Once this baseline has been established, the Secretary of State in consultation with the PTEs, will ensure that they have the right to propose and fund additional services or to reduce services in their area and retain savings, or to make cost-neutral amendments to the franchise. They can propose that the franchise specification in their area is changed provided they are prepared to meet additional costs that result from the changes. I cannot see that that is any affront to local responsibility.
Within the budget that the Secretary of State is setting in their area, the PTEs will have the flexibility to amend the specification and so have the quasi right to specify services in their areas. However, the PTEs will not be able, as they have in the past, to use their right to co-sign franchises as a lever for additional services for which they do not pay.
In future, if the PTEs are developing proposals which add value to the delivery of rail services, these will be written into franchise agreements to ensure that PTEs have access to the information they require. There is therefore no question of the PTEs not having the necessary material on which to operate effectively in discharging their power. The removal of the cosignatory power does not mean that the PTEs will be unable to invest in the rail network or that they will not receive an incentive to invest. Under the present system, Centro, the West Midlands passenger transport executive, does not co-sign the Chiltern franchise. Yet it works well to extend the services and investment in the line from Birmingham New Street through Snowhill to Smethwick. That has contributed a great deal to Chiltern's success. So co-signatory powers are not necessary to the PTEs being able to play an effective role in the system.
I also do not accept the argument that the structure that we are creating will add to complexity. Any complexity will be caused by the new PTEs having rights to buy additional services, not being co-signatories. If it is more efficient or cost-effective for a PTE to remain a co-signatory to a franchise, the powers for it to remain such have been included in the Bill. So if it works, we will do it. That is what we have undertaken with respect to Merseyside.
The amendments are unnecessary. We recognise the strength of feeling for the PTEs and the role that they have played in the past. We want them to play a constructive role in future, but against the background of a very different structure from the past. To seek to retain a system that does not expose the PTEs to the financial implications of their choices cannot be considered either local democracy or devolution. That
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system may have worked with varying success—I recognise the dispute between the noble Lord, Lord Bradshaw, and me in our instances of how well it has worked in the past. I accept in good faith that he is accurate when he points to effective work of the PTEs, but he must also accept our anxieties about where they have not worked effectively for the development of the railway.
I apologise for the length of my response, but I hope that it at least puts into context the nature of the ensuing detailed debates that we are bound to have, and will lead to increased brevity in my replies in future, which will be welcomed by all Members of the Committee.
Lord Snape: It is not the length of my noble friend's reply that concerns me, it is the content. Despite his honeyed words about PTEs at the start of his speech, he had some fairly harsh words for them. I must say at the outset that I regard the Merseyside case as a complete red herring. Merseyside is a self-contained railway system, detached, as it was a couple of years ago, from the SRA because of its self-containment. That situation does not apply in the other conurbations in the United Kingdom. I am surprised that my noble friend says that the franchisees, because that is who he is talking about, should not have to stump up for the higher costs of services demanded by the PTEs.
I repeat that as someone who was part of the successful application for a franchise, we made it plain to Centro, for that is who was involved at the time, that certain of the improvements that it demanded would have to be funded by it, rather than the franchisee. Of course there were protracted negotiations. I do not suggest that my noble friend does not live in the real world, but in the real world, that is how these things are done. It may well be inconvenient; it may well have been inconvenient for the SRA at the time; but we have already discussed its future—it does not have one. So we do not have much to worry about concerning the SRA.
My noble friend talks about PTEs being free to invest under the new arrangements. Why should they be? If we consider Centro, for example, and especially the Coventry-Birmingham-Wolverhampton corridor, Centro has local services shared between Virgin West Coast, Virgin Cross Country and, at present, on licence from Silverlink to Central Trains, semi-fast trains between Birmingham and Northampton.
Obviously, given the nature of privatisation—I shall not rehearse that argument again—each of those companies is solely concerned with the effective running of its own trains. Because Centro is a signatory to the Central Trains franchises, Centro works extremely hard to ensure that local trains are not left at the bottom of the list, underneath all the express trains that pass through the conurbation. It is prepared to put up money towards some improvements to the railway system to ensure that that traffic can be fitted in. Where is the incentive for it to do so, if everything that it does is subject to the rule of the Secretary of State?

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Those of us on this side of the Committee and the noble Lord, Lord Bradshaw, have said that the present Secretary of State is eminently reasonable and that we are sure that he would do nothing to prejudice the comfort and safety of rail passengers in the West Midlands or elsewhere. However, perhaps because of the optimism of the noble Viscount, we should look ahead to the future when some other Secretary of State may not feel the same way. Howard, under Clause 13, which the noble Lord, Lord Bradshaw, seeks to amend, the Secretary of State's hand is to be found virtually throughout. It states:
"The Secretary of State may … give a general approval",
or "withdraw his approval". I am not sure what is the Government's long-term view about railway franchising. To be honest, I wish that they would make up their mind and put us all out of our misery. It does not seem a sensible or businesslike way to expect franchisees to conduct their affairs that they are free, as my noble friend says, to come to an agreement with the passenger transport executive, authority, call it what you will, but that the Secretary of State can then approve, overrule, throw it out or amend it.
My noble friend talks in his eloquent fashion about the amount of time taken by negotiations between franchisees and passenger transport executives. What a recipe for protracted negotiation is the clause, if it remains unamended. It is a recipe for protracted negotiation par excellence. Does my noble friend think that if the Secretary of State is to be consulted and can overrule or give his approval on every single aspect of the relationship between franchisees and passenger transport authorities in any part of the country, that will speed up negotiations all considerably extend them?
Despite, as always, being impressed by the quality of my noble friend's speech, I was less impressed by the content. I am not sure whether it is appropriate to say this, but these matters may well be discussed again in future.
Viscount Astor: Before the noble Lord, Lord Bradshaw, winds up the debate, having listened carefully to the Minister's considered response, does he agree that, in effect, by removing the co-signatory and the power of PTEs to determine how local rail franchises should be awarded, the Government are effectively saying, "If we do not agree with you and do not give you the money, you can do it, but you will have to pay for it"? In effect, they will put the blame on authorities and tell them, "If you want this rail service not to be replaced by a cheaper bus service that may or may not be convenient for the area, that will have to come from your council tax income".
Perhaps the noble Lord, Lord Bradshaw, will comment on that, because I should be grateful for his confirmation that I have got it right. Equally, if I have got it wrong, I should be grateful for him putting me right.
Lord Tunnicliffe: Before the noble Lord. Lord Bradshaw, responds, perhaps I may press the Minister on his response, which was eloquent and lengthy. The
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trouble was that it drew me away from what I thought was quite a simple situation. Under previous legislation, there was a power balance in which the parties negotiated and under which the PTEs had done rather well. That does not mean that there was bad behaviour. It is perfectly reasonable that in a negotiation you have a set of cards and you play them to get the best deal for your principal. We should not be debating whether they were well or badly behaved. That is irrelevant.
The Government, in drawing up the Bill, have looked at who provides the money and compared that with the power balance and they do not like it there. It is the privilege of Government not to like things and to propose a Bill that changes that power balance. They believe, and I happen to agree, that the Bill better reflects the relationship between who pays and who has power. Is not the whole issue as simple as that? Is it not irrelevant whether people have been good, bad or indifferent in the past? There is a straightforward desire to change what money is spent and by whom.
5.30 p.m.
Lord Bradshaw: The Minister will realise that I was extremely disappointed by his reply. As I said at the outset, we regard this issue as a matter of principle. I know that it is usual to thank Ministers for their replies, and I thank him for his, but he has done nothing to give me any reassurance.
The Minister picked me up on one point—that franchises did not start until 1993, so I was wrong in that instance to refer to the 1968 Act. But I do have a long memory. I was divisional manager in Liverpool in 1973, when the Merseyside PTE built the loop and link system which connected the two systems. That came about through the energies of Bill Sefton, who then became Lord Sefton and who as PTE chairman went to Downing Street and banged on the door and got the money. He did not go to the Department for Transport, because that would not produce it—but he did actually get it.
I can think of other people in PTEs, such as Graham Stringer in Manchester, people of substance locally who command local support, who are important people in the big cities. We must not get too London oriented. I am sure that the people at the Department for Transport will be entirely London oriented. and that will be much more concerned about their commuter train home to Tunbridge or Erith than they will be with the problems of people struggling to get out of Manchester or Glasgow.
Lord Berkeley: Is the noble Lord aware that one of the four schemes that the department is allowing to go ahead at the moment with Network Rail is to allow 12-car trains to reverse at Tunbridge Wells?
Lord Bradshaw: That is a very interesting thing, which I had not touched on. None the less, the fact is that PTEs have been active in promoting railways—and not just railways but bus services. The Transport Act 1985 affected that, but still they have done an

