§ 3.9 p.m.
§ Viscount GoschenMy Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Viscount Goschen.)
§ Lord Clinton-DavisMy Lords, perhaps I may make two points in relation to the Motion. First, I thank the Government for helpfully sending to Opposition spokesmen the Notes on the Amendments which they propose to raise. I find them very helpful, as do my colleagues. The second point is whether the Government have had any further thoughts about their defeat in the House the other day on the ability of British Rail to enter the franchising stakes.
§ Viscount GoschenMy Lords, I thank the noble Lord, Lord Clinton-Davis, for his remarks about the notes. As regards the second point, the position is exactly as my noble friend Lord Caithness set it out the last time that we discussed this matter.
§ Lord Clinton-DavisMy Lords, before the noble Viscount sits down, perhaps I may point out that we have now moved on two days. Is the Minister unable to indicate to the House whether the Government have had any further thoughts since then?
§ The Lord Privy Seal (Lord Wakeham)My Lords, I believe a number of people in this House will think that the Government, when asked to reconsider a matter by this House, should not jump to any quick conclusions. The Minister made it quite clear that he would give consideration to these matters. That is the position, and that will remain for some time.
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 32 [Proposals to discontinue non franchised etc. passenger services]:
§
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe) moved Amendment No. 70A:
Page 39, line 17, leave out ("any services in the case of which") and insert ("those whose provision").
§ The noble Earl said: On behalf of my noble friend Lord Caithness, in moving Amendment No. 70A, with the leave of the Committee I shall speak also to 1396 Amendments Nos. 70B to 70E inclusive; Amendments Nos. 71A, 77B, 77C, 83A, 84A to 84H inclusive; Amendments Nos. 89A, 90A, 90B, 118A and 124A.
§ This grouping of amendments is not as daunting as it looks. The main amendments are Amendments Nos. 84F and 90B. The remaining amendments are mainly drafting or consequential. Amendment No. 84F sets out the closure procedure to be followed where a passenger network is being operated on behalf of the franchising director (for example, following the refusal of a previous closure proposal) and the franchising director wishes to discontinue that operation.
§ That circumstance is not covered by Clause 34 which allows only for circumstances where the network operator takes the initiative. Without the provisions of Amendment No. 84F, such a network could not be closed. The closure procedures follow closely those in Clause 34, amended to reflect that it is the franchising director taking the initiative.
§ Amendment No. 90B makes equivalent provision as regards facilities (that is to say, stations and light maintenance depots) operated on behalf of the franchising director, and for the same reasons. Another noteworthy amendment is Amendment No. 84E. That amends the definition of minor closures contained in Clause 34. Minor closures are exempt from the closure procedures. The amendment provides that any part of a network other than track which, in the opinion of the regulator, is not necessary for the network to be used for passenger services, is a minor closure. That will enable insignificant parts of the network, such as a redundant signal box, to be closed without going through the full closure procedure.
§ I shall not weary your Lordships by taking the Committee through the remaining amendments in the group line by line. However, I can assure the Committee that the remaining amendments are clarificatory, drafting or consequential and that they do improve the Bill. I beg to move.
§ Lord Ewing of KirkfordIt was only towards the end of the Minister's remarks that he provoked me into rising to speak when he mentioned the possible closure of redundant signal boxes. Is it within the noble Earl's memory that the late Robert Adley fought a tremendous campaign in another place to retain redundant signal boxes that, surprisingly to me, had been designated listed buildings? As I understand it, there is a fairly substantial number of fairly old signal boxes which are in effect redundant but which are listed buildings and for that reason cannot be disposed of, demolished or anything of that kind. Against the background of the late Robert Adley's campaign on this question, I ask the Minister for an assurance that the redundant signal boxes which are listed buildings will not be affected by what the noble Earl has just said.
Earl HoweI point out to the noble Lord that a closure is not the same as demolition. Clearly, if there is a listed signal box involved proper planning considerations will be taken into account on every occasion.
1397 On Question, amendment agreed to.
§
Earl Howe moved Amendments Nos. 70B to 70F:
Page 39, line 17, after ("duty") insert ("to secure").
Page 39, line 20, leave out second ("or").
Page 39, line 21, at end insert ("or.
Page 39, leave out line 22
Page 39, line 23, leave out subsection (II).
On Question, amendments agreed to.
§ Clause 32, as amended, agreed to.
§ 3.15 p.m.
§
Lord Carmichael of Kelvingrove moved Amendment No. 70G:
After Clause 32. insert the following new clause:
("Temporary suspension of rail services
—(1) In any circumstance which requires any railway passenger service to be suspended due to external or unforeseen circumstances, and a substitute rail service over an alternative line, or a substitute bus service is provided, it shall be the duty of the Regulator, Franchising Director, Franchise Operator and the Board, as necessary in each case, to cooperate together to ensure that—
(2) In this section "external or unforeseen circustances" means damage to track or other infrastructure due to storm, flood or other natural disaster, or the declaration by the appropriate authority of the track or other infrastructure to be unsafe for the carrying of passenger services.").
§ The noble Lord said: I fully accept responsibility for the fact that the wording of this amendment may not be the most suitable, but it was the best I could do to convey a fear which has been expressed by many people that there could be a reluctance by responsible authorities to make repairs to structures which become damaged to an extent that the rail service may require to be temporarily suspended.
§ The transparent subsidy for each line may lead to the temptation to propose that the line should be closed rather than to make the necessary repairs or alternatively to delay them until a future year's budget. That would cause a number of problems. Traffic would be lost during that period and people would find other ways of travelling. As regards matters of heavy engineering of this kind, unless repairs are done fairly quickly they become much more expensive in the following years. So it is a case of a stitch in time which may very well save a great deal of trouble. An amendment along the lines I have suggested would put a clear duty on all involved on a particular line to reinstate the rail service as quickly as possible.
§ I have said that I am aware that the wording of this amendment is not perfect; but I hope the idea may commend itself to the Government, and that they may see that there is a fair amount of logic in it. I hope that they will be able to find words which are more appropriate to complete the idea of making repairs and making sure that the line does not fall into disuse, which would cause a loss of traffic because of repairs not being done. I beg to move.
1398Earl HoweI believe that I can be reassuring in part to the noble Lord although perhaps not in the way that he has suggested in that I have no difficulty with the intent of the amendment. For example, where a railway bridge is washed away, I agree with the noble Lord that everything possible must be done to restore the bridge and to cater for passengers' travel needs in the meantime.
In future, responsibility for the infrastructure will rest with Railtrack. Train operators will have rights of access through their access agreement with Railtrack —in other words, those rights of access will be underpinned by a binding legal agreement. If, for whatever reason, a particular piece of infrastructure is temporarily unavailable to train operators. then the responsibility to restore the position rests primarily with the infrastructure operator. The onus should be on them to make available and/or to pay for any interim measures to ensure that operators can offer passengers alternative services.
I am sure that the Committee appreciates that it is impossible to put on the face of the Bill detailed arrangements to deal with every possible contingency which may occur on the railways in future. This is a case in point. These are detailed matters which are properly for the access agreement—in other words, the legal contract —and not the Bill. For that reason, I hope that the noble Lord will be content to withdraw his amendment with the comfort of the general reassurance which I have been able to give him.
§ Lord Carmichael of KelvingroveI am pleased that the Minister has come to grips with the idea that was put forward in the amendment. We shall need to consider this matter in some detail to understand what responsibilities Railtrack will have and to consider whether Railtrack and the franchisee could find a good reason for not doing any repairs—either a financial reason or because of alterations in the sort of traffic that will use the line. Alternative ways may be suggested by the licensee. We have been trying to ensure that repairs should be carried out as quickly as possible on temporary suspensions and that. they should not be held up because of a lack of funds. The cost of such repairs should not be added to the budget for the following year because that would perhaps cost a great deal more. As the Minister has come at least half way, for which I thank him, I shall take the amendment away and for now, I beg. leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 33 [Proposals to discontinue franchised etc. passenger services]:
[Amendment No. 71 not moved.]
§
Earl Howe moved Amendment No. 71A:
Page 39, leave out lines 45 to 48 and insert:
("and any reference in this section to a closure is a reference to a discontinuance falling within paragraph (a) or (b) above.
(1A) If in a case where this section applies—
§ The noble Earl said: This amendment has already been spoken to. I beg to move.
§ On Question, amendment agreed to.
§
Earl Howe moved Amendments Nos. 71B and 71C:
Page 40, line 7, at end insert ("or which are provided on an experimental basis, for the purposes of section 56A of the Transport Act 1962;").
Page 40, line 10, after ("designated") insert ("or which are of a class or description designated").
§ On Question, amendments agreed to.
§ [Amendments Nos. 72 to 76 not moved.]
§
Earl Howe moved Amendments Nos. 76A and 76B:
Page 40, line 30, leave out ("national") and insert ("local").
Page 41, line 1, at end insert:
(""the area affected" means the area in which is situated the station or, as the case may be the, line mentioned in subsection (1) above;").
§ The noble Earl said: These amendments were spoken to with Amendment No. MA. I beg to move.
§ On Question, amendments agreed to.
§ [Amendment No. 77 not moved.]
§
Earl Howe moved Amendment No. 77A:
Page 41, line 24, leave out subsection (7).
§ The noble Earl said: This amendment was spoken to with Amendment No. 64A. I beg to move.
§ On Question, amendment agreed to.
§ Clause 33, as amended, agreed to.
§ Clause 34 [Notification of proposals to close operational passenger networks]:
§
Earl Howe moved Amendments Nos. 77B and 77C:
Page 41, line 34, leave out ("and").
Page 41, line 38, at end insert ("and
(c) the network or, as the case may be, the part of the network in question is not one which is operated on behalf of the Franchising Director,").
§ The noble Earl said: These amendments were spoken to earlier with Amendment No. 70A. I beg to move.
§ On Question, amendments agreed to.
§ [Amendment No. 78 not moved.]
§
Earl Howe moved Amendment No. 78A:
Page 41, line 44, at end insert:
("(1A) In determining for the purposes of subsection (1) (b) above whether the network or, as the case may be, the part of the network in question has at any time within the period there mentioned been used for or in connection with the provision of services for the carriage of passengers by railway, there shall be left out of account any use for or in connection with the provision of services—
and this section shall not have effect in relation to any networks which are designated, or which are of a class or description designated, by order under section 42(4) below as networks in relation to which this section is not to have effect.").
§ The noble Earl said: This amendment was spoken to earlier with Amendment No. 62A. I beg to move.
§ On Question, amendment agreed to.
§ [Amendment No. 78B had been withdrawn from the Marshalled List.]
§ [Amendments Nos. 79 to 83 not moved.]
§
Earl Howe moved Amendment No. 83A:
Page 42, line 37, leave out ("any subsequent application of this section") and insert ("the provisions of section (Proposals to close passenger networks operated on behalf of the Franchising Director) below").
§ The noble Earl said: This amendment was spoken to with Amendment No. 70A. I beg to move.
§ On Question, amendment agreed to.
§ [Amendment No. 84 not moved.]
§
Earl Howe moved Amendments Nos. 84A to 84E:
Page 43, line 15, after second ("or') insert ("(a)").
Page 43, line 16, after ("network") insert ("which consists of a stretch of track, or ancillary facilities associated with a stretch of track,").
Page 43, line 19, leave out ("(a)") and insert ("(i)").
Page 43, line 22, leave out ("(b)") and insert ("(ii)").
Page 43, line 25, at end insert ("or
(8A) The networks, and the parts of networks, which are to be regarded for the purposes of this section as operated on behalf of the Franchising Director are those whose operation he is for the time being under a duty to secure, in consequence of—
§ The noble Earl said: These amendments were spoken to with Amendment No. 70A. I beg to move.
§ On Question, amendments agreed to.
§ Clause 34, as amended, agreed to.
§
Earl Howe moved Amendment No. 84F:
After Clause 34, insert the following new clause: Proposals to close passenger networks operated on behalf of the Franchising Director
(" .—(I) This section applies in any case where—
(2) If in a case where this section applies—
1401
the Franchising Director may discontinue the operation of the network or, as the case may be, the part of the network in question, notwithstanding any duty imposed upon him by or under this Part to secure its operation, and subsections (4) and (5) below shall not apply in relation to the closure.(3) In determining for the purposes of subsection (2)(b) above whether the network or, as the case may be, the part of the network in question has at any time within the period there mentioned been used for or in connection with the provision of services for the carriage of passengers by railway, there shall be left out of account any use for or in connection with the provision of services—
(4) Subject to subsection (2) above, where this section applies, the Franchising Director shall publish in two successive weeks in a local newspaper circulating in the area affected and in two national newspapers, and in such other manner as appears to him to be appropriate, a notice containing—
and shall be under a duty during the interim period to secure the operation of the network or, as the case may be, the part of the network to which the proposed closure relates.(5) Subject to subsection (2) above and without prejudice to any subsequent application of this section in relation to the network or the part of the network in question—
(6) In this section—
the area affected" means the area in which is situated the network or, as the case may be, the part of the network in question;
the final decision on the closure question" means—
the interim period" means the period beginning with the date mentioned in subsection (4)(b) above and ending four weeks after the date of the final decision on the closure question;
minor closure" has the same meaning as it has in section 34 above.
(7) The networks and parts of networks that are to be regarded for the purposes of this section as operated on behalf of the Franchising Director are the same networks and parts of networks as are to be so regarded for the purposes of section 34 above.
(8) Any sums received by the Franchising Director under this section shall be paid into the Consolidated Fund.").
§ The noble Earl said: This amendment was spoken to with Amendment No. 70A. I beg to move.
§ On Question, amendment agreed to.
§ Clause 35 [Notification of proposals to close railway facilities used in connection with passenger services]:
§
Earl Howe moved Amendments Nos. 84G and 84H:
Page 43, line 32, leave out ("and").
Page 43, line 36, at end insert ("and
§ The noble Earl said: These amendments were spoken to with Amendment No. 70A. I beg to move.
§ On Question, amendments agreed to.
§
Earl Howe moved Amendment No. 84J:
Page 43, line 43, at end insert:
("(IA) In determining for the purposes of subsection (I)(b) above whether the relevant facility or, as the case may be, the part of the relevant facility in question has; At any time within the period there mentioned been used in connection with the provision of services for the carriage of passengers by railway, there shall be left out of account any use in connection with the provision of services—
and this section shall not have effect in relation to any stations or light maintenance depots which are designated, or which are of a class or description designated, by order under section 42(5) below as stations or light maintenance depots in relation to which this section is not to have effect.").
§ The noble Earl said: This amendment was spoken with Amendment No. 62A. I beg to move.
§ On Question, amendment agreed to.
§ [Amendments Nos. 85 and 86 not moved.]
§
Earl Howe moved Amendment No. 86A:
Page 44, line 21, after ("appear") insert ("to him").
§ The noble Earl said: This amendment was spoken to with Amendment No. 64A. I beg to move.
§ On Question, amendment agreed to.
§ [Amendments Nos. 87 to 89 not moved.]
§
Earl Howe moved Amendment No. 89A:
Page 44, line 41, leave out ("any subsequent application of this section") and insert ("the provisions of section (Proposals to close passenger railway facilities operated on behalf of the Franchising Director) below").
§ The noble Earl said: This amendment was spoken to with Amendment No. 70A. I beg to move.
§ On Question, amendment agreed to.