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awful lot in the way of bus stations, publicity, co-ordination of services through tickets and all sorts of things, to make their local transport system more attractive. That is what the electors want in those places; it is not a matter of what the Secretary of State might want.
I shall study carefully the list of things that the Minister said when PTEs are alleged to have kicked over the traces. But since 1993 or 1997, the Department for Transport has not itself been entirely blame free or cost free in the decisions that it has taken. In fact I should imagine that the money wasted in that regard would make the money spent by PTEs a mere bagatelle in comparison.
There is a subplot here, which is to reduce services in the PTE areas by withholding cash from the PTEs and making it more difficult to come to agreements. Yet how else do the Government believe that they will relieve congestion? If the Minister were to go to Birmingham on a Friday afternoon at about half past three, he would see that it was ever so difficult to move about. The railways are essential to Birmingham and must be run properly. But the office of the PTE and the members are not sitting down with the railway companies saying, "Here's all the money, come and take it". They are negotiating very hard to get the best deal that they can. If they occasionally get a bit more out of government, good luck to them.
But I must say that I have been extremely disappointed in what the Minister has said. We shall return to the matter at the next stage and will seek the opinion of the House when the opportunity arises. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 40 to 45 not moved.]
Clause 13 agreed to.
Clause 14 [Repeals and savings relating to Passenger Transport Executives]:
[Amendment No. 46 not moved.]
Clause 14 agreed to.
Clause 15 [Duty of Secretary of State and Transport for London to co-operate]:
Viscount Astormoved Amendment No. 47:
Page 15, line 3, after "services" insert "within Greater London"
The noble Viscount said: We now move on to London. In moving the amendment, I shall also speak to the other amendments in the group and probe the Minister on the plans for the far greater powers being given to Transport for London and by implication therefore to the Mayor of London.
We all accept that the Secretary of State should have a duty and responsibility to co-operate with Transport for London. However, we do not believe that the role or remit of Transport for London should be broadened. There is great anxiety among train operators about how decisions about the allocation of franchises will be taken under the new regime,
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especially if that were to mean greater influence and thereby greater interference by the Mayor, Ken Livingstone.
Our concern about the whole clause is about rail journeys beginning or ending in London. We know of course that about 70 per cent of all journeys fall into that category. The government proposals are worrying, particularly for passengers travelling to or from stations outside the area for which the Mayor is responsible. They may find either that fast trains stop at the edge of London to pick up more commuters—thereby increasing journey times—or, perhaps more importantly, that fares might rise because Transport for London so decrees it. That is an issue on which we want to probe the Minister—the powers that Transport for London and the Mayor will have.
It is clear that the proposed expansion of the powers to Transport for London will affect travellers and commuters from outside the Greater London area. So where will the accountability lie? Perhaps the Minister will shed some light on how local authorities which are outside the area will be affected, when the journey starts in the area. What will be the interface—how will that work with Transport for London?
It is almost unprecedented to see so much power being given to the Mayor or Transport for London. We want to ensure that there is democratic accountability at all stages of the process. At Second Reading, my noble friend Lord Rotherwick dealt with this issue; he noted the difference between the policy on roads and that on rail. In the previous Transport Act, the strategic roads that went through London could not be interfered with because they were regarded as strategic. I believe that there should be rail services regarded as strategic in the same way. It seems strange that under the Bill, the powers given to the Mayor and Transport for London will mean that they have control over strategic services coming into London. Will the Minister give us some comfort on those issues? I beg to move.
The Deputy Chairman of Committees (Lord Lyell): I advise the Committee that if Amendment No. 50 is agreed to, it would pre-empt Amendment No. 51. We are discussing Amendment No. 47.
Lord Snape: I confess to some confusion here. I listened to the last two speeches made by the noble Viscount. When we debated the previous group of amendments he supported my noble friend and me in demanding more powers for the passenger transport authorities. It seems that the measure that we are now discussing grants exactly the same powers to Transport for London, albeit restricted ones, as we debated on the previous group of amendments concerning the passenger transport executives.
I am not sure what the policy of the Conservative Party is in this regard—no doubt the noble Viscount will enlighten us. On the one hand we and the noble Viscount say that we are not giving enough powers to the passenger transport authorities, but as regards the clause we are discussing—the wording appears to me identical to that of the previous one—he says that we

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are giving far too many powers to that big red bogeyman known as the Mayor for London. I realise that the noble Viscount must make the odd political point during the course of these debates but I, and, I am sure, the Committee, would be grateful if the points that he made were at least consistent.
Lord Bradshaw: Despite that speech, this is an important point. Rail corridors into London are extremely crowded. It should not be possible for any one person—I shall call the person the Mayor for London rather than by his name because he may be a transient voice—to pre-empt these. One person should not be able to design or impose a pattern of service on railway lines which are used by many people.
If you take the lines with which I am familiar—the lines into Paddington—it is quite ridiculous in my opinion to bung up capacity on those lines. Those lines are very close to London and face huge demand from all sorts of sources. One should not bung up capacity because of the very narrow sectional interests of one group in the community. This matter must be evaluated in the round. You have to balance the needs of the inter-city traveller, the longer distance commuter and the freight user. The sorts of train services that the Mayor for London favours are the stopping trains, which are the greediest in terms of capacity on the lines involved.
I am very concerned that we make a distinction between what I call the strategic arteries, which need some form of national control, and the lines which genuinely comprise the kind of all-station metros, the pattern of use for which may be designed by the Mayor for London. Therefore, to some extent I support the reservations expressed by the noble Viscount, Lord Astor, because the claims made by Transport for London are rather wrong-headed.
If I were given the choice, I would close a few small and very underused suburban stations around London and provide better bus services to the people who travel from those stations. That would enable more trains, less crowded trains and more useful services to be provided to people who have longer distances to travel. I think that is the essence of what the noble Viscount, Lord Astor, said. If I am right in that, I support him.
Lord Berkeley: The noble Lord, Lord Bradshaw, made a good point about some of the main lines into London and their uses. I have a question for the Minister. If and when we have a strategy for the UK's railways as a whole, out of that may come statements about preferences or priorities for inter-city, regional, local passenger services or freight. Add into that the contractual rights of freight and other open access operators, and it is still down to the Office of Rail Regulation to agree access rights and therefore effectively establish priorities if there is a capacity constraint. That will tie in with the open access directives, which are due to be published as regulations by the Government some time this year.
My noble friend can comment on that, but it is interesting that on top of all that, there has been a well established process over the past 10 years of allocating
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access and the regulator acting as the independent adjudicator if there is a capacity problem. Then you have the Mayor of London in another guise promoting a Crossrail service that will completely kick all those things into touch.
Clause 15, and all the amendments tabled by the noble Viscount, will not apply to the slow lines into Paddington or Liverpool Street. This is an opportunity to have a bit of a debate. I urge my noble friend to think carefully before the Government try to fetter the regulator's independent ability to allocate access to congested lines.
5.45 p.m.
Lord Tunnicliffe: I wonder whether the Minister can help me with these amendments. My understanding is that the Bill amends the Greater London Authority Act to create exactly the same situation for London as the influence that other metropolitan areas will have on the railway services in and to them. I would be grateful if he could say that in terms, to pick up the point made by the noble Lord, Lord Snape.
What goes along with that is that the influence of TfL must extend only to decisions made in a proportional way. In other words, if the railway service in question is clearly strategic in nature, fitting together city centres and so on, the TfL influence should be modest to slight. If the service concerned is clearly part of the commuter system and substantially serves London but also an area beyond that, the influence should be greater. If that proportionality is envisaged in the Bill, or the way that the Act will be applied if this goes through unamended, I would be happy to support it and hence oppose these amendments.
Lord Davies of Oldham: I am grateful to noble Lords who have contributed to this short debate. My noble friend Lord Snape was perhaps being a little uncharitable. As the noble Viscount, Lord Astor, indicated, these are probing amendments, seeking elucidation of where we are. Of course, 1 am only too happy to seek to provide that elucidation.
I shall make one thing absolutely clear, which the noble Lord, Lord Bradshaw, also emphasised in his thoughtful contribution. Like the noble Viscount, Lord Astor, he indicated that there should be an answer to the question, "Where do the Mayor's additional responsibilities potentially lie?". They lie in exactly the same place as for any other passenger transport executive. At present, transport executives have the capacity to influence the position 25 miles beyond their boundaries. Nothing in the Bill gives the Mayor of London additional powers. He is subject to the Secretary of State, as they are, in terms of agreement from the Secretary of State on key issues. Of course, we are talking about the issue that in a great metropolis—not just London, also Birmingham and Manchester among others—that commuter services are of supreme importance because a large number of our fellow citizens rely on them. The area into which they travel might be a considerable distance from the authority.

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The effect of the amendments would be that Transport for London could make payments to the Secretary of State under that concept of financial responsibility—which I was seen to laud in my earlier contributions—in respect of London railway passenger services and stations, but under the amendments it would be able to make payments for bus substitution only within a specifically defined area, which would lead to some interesting inconsistency. It could lead to a situation, for instance, where a rail service outside London funded by TfL is suspended temporarily for maintenance, but TfL would not be able to pay for any bus substitution service. That inconsistency is implicit in Amendments Nos. 47, 48 and 49, but I am sure that they are merely there as probing, to identify what is contained in the Bill, not seriously to amend the Bill, which would produce a bizarre result.
It is recognised in all parts of the Committee that the national rail network does not tidily match current boundaries. That is the case with a number of our large metropolitan areas. Because the London commuter network does not stop at the Greater London Authority boundary, our White Paper said that we would consider whether it was feasible to give TfL the right to buy services in an area slightly bigger than greater London, which makes more sense in rail transport terms. That is what this Bill seeks to empower.
I cannot give a definitive answer to the noble Lord, although I would like to do so. He knows that I always wish to respond to his probing amendments in as full and accurate a way as possible. We are still in the process of consultation with neighbouring regional and local bodies about these issues, and we have not yet reached a conclusion. There surely cannot be opposition, and I have not detected any in the Committee, to the principle of TfL having an influence over rail outside the restricted GLA boundary.
TfL would not be able to buy additional services at will. If it is buying a service by the Secretary of State, he must agree to its proposals. Clause 16 prevents TfL from entering into agreements with train operators without the Secretary of State's approval. As my noble friend Lord Snape indicated, this is no Bill that enlarges the power of a demon figure sometimes identified on the other side as the Mayor of London. On this occasion, his demon qualities are under the constraints of the Bill, and in any case he will be acting in a benign way to the needs of rail commuters into London, and the necessary support and integrated services.
I hope that the noble Lord will recognise that this has been a useful debate. We all recognise the principle of some extension beyond local authority boundaries, but under suitable constraints that should allay the fears of even the most nervous Member of the Opposition Benches.
Viscount Astor: I am grateful for the Minister's reply. I was not trying to be inconsistent; I was trying
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to be consistent. I was concerned that Transport for London was getting additional powers over and above what a normal PTE would have.
I think the Minister has satisfied me that Transport for London will not be able to interfere with intercity or strategic routes requiring them to stop at a regional station. I think he also said that not without the agreement of the Secretary of State would Transport for London be able to have any influence on fares on an intercity route through London. We all recognise that London is a special case because so much of the rail network goes through it.
I am grateful to the Minister as I think he answered all my questions. I am not sure whether in using the word "benign" he referred to the behaviour of the Secretary of State rather than the mayor. I have never known the mayor be benign on any issue whatever, but I am sure that the Secretary of State is always benign. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 48 to 51 not moved.]
Clause 15 agreed to.
Viscount Astormoved Amendment No. 52:
After Clause 15, insert the following new clause—
"MEMORANDUM OF UNDERSTANDING BETWEEN THE SECRETARY OF STATE, TRANSPORT FOR LONDON AND THE MAYOR OF LONDON

(1) A Memorandum of Understanding will be drawn up between the Secretary of State, Transport for London and the Mayor of London explaining their duties of mutual co-operation regarding the railways under this Act.