§ [Amendment No. 90 had been withdrawn from the Marshalled List.]
§
Earl Howe moved Amendment No. 90A:
Page 45, line 33, at end Insert:
("(8A) The stations and light maintenance depots, and the parts of stations or light maintenance depots, which are to be regarded for the purposes of this section as operated on behalf of the Franchising Director are those whose operation he is for the time being under a duty to secure, in consequence of—
§ The noble Earl said: This amendment was spoken to earlier with Amendment No. 70A. I beg to move.
§ On Question, amendment agreed to.
§ [Amendment No. 90A A had been withdrawn from the Marshalled List.]
§
Earl Howe moved Amendment No. 90B:
Insert the following new clause:
Proposals to close passenger railway facilities operated on behalf of the Franchising Director
(" .—(I) This section applies in any case where—
(2) If in a case where this section applies—
the Franchising Director may discontinue the operation of the relevant facility or, as the case may be, the part of the relevant facility in question, notwithstanding any duty imposed upon him by or under this Part to secure its operation, and subsections (4) and (5) below shall not apply in relation to the closure.(3) In determining for the purposes of subsection (2)(b) above whether the relevant facility or, as the case may be, the part of the relevant facility in question has at any time within the period there mentioned been used in connection with the provision of services for the carriage of passengers by railway, there shall be left out of account any use in connection with the provision of services—
(4) Subject to subsection (2) above, where this section applies, the Franchising Director shall publish in two successive weeks in a local newspaper circulating in the area affected and in two national newspapers, and in such other manner as appears to him to be appropriate, a notice containing—
and shall be under a duty during the interim period to secure the operation of the relevant facility or, as the case may be, the part of the relevant facility to which the proposed closure relates.(5) Subject to subsection (2) above and without prejudice to any subsequent application of this section in relation to the relevant facility or the part of the relevant facility in question—
(6) In this section—
the area affected" means the area in which is situated the relevant facility or, as the case may be, the part of the relevant facility in question;
the final decision on the closure question" means—
"the interim period" means the period beginning with the date mentioned in subsection (4) (b) above and ending four weeks after the date of the final decision on the closure question;minor closure" has the same meaning as it has in section 35 above.
(7) The stations and light maintenance depots and the parts of stations and light maintenance depots that are to be regarded for the purposes of this section as operated on behalf of the Franchising Director are the same stations and light maintenance depots and parts of stations and light maintenance depots as are to be so regarded for the purposes of section 35 above.
(8) Any sums received by the Franchising Director under this section shall be paid into the Consolidated Fund.").
§ The noble Earl said: Again, this was spoken to with Amendment No. 70A. I beg to move.
§ On Question, amendment agreed to.
§ Clause 35, as amended, agreed to.
§ Clause 36 [Notification to, and functions of, the Regulator and the relevant consultative committees]:
§
Earl Howe moved Amendment No. 90C:
Page 45, line 37, after (" 35") insert ("(Proposals to close passenger networks operated on behalf of the Franchising Director) and (Proposals to close passenger railway facilities operated on behalf of the Franchising Director)").
§ The noble Earl said: In moving Amendment No. 90C, with the leave of the Committee I should like to speak also to Amendments Nos. 90D and 124B. I can be brief in introducing the government amendments, although I shall obviously wish to comment on the amendments standing in the name of the noble Baroness, Lady Stedman, once she has spoken to them.
§ Amendment No. 90D has a simple purpose. It provides that the regulator shall send to appropriate 1405 railway users consultative committees copies of objections to a closure proposal so as to enable them to report to him on cases of hardship. Amendments Nos. 90C and 124B are purely technical and consequential. I beg to move.
§ Baroness StedmanI, too, should like to thank the Minister for the Notes on Clauses and for the amendments. I accept that some of them have gone some way towards meeting some of the points that I raised earlier. That is the case with Amendments Nos. 91 and 92 in this grouping which have been rather superseded by Amendments Nos. 90C and 90D. Perhaps I may refer in the first instance, therefore, to Amendments Nos. 93 to 96 which make rather wider points than the Minister's existing amendments. I should like to explain them to him and to ask him to consider them before we reach the next stage in our consideration of the Bill. I hope that he will be able to take them on board.
Amendments Nos. 91 and 92 have now been superseded. Turning to Amendment No. 93, the RUCC will receive from the regulator copies of objections in a particular closure case and will be obliged to consider them. The objections which the RUCC will be obliged to consider will have been lodged in accordance with Clauses 32 to 35, which do not in any way limit the grounds on which an objection may be lodged. Therefore, an RUCC would receive, and be obliged to consider, copies of objections on any grounds. Having been obliged to receive and consider the objections and the issues raised in them, is it not logical that the RUCC should address the substance to the whole range of objections when it prepares its report?
Clause 36(2) (c) appears to limit the scope of the RUCC's report to the regulator to two aspects: hardship and alleviation. Amendment No. 93 would require the consultative committees to report on hardship and alleviation, but would not prevent them from reporting on other matters raised by the objections. That would replicate closely the existing arrangements whereby it is accepted by government and British Rail, in a tripartite agreement, that the TUCCs may include matters other than hardship in their reports to the Secretary of State.
On Amendment No. 94, the Bill, again, makes no provision for copies of the RUCC's closure report to be sent to the central committee which, by virtue of an earlier clause, may investigate matters relating to the effects of the discontinuance of services generally, to the efficacy of procedures relating to such discontinuances, or to the franchising director who made the closure proposal to which the report relates. The Bill is also silent about whether RUCC closure reports may be published. It is current practice for those closures reports to be published when the Secretary of State announces his decision. In the absence of any specific provision to the contrary, it is understood that the regulator may be able to insist that the RUCC's report is made in confidence to him and that he should himself publish a report at his own discretion. Such a development would be a step backwards from open government, and the amendment would help prevent that.
1406 Amendment No. 95 seeks to define the nature of a public hearing in this context. It is to hear objectors orally or to hear oral representations made on behalf of the franchising director. The presence of the franchising director's representative will be important to the consultative committee in helping it to understand the case for closure and answering questions raised by the consultative committee at the hearing. Many of those questions may be prompted by objectors' contributions. British Rail undertakes that role under the present arrangements and is invariably represented at the consultative committee hearings, but there is no compulsion upon British Rail to attend, as there will be no compulsion on the franchising director under the amendment.
The present Act specifically provides. for the possibility, of British Rail's attendance at closure hearings. The Bill makes no such provision in relation to the franchising director. That provision might be helpful. It also removes the need for a consultative committee to consult the regulator before holding a public hearing, although by virtue of Clause 36(4) before deciding whether to hold a public hearing the consultative committee will still be obliged to take account of such matters as may be notified to it by the regulator.
Amendment No. 96 deals with the existing closure procedures which require two or more consultative committees concerned with a closure proposal to decide whether they will report jointly or through the committee principally concerned. The Bill could be interpreted as requiring each consultative committee to report independently to the regulator. That could lead to him being given different advice by the consultative committees concerned. The amendment proposed seeks to ensure that the objectors are represented in just one report.
On Amendments Nos. 97, 99 and 100, we are dealing with the timescale of the closure procedure. There is no objection in principle to the imposition of timescales, but they have to be reasonable. The period of 12 weeks for the preparation by the consultative committee of its report is totally unrealistic in regard to a major closure proposal which may attract many thousands of objections. Even if the regulator allows the consultative committee more time, the whole process is governed by the period of 26 weeks, extensible to 52 weeks with the consent of the Secretary of State. There has to be more flexibility to extend the time limits. The Settle-Carlisle closure proposal in the late 1980s took over four years from beginning to end. It would be impossible for a consultative committee, with its unpaid, part-time members, and tiny secretariat, to read, consider and analyse the 22,000 objections which were made to that proposal, let alone hold public hearings spread over several weeks in several locations, and then prepare a detailed report within the timescales laid down by the Bill.
The amendment would mean that we could have more reasonable timescales. There would then be every prospect that the consultative committee, the regulator or the Secretary of State—if they did not follow the procedure—would lay themselves open to a 1407 judicial review if there was any evidence that they were unable to discharge their duties properly and fully because of restrictive timescales.
Amendment No. 98 requires the regulator to have regard to a number of matters when deciding whether to allow the proposed closure procedure to take place. Under the present procedures, when making such a decision the Secretary of State has to,
have regard to any matters which for the time being appear to him to be relevant, including any social or economic considerations".That guidance is laid down in Clause 54 of the Transport Act 1968, but has not been replicated in the Bill. The amendment seeks merely to relate to that and to rectify it.
§ Lord Clinton-DavisI support the observations made by the noble Baroness. They are important. I was proposing to raise a number of matters on clause stand part, but it is more convenient to do so now. To impose a duty on the consultative committees to have regard, on the basis of information available to them, to the value for money of any such measures, is to impose an enormous task upon them. It is a task that they have not previously been expected to fulfil.
The Government must spell out in rather more detail than has been the case up until now how, in their view, the committees are expected to undertake their tasks: what sort of evidence will they be expected to hear? If they are expected to have regard to that criterion (the value for money of any such measures), why should they not equally have regard to the wider considerations to which the noble Baroness referred —that is, the wider social and economic considerations? More than that, why should they not be considering the environmental considerations of a proposed closure? After all, it may be that there is no other way of doing it, because it is conceivable that some of the closures may not be subject to the environmental impact assessment procedures required by the directive and the relevant Act.
Consequently, I should like to hear from the Government how they believe those environmental matters can be properly considered in the context of a proposed closure. It is odd that in a narrow remit the committee should be restricted to considering the criterion of relieving the hardship of a proposed closure. I should also like to know who studies the wider implications of closure which go beyond the remits of the consultative committees. I have already referred to the implications for the environment, but there is also the impact of the cost of the increased road traffic that will follow. That is a matter that will fall to be dealt with in the wider duties of a consultative committee, which the noble Baroness is urging, and which I, too, am urging. Someone should be giving consideration to that point at a local level, or where a more major closure is being considered.
So who considers these wider transport issues? How will it impact on the general desirability of maintaining a rail link, because it fits in with broader transport issues? Specifically, what criteria are to be followed in these deliberations?
Earl HoweI wish to begin by considering the amendments in the group which concern the role of the consumer committees—the RUCCs—in the closure procedure. Amendment No. 94 provides for the RUCCs' reports to the regulator also to be sent to the CRUCC and to the franchising director and permits the RUCCs to publish those reports. I understand that at present the TUCCs make available their report once a final decision has been reached.
I have no difficulty with that idea, nor any desire to see the practice changed. For that reason I should like to take the amendment away and consider it before a later stage. I am a little uncertain about the drafting of the amendment but I shall be happy to consider it with the noble Baroness.
However, I am not so sympathetic to the other amendments standing in the name of the noble Baroness, which relate to the committees' role in the closure procedures. Amendment No. 91 has much the same effect as the Government's Amendment No. 90D in providing that the regulator shall send to the appropriate RUCCs copies of objections to a closure proposal so as to enable them to report to him on hardship. Not surprisingly, I commend the Government's Amendment No. 90D to the Committee and I hope that the noble Baroness will be content with that.
Amendment No. 92 would require the RUCCs to consider those objections. I do not believe that it is necessary to spell that out in the Bill. What else should the RUCCs do with them other than consider them?
Amendment No. 95 requires that any hearing an RUCC may elect to hold shall be held in public. Again, I do not believe that that needs to be stipulated in the Bill. The matter can be safely left to the RUCCs. I am sure that in practice the presumption will be that such hearings are held in public.
Amendment No. 96 would permit RUCCs to report jointly or to agree that one should take the lead where the area affected by a proposed closure covers the area of more than one RUCC. Again, I do not believe that it is necessary to make specific provision for that. The Bill provides that every RUCC whose area includes areas affected by the proposed closure shall receive copies of the franchising director's notice. There is nothing in the Bill to suggest that RUCCs should not collaborate where a closure proposal straddles the boundary of two or more RUCCs.
Amendment No. 98 would require the regulator, before deciding whether to allow a proposed closure to take effect, to consider wider economic and social considerations. The amendment would add nothing of substance to the requirements already implicitly placed on the regulator by the Bill as drafted. In the absence of any qualification to the contrary, he must take into account all relevant matters in reaching his decision. Economic and social considerations will invariably be relevant to a greater or lesser degree when considering a closure. I hope that the noble Baroness will agree, therefore, that Amendment No. 98 is unnecessary.
The remaining amendments in the grouping aim to extend the periods within which the RUCC must make its reports to the regulator about hardship and 1409 the period within which the regulator must make his decision on the closure proposal. In my view, 12 weeks ought to be sufficient time for the RUCC to report in the majority of instances. However, I accept that there will be more difficult cases. For that reason, the 12-week period is extensible by the regulator within the overall time limit. There are 26 weeks for the regulator to make his decision and that is extensible up to 52 weeks on application to the Secretary of State.
It would be difficult to justify a longer period of consideration of a closure. We must think of the passenger whose service is hanging in the balance. The public would be entitled to criticise an inability to come to a decision within a year. If a particularly difficult case arises, with a large number of objections to he considered, the RUCC must be resourced accordingly. That, rather than allowing for an indefinite prolongation of the matter, as I believe would be the potential effect of Amendment No. 100, is, I am sure, the way to tackle the matter.
I hope that in the light of what I have said, and my commitment to correspond with the noble Baroness on Amendment No. 94, she will not press her amendment and that the Committee will approve the Government's Amendment No. 90D together with the technical consequential amendments which were spoken to earlier.
§ 3.45 p.m.
§ Lord ShepherdThe Minister said that if an extension were required it could be achieved up to 52 weeks, subject to the approval of the Secretary of State. Why does the matter have to go to the Secretary of State? Why cannot the regulator, who plays an important role in this, make his own judgment? I should have thought that that would save a good deal of time, knowing how long it takes for consultations to arise. If the object is to obtain speed and efficiency, I believe that it would be best to leave the matter to the regulator to agree to an extension if in his view that is required. Why is it necessary for the matter to go to the Secretary of State?
Earl HoweEssentially, the reason is that it would be wrong to signal in the Bill that a 52-week period, or any period longer than that, should be the norm. In the majority of cases it should be incumbent on the regulator to reach a decision within a reasonable timescale. I do not see that a referral to the Secretary of State should necessarily lead to delay. If the regulator foresees the need for a longer period of consideration he will no doubt be aware of that in good time and can approach the Secretary of State accordingly. Therefore, I do not see that there is any difficulty.
§ Lord ShepherdThe Minister may be right as regards delay but there is bound to be a degree of uncertainty about the granting of an extension.
Earl HoweThat is why I believe the norm should be as enshrined in the Bill. There would be greater uncertainty if the Bill specified a longer period as being within the power of the regulator to approve. That is essentially the reason.
§ Lord Clinton-DavisI believe that the Minister has overlooked in his reply the points that I raised. I am sure that he did not do so deliberately. I asked why the criterion about value for money is imposed upon the committee when the wider considerations to which the noble Baroness referred and the question of the environment, albeit in a limited way, are not also spelt out. Once one spells out that criterion one is giving emphasis to it. The Minister said that it is all right because an implicit duty is placed on the regulator to deal with all relevant matters. That in itself is extremely vague and gives little, if any, guidance to the regulator.
I fear that I must repeat the question. What happens to the environmental issues which are not touched by the environmental impact assessment? Who will deal with that? Will it be the regulator or the committee? If it is no one apart from the Secretary of State, perhaps the matter should be referred to in the Bill.