(2) Subsection (1) may not come into effect unless an order containing the text of the Memorandum of Understanding has been laid in draft form and approved by a resolution of both Houses of Parliament.

(3) No section of this Act with relation to the Memorandum of Understanding may come into force until subsection (2) has been fulfilled."

The noble Viscount said: This is a small, simple amendment. It would ensure that the memorandum of understanding between the Mayor of London, Transport for London and the Secretary of State will be subject to a parliamentary process. I have suggested the affirmative procedure, but the Minister might suggest that it should be the negative procedure or have another suggestion. However, agreement is so crucial that it needs parliamentary scrutiny. I am open to the kind of scrutiny that should be and I beg to move.
Lord Davies of Oldham: We agree that a memorandum of understanding can add to potential improvements to the railway and to transport and we agree with the noble Viscount in his comments but with one obvious exception. We need the memorandum of understanding to be flexible and to evolve over time. It will develop with the benefit of practical experience and we are in favour of the concept. We would resist putting it in the Bill and making it statutory because that would be unduly restrictive.

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I hope that in seeking to be constructive, the noble Viscount, Lord Astor, will recognise that we have no problems about the importance of a memorandum of understanding but the basis for it already exists in legislation. The duties under a memorandum of understanding are already set out in the Bill and in the Greater London Authority Act 1999. The amendment is therefore unnecessary and I hope that the noble Viscount will therefore feel able to withdraw his amendment.
Viscount Astor: Will the memorandum be published in full?
Lord Davies of Oldham: It will be the product of fairly substantial discussion and agreement. There will be many parties to it. I have just been handed a piece of paper which sets out the argument more succinctly than 1 have managed—"Yes".
Viscount Astor: I am grateful for that assurance from the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 agreed to.
6 p.m.
Clause 17 [Membership of Transport for London]:
Viscount Astormoved Amendment No. 53:
Page 16, line 11, leave out "two" and insert "four"
The noble Viscount said: This clause deals with the membership of Transport for London. Again, these are probing amendments, through which we are trying to learn a little more about the Government's policy.
As I understand it, the arrangements as drafted will enable Transport for London to have eight members out of a 15-strong board. Members with a modest appreciation of maths, as I have, will know that that gives Transport for London a majority—so that, in other words, the Mayor will have a majority over these matters. As we have already heard from the Minister, that means over not only London but an area further outside London. My amendment arose from a concern that those outside the area will not be adequately represented. Therefore we propose that four rather than two members be appointed from beyond the boundaries of Greater London—or that there should be some reference to county councils in the clause.
We are concerned because the clause removes input from local authorities that are just outside the area, while we know that those who live in those outside areas are the people who mainly use the services. After all, it is not those who live in the centre of London who are the commuters; it is those who live outside London who commute. So we want to ensure that the membership reflects the needs of all those using the services, and we are concerned that the Bill as currently drafted does not do so. Will the Minister consider those concerns and that argument and go slightly further to alleviate those concerns? I beg to move.
Baroness Crawley: I am grateful to the noble Viscount for explaining his amendment. As my noble friend Lord Davies said a moment ago in answer to previous amendments, the national rail network does not fit tidily with current political boundaries. It is already the case that PTEs can influence rail services up to 25 miles beyond their boundary. The Future of Rail White Paper explained that because the London commuter network does not stop at the GLA boundary, we would consider whether it is feasible to give Transport for London the right to buy services in an area slightly bigger than Greater London, which makes more sense in rail transport terms.
Clause 17 changes the membership of the Transport for London board to ensure that the interests of rail passengers outside London are represented. It is intended that it would be brought into force only if it was decided to allow Transport for London a role in respect of the service outside the Greater London area. We have made it clear that we shall want to consult fully with neighbouring regional and local bodies before reaching a conclusion on this proposal. So nothing is cut and dried in this regard.
Amendment No. 53 would increase the number of non-London rail members from two to four. The Mayor is already required to ensure that the board has members with experience in transport—obviously—and particularly the impact of transport on business and the environment. There should be members with experience in finance and commerce, in national and local government, and in the management of organisations and trade unions. He is also required to ensure that the interests of women and disabled people are represented. We are persuaded that the current board is balanced and that this balance would be best maintained if the new members of the board were additional to, not replacements for, existing members.
Amendment No. 54 would specify where the two additional rail members were required to live. Appointments to the Transport for London board should be on merit, however, and the Mayor will appoint those two members on their ability to advocate and represent the interests of rail passengers. Where they live should not be a defining consideration. I do not need to remind the Committee that there is no specification on MPs being required to live in their constituencies.
Furthermore, rail commuters coming from outside Greater London will represent only a very small percentage of the users of public transport services that Transport for London is responsible for funding. That brings us back to the concern that the noble Viscount raised. In 2002–03, national rail passengers originating from outside London accounted for only 8 per cent of all public transport journeys within the capital. So we believe that the number of extra numbers that we propose would adequately represent that percentage.
Amendment No. 55 would require the Mayor to consult every affected council before appointing the two members. We believe that that would be unwieldy; furthermore, it could mean that local concerns might influence the choice of member rather than taking a