Earl HoweI apologise to the noble Lord for not answering his questions in my initial reply. The RUCCs are obliged to take into account value for money considerations only to the extent that they are able to do so. They must use their best endeavours arid no one expects more than that. It is not intended to be an onerous duty on them. The wider environmental and transport considerations are to be considered by the regulator. He must consider all the relevant circumstances of the case in line with his general duties in Clause 4, especially subsection (3)(b). I hope that that will be of assistance. The reason why it is not specifically laid out in the Bill is that once a particular aspect of a certain individual's duties is emphasised, that is done at the expense of others. As I am sure the noble Lord will be aware, the convention in legislation is not to highlight any particular aspects but to refer in general terms to the duties laid upon an individual.
§ Lord Clinton-DavisPrecisely. That is why one could have a similar provision in relation to those wider considerations, including the environment. The Government are standing on its head the statement that has just been made by the Minister because specific attention is being drawn and emphasis is being given to one item—value for money.
Secondly, it is grotesquely unsatisfactory that a general remit should be offered about value for money. The Minister concedes that the committee must do its best. How will it do that without guidance? If guidance is to be given, what will be its nature? The Minister has conceded that it is an extremely imprecise area. I do not believe that such imprecision should find its way into a Bill of this kind. It imposes nothing short of a duty on the consultative committee to have regard, on the basis of information available to it, to the value for money of any such measures. However, the committee is not given guidance as to how lit should go about measuring whether something is value for money. What sort of evidence is the committee to hear? That is riot the kind of consideration to which committees in the past have become accustomed. They have not had to undertake 1411 such a duty and I do not see why such a provision should be imposed upon them now. I am not reassured by what the noble Earl said.
Earl HoweI am sorry that the noble Lord is not reassured by what I said. He has made some pertinent observations. I shall consider what he has said and write to him before a later stage of the Bill.
§ Baroness StedmanI was about to ask the Minister whether he will look again at what the noble Lord, Lord Clinton-Davis, said, among other things. I believe that it is important that the noble Earl should look at the extension matter. I know that we do not have many Settle-Carlisle railways, but if such a problem crops up and a large number of objections are made, how is the extra help triggered off if committees have to deal with such matters within the 52 weeks? The Minister said that if there are many objections, then more resources would have to be made available to the committee. However, extra resources will not necessarily deal with 22,000 objections within a limited timescale and the committee may require longer than 52 weeks.
When the Minister looks again at Amendment No. 94 to consider what I said, perhaps he will give a little more thought to the question of extensions. Perhaps he will consider whether, rather than having joint submissions from two consultative committees, it is better to have one submission from the committee in which the major part of the closure procedure is concerned. I am sure that on occasions there may be conflicting advice from two committees and it may be better if one committee were to speak with one voice for the two committees.
Earl HoweI am happy to assure the noble Baroness that I will look at those points between now and Report. I shall write to the noble Baroness on those matters.
On Question, amendment agreed to.
§
Earl Howe moved Amendment No. 90D:
Page 45, line 45, at end insert:
("( ) The Regulator shall send to every consultative committee whose area consists of or includes the whole or any part of the area affected a copy of every objection to the proposed closure which is lodged with him in accordance with the terms of the statement published pursuant to paragraph (e) of whichever of sections 32(6), 33(3), 34(5), (Proposals to close passenger networks operated on behalf of the Franchising Director)(4), 35(5) or (Proposals to close passenger railway facilities operated on behalf of the Franchising Director)(4) above is applicable in the case of that proposed closure.").
§ On Question, amendment agreed to.
§ [Amendments Nos. 91 to 97 not moved.]
§ [Amendments Nos. 97A to 97C had been withdrawn from the Marshalled List.]
§ [Amendments Nos. 98 to 100 not moved.]
§ Clause 36, as amended, agreed to.
§ Clause 37 [Reference to the Secretary of State of decisions of the Regulator concerning proposed closures]:
§
Lord Ewing of Kirkford moved Amendment No. 101:
Page 47, line 30, at end insert:
1412
("( ) The Secretary of State shall not exercise the power conferred upon him by subsection (2)(a) above without having obtained confirmation in writing from the Secretary of State for Defence that the proposed closure will not be contrary to the requirements of national defence.").
§ The noble Lord said: Perhaps I may say at once to the noble Earl that this amendment does not strike at the heart of the Bill, nor is it a wrecking amendment. I thought that I should begin my remarks by assuring the noble Earl that I am not trapping him into any great dangers.
§ Amendment No. 101 is extremely helpful to the Minister and the Government because it would provide some consistency and cohesion in the Bill. The Committee should refer to Clause 111 which gives the Secretary of State for Transport the power to take control of the railway system in times of hostilities. Clause 111 is extremely specific in giving the Secretary of State the power to take control of the rail network in times of hostilities.
§ Amendment No. 101 to Clause 37 merely seeks to impose on the Secretary of State a duty that, when the regulator has made a decision to close a particular line and that closure has been referred to the Secretary of State for Transport, before he exercises the powers given to him in Clause 37 to confirm the closure proposal from the regulator, the Secretary of State for Transport should obtain from the Secretary of State for Defence an assurance in writing that the closure would not be prejudicial to the requirements of national defence. That brings consistency to the Bill which I am absolutely certain will appeal to the noble Earl.
§ The noble Earl and I have one great thing in common; we are both far too young to remember the last war. But I am advised by those Members of the Committee who are much older than the noble Earl or myself that during the last war the railway system was absolutely vital to the war effort in this country. Indeed, one can imagine how the rail network was used to move men, machines, ammunition and almost everything else that was required for the successful pursuit of those hostilities.
§ I know that the noble Earl, Lord Caithness, is checking on my age. I shall be 63 in January. It is just that I have a bad memory.
§ I am seeking to persuade the noble Earl to accept the principle of the amendment rather than the amendment itself, because I always accept in Opposition that the drafting may be technically incorrect and not acceptable. However, Amendment No. 101 provides a consistency to the Bill. The matter could be handled quite easily by the Secretary of State for Transport when he publishes his decision in confirming a closure, adding the words that he is satisfied by the Secretary of State for Defence that the closure is not prejudicial to the requirements of national security. As I say, I believe that that would provide some cohesion to the question, where the Secretary of State for Transport has the power to take control of the railway network during times of hostilities. I beg to move.
1413§ 4 p.m.
Earl HoweI fully understand and sympathise with the thinking behind the amendment. While I had no clue at all about the noble Lord's age, I did have a shrewd suspicion that he would be treating the amendment as a probing one. Nevertheless, I have some difficulties with it. I shall explain my reasons.
The railway has an important role to play in national defence. That is quite clear. At present, closure proposals are decided by the Secretary of State. Before he makes his decision, as a matter of established practice, the views of a number of other government departments are sought, including the Ministry of Defence. I hope that it goes without saying —although I shall say it—that consent to closure would not be given if closure would prejudice defence interests. I can assure the noble Lord that the Secretary of State will discharge his duties under the new closure procedures with no less care than he does currently.
However, I hope that the noble Lord agrees with me that the matter is best dealt with administratively. Arrangements will he put in place, but I do not think that it is necessary to draw attention to the matter by including provision on the face of the Bill. The noble Lord, Lord Ewing, will appreciate that it is not the convention to distinguish in legislation between different Secretaries of State. At present, the Bill does not do so and I believe that it would be undesirable to depart from the convention in the manner which the amendment would involve. In the light of those reassurances—and that is what they are intended to be —I hope that the noble Lord will not press his amendment.
§ Lord Ewing of KirkfordWhile I would have been happier if the Minister had indicated that he was prepared either to accept the amendment or at least to give it further consideration, I must admit that as we get older in life we are always prepared to settle for second best. The second best that I have been given today is having the Minister's assurance on the record. That is important, and I accept it. Therefore, I shall not press the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 37 agreed to.
§
Lord Tordoff moved Amendment No. 101ZA
Before Clause 38, insert the following new clause: ("Closure of railway line
.—(1) Where the Regulator's or the Secretary of State's decision leads to the closure of a railway line, the route of the closed railway shall be registered as a "Railway Right of Way" for a period of not less than ninety-nine years.
(2) Any land on which is registered a Railway Right of Way may be disposed of and developed at any time for alternative use subject to the provision that, on a recommendation from the Regulator and by order of the Secretary of State, the railway may be reinstated and the line reopened on all or part of the registered Railway Right of Way.
(3) Any person acquiring or proposing to develop land on which there is registered a Railway Right of Way shall inform the Regulator of his interest and intentions and shall not make any significant investment in the development of the land without written approval of the Regulator.
1414
(4) Where the Regulator recommends and the Secretary of State orders the reopening of a railway on land then owned by any person other than a railway operator or railway facility owner that person shall be given not less than twenty-five years notice of reopening or reasonable compensation in lieu of such notice.").
§ The noble Lord said: I am not sure whether the memory of the noble Lord, Lord Ewing, goes back as far as the Beeching plan or at what point his amnesia started. However, Members of the Committee on all sides will remember that, although in the short term the Beeching plan looked very good from an economic: point of view, many lines were closed at that time and many of the cuts were in fact a national mistake.
§ As the mobility of our population arid its freight has developed, so both passengers and freight have moved on to the roads. We then find ourselves in the cycle of having to build more roads or securing some other means to transport people and goods. We now have a situation where, in some parts of the country, the railways are coming back into demand. At present, there are more disused lines and stations being restored than there are lines under consideration for closure.
§ It is interesting to note that British Rail's route mileage, which was 19,630 in 1948, is now down to 10,270 miles which represents a reduction of just about half—that is, 9,360 miles. Of that reduced amount, only about 600 miles still remain in British Rail ownership. That has mainly been due to pressure from the Government, especially the DoE, on BR to dispose of surplus land. That has taken place fairly effectively. Very often such derelict or disused lines are handed over to the county council and, in some places, that has proved to be successful. For example, in my own fair county of Somerset, the county council leases the Taunton to Mineheacl line to the privately owned West Somerset Railway. It is only a pity that certain restrictive practices have stopped it connecting with the main line at Taunton. However, that is another long story. Moreover, part of the Taunton to Yeovil line is now used as a road. Avon County Council has bought a line between Bristol and Bath to use as a cycle track. That is something that one would also wish to encourage.
§ There are two worries on the horizon. First, there is the attention to closures contained in the Bill:, and, secondly, there is the declared intention of the Treasury to reduce support for regional railways which is the sector of BR that attracts the highest subsidy for rural lines and services. All indications suggest that there may be further decline arising from the provisions of the Bill. If the Treasury does not ease its demands for lower subsidies within the next five years, I am convinced that a great many rail closures will be suggested in various parts of Britain.
§ Our main concern must be the extent to which the closure proposals, when put into effect, will be irreversible. As I have already said, there are currently many cases of stations and lines being reopened. For example, the network of South Wales valley lines serving the Cardiff area and sponsored by Mid-Glamorgan County Council; the Oxford-Bicester line; the Birmingham Moor Street to Snow Hill line which was closed in 1972 and reopened in 1987; and, finally, 1415 the Rutherglen-Glasgow-Finniston line which was closed in 1964 and reopened in 1987. I have mentioned the dates because they show the time gap that very often occurs between the closure and the reopening. Moreover, nearer to here there is the London Thameslink Blackfriars to Farringdon line which was closed in 1962 and reopened in 1988.
§ There are many other lines under active consideration at present. I shall give the Committee just a few examples. There is Nottingham to Mansfield, Snowhill to Smethwick, and so on. There is also interest in the West Country, notably in Barnstaple, Bideford and Torrington. It would be unfortunate if such reopenings were unable to progress because of developments that have taken place on the line after it had been closed.
§ There are a number of cases of obstructed reopenings. For instance, I suppose the most obvious one is the Great Central line where it was proposed that the wide gauge should be used for piggy back to the Channel Tunnel and up to Derby. That is complicated by, among other things, housing development on the old Great Central rail track. There is also the case of the more direct route between Edinburgh and Perth which has now been lost under sections of the M.90.
§ The object of the amendment is to ensure that there is a limit to the destruction of the track that can take place. Although one accepts that some tracks will be closed, the idea of the amendment is to leave the responsibility with the Secretary of State and the regulator to protect those lines from unsuitable development, even if the chance of them ever being needed again is remote. Indeed, I can imagine that, at the time when some of the lines I have mentioned were closed, no one had the slightest idea that they would ever be reopened.
§ The purpose of the amendment is to set up a registered "Railway Right of Way", not totally to blight such areas of track but to ensure that the opportunity is there for them to be reopened and that there is always at the back of the minds of those who wish to develop the thought that such lines may be reopened at some subsequent time. Within the clause we would also like to see recommendations for compensation—or the possibility of compensation—that might be administered in the case of people who have developed parts of the track and subsequently find that they have to abandon those developments.
§ It is an important matter. If we have faith in the future of the railways and in their future development, we must ensure that mistakes are not made, as they were in the past following the Beeching cuts. It is in that spirit, and very much in the manner of a probing amendment, that I beg to move.
§ Lord Carmichael of KelvingroveI wish strongly to support the amendment of the noble Lord, Lord Tordoff. He made an important point when he mentioned that we needed a flexible approach to this matter. He was not saying that all closed railway lines —or solums as we used to call them—should be eligible for a 99 year lease as certain developments on that land would be acceptable. We are all beginning to 1416 become aware of traffic problems, particularly in conurbations. We can build as many motorways as we like but, as they all lead into towns, we shall find there is a limit beyond which we cannot go in terms of building more motorways. I believe it is estimated that road traffic will increase by about 146 per cent. by the first quarter of the next century. Where can that increase be accommodated in London, Birmingham, Edinburgh, Glasgow or any other town? People travelling into cities in the future will need to rely more and more on public transport.
Even at the time of the Beeching Report there was some concern to preserve railway routes. When I was at the Department of Transport a number of applications were made to cut railway lines to build roads or construct new developments. Sometimes it was decided that, rather than cut a railway line, a bridge would be built over it. At a later stage, if the railway line was not removed, people wondered why the bridge was still there as it appeared to be going nowhere. Therefore there was a flexible approach to these matters. As the noble Lord, Lord Tordoff, said, some passenger transport executives have been able to open up a number of lines that people thought were closed for good.
In Glasgow the PTE has established a railway system which is almost as comprehensive as the London Underground. The PTE has established that system using the old tunnels of the four railway companies that used to come into Glasgow. This is an extremely important amendment. I hope the Minister will consider it carefully. The old railway companies were always conscious of the fact that they might need the land on which the track ran.
I do not believe the railway companies granted tenants more than an annual lease on railway property. The many small businesses that established themselves under railway arches were never permitted to take more than an annual lease. Unfortunately they tended to be tar paper constructions. The railway companies always had an eye to the future as regards their track. I believe nowadays we are a little more aware of the limitations of road transport and of the fact that we may need the railways to relieve the roads. I hope the Minister will look at this measure sympathetically. We are only asking for flexibility in this matter. We want the Government to be aware that, in the future, travel, particularly in the conurbations, will largely be reliant on public transport of some kind. The railways are surely one of the best methods of transporting people in conurbations.
§ Lord Stodart of LeastonWhat has been said has caused me to recall the closure of a line in the constituency which I used to represent in the western part of Edinburgh. There used to be a line that ran from the suburb of Corstorphine into Waverley Station in the centre of the city. That line was closed as a result of the Beeching exercise. Were it open today I am quite certain that the build-up, the grumblings and the groanings of motorists as they queue to get through the narrow high street of Corstorphine would not exist. I remember the inquiry that was held at the time of the closure. I said to British Rail, "Please if you 1417 are going to close the line, at least leave the lines there, because once you have taken the lines up the chance of reopening the line is almost nil because the expense then becomes gigantic".
In a lot of country areas in the south east of Scotland, which I know well, tracks have been taken up because one cannot lay down a cycle track if sleepers are still there. That would result in uncomfortable bicycling. I believe the chances of those lines being needed in the future are pretty remote with the motor car population as it is. I do not believe there is a great need for leaving track in place in country areas. But if there is any question of closing railway lines within the ambit of a city, I strongly urge that track should be left in place in case it is needed in the future.
§ 4.15 p.m.
Earl AttleeI agree with practically everything that has been said to this amendment. However, I do not agree with the concept of leaving the track down as I believe that the steel in the railway weighs about 60 or 90 pounds a foot and therefore it stands to reason that the capital value of the scrap of even a mile of track would be quite considerable. It would be a shame to leave the track down for the gypsies to remove. It is important to remember that, with new technologies and materials, arid particularly magnetic materials, we could establish a new form of transport that would benefit from having the railway rights of way left in place.
§ Lord RedesdaleI wish to refer to a matter that may not have been mentioned so far, as it does not concern the economics of the railways. Many rail lines are considered to be green corridors; that is, routes by which wildlife can enter cities. Many disused railway lines are left in place as green corridors. However, if development takes place on routes where there used to be track, the green corridors will be cut. Many councils are now trying to encourage green wildlife corridors into cities and it would be a great shame if that initiative were lost.
Earl HoweThe purpose of Amendment No. 101ZA, as the noble Lord, Lord Tordoff, has explained, is to safeguard the lines of disused railways for potential future railway use. The Government are aware of anxieties that ex-railway land might be built on and then not be readily available for transport use at a future date. But, while I fully recognise the examples mentioned by the noble Lord, I believe his concern is somewhat misplaced. I hope the Committee will bear with me while I explain why.
The current procedures for disposal of disused track bed ensure that there is no current or foreseen railway use before sale is even considered. Once sale is decided, those with transport interests have every opportunity to bid for BR land. The knowledge that there is or could be a transport scheme in prospect for which compulsory purchase order powers are available—as this amendment suggests—or might be sought at some time in the future, could be expected to 1418 depress the interest of non-transport purchasers. Transport scheme promoters could obtain the land by CPO at a later date even if they failed at the auction.
This is essentially a land use planning issue and the planning system is well placed to deal with it. Local authorities can zone disused track bed for transport purposes in development plans, and reject planning applications for conflicting development. They can make it clear in response to land searches that transport uses are in prospect and that they would not favour planning applications for non-transport uses. Those will be local issues and mechanisms exist to deal with them.
I can provide further general reassurance. My right honourable friend the Secretary of State for the Environment intends to stress in future guidance to local authorities the importance of taking into account the potential future transport use of such corridors when drawing up their development plans. That guidance will then be taken into account in plans and in planning decisions.
Of course I accept that events can move over a period of perhaps a quarter of a century in ways that may not be foreseen at the time a decision is taken. However, doubtless the type of argument and examples brought forward today could also be brought forward to local authorities at the appropriate time. However, we envisage that a balance will continue. We believe that the present arrangements strike an appropriate balance between the need to dispose of vacant public land, the need to safeguard potential transport corridors and the rights of landowners. I stress to the noble Lord that disposal procedures and planning safeguards will remain in place after privatisation.
I hope that I have persuaded the noble Lord that for those reasons his amendment is not necessary.
§ Lord TordoffThe noble Earl has not quite done that but he has given me food for thought. The problem is not so much those cases in which future transport needs are envisaged, even in the long term, but those cases in which future transport needs are not envisaged in the short or medium term. The purpose of the amendment was to provide some means of preserving such land against perhaps a local initiative. The balance is difficult to maintain. In some cases the pressures on local authorities to damage a future right of way can be great yet it might be in the national or regional interest for that right of way to be preserved in order to link up with a network at a later stage.
Obviously I shall not press the amendment today. I was most interested in what the Minister said. I shall. examine his response and possibly return to the matter at a later stage. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 38 to 40 agreed to.
Clause 41 [Experimental railway passenger services]:
§
Earl Howe moved Amendment No. 101A:
Page 50, line 33, leave out first ("to") and insert (" 33, 36 and").
§ The noble Earl said: The amendment was spoken to previously with Amendment No. 62A. I beg to move.
§ On Question, amendment agreed to.
§
Baroness Stedman moved Amendment No. 102:
Page 50, line 42 after ("proposes") insert ("following consultation with every consultative committee whose area consists of or includes the whole or any part of the area affected by the proposed closure").
§ The noble Baroness said: In moving Amendment No. 102 I should like to speak also to Amendments Nos. 103 to 107.
§ Amendment No. 102 establishes the closure procedure for certain experimental services covered by Clause 41. Where the operator of an experimental service subject to a franchise agreement intends to discontinue that service at the end of the franchise period, the franchising director is required to give notice if he proposes not to secure its continued existence. The amendment would require that the franchising director consults with the relevant rail users' consultative committee before deciding not to continue the service. That will at least ensure that there is some user input into the decision-making process before the closure of an experimental service is put into effect. It is important that the consultative committee should be able to make its input at that stage because once the franchising director has published his notice the closure happens automatically in a very short space of time.
§ Amendments Nos. 103 and 104 set out the procedure to be followed to discontinue an experimental service. The amendments would require that the franchising director or the operator should publish a notice at every station affected and in at least one newspaper rather than only one. The discontinuance of an experimental service can happen rapidly after six weeks' notice has been given. It is incumbent upon those who propose to close the service and take it out of use to give notice of their intention as effectively as possible.
§ Amendments Nos. 105, 106 and 107 set out the procedure for the franchising director to follow when he decides to designate a service as experimental. They would require that the franchising director sends a copy of his notice of designation to the relevant consultative committees and publishes the notice of designation at every station affected and in at least one local newspaper rather than only in a single newspaper.
§ It is important that users and the statutory users' committee are aware of the experimental status of a service. Complaints have already been raised in earlier stages of the Bill about local timetables being issued and stations not being included in those timetables although trains stop at those stations. It is important that the people who use the trains and those stations should be aware that the service is experimental. I beg to move.
Earl HoweAmendments Nos. 103 and 106 concern the notices which must be published where an experimental service is to be so designated or where 1420 there is a proposal to close such a service. They would require the franchising director to publish notices at every station affected in each case.
I have no difficulty with the intent of the amendments, but I do not believe that they are necessary. As I indicated to the noble Baroness on an earlier occasion, the Bill sets out the minimum in terms of publication requirements. It already requires the franchising director to publish his notices in national and local newspapers and in any other manner he thinks appropriate. That could include publication at appropriate stations, and as a matter of good practice he may wish to do that. However, there is no need to spell that out on the face of the Bill.
Amendments Nos. 104 and 107 would require the notices that I have just described to be published in at least one local newspaper in addition to two national newspapers. The amendments would add little to the Bill. The present formulation is already effectively a minimum requirement since the franchising director is already empowered to publish the notice in such other manner as appears to him to be appropriate. If he considers it appropriate to publish it in two local newspapers he will do so.
Having been a little critical, I am pleased to say that I can be more positive about Amendments Nos. 102 and 105. Amendment No. 102 would have the effect that the franchising director must consult the appropriate rail users' consultative committee before proposing closure of an experimental service. Amendment No. 105 would require the franchising director to send to the appropriate consultative committee copies of his notice designating services as experimental. I have no difficulty with the intent of the amendments, and I am grateful to the noble Baroness for tabling them. However, I have reservations about their drafting and I should therefore like to take them away and consider them further before a later stage. In the meantime, I hope that the noble Baroness will not wish to press those or the other amendments in the group which she tabled.
§ Baroness StedmanI am most grateful to the noble Earl. I am getting more than I thought I would this afternoon. I am still a little unhappy that there is an either/or situation and that the director must meet a minimum requirement or, if he thinks fit, can do a little more. I still believe that he will tend to do the minimum. However, I note what the Minister said and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 103 to 107 not moved.]
Clause 41, as amended, agreed to.
Clause 42 [Abolition of former closure procedures, exemptions from new procedures and imposition of alternative procedure]:
§
Earl Howe moved Amendments Nos. 107A to 107C:
Page 52, line 32, after ("shall") insert ("subject to the provisions of this Act").
Page 53, line 5, at end insert:
(5A) Where any enactment or instrument passed or made before the relevant date contains provision to the effect that section 56 of the Transport Act 1962 is not to apply in respect of the discontinuance of specified railway passenger services
1421
or railway passenger services of a specified class or description, that provision shall (notwithstanding anything in subsection (1) above) have effect in relation to any such discontinuance after the relevant date as if references in that provision to that section were references—
and in this subsection "the relevant date" means the date on which the provisions mentioned in paragraphs (a) and (b) above come into force.").Page 53, line 9, at end insert:
("(7) For the purposes of this section, "railway" has its wider meaning.").
§ The noble Earl said: I beg to move Amendments Nos. 107A, 107B and 107C en bloc. They were spoken to with Amendment No. 62A.
§ On Question, amendments agreed to.
§ Clause 42, as amended, agreed to.
§ 4.30 p.m.
§
Lord Swinfen moved Amendment No. 107D:
After Clause 42, insert the following new clause: ("Duties of station operator
.—(1) It shall be a duty of a station operator or franchisee to notify the Regulator at least 90 days in advance of his intention to reduce the number of hours during which any station under the control of the station operator or franchisee is staffed.
(2) In the event of receiving a notification as set out in subsection (1) the Regulator shall obtain the views of the appropriate Rail Users' Consultative Committee and organisations representing disabled persons.
(3) The Regulator shall refuse consent to a proposed change notified to him under subsection (I) above if he is satisfied, in the light of representations received from the organisation set out in subsection (2) above, that significant hardship, danger or loss of amenity will be caused by the change to any person or persons.").
§ The noble Lord said: The amendment is designed to prevent the destaffing of stations once the Bill becomes law without any adequate checking or warning. As I understand it, there are at least 6 million citizens in the United Kingdom who, through disablement of one kind or another, are unable to read platform numbers, destination indicators, lettering and numbers on their tickets, to use staircases and to carry luggage. Of course, those citizens do not have difficulty with all those matters; some Members of your Lordships' House have difficulty with some of those problems. Many of those individuals are unable to drive cars or, because they have a low income through disability, are unable to obtain a car to drive. I understand that out of approximately 2,500 British Rail stations, some 950 are already unstaffed, and 200 partly staffed. That means that for a large number of disabled people, the 950 stations which are unstaffed are probably unusable all the time, and those which are partly staffed will be unusable when no staff are on duty.
§ The amendment seeks proper consultation before serious reduction of staff at any station, or the complete removal of staff. As an illustration, perhaps I may describe a station near my home. It can be approached by car from the down train side only. Over the past 25 years the potholes on that side have frequently been so horrendous that anyone in a wheelchair would have had considerable difficulty even if delivered to the station by car. However, 1422 having reached that side, if he wishes to travel to London, the individual is faced by a staircase up to a bridge, then another staircase down on the other side. On his own he has no chance. His only alternative is to go out of the station and down a fairly steep hill to join a narrow road with a Z-bend corner underneath the railway at an extremely dangerous spot, and then to take a detour on the other side up a narrow and uneven path which is often overgrown with brambles. It is not the easiest route for a disabled person, and certainly not in a wheelchair. It is almost impossible for someone who is blind or partly sighted. It is such a situation that the amendment seeks to avoid. I beg to move.
Baroness Darcy (de Knayth)I support the amendment, which stands in my name also. The case has been put cogently and comprehensively by the noble Lord, Lord Swinfen. I hope that the Minister will be able to accept the amendment or consider it and bring forward a provision that will meet the anxieties expressed.
§ Lord John-MackieI support the amendment. I come to London by train. There are steep steps at my local station of Broxbourne. The steps are not so steep coming into Liverpool Street, but they are very steep when returning home. Anyone who comes to Westminster will know of the steep steps there. The noble Lord should propose that every station has an elevator.
§ Lord Clinton-DavisI have a great deal of sympathy with the observations made by Members of the Committee. After a visit to Pakistan with the noble Lord, Lord Tordoff, I was quite seriously ill; it was not his fault. I had a virus which affected my heart and I was away from the House for about seven weeks. For some little time after that I was unable to carry luggage with any degree of ease. I therefore support strongly the case that is made out by a number of Members of the Committee today. I found it extremely difficult to travel, for example, to Newcastle, and to York as I believe it was, where one simply had to walk up or down stairs; there was no alternative. That must affect not only disabled people but the elderly too. I believe that attention needs to be given to that aspect of the matter.
The groups representing the disabled feel very anxious about the matters to which reference has already been made, and with cause. The destaffing of stations, which has already taken place on a very substantial scale, and the understating of stations if they are not wholly destaffed, represent a real problem. Such destaffing has taken place largely because British Rail has felt impelled to run down its services in preparation for privatisation and in order to reduce costs. It is salutary that, at present, of 2,500 British Rail stations, 950 are unstaffed and another 200 only partially staffed. That represents about 40 per cent. of the total. It is a sad state of affairs. While the situation is bad enough, I believe that it could easily be exacerbated if the Bill were to be enacted, unless the Government are prepared to listen to the pleas that have been made in Committee.
1423 Understaffing has a bearing upon another matter. There are many vulnerable people around. Blind and partially sighted people are certainly exposed to dangers that may arise. Women are particularly vulnerable. We hear too many horror stories about assaults on women and other people at or about railways stations: these arise largely because of lack of staffing. Clearly the hazards are even more serious for the disabled, blind or partially sighted.
The Bill does not make any provision that can be regarded as adequate to deal with the matter. The people about whom we speak are, quintessentially, heavily dependent upon public transport. It is critically important that the debate in Committee should stimulate a positive reply from the Minister today.
We are talking about large numbers of people. The noble Lord, Lord Swinfen, who is well versed in these issues and has made notable contributions in debates of a comparable kind—as indeed has the noble Baroness, Lady Darcy (de Knayth)—will correct me if I am wrong, but I believe that we are talking about something like 6 million people. In addition, people who are disabled visit this country as tourists. They may be blind, partially sighted or have other disabilities. Therefore the figure is not simply 6 million, bad enough though that is in terms of people who find themselves unable to read the numbers on the platforms, the destination indicators, the lettering and numbers on self-service ticket machines, and so on. It is a matter to which the Government must give urgent attention. Even if the Bill were not to go through, which I sincerely hope will be the case—although we have done nothing by way of wrecking amendments; I deny that allegation altogether—this social problem needs to be addressed very rapidly.
I draw the Committee's attention to another matter, an issue raised, I believe, by the noble Lord, Lord Swinfen, in another debate and perhaps in another context. Voluntary bodies which provide special access facilities (ramps, and so on) which have been incorporated into the design of stations, would perhaps find that, if there were a further de-staffing of stations, the many millions of pounds that have been put into such efforts could be rendered vulnerable through damage by hooligans and others. The point that has been raised in this amendment is of the utmost importance. I am very glad to be associated with it.