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strategic overview that might be better for all rail passengers overall. To ensure that the interests of rail passengers are properly represented, the restriction in the GLA Act that councillors are not allowed to be members of the Transport for London board has been lifted in relation to the two rail members. Clause 17 specifically provides that the members chosen by the Mayor to represent rail users outside Greater London may be councillors.
I hope with that explanation that the noble Viscount will feel reassured enough to withdraw his amendment.
Viscount Astor: I must say that if the Minister believes that any prospective MP has a hope of being selected by any major party in this country by going along and saying, "I would like to represent you but by the way I am not going to live in your constituency". she is in for a bit of a surprise. My experience is that the first thing that all selection boards ask is whether a candidate is going to live in the constituency.
It is extraordinary that the Government are—well, I do not know whether they are frightened of the Mayor of London or what, but in this measure they are giving him a majority. We all know what the current Mayor does with majorities: he just does exactly what he wants. That is the fact of the matter. He does not listen to those outside his area or anything like that.
The Minister's reply is disappointing and I shall return to the matter on Report. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 54 and 55 not moved.]
Clause 17 agreed to.
Clauses 18 and 19 agreed to.
Schedule 5 agreed to.
Clauses 20 and 21 agreed to.
Schedule 6 agreed to.
Clause 22 agreed to.
Schedule 7 [consultations under Part 4]:
Viscount Astormoved Amendment No. 56:
Page 110, line 2, leave out paragraph (e).
The noble Viscount said: This is a simple amendment, which is about open government. It allows that those local rail users who will argue for the retention of their services should not be made, in effect, to pay for the privilege. They should be able to put their views forward. That is an important part of local democracy, particularly if the concerns expressed so far in the Committee about possible cuts in services come into play. I beg to move.
Baroness Crawley: I thank the noble Lord for his amendment. I agree that in practice copies of the documents may be free and available via the Internet. I assume, I hope correctly, that it is paragraph 2(2)(d) of Schedule 7 that should be deleted, and not paragraph 2(2)(e), which deals with the timetable for consultation. If I am correct in that assumption, the
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amendments are still not necessary. We would not want the legislation to be so specific as to say how documents can be made available and how much they might cost.
Turning to the matter of making the freight industry one of the statutory consultees, again the amendment is unnecessary. Of course, all consultation exercises should be as broad and as open as possible. Therefore, paragraph 3(2)(k) of Schedule 7 states that every person providing rail services affected by the proposal should be consulted. That can cover freight operators too.
Paragraph 3(1)(b) of Schedule 7 states that the person carrying out the consultation must consult not only the statutory consultees listed in paragraph 3(2), but such other persons as he sees fit. That, too. enables consultation with the freight industry and many other bodies not specifically listed in the Bill. Given that assurance. I hope that the noble Viscount will feel able to withdraw his amendment.
Lord Berkeley: Before my noble friend sits down, I apologise for not having spoken to my Amendment No. 58—I got the answer before speaking to it. I am grateful for that. The noble Baroness is right that paragraph 3(2)(k) requires providers of freight railway services to be consulted. However, it does not cover people such as terminal operators, quarry aggregate suppliers, or ports, who are not strictly providers of rail freight services, and they are not train operators, but nevertheless they may be the origins or destinations of a large amount of business. In the past, we have had occasions when Net work Rail has dug up tracks or closed things without consulting those people, or indeed anyone else.
I hear what the noble Baroness says, that under paragraph 3(1)(b) the person carrying out the consultation may consult such others as he sees fit. Unfortunately, some of the people doing those closures do not always see fit, and we have already discussed station closures in Committee. If all those other people listed in headings (a), (b), (c), clown to (k) and (1) get consulted, there is a need to put on the face of the Bill that the freight industry be consulted as well. It might have a terminal with a connection that gets cut off. It should not be left to the organisation—much as we all love Network Rail or anyone else who might be involved—to act. I do not see why we should have to rely on good offices, when everyone else is consulted on the face of the Bill.
6.15 p.m.
Baroness Crawley: In answer to my noble friend, I can say that it is intended that we will mention in closures guidance other organisations that should be consulted under Schedule 7. The explicitness that he looked for will be in the closures guidance, which I hope reassures him.
Lord Berkeley: I am grateful to my noble friend. I have got hold of a copy of the draft closures guidance and notes for MPs dated 20 January. I do not know whether that document is in general circulation. I

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assume that it was prepared for a stage of the Bill in the House of Commons. It is mostly to do with appraisals—how various factors are taken into account before closure. However, I have not seen anything in it that specifically addresses the issue. Perhaps she could help me now or write to me. Perhaps the amendment is old. If what I am looking for is in the closure guidance I will accept that, but if it is not perhaps we need to look at it again.
Lord Bradshaw: We have to take a lot on trust with the idea that things are included in guidance—guidance that I am not aware has been published. This is an important amendment. I see the long list of people and expect that some of them may be only marginally affected, but the rail freight industry could be seriously affected. We ought to see guidance alongside the latter stages of the Bill, so that we can be satisfied that the concerns raised in Committee are taken into account.
Baroness Crawley: I am happy to confirm that the freight industry is being consulted on the content of the closures guidance.
Viscount Astor: I will study the Minister's response with care. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 57 and 58 not moved.]
Schedule 7 agreed to.
Clause 23 [Proposal by funding authority to discontinue non-franchised services]:
Viscount Astormoved Amendment No. 59:
Page 21. line 42, after "carry out" insert "and publish"
The noble Viscount said: This amendment is again about open government. The clause seems to allow a funding authority to certify that it has carried out an internal assessment of whether its proposals to meet the statutory guidance have been met. However, it is not clear how local residents who will be affected will have the opportunity to see that the assessment has been carried out in a fair and transparent manner. Requiring the assessment to be published will give an opportunity for those outside the industry in the general public at large to understand, and if necessary challenge, the reasoning followed and used by the funding authority. I beg to move.
Lord Berkeley: 1 shall again refer to the draft closures guidance dated 20 January 2005. The noble Viscount has a good point. I do not know whether the guidance could be circulated to all Members of the Committee before Report, updated if necessary. It purports to give a process for justifying closures on the basis of the new approach to transport assessment for multi-modal studies, which is the Department for Transport's methodology. It lists all the different factors taken into account. Of course, what it does not do is give the values appropriate to those factors. One may quantify noise and vibration and greenhouse gases, but then you get a score for landscape, heritage and biodiversity and a value for effect on rail users, passengers and freight. What is the basis of those
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calculations? You get a score for the wider economic effects, including regeneration. I can think of wonderful ways of scoring those things to demonstrate that even the West Coast Main Line is unnecessary; or else that we need two more. They are subjective.
I press my noble friend to go into that in a bit more detail before the next stage. It is nice to know that all those things will be taken into account. The last one is,
"Railway strategy and other government policies … score".
I do not know what that means, as, apparently, we will not have a strategy, but that is vital to closures. If it is to he done on an appraisal methodology, we need to know the detail of the basis on which it will be done.
Lord Bradshaw: This is probably a relevant point at which to raise the issue of closures, although I could do so on several of the amendments. We are very concerned about the amount of the Bill that is taken up with a new closure procedure, whichever sort of service it refers to—whether a franchise passenger service, part of the passenger network, an excluded service or a non-franchised service. This is a new procedure, and we are concerned that it must take into account all the things that affect the railway.
The assurance that I am seeking most of all from the Minister is that any appraisal, and anyone who is advised or asked, takes into account the full environmental, economic and social effects of what they are doing and that the process is open and fair. That is why, earlier, I made such a loud protest against the closure of some small stations in Staffordshire: not that I was particularly arguing in favour of those stations, but because the process has not been open and fair. It has been anything but that.
People expect fairness and consistency and figures capable of being tested. I hope that, in the fullness of time, Parliament will be presented with any closure proposals. When we are, we shall not be content with the broad averages used in the Beeching closures. We will not be content with a statement that if we close 10 miles of track, we will save a certain sum of money, regardless of whether it is on a busy line or an under-used line. Economics has advanced since those days. We will want to know what actual money will he saved.
In the same way, we will want to know what revenue will be put at risk—not the little hit of revenue that may be taken on that line. Let us take, for example, the Newquay line in Cornwall. The people who travel on that line in summer come long distances. We will not be satisfied with just totting up the little bit of money that is taken between Par and Newquay; we want a proper assessment of the total economic consequences of any action.
We are also concerned about the extent to which the public will be involved in any decision-making, because there are radical proposals in the Bill for the future of the Rail Passengers' Council. I accept that it has not been a good body; it is not known to exist by 99 per cent of people. It is probably true that that the regional Rail Passengers' Councils are even. less

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known, but there needs to be a mechanism whereby people are consulted. We want people to be consulted for an honest appraisal that addresses the issue of the places to be closed, the amount of money that would be saved by closing them, the opportunity cost, the revenue that is at risk, not some small sum of money calculated to make an unanswerable case.
Overall, there needs to be a degree of honesty in appraisal that takes into account the likely long-term impacts on an area, which can be quite serious. If you close the branch line that I spoke about, some people will not go to Newquay for their holidays at all. People will stop going there because it will be off the list. There are big costs involved, which I want to think will be taken into account, as well as the financial accounts.
We are looking for transparency; I hope that the Minister can give us some assurance. I could have put down a number of little amendments to bring out these things, but they are covered by this amendment and several others later in the name of the noble Viscount, Lord Astor. I hope that he will forgive me if I trespass a little beyond it. We are both concerned that the closure procedure, if it has to be brought into effect, will be an open procedure.
To save time, perhaps I may turn to bus substitution. Again, that is in the Bill, yet we know that often it is not a substitution of the rail service being withdrawn. We will want something appropriate to be put in place, not something that will disappear. As in the case of Beeching, it was probably not appropriate at the time, and it very quickly disappeared thereafter.
Lord Berkeley: Before the noble Lord sits down, he mentioned many things that need to be covered during appraisal, with which I entirely agree. But he did not mention the savings, if any, to Network Rail. While that requires Network Rail to know what its costs are on each bit of line, it is clear that it does not have a clue at the moment. When I probed, in a Written Question, about the regulatory asset base split between England, Wales and Scotland, the value put on the Scottish one was basically a guess. It looks as if it will be many years before Network Rail has any understanding of its costs on a branch line basis and its liabilities, if it were closed, to maintaining structures, because they may be listed or could otherwise fall down. Does the noble Lord agree that that is an important part of the calculation?
Lord Bradshaw: If a closure on a particular line is brought forward, we want to know how much was expended in the previous, say, seven or 10 years on the line concerned. We do not want some theoretical calculation that it represents 0.01 per cent of a network, but how much cash had been spent—out-of-pocket money—on the service. I am expressing, I think, the view of many Members of another place, who are very much aware of the fact that very little money is spent on a lot of the network, whereas some might say that an inordinate amount of money is spent on other parts of the network.
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We have got to get away from those rule-of-thumb measures. We have to get down to real things. We want to know if a line has tuppence-halfpenny spent on it, because that often is the case. It is a fact that many of the railways run by heritage railways exist on very low costs of maintenance, because they are talking about real costs and not theoretical costs.
I would be very disappointed if I hear after all this time that Railtrack and Network Rail are far away from getting some real costs, but I acknowledge that any form of costing of railway assets is extremely difficult, time consuming and expensive. It is not easy to do, as suggested by some accountants.
6.30 p.m.
Baroness Crawley: Amendments Nos. 59 to 61 are not necessary. I shall try to explain why. Schedule 7 already requires those carrying out consultations on closure proposals to make available details of the assessment carried out in accordance with the closures guidance. All statutory consultees in that schedule have to be sent a summary of the assessment results, and details of where the full assessment can be obtained or inspected must be set out in a notice to be published in a local or national newspaper. There is no need therefore to include a further duty to publish the results of the assessments in Clauses 23, 24 and 28 as the amendments propose. I shall try to reassure Members of the Committee by quoting from a letter from the Minister of State in another place, who wrote to David Amess MP that,
"the Government will consult widely on draft versions of the guidance before it is published in its final form".
The noble Lords, Lord Berkeley and Lord Bradshaw, talked about appraisal. Guidance will include how to take account of environmental and social impacts for closure proposals. As they will know, that is already done for road and multi-modal studies. The noble Lord, Lord Bradshaw, raised concerns to do with closure. I agree that there must be a new approach to it that is more transparent than the current one. Closure guidance helps that. We agree that we will need as detailed information as possible on costs of specific closures, and on revenue effects across the network from those closures. We agree again on the need to take on board environmental and social costs.
The noble Lord also asked whether the long-term effect of closures would be considered. Consultation will give the opportunity for the Government to make sure that all factors that need to be taken into account are included in the guidance. I hope that I have covered the points raised by Members of the Committee. I will check Hansard and, if I have not, I will write to them.
Lord Bradshaw: I thank the Minister very much for what she said about closures; that clears up a number of points. However, there is one more. It occurred to me at the time of Beeching, and it occurs to me now, that one option in the end is that the community should take over the railway line concerned. When the Government have decided that they cannot afford to