§ Lady KinlossI strongly support the amendment. There are many stations which are very difficult for disabled people. They are difficult even for the able-bodied. Perhaps I may say to the noble Lord, Lord Clinton-Davis, that it cannot have been York station that he found difficult. That station has very efficient passenger lifts, and many of the station staff are only too willing to help. If, for some reason (vandalism or otherwise) the lift is out of action, the staff will take you in the luggage lift.
§ Lord TordoffI heartily support this amendment and the intentions behind it. I should like to extend it a little further. I have received a briefing from the Suzy 1424 Lamplugh Trust, which obviously is very concerned about this matter. It is quite clear that many people are extremely fearful of going on to stations which are not properly manned. There may not be any actual danger. But it is the fear of danger in the absence of proper manning that causes the trouble. And indeed, it is quite clear that some people become victims because they exhibit the signs of fear; they exude fear, as it were. That very often brings out the worst in people and that is when attacks take place. So this matter does not relate only to disability—though that is extremely important; as Members of the Committee know, I have a connection, through one of my daughters, with looking after the partially sighted, so I get a constant stream of information on that aspect. I thought that I ought to mention that the amendment goes beyond the needs of the disabled into the whole area which is so wonderfully covered by the Suzy Lamplugh Trust.
§ Lord RixI too should like to say a few words in support of this amendment, and perhaps at the same time indulge in a little heart-to-heart with the noble Lord, Lord Clinton-Davis. I too suffered a heart condition until the autumn of last year, when I had open heart surgery. I found that when I approached one of the London railway stations with my luggage that I was quite unable to carry it up the stairs. Equally, I was unable to find any staff to help me do so. This was in the recent past. So I hope that the staffing levels will be maintained at main London stations to provide disabled people with adequate support. Clearly, in one particular case that is not so.
I should also like to make reference not only to the Suzy Lamplugh Trust but also to MENCAP and the Disability Consortium, and return to a point that I made the other night. That, again, is the question of through-ticketing. If I may refer to the briefing: there is no guarantee that passengers will be able to buy through tickets from unstaffed stations. At present a through ticket is available for any journey between any two stations. If the station is unstaffed, a ticket is available from the guard on the train. After privatisation, operators will be under no obligation to sell through tickets on trains, so through tickets may be available only at staffed stations. That is despite the Government's assurance that through-ticketing will be preserved after privatisation, a point to which I made reference the other day.
§ 4.45 p.m.
§ Lord TeviotI had no intention of intervening until a few minutes ago, when the discussion about unmanned stations arose. Many unmanned stations will be totally closed through considerations of commercial value. I agree with a great deal of what has been said. Another aspect might be that cameras could be linked to a police station. It would be a great pity if, as a result, a great many stations had to be closed.
The noble Lord, Lord Rix, mentioned luggage at mainline stations. That is terribly important. We must look very carefully at this whole area. There might be a code of practice, or some other approach that could be considered, perhaps at Report stage.
Earl HoweThis is a sensitive issue. I appreciate the anxiety about safety at stations which prompted this amendment. Stations should be safe and secure places for all passengers. However, I have to say to my noble friend that the fears that have been expressed that privatisation will exacerbate de-staffing have no foundation. We see no reason at all why privatisation should have that effect. While it will generally be for station operators to decide what staffing levels are appropriate, we believe that they will be most concerned to ensure that stations are safe and secure places for their customers to use. We also believe that the private sector will make better use of the commercial and development opportunities at stations, and that passengers will benefit from the improved facilities which will result. Operators will, after all, wish to attract people to stations in order to maximise their commercial benefit. As a general observation, there is no evidence that their needs of disabled people are overlooked or ignored by transport operators in the private sector. It is not in its interest to do so. Much as I understand my noble friend's anxieties, I have difficulty with Amendment No. 107D. I believe that it is too intrusive and too inflexible.
I think that we need to be more selective in identifying genuine problems. This is precisely an area where the franchising director will want to have the views of the consultative committees and other representative groups, including those representing disabled people, when holding franchise competitions. In the light of their comments, the franchising director would, for example, be able to specify minimum staffing levels at qtations where he considers that that is necessary. Franchisees would then have to meet those minimum levels. We shall be looking in more detail at the many ways in which disabled passengers, including visually impaired people, can be helped when we come to discuss Amendment No. 111.
There is much less of a problem with station operators who are not also franchisees—the sort of case alluded to by the noble Lord, Lord Rix. They will generally be running the very large stations, where staffing levels should not present any problems of safety for disabled people. Moreover, the train operators who are paying to use those stations will have every incentive to ensure that station operators provide the best possible service to passengers, and safety will clearly be a paramount concern. With this in mind, a train operator is very likely to want to set out the minimum staffing levels at a station in the access agreement that he enters into with a station operator. The station operator will then be bound to honour that agreement.
I intend these remarks to be reassuring. I hope that in the light of what I have been able to say my noble friend will not feel that he has to press his amendment.
§ Lord Clinton-DavisI find the Minister's remarks less than reassuring, and inappropriate in the circumstances, having regard to the evidence that has already been placed before the Committee of which he must be aware. Surely, it is inherently improbable, with the present. difficulties which have arisen with regard to British Rail, because of the pressures it is 1426 under and the destaffing or understaffing that already exists, that the new franchisees will be asked to remedy the situation. That exceeds any possibilities.
To say that these amendments are too intrusive and inflexible is an argument not worthy of the Minister. He could have said that in principle the Government ought to go along with the amendment but that the wording was wrong. In fact, I hoped—as I am sure the noble Lord, Lord Swinfen, hoped—to receive a positive reply from the Minister in relation to these matters.
The Minister said that staffing levels at the larger stations are unlikely to present difficulties for the disabled. I recommend him to go along to some of the larger stations. There are major problems under the existing management because of the pressures that have been and will continue to be imposed. We are told that 50,000 staff are likely to find their jobs at hazard over the course of the next year or so.
There is every probability that there will be further difficulties facing passengers at stations under the present regime, let alone the new one. I feel that the Minister is somewhat naive in believing that somehow or other the benevolence of private franchisees will be such that they will place this issue above the issue of profit. The whole thing is absurd. The Minister might say, "Well, what they are about is trying to ensure that people enjoy travel and encouraging them to go on the railways". That is part of his case. However, I still believe that when it comes to the overwhelming majority of cases, those aspirations will not be fulfilled.
Whether or not I am right, at the moment there is a problem that has to be addressed. Some of the importance of this debate lies in alerting people—British Rail in particular —to the concern of this Chamber about the problems that exist at the moment. We are entering a totally new scenario and additional protection needs to be provided. It is singularly missing from the Bill as it stands. I simply cannot go along with the argument that the provision is too intrusive and too inflexible. I hope that the Minister will think further about it. My recommendation would be not to divide the Committee at the present time but to give the Minister another few months until we come to Report stage to give further consideration to this matter.
The noble Lord, Lord. Swinfen, may decide to put the matter to a vote tonight. If he does not do so, I hope that he will return to it. We shall certainly support him when the matter comes to Report stage. We hope that after further reflection the Minister will then be able to be rather more positive than he has been today.
§ Lord TordoffBefore the Minister replies, perhaps I may interject. It seems to me that the amendment is a fallback position. It does not deal with the situation at the moment of franchise. It deals with the situation where, for one reason or another, the operator has or wishes to reduce the staff'. This is not a pious hope for the future—the hope that market forces will make people want to make their stations better. The amendment seeks to ensure that in those cases in which the operator, for whatever reason, wants to 1427 reduce the staff, certain arrangements will come into operation and certain safeguards will be built in. It is in that light that we should look at these amendments.
Earl HoweI do not think that the noble Lord, Lord Clinton-Davis, has taken fully into account either what I said or what has been said in another place. Ministers have given a commitment that the needs of disabled people will be specifically referred to as one of the considerations which the franchising director must consider in furtherance of his objectives. The franchising director's duties will depend on instructions and guidance from the Secretary of State. That will include the needs of the disabled. We do not want to be too prescriptive because some cases will not warrant wide consultation at all.
The point I made earlier was that it is not benevolence that will motivate the station operators; it is the reputation of the line, which is vital to both station operators and the operators of the line. The noble Lord spoke about stations as they are at the moment. I do not quarrel with him over that. But we have to take account of the real world as it is in the private sector.
§ Lord SwinfenMy noble friend will probably realise from comments made by Members of the Committee that I find his answer to the amendment extremely disappointing. I doubt whether he or his advisers understood it. The noble Lord, Lord Tordoff, is quite right. It is a fallback position. It is a request that consultation should take place when, at some future date, after a franchisee has taken control of the station he wishes to reduce the number of station staff or remove staff altogether. It is not an up front position. It is a delayed position where I am attempting to make certain that problems do not arise.
Problems arise today very genuinely. I have with me a letter from someone who was very seriously discommoded and left in serious pain after having her request to be met at Victoria ignored. She had to get a friendly person to go and get the help that had been booked. Someone who works for me uses a wheelchair. She was left on a train at a country station where she had made arrangements to be taken off. She had to go on to another station completely ignored by the staff and unable to do anything to help herself.
I feel that my noble friend should give this matter more consideration between now and Report stage. I realise that the drafting of the amendment probably leaves a great deal to be desired. No doubt it can be improved. If my noble friend had said that he was going to take the amendment away, consider the drafting and come back again, I should have been delighted. I shall not ask the Committee to divide on this matter this evening. That was never my intention. But I must admit that I hoped to have a more satisfactory answer from my noble friend. I admit to being extremely disappointed and in all probability I shall return to the matter at Report stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 4 [Alternative closure procedure.]
§
Baroness Stedman moved Amendment No. 108:
Page 141, line 4, at end insert:
("Functions of the Secretary of State
4A.—(1) In discharging any of his functions under this Schedule in relation to, or to a proposal by an operator for, the discontinuance of all railway passenger services from any station or on any line, the Secretary of State shall have regard to any matters which for the time being appear to him to be relevant, including any social or economic considerations.
(2) In the case of any closure requiring the consent of the Secretary of State under this Schedule—
and where any such condition or direction relates to the provision of, or assistance in the provision of, alternative services, the Secretary of State may refer to a consultative committee any matter relating to those services, and the committee shall consider and report on that matter to the Secretary of State.").
§ The noble Baroness said: Clause 42 abolishes the existing statutory closure procedure for railways and enables the Secretary of State by order to exempt railway passenger services, networks and other railway facilities from the closure provisions of the Bill. It also enables Schedule 4, which broadly replicates the existing statutory closure procedures to be applied to the railway services not subject to the requirements of Clauses 32 and 33.
§ Schedule 4 replicates only those closure procedures set out in Section 56 of the Transport Act 1962. Unfortunately, it fails to replicate the amendments to the closure procedures brought into being by the 1968 Act. Those concern the requirement on the Secretary of State to take into account social and economic considerations and give to him the ability to impose conditions when consenting to a closure.
§ Without this amendment the Secretary of State may find that he is unable to impose conditions in consenting to a closure under this procedure, and is not required to take into account in reaching his decision all relevant matters. I beg to move.
§ 5 p.m.
Earl HoweLet it not be said in these debates that the Government do not give credit where it is due, especially to the noble Baroness. I am grateful to her for detecting a flaw in the Bill as drafted. The intention of Schedule 4 is to replicate the existing closure procedures as they apply to operators such as London Underground. In doing so, we omitted to carry into the Bill a power for the Secretary of State to give 1429 consent subject to conditions, and for him subsequently to vary or revoke those conditions. We propose to bring forward a government amendment to remedy those omissions.
However, we do not consider that provisions equivalent to Amendment No. 108 in its entirety are necessary. For example, the Bill as currently drafted is silent on what matters the Secretary of State must take into account in deciding closure proposals. He must therefore take into account all matters that are relevant. It is not necessary to say so in the Bill, then give examples of matters that might be relevant. Similarly, we propose that the power to impose conditions should be unqualified, in which case it is not necessary to provide that any closure conditions may include the provision of alternative services.
I hope, in the light of what I have said, that the noble Baroness will not press Amendment No. 108.
§ Baroness StedmanI am grateful to the noble Earl and I look forward to seeing the government amendment at the next stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§
Earl Howe moved Amendment No. 108A:
Page 141, line 9, at end insert:
("(2) For the purposes of this Schedule, "railway" has its wider meaning.").
§ On Question, amendment agreed to.
§ Schedule 4, as amended, agreed to.
§ Clause 43 [Performance of the Franchising Director's duties to secure the provision of services etc.]:
§
Lord Carmichael of Kelvingrove moved Amendment No. 108B:
Page 53, line 11, after ("Director") insert ("has notified the Board and any appropriate Passenger Transport Executive of their powers under section 46(1A) below, and").
§ The noble Lord said: In moving Amendment No. 108B, for the convenience of the Committee I shall speak also to Amendment No. 108C.
§
The amendments give effect to the recommendations of the Transport Select Committee in another place. I should stress that it is an all-party committee and has a high reputation for probity and impartiality. In one of its recommendations, the committee said,
We recommend that the Government should continue to fund British Rail's rolling stock renewals until it is quite clear that franchisees are ready to assume this responsibility".
The committee said also,
It is vital that what remains of BR is not allowed to become a poor relation in terms of investment … the Government should make clear its commitment to ensuring that adequate funds are available to British Rail to enable it to keep rolling stock on unfranchised services up to a reasonable standard".
§ As we understand it, Clause 46 is to enable the franchising director and PTEs to give comfort to lessors and other investors in rolling stock or railway assets that the latter will continue in use for the life of the asset and that reasonable residual values will be maintained. Together with other requirements on franchisees, they make clear the pivotal role of the franchising director in assembling and protecting packages of assets required to operate franchises.
§ That may be sufficient once a franchise is in place. But it will he quite some time before that is the case. 1430 In the interim, the franchising director will pay subsidies to the board under public service-obligations. The proposed addition to Clause 46 will allow the board and PTEs, by agreement with the franchising director, to continue rolling stock renewal and refurbishment programmes.
§ A clear case in point is the need for new trains on the Leeds-Bradford electrification scheme in West Yorkshire. In that case the PTE seeks to acquire on lease £40 million of new rolling stock for BR to use. Two problems prevent the finalisation of the proposals. First, lessors are not convinced, even since Clause 46 was added to the Bill at Report in another place, that continuity of use of assets and maintenance of residual values is assured. Secondly, the size of the order in relation to the PTA's asset base requires certain safeguards in respect of the Government's revenue support grant payments before a lease can prudently be entered into.
§ I understand that a joint working party of department and PTE officials has been investigating those issues. The amendment seeks to clarify the position before franchising commences, by making it clear that the franchising director will continue any agreements that the board or a PTE may enter into in the interim to acquire new rolling stock or refurbish existing trains. There is no risk to public expenditure from that, as the Government exercise control over the expenditure both of the board and of local government.
§ The example of the Leeds-Bradford electrification scheme in West Yorkshire was debated at some length in a government debate in another place. Even in the. short time available, a number of Members were able to state the case. One of the points that arose strongly was that, although, as I have mentioned. refurbished stock may be used in some cases, there was a strong feeling—as I believe there is in areas where new lines are being built or new types of rail transport are being introduced—that there should be no attempt to overdo the refurbishing of stock. For instance, it was suggested that some of the Network South East stock should be refurbished and taken up to Leeds. Anyone who has travelled on that stock—the commuters down here—will confirm that it is clapped out. It would be insulting to build a new service and use that stock.