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keep a railway going, the community should be given the opportunity of running the railway itself, as a last attempt.
Not long ago, I was up on the north Yorkshire moors, where the North Yorkshire Moors Railway seems reasonably well run by enthusiasts. It runs a decent service for a good deal of the year. Next to it you have the line from Middlesbrough to Whitby; they meet halfway along at Grosmont junction, I think. There you have a railway that is run at the taxpayers' expense, vastly more expensively than the North Yorkshire Moors Railway. I would like to think that the opportunity might arise for someone to take a line over and not be charged huge sums by Network Rail for the value of the rails and infrastructure, which it has not managed to keep up at the satisfactory level.
Lord Berkeley: If a passenger service were closed on a particular line, should there be some requirement on Network Rail to keep it open and operational for a number of years—one, two, five, whatever—to see whether other services such as community services could be considered? That leaves aside freight.
My noble friend did not respond to me on the draft closures guidance. Will it be possible for the latest version to be sent to Members of the Committee who have spoken in this debate? I assume that it is in the public domain.
Baroness Crawley: I am sure that it will be.
Viscount Astor: My modest little amendment seemed to spark off quite a debate. All my amendments are very modest, of course. I am grateful for the noble Baroness's reply, which answered my questions. There are some concerns about the clauses. If we get to clause stand part debates on Clauses 23 and 24, Members of the Committee might ask further questions. I accept what she says about publishing.
The noble Lord, Lord Berkeley, made an interesting point about what happens to the line when a service goes to seed—what opportunities there will be for someone else to operate a new service. Going back to his point about what happens to the occasional freight operator who wishes to use the line, how would those costs and charges be affected? Perhaps we will consider that. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 23 agreed to.
Clause 24 [Proposals to discontinue franchised or secured services]:
[Amendment No. 60 not moved.]
Clause 24 agreed to.
Clause 25 agreed to.
Schedule 8 agreed to.
Clauses 26 and 27 agreed to.
Clause 28 [Proposal to discontinue operation of second network]:
[Amendment No. 61 not moved.]
Clause 28 agreed to.
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Clauses 29 to 32 agreed to.
Clause 33 [Closure requirements]:
Lord Rotherwickmoved Amendment No. 62:
Page 35, line 30 after second "a" insert "reasonable"
The noble Lord said: I wish to speak to Amendments Nos. 62 to 64. Amendment No. 65 is shown in the group, but in the earlier groupings list it was not elevated to this group and was in a group with Amendment No. 66. If everyone is happy, I shall go back to the original groupings list and speak to Amendment No. 65 later.
Amendment No. 62 is designed to test the extent to which the Office of Rail Regulation can impose requirements on a funding authority. Local rail funding authorities may find that they are starved of resources because of the wider public spending priorities of central government, and may four that reason make a closure proposal against their wishes. The clause appears to give the ORR the ability to make any requirement that it likes on any funding body, following consultations. Local funding authorities may be put into difficult positions because of externally imposed spending limits. It should be made clear that they will be expected to carry out only those activities which are reasonably requested. Any requirement could be made more reasonable if directed at the local funding authority. The intent behind Amendment No. 64 is that the clause contains a provision which ensures that the relevant national authority will provide such resources as are required to deliver the commitment.
On Amendment No. 63, under the provisions of the Bill it seems that any promises and commitments given for the provision of replacement services of whatever nature, which may have been an essential element leading to the making of the closure decision. can be overturned at any time by the executive body. The Secretary of State must have a role in authorising the withdrawal of any facility which was provided on the basis of a firm promise. I beg to move.
Lord Bradshaw: We return to the question of who makes the decision to issue a closure notice. I do not believe that we received a satisfactory answer last time and I do not suppose that we shall get much further today. There is much disquiet about whether the decision will be an overt political one which will be put before Members of Parliament, or the national assemblies or anyone else.
At page 35, the Bill states:
"The Office of Rail Regulation may, when it issues the closure ratification notice",
which I am afraid will mean the Office of Rail Regulation and not the Secretary of State. That view is widely held by many critics of the Bill.
We in this country believe in a system of political accountability and we do not want these decisions taken by a regulator who is "difficult to get at"—that is the best way I can describe it. He is someone seen as the person in London, away from the scene of these actions. I expect that if there are closures, they will not be in London because there would be such hell to pay