§ Amendment No. 108B is important from a number of points of view. One of the most important is the state of the rail producing industry in this country. Public investment is reducing rapidly. Much British Rail investment in 1992 was spent on works linked to the Channel Tunnel project. Domestic investment in the existing railways was estimated at £987 million in 1992–93 but it was projected by British Rail that it would reduce to £543 million in 1993–94 and increase' slightly to £636 million in 1994–95. That is not because there is a shortage of worthwhile projects; it is because there is a shortage of public money. If the national will was present, £13 billion could be spent within a decade. For instance, France has investment plans for over £30 billion, most to be completed by the year 2000.
1431§ My point is that, if we do not spend money now, while we still have a manufacturing industry for the railways, the chances are that by the time the green shoots grow high enough, we may not have a railway industry left. The railway industry believes that it has only two or three years or less to do substantial public work to modernise our railways. Should the railways industry close down, we will be importing our railway equipment from France, Germany, Switzerland or elsewhere and creating problems with the balance of payments in this field as well as in many others.
§ I hope that the Minister will take all those points into consideration. It is a vitally important amendment and I hope that he will be able to give us a satisfactory reply. I beg to move.
§ Lord TeviotAmendment No. 108D should have been in my name instead of that of the noble Lord, Lord Tordoff, but I should gladly have given it to him since I shall talk about Yorkshire. His ancestral home is the other side of the Pennines, in Lancashire, and even though I was going to talk about Saddleworth or Todmorden, I should gladly have given it to him. However, I shall have pleasure later in moving Amendment No. 108D.
The amendment addresses an important point which has also been clearly addressed by the noble Lord, Lord Carmichael. The point was raised by recent practical experience in trying to arrange leases for electric trains for use in West Yorkshire. As the Committee knows, a £50 million package of schemes is currently underway to electrify and re-signal the busy commuter lines in the Aire and Wharfe valleys which link Skipton and Ilkley with Leeds and Bradford. In the case of the Ilkley lines, they were proposed for closure in the Beeching report; but under the progressive policies of the West Yorkshire passenger transport authority, the lines have seen such dramatic traffic growth—more than doubling in the past 10 years—that electrification is now urgently required to increase capacity and improve reliability.
For those who do not know the area, I remind Members of the Committee that, arriving at Leeds Station from Euston, one looks at all those busy trains on the left which go to the splendid conurbations, villages and far distant destinations. West Yorkshire passenger transport executive was a pioneer of leasing trains. It first did it about six years ago because British Rail could not supply the trains required. There are now four classes of unit acquired on lease—the first two on finance leases, and the latter on the now required operating leases. Finance houses were keen to write leases for the passenger transport executive, as they saw very secure lessees and certainty of continued use of the assets.
Unfortunately, when negotiations were well advanced for the Airedale and Wharfedale trains, a significant problem arose. The prospect of privatisation and suggestions that the status of the passenger transport authorities might change led to onerous termination conditions which the passenger transport authority could not prudently accept. What the financiers were worried about was continuity and security: would the passenger transport executive 1432 continue in the same form? Would the passenger transport executive's role be overridden by the franchising director? Would franchisees want the trains? What would be the position if a franchise changed hands? Would all the parties be as creditworthy as the passenger transport executive, and so on?
My right honourable friend the Minister for Public Transport, Mr. Roger Freeman, has been most helpful to the passenger transport authority. Indeed, in an adjournment debate in the other place a week ago tonight, to which the noble Lord, Lord Carmichael, referred, Mr. Freeman said:
Although I understand the difficulties of both parties, I am convinced that they are not insuperable and should be capable of resolution with a little give and take. The Government are prepared to he part of the give".—(Official Report, Commons, 30/6/93; col. 1085.]I think it is true to say that Clause 46 is in part evidence of that spirit, having been influenced by the ongoing discussions between the department, passenger transport authorities and passenger transport executives, both on the particular case and the wider issues of principle relating to assets funded by PTAs.However, the response from prospective lessors so far has been that although Clause 46 gives them comfort, it does not go far enough. The amendment proposes a modest addition to the clause which makes it crystal clear that the franchising director is able to stand four square with the PTE by undertaking to continue use of the assets acquired through successive franchise periods. The wording also covers satisfactorily, I hope, the period before franchising starts, which was touched on by Amendment No. 108C.
In view of the spirit of co-operation which has surrounded discussions between the passenger transport authorities, the passenger transport executives and the Department of Transport, both nationally, and, in the case of West Yorkshire, locally, I hope that the Minister will accept this constructive addition to the Bill.
§ 5.15 p.m.
§ Lord Sefton of GarstonBefore the Minister replies, perhaps I may say this. I have been reading the Bill to try to find out its effect on the urban authorities, the PTAs and the PTEs. I was in at the conception of the PTEs and PTAs on Merseyside and the fear was expressed that when they were set up there would be difficulty in apportioning responsibility between them.
Repeatedly throughout the Bill, the responsibility switches. Sometimes the Bill deals with what appear to be powers given to the PTE; sometimes powers appear to be given to both. In regard to the franchisee, the PTE will negotiate an agreement, but it must have the approval of the PTA. I suppose that I could have written to the Minister and asked for an answer to the question that I am about to put. Alternatively, I could have put down what are formally called "probing amendments". However, that would have taken a long time so I thought it would be better to take this opportunity briefly to ask the Minister a question. I shall try to make it as clear as I can.
I accept that the present division of responsibility between the PTEs and the PTAs is fair. It was 1433 negotiated over many years; but the responsibility differs in different places. In Merseyside, I understand that the relationship between the two is very close indeed. The same offices serve both. In other places, they are not as close. I may consider putting down an amendment later on, depending on the answer that I receive to my question. I do not expect an answer at the moment.
With that in mind, will the Minister write to me stating how many powers the Bill confers on the PTE, without involving the PTA? I hope I have made the question clear so that the Minister understands it. I am very anxious, having seen the growth of PTEs and PTAs in establishing an integrated transport network in the locality, that that should not be damaged, and that local authorities should not be further pushed into the background.
§ Lord TordoffPerhaps I ought to put in a word of explanation. Although my name is down to Amendment No. 108D, I did not put it down. Apparently the names Teviot and Tordoff were confused at some stage; but, nevertheless, having heard the explanation which the noble Lord, Lord Teviot, put forward, I support the amendment.
While I am on my feet, perhaps I may ask the noble Lord, Lord Carmichael, whether he was speaking to Amendment No. 108E which I understand was grouped with these amendments.
The Earl of CaithnessI am grateful to the noble Lord, Lord Carmichael, for so clearly explaining the amendments and the purposes behind them.
I start by answering his Amendment No. 108B, which would require the franchising director to notify the board and any appropriate PTE of their powers under the new subsection (1 A) of Clause 46, which is the subject of Amendment No. 108C, before he could enter into agreements or arrangements with other persons under Clause 43(1).
I have to say to the noble Lord that I do not think that it would be appropriate to have in this Bill a provision which provides for the franchising director to notify another person of that other person's powers under the Bill, before the franchising director is able to perform his duty under Clause 43(1).
Amendment No. 108C would require the franchising director to exercise his franchising functions so as to ensure the continuation of agreements to secure new or improved rolling stock entered into by BR or any PTE, before franchising of any particular service takes place. Clause 46(2) already enables the franchising director to enter into agreements with any person whereby the franchising director may undertake to exercise his franchising functions in a particular manner. It is not clear in the amendment how it is envisaged that the franchising director would exercise his functions to ensure the continuation of any agreements entered into by the board or PTE. But in any event I do not believe that it is acceptable that a duty be placed on the franchising director to undertake to exercise his franchising functions to achieve a particular result.
I turn to Amendment No. 108D mentioned by my noble friend Lord Teviot. That would enable the 1434 franchising director to guarantee the performance by a PTE of its duties and obligations under any franchise agreement to which an agreement under Clause 46(3) is related. My noble friend Lord Teviot said that the amendment was a small extra step. I am sure that Members of the Committee would agree that it would not be desirable for the franchising director to give guarantees in respect of the obligations of a PTE under a franchise agreement. If PTEs are to be parties to franchise agreements, then they, not the franchising director, must surely be responsible for meeting their obligations under such agreements.
I turn to the main amendment, Amendrnent No. 108E, concerning the leasing of assets. The noble Lord, Lord Carmichael, mentioned that in relation to West Yorkshire. He adduced the current uncertainties that were continuing there when he spoke to the amendment. I say to the noble Lord and to my noble friend Lord Teviot, that I am not clear that the doubts about the powers of the PTEs to lease are at the heart of the present difficulties. Indeed, I believe that my noble friend Lord Teviot made the position clearer by saying that it was more a question of continuity and security which is at the heart of the concerns. The West Yorkshire PTE and other PTEs in the West Midlands and Strathclyde have already leased rolling stock.
I can confirm to the noble Lord, Lord Carmichael, that the West Yorkshire PTE officials and my department officials have discussed the effect of Clause 46 powers on the West Yorkshire proposals and the deal. The PTE officials are now resuming discussions with their lessors. I was grateful for the tribute that my noble friend Lord Teviot paid to my right honourable friend the Minister for Public Transport, Mr. Roger Freeman. I can also say to my noble friend that my right honourable friend is due to meet the leader of the West Yorkshire PTE on 15th July to review progress. So he certainly has not given up his interest in this particular matter.
It is also worth noting that the amendment goes very much wider than rolling stock. It would give PTEs an explicit power to acquire, by lease, rolling stock, network services, stations, buses or any other assets used in connection with the provision of local passenger transport services and, furthermore, a power to let out those assets on loan, hire or lease.
I put it to the Committee that PTEs do not need an explicit power to enter into leases. Section 10(1)(xxxii) contains a power:
to do all other things which in their [that is, the PIEs'] opinion are necessary to facilitate the proper carrying on of their business".Further, Clause 31(1), as amended by your Lordships in Committee on 5th July, amends Section 10(1) of the Transport Act 1968 so that a PTE will be able to let on hire railway locomotives and other rolling stock. Therefore, I do not believe that the amendment is desirable because in part it duplicates what is already provided for in the Bill.The noble Lord, Lord Carmichael, mentioned investment. Yes, there has been considerable investment over recent years and we are keen that that should continue. But after a long period of sustained investment to a high value, it is natural that it should 1435 tail off at a certain stage. For instance, the average life of rolling stock is perhaps 25 to 35 years, but when one considers the rolling stock on regional railways in this country, I wonder how many noble Lords would know how old it is. Approximately 90 per cent. of the diesel trains are less than eight years old. When one considers that such rolling stock has a life of about 30 years, it is not really surprising that there is a tailing-off in some of the investment. The noble Lord, Lord Sefton, said that he did not want a reply now so I will not give him one now.
§ Lord Carmichael of KelvingroveThe Minister made a very good job of apparently covering all the points that were raised. One of the major points I was trying to make and which is implicit in the amendments relates to railway manufacturing industry, about which he really said nothing. He said that investment was continuing. I gave the noble Earl figures comparing the situation with France. I compared the figures with last year's figures because there has been much greater investment due to the Channel Tunnel. From then on the figures go down.
The Minister must be fully aware that the railway manufacturing industry is in a very serious state. Surely that is not another industry which we want to lose so that we have to import from Japan or some other part of the world. Our problem is how investment will be assured in future. How will it be possible for the PTAs or even the franchisees to be assured of long-term investment? That is the real point. In merely drawing the Minister's attention to that point, I wish to have the opinion of the Committee on this question.
The Earl of CaithnessBefore the noble Lord finally makes up his mind, perhaps I may point out to him that I took some trouble to answer the point about investment. I mentioned the age of the diesel electric trains on regional railways where the average age of 90 per cent. of the stock is now eight years. That shows how much investment has taken place. The noble Lord will be aware of the proposed leasing arrangements. We are waiting to hear the results of those arrangements. That is one area where new finance will be able to keep the level of investment going.
We also hope that the private sector, when it bids and wins franchises, will bring in extra money. In setting the details of the franchise, the franchising director will, if necessary, be able to take into account the investment which the potential franchisee is going to make or indeed which the franchising director wants to make. So there is hope. We understand the position of manufacturing industry in this country. None of us wants to see it deteriorate any more than the continual decline which has occurred since the Second World War. The fuller answer which I have now given to the noble Lord should be of some reassurance to him.
§ Lord Carmichael of KelvingroveI do not want to be churlish to the Minister for I know that he is doing his best. We allow for the fact that the railway 1436 manufacturing industry will probably exaggerate a bit, but the problem is that they are talking in terms of the order books being empty by 1995. Therefore the situation is quite serious. I have said before that in Britain—particularly in my part of the country, which was one of the great exporters of railway equipment —that has now all gone. We do not have much time. Even if we are out by a couple of years and it is 1997 before the real crisis of job losses occurs—that has already started and is quite severe in many areas—it is important that we emphasise that for the sake of the railway industry. We shall look at what the Minister has said, but on that one point alone we must divide the Committee.
§ 5.29 p.m.
§ On Question, Whether the said amendment (No. 108B) shall be agreed to?
§ Their Lordships divided: Contents, 79; Not-Contents, 149.
1437| Division No. 1 | |
| CONTENTS | |
| Airedale, L. | Jenkins of Hillhead, L. |
| Ardwick, L. | Jenkins of Putney, L. |
| Barnett, L. | John-Mackie, L. |
| Bonham-Carter, L. | Kirkhill, L. |
| Boston of Faversham, L. | Lockwood, B. |
| Bottomley, L. | Longford, E. |
| Carmichael of Kelvingrove, L. | Lovell-Davis, L. |
| Castle of Blackburn, B. | Macaulay of Bragar, L. |
| Cledwyn of Penrhos, L. | Mclntosh of Haringey, L. |
| Clinton-Davis, L. | Mackie of Benshie, L. |
| Cocks of Hartclifle, L. | Mason of Barnsley, L. |
| Dean of Beswick, L. | Merlyn-Rees, L. |
| Desai, L. | Milner of Leeds, L. |
| Dormand of Easington, L. | Monkswell, L. |
| Eatwell, L. | Morris of Castle Morris, L. [Teller.] |
| Ennals, L. | |
| Ewing of Kirkford, L. | Mulley, L. |
| Falkender, B. | Nicol, B. |
| Falkland, V. | Peston, L. |
| Fisher of Rednal, B. | Pitt of Hampstead, L. |
| Foot, L. | Plant of Highfield, L. |
| Gallacher, L. | Prys-Davies, L. |
| Galpern, L. | Redesdale, L. |
| Gladwyn, L. | Rochester, L. |
| Glenamara, L. | Seear, B. |
| Graham of Edmonton, L. | Sefton of Garston, L. |
| Greene of Harrow Weald, L. | Serota, B. |
| Greenhill of Harrow, L. | Shackleton, L. |
| Gregson, L. | Shepherd, L. |
| Grey, E. | Stedman, B. |
| Hampton, L. | Stoddart of Swindon, L. |
| Hanworth, V. | Strabolgi, L. |
| Hayter, L. | Teviot, L. |
| Henniker, L. | TordofT, L. |
| Hollis of Heigham, B. | Turner of Camden, B. |
| Holme of Cheltenham, L. | Wedderburn of Charlton, L. |
| Houghton of Sowerby, L. | White, B. |
| Hughes, L. | Williams of Elvel, L. |
| Jay, L. | Williams of Mostyn, L. |
| Jay of Paddington, B. [Teller.] | Winchilsea and Nottingham, E |
| NOT-CONTENTS | |
| Alexander of Tunis, E. | Blake, L. |
| Allenby of Megiddo, V. | Blatch, B. |
| Annaly, L. | Bledisloe, V. |
| Arran, E. | Boardman, L. |
| Ashbourne, L. | Bolton, L. |
| Astor, V. | Borthwick, L. |
| Astor of Hever, L. | Boyd-Carpenter, L. |
| Barber, L. | Brabazon of Tara, L. |
| Bauer, L. | Brougham and Vaux, L. |
| Beloff, L. | Bruntisfield, L. |
| Bessborough, E. | Butterworth, L. |
| Cadman, L. | Lyell, L. |
| Caithness, E. | McColl of Dulwich, L. |
| Caldecote, V. | Mackay of Ardbrecknish, L. |
| Carnegy of Lour, B. | Mackay of Clashfern, L. [Lord Chancellor.] |
| Carnock, L. | |
| Cavendish of Furness, L. | Mancroft, L. |
| Chalker of Wallasey, B. | Merrivale, L. |
| Charteris of Amisfield, L. | Mersey, V. |
| Chelmer, L. | Montagu of Beaulieu, L. |
| Chelmsford, V. | Morris, L. |
| Clanwilliam, E. | Mountevans, L. |
| Clark of Kempston, L | Mountgarret, V. |
| Cochrane of Cults, L. | Munster, E. |
| Constantine of Stanmore. L. | Murton of Lindisfarne, L. |
| Cork and Orrery, E. | Nelson, E. |
| Craigmyle, L. | Nelson of Stafford, L. |
| Cranborne, V. | Newall, L. |
| Crawshaw, L. | Onslow, E. |
| Cumberlege, B. | Orkney, E. |
| Dacre of Glanton, L. | Orr-Ewing, L. |
| Davidson, V. | Oxfuird, V. |
| Denham, L. | Pearson of Rannoch, L. |
| Denton of Wakefield, B. | Pender, L. |
| Elibank, L. | Peyton of Yeovil, L. |
| Ellenborough, L. | Prentice, L. |
| Elles, B. | Quinton, L. |
| Elliot of Harwood, B. | Rankeillour, L. |
| Elliott of Morpeth, L. | Reay, L. |
| Elton. L. | Rees, L. |
| Fanshawe of Richmond, L. | Renton, L. |
| Ferrers, E. | Rippon of Hexham, L. |
| Flather, B. | Rodger of Earlsferry, L. |
| Fraser of Carmyllie, L. | Romney, E. |
| Fraser of Kilmorack, L. | St. Davids, V. |
| Gainsborough, E. | Saint Oswald, L. |
| Gardner of Parkes, B. | Saltoun of Abernethy, Ly. |
| Geddes, L. | Sanderson of Bowden, L. |
| Gisborough, L. | Sandys, L. |
| Glenarthur, L. | Savile, L. |
| Goold, L. | Seccombe, B. |
| Goschen, V. | Sharpies, B. |
| Granard, E. | Skidelsky, L. |
| Hailsham of Saint Marylebone, L | Stewartby, L. |
| Stodart of Leaston, L. | |
| Halsbury, E. | Strange, B. |
| Hamilton of Dalzell, L. | Strathcarron, L. |
| Harmsworth, L. | Strathclyde, L. |
| Harrowby, E. | Strathmore and Kinghorne, E [Teller.] |
| Henley, L. | |
| Hesketh, L. [Teller.] | Sudeley, L. |
| Hives, L. | Swansea, L. |
| Holderness, L. | Swinton, E. |
| HolmPatrick, L. | Thatcher, B. |
| Howe. E. | Thomas of Gwydir, L. |
| Huntly, M. | Trefgarne, L. |
| Hylton-Foster, B. | Trumpington, B. |
| Ironside, L. | Ullswater, V. |
| Johnston of Rockport, L. | Vaux of Harrowden, L. |
| Killearn, L. | Vivian, L. |
| Lane of Horsell, L. | Wade of Chorlton, L. |
| Lauderdale, E. | Wakeham, L. [Lord Privy Seal.] |
| Leigh, L. | |
| Lindsay, E. | Wedgwood, L. |
| Lindsey and Abingdon, E. | Willoughby de Broke, L. |
| Long, V. | Young, B. |
| Lucas of Chilworth, L. |
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 5.37 p.m.
§ Clause 43 agreed to.
§ Clauses 44 and 45 agreed to.
§ Clause 46 [Exercise of functions for purpose of encouraging investment in the railways]:
§ [Amendments Nos. 108C and 108D not moved.]
§ On Question, Whether Clause 46 shall stand part of the Bill?
1438§ Lord Clinton-DavisThere is common ground between us in that we all want to see investment. encouraged. I believe that we are a little more realistic about it than the Government. But, be that as it may., investment in rolling stock, signalling and so forth is important, as my noble friend Lord Carmichael said. It is right in principle that the franchising director and the PTEs should agree as to the future use of their powers, and that is set out in the Bill. I have some anxiety about the competition implications.
If one looks at the Notes on Clauses—I read from the introduction—one sees:
It would also enable the Franchising Director to give undertakings about how he will exercise his franchising powers in future in order to encourage investment in assets for use in the provision of railways services, He might, for example, want to undertake to a rolling stock lessor that he would require future franchisees to use that lessor's stockThe logic of that is reasonable. I in no way dissociate myself from it. But I am a little worried about the competition rules, and I will come to that point. The introduction continues:This would give the lessor confidence that he would not be left with stock which he could not re-lease at the end of the initial franchise. Without such comfort, private sector lessors are unlikely to be prepared to invest in rolling stock with a. 30–year life on the strength of. say, a 7-year lease to an franchisee".I agree with the purpose of that requirement.It is most helpful that we have the Notes on Clauses which give us a greater insight into the Government's thinking in advance of a debate like this. From examining the Notes on Clauses we see the way in, which the franchising director will go about exercising his powers. That is the Government's indication. It is purely indicative. I wonder how that requirement is likely to be viewed by the Office of Fair Trading. The Minister and his department may have had discussions with the Office of Fair Trading. I wonder how the indication that the franchising director would require future franchisees to use a particular lessor's, stock fits in with the competition articles of the Treaty of Rome. I wonder whether the department has had discussions in advance with DG4 (the competition directorate general) about this point.
It is a matter which relates to the application of Articles 3, 5 and 85. Article 3(a) of the treaty refers to
the elimination, as between Member States, of customs duties and of quantitative restrictions on the import and export of goods, and of all other measures having equivalent. effect".That includes the institution of a system ensuring that competition in the Common Market is not distorted. As I see it, the difficulty is that there is prima facie some distortion if one favours one lessor in that way. and favours him for a long period of time. I hope that the Government will be able to persuade not just me —it is less important that they persuade me—but the competition authorities that what they are doing is acceptable and is not likely to be challenged.Article 5 merely provides that member states,
shall abstain from any measure which could jeopardize the attainment of the objectives of this Treaty".It is Article 85 in particular that seems to me to be most relevant. Article 85.1 provides:The following shall be prohibited as incompatible with the common market".1439 I need not go through all the items that are cited. It continues:all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States".The requirement appears prima facie to be a possible restriction or distortion of competition within the Common Market. I hope that the Minister will be able to give assurances to the Committee, or reflect upon the matter further. I mentioned to him in general that I would be raising this point. I hope that sufficient assurances can be given, because it would be most unsatisfactory if we went ahead with the provision and it was later open to a massive challenge from rolling stock manufacturers or lessors from outside this country, or even from within, because of course the competition articles can be prayed in aid by industries of undertakings within a Community member state.I make it clear to the Minister that I want to see him get away with this. It is a sensible proposition, but I worry a little about the legal implications, and that the situation could go wrong. I hope not, and I shall listen with interest to what the Minister has to say.
§ 5.45 p.m.
The Earl of CaithnessI listened with care to what the noble Lord, Lord Clinton-Davis, had to say. I shall have to look at this matter after reading what he has said in the Official Report. I assure him that we have discussed the Bill with the Commission. It has not raised any points on Clause 46. It is obviously aware of the situation but has not as yet come back to us. There is no question that we shall be in breach of any of the competition rules with regard to the investment in the first place, because if the initial franchisee goes for rolling stock he will go to the market and be bound by the competition rules. This is the next stage. It is designed to ensure that that investment is put to good effect over the life of that investment.
The franchisee might well be looking at German, French or two types of British equipment for his franchise. It is the continuation of the use of that asset once we have gone through all the competition rules which is the point that the noble Lord is on, and that is the point at which I need to look again.
§ Lord Clinton-DavisI am grateful to the Minister. It is better to be safe than sorry. I do not claim to have special expertise in this field, but I have taken a view from some lawyers. They have confirmed the anxiety about which I went to them. It may well be that the Commission is satisfied. On the other hand, perhaps its attention did not reflect upon that clause. I am grateful to the Minister for his reply. It would be helpful if he would let me know the outcome of any reference he makes about this matter to the Commission so that if we can avoid referring to the matter on Report so much the better. We shall be rather busy on Report anyway.
Clause 46 agreed to.
[Amendment No. 108E not moved.]
Clause 47 agreed to.
1440 Clause 48 [No person to be common carrier by railway]:
On Question, Whether Clause 48 shall stand part of the Bill?
§ Lord Carmichael of KelvingroveThis is a technical Motion. I now realise that it is deficient. I should have tabled an amendment explaining that the Secretary of State would have the power to decide who should be a common carrier in a particular instance. It would be designed to protect the Secretary of State in case there was a national emergency of some kind falling short of hostilities. For instance, when oil prices went through the roof and there was a threat of rationing, it might have been important for the Secretary of State to have the power to order certain things to go by rail instead of road because of the possible shortage of motor fuel.
That was the only reason for opposing the Question that Clause 48 shall stand part of the Bill. If the Minister will think about the matter I shall table an amendment on Report in order to include that consideration in the Bill.
The Earl of CaithnessI hope that the noble Lord will consider that to be unnecessary. This short clause is simply trying to continue the procedure that has been in effect for British Rail since 1962. British Rail has not been regarded as a common carrier since that date. We have survived various oil price crises, and perhaps on reflection the noble Lord will agree that such situations can be taken care of naturally in the commercial nature of a deal between a franchisee or a licensee and the Government in certain circumstances.
As regards the Gulf War and the chartering of ships, the Government were able to go to the market and charter the appropriate vessels in order to carry out the task that had been set. In exactly the same way, one does not need the railways to be a common carrier under certain circumstances; one can deal with such situations in the normal course of commercial events.
§ Lord Carmichael of KelvingroveI am grateful to the Minister. I suppose that, if necessary, the Secretary of State could take emergency powers in order to insist that the railway should carry certain goods. I shall read the Minister's answer, which seemed to be satisfactory—
The Earl of CaithnessPerhaps I may help the noble Lord a little more by referring him to Clause III, which gives the Secretary of State wide powers in national emergencies.
Clause 48 agreed to.
Clauses 49, 50 and 51 agreed to.
Clause 52 [Power to require information etc.]:
§ Lord Ewing of Kirkfordmoved Amendment No. 109:
Page 61, line 31, at end insert:("( ) Nothing in this section shall be construed as requiring the Board to furnish any person with any information the furnishing of which might, in the opinion of the Board, seriously and prejudicially affect the interests of the Board or any of its subsidiaries.").
§ The noble Lord said: In moving Amendment No. 109, I shall speak also to Amendment No. 124 which relates to Clause 72 dealing with the disclosure of 1441 information to the franchising director. When Amendment No. 109 was tabled it did not have the significance that it has assumed since the decision of the Committee to allow the British Rail Board to tender for franchises. When the original amendment was placed on the Marshalled List the Government had held to their firm position and view that the BRB should not be allowed to tender for any of the franchises. The Committee reversed that position in earlier proceedings.
§ We are now in a position in which the Government and Department of Transport are plundering—if that word is acceptable—the information and knowledge of the British Rail Board in order to make the Bill work. We fear that under the provisions of Clauses 52 and 72 the British Rail Board will be placed in a position where the "appropriate officer" can require any person to provide any information which he deems to be appropriate to the matter under consideration. The exceptions to that are that that person will not be required to provide information that he would not be required to provide in either civil or criminal court proceedings.
§ Amendment No. 124 relates to Clause 72, which gives the franchising director the power to require the disclosure of information in considering applications for franchise. Therein lies the danger to the British Rail Board. I hope that the Minister will see how the position has changed as a result of the decision taken by the Committee.
§ We could easily find ourselves in the ludicrous position in which the British Rail Board is required to provide information in particular to the franchising director which could be passed on to a competitor for a franchise, thereby putting the board at a serious disadvantage. Equally, because such things happen, the British Rail Board could be put in the even more ludicrous position of being required to provide information to be passed on to an organisation or a company—a bus operator is a good example—which has no intention of bidding for a franchise but is keen to obtain that information from the board. The only way in which it can obtain that information is under Clause 52, the appropriate officer, or under Clause 72, the franchising director. The powers of the franchising director come into play when he begins to parcel up various parts of British Rail in order to be franchised.
§ I hope that the Minister will accept that the position has now changed. I accept that the amendments had been tabled before the position changed, but as a result of that change they have assumed an even greater importance. I beg to move.
§ Lord RentonI hope that my noble friend will not accept Amendments Nos. 109 and 124. The noble Lord, Lord Ewing, suggested that when a franchise is to be invited for a subsidiary, the board needs to tell only part of the truth. I remember when some 60 years ago a Member of this Chamber was sent to prison because he disclosed only half the truth in a prospectus relating to the sale of a subsidiary company. The learned judge, the late Mr. Justice Avory, used these penetrating words: "Half the truth is no better than a lie". In the circumstances envisaged in Clause 52 it is essential that its terms should remain as they are and 1442 that the board should be required to provide all the relevant information. Therefore I hope that the amendment will not be accepted.
§ Lord Cochrane of CultsThe noble Lord, Lord Ewing, gave the game away a little by saying that the amendment was tabled before the events of Monday evening which aroused so much exciternent. It is a little ingenuous of the noble Lord to say that those events made the amendment more necessary and that it is merely consequential. I disagree with the noble: Lord. I agree with this part of the Bill, at any rate, and I fear that the noble Lord's amendment is intended to make the much-needed process of privatisation more difficult. For that reason I shall oppose it.
§ 6 p.m.
The Earl of CaithnessI understand the anxieties expressed by the noble Lord, Lord Ewing of Kirkford, but I profoundly disagree with them.
Clause 52 provides powers for the regulator and the franchising director, as appropriate, in order for them to obtain information if they believe an operator is contravening the terms of a licence, access agreement, franchise agreement or closure condition. I think it is right that they should have such powers. They would apply to BR only in circumstances where BR was suspected of contravening the terms of its licence, of a closure consent, or, indeed, of a franchise agreement. I doubt whether such a situation would be likely to arise, and I doubt whether BR should be afforded any special protection from the requirement to provide information if it did.
Clause 72 gives the franchising director powers to obtain information from the board, wholly owned subsidiaries of the board or network licence or station licence holders for the purpose of facilitating the performance of his functions under Part I of the Bill —the franchising of passenger services.