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that people would not dare do that. However, I am sure that the people on whom such closures will be inflicted would prefer to hear about them from some body who is accountable to them rather than someone whom they see as not accountable to them.
While I can see that the Office of Rail Regulation may put forward options, those options must be fundable and acceptable. They must be seen to come from someone who has been elected by the people.
Lord Berkeley: I have sympathy with the amendments because of what has been said by the noble Lords, Lord Rotherwick and Lord Bradshaw. It is extraordinary that, given our discussions, as the Bill stands the Rail Regulator will make the decision on a closure. Then in Clause 33(2)(a) to (i), the Bill asks all these people to stump up some cash.
Starting at the bottom with paragraph (i), I do not believe that the rail operator includes open access or freight operators, but I fail to see why, if the line closes, they should have to pay anything at all. They probably deserve compensation. But after the discussions that we had earlier about PTEs and PTAs, here they are being required to pay cash when the service that they have been supporting is closed—and, by the way, the Secretary of State is to have nothing to do with it! I am sure that I have got that wrong and that my noble friend the Minister can clarify the matter. It does seem reasonable that in the event of such a closure, the Secretary of State should ratify it. I do not quite see why all these people should have to pay to have the service closed.
6.45 p.m.
Lord Davies of Oldham: The amendments are concerned with the closure requirements as well as seeking to introduce a new concept of closure decisions. Closure requirements can be imposed by the ORR on the organisations listed in subsection (2) of Clause 33—essentially railway funding authorities and relevant operators—when it issues closure ratification notices. These requirements can only be "relevant requirements" as defined in Clause 33; that is, those that relate to matters that have been taken into account in making the assessment under the closures guidance. The policy intention behind this is that the ORR should impose as requirements only factors that are key to the proposals satisfying the criteria in the closures guidance and that are an integral par t of the closure proposal.
Let me give as an example a railway funding authority promising to provide a substitute bus service for a period of time. What can be a closure requirement is therefore closely defined, and in many cases may well have been suggested by the organisation making the proposal. There seems therefore absolutely no need to require bodies on which a closure requirement is imposed to comply with it only if it is a "reasonable" requirement, as Amendment No. 62 suggests. What I am seeking to emphasise is that the Bill already contains the safeguards to ensure that the closure requirement is within that framework.
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Similarly, given the intention of this clause as just discussed, it does not seem appropriate for a national authority to have a duty to provide funding to meet closure requirements, either when they are first imposed or subsequently varied, which is the effect that Amendment No. 64 would have. It is quite possible that varying a closure requirement will lead to a financial saving, not a cost.
Similar arguments apply to Amendment No. 63, which would require the Secretary of State to ratify any closure requirements imposed by ORR. A careful reading of the clause will show that with the policy intention behind closure requirements, there would be no point in requiring the Secretary of State to ratify ORR closure requirements. Not only would that be unnecessary, but it would also undermine the independent role that we see the ORR has in the whole statutory closure procedure.
The clause is quite specific and restrictive in terms of closure requirements. We do not need any extension in that regard or any imposition on the Secretary of State or national authority. The basis on which closure would be affected is quite clear. Of course, the ORR has a distinct role in that, which would be compromised if Amendment No. 63 was accepted.
Lord Snape: Can the Minister envisage a situation, particularly in the other place, when there are rumours in the newspapers about the closure of a particular railway line and an honourable Member from either side of that House asks the Secretary of State to confirm or deny those rumours? Presumably the Secretary of State would say, "I don't know anything about that—this is a matter for the ORR". I suggest to my noble friend that in the real world that would cause some degree of controversy, and if he was the Minister who had to do it I would not envy him.
Lord Davies of Oldham: I am seeking to get myself into the same world of reality that my noble friend inhabits. Ministers are not infrequently challenged at the Dispatch Box about decisions which are made by others. A Minister gives the most cogent and accurate reply possible, which is invariably the case with Ministers in the present Administration, as my noble friend will recognise. However, that does not mean to say that because Ministers have to answer at the Dispatch Box on a whole range of issues, it is not the proper responsibility of others to take the decisions. We expect that the vast majority of those decisions will be taken in good faith according to the legislative provision and will be accepted in good faith. When they are not, of course my noble friend is right, the balloon goes up in the other place. However, we are all accustomed to that. No one is suggesting that because Secretaries of State can be challenged on everything within their purview all legislation should be constructed on the basis that the Secretary of State does everything.
Lord Bradshaw: Will the Minister confirm whose name is on a notice of closure? Is it the ORR or the Secretary of State?
Lord Davies of Oldham: Yes, it will be the Office of Rail Regulation.
Lord Faulkner of Worcester: Following the point made by my noble friend Lord Snape, is the Minister aware of the passage in what I think was the second volume of the Crossland diaries in which the future of the Central Wales Line was discussed not by the Office of Rail Regulation or by officials in the department but in the Cabinet? The decision was taken by the Cabinet not to close that particular service—a very lightly used service which, happily, is still open today—because it was said at the time that it passed through seven marginal constituencies.
Lord Davies of Oldham: Not just in rail but across the board we can all identify areas where intelligent political decisions have been taken by Labour Ministers when faced with an obvious crisis which needed to be resolved by their direct action for the public good. However, that is very different from creating legislation which requires the Secretary of State to be responsible for every aspect of action with regard to the railways. Of course, he is ultimately responsible. My noble friend Lord Snape is absolutely right that an issue such as we are discussing would undoubtedly be raised by a Member of Parliament with an interest in the matter. If it was sufficiently significant, no doubt it would be considered at Cabinet level. We all know where ultimate responsibility lies. But are we really suggesting that all railway closures, even those which might bring financial benefit to the area concerned, will be decided at Cabinet level? Of course not.
Lord Snape: No, of course we are not suggesting that for a moment. However, I take my noble friend back to a discussion that we had what seems like years ago, but was actually earlier today. Under Clause 13 concerning the railway functions of passenger transport executives, the Secretary of State must either consult or give his approval on every one of the 10 or so subsections there as regards the franchising of railways. But suddenly, when the railways do not run any more. it is nothing to do with the Secretary of State. My noble friend cannot have it both ways. Either the Secretary of State is a genius who dabbles in all aspects of railway matters, including closures, or he leaves things alone and lets other people get on with them. No matter how eloquently, my noble friend is trying to have his cake and eat it.
Lord Berkeley: Earlier we discussed the question of the high-level output. It is my understanding that the Secretary of State's high-level output specifying the passenger services will include how many trains an hour stop at West Bromwich, Par or Tilehurst or wherever. So all the constituents of the 600-odd Members of Parliament will write to the Secretary of State. It is surprising that he will take on that
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responsibility in addition to the list that my noble friend Lord Snape read out, but he is not going to get involved in closures.
Lord Rotherwick: My Lords—
Lord Davies of Oldham: Such has been the sustained fire from this side of the Chamber, I had even lost track of whose amendment it was. I rise to my feet because, to the delight of the Committee, I would have been found in error—not, I hasten to add, on the broad thrust of the argument, on which I remain committed because of the beauty of this clause and its relationship to the rest of the Bill. I will not say that we will accept the amendment, but I was in error.
I nodded to the noble Lord, Lord Bradshaw. I do not think that I gave a distinct answer, but if I nodded, I nodded incorrectly in the wrong direction. It should have been horizontal and not vertical. Although the Office of Rail Regulation has got a crucial independent role to play with regard to the process, the announcement—the closure notice—will be for the appropriate rail funding or national authority. That is the answer to the point about on whose part the final announcement is made.
Lord Rotherwick: I was under the impression that I had the very modest amendments and that my noble friend on my right had the modest ones. As the Minister has proven by the fact that he has come under sustained fire, has had to jump to his feet more than usual ant all Members of the Committee have joined in, I have had great delight in moving this amendment.
I am grateful for the support that I have had from everyone bar the Minister, in particular what was said by the noble Lords, Lord Bradshaw and Lord Berkeley, and the very precise comments made by the noble Lord, Lord Snape. I understand that we are trying to ensure that where the Secretary of State has the enjoyment of holding the purse strings. he does not get off the hook from accountability for the actions carried out in his name, in effect. by the ORR. Therefore, like the noble Lord, Lord Bradshaw, we cannot possibly be satisfied with the answers and the way in which the Minister would wish this to go. We will no doubt come back to it at a later date.
Lord Snape: Before the noble Lord withdraws his amendment, perhaps I may put a question through him to my noble friend. In reply to the noble Lord, Lord Bradshaw, he said that the heading for a closure will be from the funding authority. Outside Scotland. the funding authority is the Secretary of State. If my noble friend is not going to answer any questions about a closure, why is his name on the closure in the first place?
Lord Davies of Oldham: My noble friend is having trouble with the subtlety of these arrangements. He should recognise the proper role of the Office of Rail Regulation in the closure procedures that these amendments would change, which I have sought to

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resist. At no stage have I suggested that the Secretary of State is not responsible, nor am I denying that he can be called to account even in areas in which he would not be directly responsible because of the pressures that could be engendered on him.
I rise to reassure the noble Lord, Lord Bradshaw, and the Committee, that once the Office of Rail Regulation has played its part with regard to the closure notice, it is the funding authority with regard to the railways system that is under consideration that announces the closure; that is, the Secretary of State, the passenger transport executive, Transport for London, the National Assembly for Wales or the Scottish Parliament. So it is not just the Secretary of State. But I think that my noble friend would also recognise that the Secretary of State has his role to play alongside those other authorities.
Lord Berkeley: Before the noble Lord, Lord Rotherwick, withdraws his amendment. I want to say that I am pleased with my noble friend's answer. The Rail Regulator will conduct the appraisal, which I am sure is right, and then the Secretary of State or the other funding authority will make the announcement. That is on a closure under this clause.
However, as regards a closure because the railways have run out of money, as we discussed earlier today under Amendment No. 32, my noble friend resisted the suggestion that after the regulator had conducted his appraisal the Secretary of State should make an
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announcement about the closure or a reduction in service. Perhaps he could see his way of putting the two closures into the same pot.
Lord Davies of Oldham: The regulator does not quite conduct the appraisal: he makes the order that it is carried out correctly. His job is regulation, but not as an actor.
At this late stage, I take notice of the point my noble friend has raised. To put it at its mildest, it is a fairly controversial assertion. As we still have a little time to debate the Bill, I will have the opportunity of persuading him of the coherence of the Bill, despite the fact that it has different aspects to it. Here, we are not talking about closures but about reductions in services.
I have taken note of my noble friend's comments and he has every right to be satisfied on that point. I shall seek to achieve that.
Lord Rotherwick: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 63 and 64 not moved.]
Clause 33 agreed to.
Baroness Crawley: This may be a convenient moment to adjourn the Committee until Wednesday next at 3.30 p.m.
The Chairman of Committees (Lord Brabazon of Tara): The Committee stands adjourned until Wednesday next at 3.30 p.m.
The Committee adjourned at two minutes past seven o'clock.