I should say at this point that, although the noble Lord, Lord Ewing, spoke to Amendment No. 124 when moving Amendment No. 109. much of Amendment No. 125ZA is equally pertinent to the discussion and I shall refer to that amendrnent in what I say now.
When franchising passenger services the franchising director will need to obtain information not only about the current cost of BR operating in shadow franchise form but also about the cost of access to the railway network in order to establish the full cost of providing a service. This will include the charges for access to track and to stations, which may be operated and charged for separately. He will need this information to prepare invitations to tender and also for the purpose of considering bids. The franchising director will also need information generated and collected by track operators in order to monitor franchisees' performance.
I say to the noble Lord, Lord Ewing, that the regulator and the franchising director will not be able to pass on information to BR's competitors except where strictly necessary for the performance of their own functions. I refer the noble Lord to the restrictions in Clause 73.
1443 Clause 72 already contains two important safeguards against the misuse of this power by the franchising director. The first is in subsection (1), which limits the franchising director's powers explicitly to information he considers necessary for the purpose of facilitating his functions under this part of the Bill. The second is in subsection (5) which provides that no person shall be compelled to provide documents or furnish information which he could not be compelled to produce in civil proceedings in the court.
I hope that the Committee will agree with me that it would be inappropriate for BR to withhold information from the franchising director on the grounds of commercial confidentiality which he needs to fulfil his statutory functions. My noble friend Lord Renton was absolutely right to draw attention to that earlier incident. All potential bidders for a franchise will need information on which to base their bids. Without this information there could be no sensible competition. The only source of that information is BR. With such a restriction on the provision of information, the chances of being able to hold a properly competitive franchise competition, as my noble friend Lord Cochrane of Cults said, would be nil. There would be no chance. Only BR would have access to the information necessary for compiling a tender. I hope that the Committee will agree with me that that cannot be right. The amendment would undermine the whole concept of franchising being a genuinely competitive process.
I am grateful to the noble Lord, Lord Ewing of Kirkford, for tabling the amendment because it clarifies the Labour Party's position. It does not want the private sector to have any say at all in the running of the railway.
§ Lord Ewing of KirkfordI find the Minister's response both interesting and in many ways contradictory. Perhaps I may deal first with the Minister's last point. I put on record that the commitment of the Labour Party in assuming power at the time of the next general election is to return the railways, with the involvement of private sector finance, to public ownership. That is the position. My honourable friend John Prescott has placed that on record time and time again. It does not do the noble Earl any credit to seek to distort the position of the Labour Party. I can understand the reasons for that. I admit to my shame that I sometimes do it with the Conservative Party, but I have had great competition in recent months from the Conservative Party, which has distorted its own position. Therefore, I have been helped in that regard.
The Minister's answer was quite contradictory. If I were to table a Question tomorrow asking what level of grant—how much money—was made available to Toyota to set up in Derby, I should be told that that information is commercially confidential. I tried to obtain information about the level of finance which the Scottish Office offered to the Timex Corporation to encourage it to remain in Dundee and I was told that that information was commercially confidential.
1444 The Minister is saying that BR will have to reveal information which is commercially confidential. He went out of his way to say that it would be wrong for British Rail to hide behind the commercially confidential approach and refuse to reveal the information. Therefore, I find the Minister's position slightly contradictory, to say the least.
The intervention by the noble Lord, Lord Renton, was, with great respect, particularly unfortunate. The amendments do not suggest, I do not suggest and I do not believe that the Minister accepts that I suggest that British Rail, or any other company, should tell only half the truth. That was a rather unfortunate phrase, although I understand, with what has been going on in the City for the past four or five years, that Members of the Committee opposite now have reservations about the way in which certain people conduct their business in the City; but that is not a good reason for laying that charge against reputable organisations like the British Rail board. There is no question of trying to encourage British Rail to tell only half the truth.
§ Lord RentonI find it difficult to understand why the noble Lord makes those comments. The amendment that he proposes is perfectly clear. It entitles the board to withhold information. Therefore, what I said was completely relevant and justified.
§ Lord Ewing of KirkfordThe noble Lord and I will have to agree to differ on that because I honestly take the view that the comments were not justified. I wish to place that on the record.
The noble Lord, Lord Cochrane of Cults, said that at least I was honest in saying that the amendments had been tabled before the Committee reversed the position in relation to the ability of BRB to tender for the franchise; that is absolutely true. However, the events of our earlier proceedings have altered the importance of the amendments. I shall not press the amendments to a vote today, but I give notice to the Minister that by the time we reach Report stage we shall be well into the autumn. By that time we shall have an indication from the Government as to what they intend to do, if they intend to do anything, in relation to the amendment in the name of the noble Lord, Lord Peyton, that was carried earlier in our proceedings. I may well return to this matter on Report because I do not wish to see the British Rail board placed in a position in which it has to provide more detailed information than any other bidder for a franchise. That would not be a level playing field. I hate the expression "level playing field" but that would not be a level playing field. It would not be fair to say to British Rail that it must provide more information than any of its competitors.
The Earl of CaithnessBefore the noble Lord decides finally what to do with his amendment, I wish to make the position absolutely clear. With or without the amendment which the Committee agreed, I could not advise the Committee to accept this amendment now, on Report or on Third Reading. I have made it clear that the franchising director will not be able to 1445 pass on the information to BR's competitors except where strictly necessary for the performance of their functions.
I hope therefore that the noble Lord will decide now whether the amendment is worthy enough to test the opinion of the Committee. Regardless of the Government's decision on my noble friend's accepted amendment, BR will be the only place from which information can be obtained to enable the franchising director to fulfil his statutory obligations. Therefore, that information has to be given regardless of whether or not BR is a potential franchisee.
§ Lord Ewing of KirkfordI notice that the Minister did not deal with the point about BR having to provide more information than a competitor. However, as I said, I should like to give the matter further thought and consideration. I may or may not return to it on Report. For the time being, I beg leave to withdraw the amendment.
The Earl of CaithnessNo!
6.11 p.m.
On Question, Whether the said amendment (No. 109) shall be agreed to?
§ Their Lordships divided: Contents, 60; Not-Contents, 121.
| Division No. 2 | |
| CONTENTS | |
| Addington, L. | Jenkins of Hillhead, L. |
| Airedale, L. | Jenkins of Putney, L. |
| Archer of Sandwell, L. | Kirkhill, L. |
| Ardwick, L. | Lockwood, B. |
| Beaumont of Whitley, L. | Longford, E. |
| Bonham-Carter, L. | Macaulay of Bragar, L. |
| Bottomley, L. | Mclntosh of Haringey, L. |
| Carmichael of Kelvingrove, L. | Mackie of Benshie, L. |
| Clinton-Davis, L. | Mallalieu, B. |
| Cocks of Hartcliffe, L. | Marshall of Goring, L. |
| David, B. | Mason of Barnsley, L. |
| Dean of Beswick, L. | Mishcon, L. |
| Desai, L. | Monson, L. |
| Dormand of Easington, L. | Morris of Castle Morris, L.[Teller.] |
| Eatwell, L. | |
| Ennals, L. | Nicol, B. |
| Ewing of Kirkford, L. | Pitt of Hampstead, L. |
| Galpern, L. | Prys-Davies, L. |
| Geraint, L. | Redesdale, L. |
| Glenamara, L. | Robson of Kiddington, B. |
| Graham of Edmonton, L. [Teller.] | Rochester, L. |
| Seear, B. | |
| Greene of Harrow Weald, L. | Shackleton, L. |
| Gregson, L. | Shepherd, L. |
| Hayter, L. | Stedman, B. |
| Henniker, L. | Stoddart of Swindon, L. |
| Hollis of Heigham, B. | Taylor of Gryfe, L. |
| Holme of Cheltenham, L. | Tordoff, L. |
| Houghton of Sowerby, L. | Williams of Crosby, B. |
| Hughes, L. | Williams of Elvel, L. |
| Jay, L. | Winchilsea and Nottingham, E |
| NOT-CONTENTS | |
| Allenby of Megiddo, V. | Boardman, L. |
| Amwell, L. | Bolton, L. |
| Arran, E. | Borthwick, L. |
| Astor, V. | Brabazon of Tara, L. |
| Attlee, E. | Braine of Wheatley, L. |
| Barber, L. | Bruntisfield, L. |
| BelofT, L. | Cadman, L. |
| Blake, L | Caithness, E. |
| Blatch, B. | Caldecote, V. |
| Bledisloe, V. | Campbell of Croy, L. |
| Carnegy of Lour, B. | Mackay of C'lashfern, L. [Lord Chancellor.] |
| Carnock, L. | |
| Cavendish of Furness, L. | Mancroft, L. |
| Chelmsford, V. | Merrivale, L. |
| Clanwilliam, E. | Mersey, V. |
| Clark of Kempston, L | Milverton, L. |
| Cochrane of Cults, L. | Montagu of Beaulieu, L. |
| Colnbrook, L. | Mountevans L. |
| Colwyn, L. | Munster, E. |
| Constantine of Stanmore, L. | Murton of Lindisfarne, L. |
| Cork and Orrery, E. | Newall, L. |
| Craigavon, V. | Norrie, L. |
| Cranborne, V. | Orr-Ewing, L. |
| Cumberlege, B. | Pender, L. |
| Davidson, V. | Peyton of Yeovil, L. |
| Denton of Wakefield, B. | Prentice, L. |
| Elibank, L. | Quinton, L |
| Ellenborough, L. | Rankeillour, L. |
| Elles.B. | Renton, L. |
| Elliot of Harwood, B. | Ren wick, L. |
| Fraser of Carmyllie, L. | Rippon of Hexham, L. |
| Fraser of Kilmorack, L. | Rodger of Earlslerry, L. |
| Gardner of Parkes, B. | St. Davids, V. |
| Geddes, L. | Saint Oswald, L. |
| Gisborough, L. | Sanderson of Bowden. L. |
| Glenarthur, L. | Sandys, L. |
| Goold, L. | Savile, L. |
| Goschen, V. | Seccombe, 8. |
| Granard, E. | Sharpies, B. |
| Hailsham of Saint Marylebone, L. | Stewartby, L. |
| Stockton, F. | |
| Harmar-Nicholls, L. | Stodart of Leaston. L. |
| Harmsworth, L. | Strathcarron. L |
| Harvington, L. | Strathclyde, L. |
| Henley, L. | Strathmore and Kinghorne, E [Teller.] |
| Hesketh, L. [Teller.] | |
| Hives, L. | Sudeley, L. |
| Holderness, L. | Swansea, L. |
| Howe, E. | Swinton, E. |
| Jeffreys, L. | Thomas of Gwydir, L. |
| Johnston of Rockport, L. | Trefgarne, L. |
| Killearn, L. | Trumpington, El. |
| Kilmarnock, L. | Ullswater, V. |
| Lane of Horsell, L. | Vaux of Harrowden. L. |
| Lauderdale, E. | Vivian, L. |
| Leigh, L. | Wade of Chorlton, L. |
| Lindsay, E. | Wakeham, L. [Lord Privy Seal.] |
| Lindsey and Abingdon, E. | |
| Long, V. | Westbury, L |
| Lucas of Chilworth, L. | Wise, L. |
| Lyell, L. | Young, B. |
| McColl of Dulwich, L. | Younger of Prestwick, L. |
| Mackay of Ardbrecknish, L. |
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 6.19 p.m.
§ Clause 52 agreed to.
§ Clause 53 [Meaning and effect of railway administration order]:
§
Lord Clinton-Davis moved Amendment No. 110:
Page 61, line 40, at end insert:
("( ) in a manner which ensures the continued operation of passenger railway services.").
§ The noble Lord said: In moving the above amendment, I should like to make it quite plain that it is a probing amendment. I wish to reflect not only on the effect of Clause 53 but also on the whole question of enforcement of franchise conditions. We alluded to the matter earlier, and I believe that the Minister and I both agreed that it would be appropriate to deal with the point under the present clause.
§ I believe that the whole question of railway administration orders and the enforcement of conditions which are not a hundred miles apart from 1447 each other are replete with problems. I have previously—as has the noble Lord, Lord Tordoff—alluded to some of the problems that we envisage. We see problems in the continuation of services. One can immediately see that in Clause 53 as it is drafted at present priority is given to the interests of shareholders and creditors of the failed railway company. However, it is important—the Minister will be the first to concede this —to protect the interests of passengers too. That has been the implicit argument that the Minister has alluded to on a number of previous occasions.
§ The Notes on Clauses state in relation to Clause 53 that the continuation of services is the main objective of the clause. Somehow or other the clause must—perhaps our amendment is not the most appropriate way of doing it—be tightened up, but the question is: can it be done in practice? How does one ensure that the continued operation of passenger railway services will take effect?
§ I see a weakness in the situation where a company is rendered insolvent or where there is a major breach of a franchising condition. The two situations are different and the Government are quite right in saying that discussions over the breach of a franchise are likely to take some considerable time as negotiations would be entered into. However, that depends on the nature of the breach. There may, for example, be a situation where the franchisee simply says that he cannot afford to conform with the condition that is being applied—it could relate to discounted fares, for example—and that he simply cannot break even. With all the good will in the world and with all the negotiations that may be put in hand, at the end of the day it is a matter of commercial judgment. The franchisee may say, "You can threaten me with prosecution and with anything you like but on a commercial basis I cannot conform to the condition that is being applied". That is that. What happens then?
§ I believe there is a serious gap in the way in which this whole argument has been developed. Therefore, in a number of cases, but not in all, it is bound to be immensely difficult for some services to continue to be operated. At the end of the day will it be British Rail that will be expected to fill the gap? But is that practical? A franchise may have been operating for a number of years and British Rail may have withdrawn from that service. It may not have the expertise, or even the will in the circumstances, to run the service unless provision can be made by way of PSO grant. However, I do not believe that even that will necessarily be sufficient. British Rail could therefore be placed in a most invidious position and may not wish to take up the service in question, or feel capable of doing so.
§ If that situation were to obtain, there can be little doubt that the cost of running the service—in an emergency, so to speak—would fall on the taxpayer to a greater extent than if the current situation continued to prevail. It may be that because of the situation that emerged the other night we shall not be faced with this. That is why in some respects it is unsatisfactory 1448 that we are debating these issues against that backcloth. However, we have to be prepared for the possibility that the Government may try to reverse the situation.
§ I am deeply worried that the railway administration order and all the enforcement provisions which relate to earlier parts of the Bill will not in practical terms be capable of dealing with the continuation of services in certain instances, and possibly in certain major instances. We cannot hypothesize about all those situations, but if we are to have this Bill in the form that the Government want, it is right that we deal with this matter. I accord with the Government's interests in this respect but I do not see how the matter will work out in practice. The Government will have to go a good deal further in giving assurances on how these provisions will work out than they have thus far.
§ I do not know the Government's thinking on this matter other than what is set out in the Notes on Clauses. I hope that by my asking these questions at this stage the Minister will be able to give certain reassurances on this matter. It is only for that purpose that I raise this amendment at this time. These are important matters. It is the provision of services for passengers and communities that is at stake. I beg to move.
The Earl of CaithnessThere is nothing between the noble Lord and the Government on this point. In the unfortunate event of a situation occurring such as he described, we both want to see that practical, workable arrangements are in place to ensure there is no loss of service.
Clause 53(2) defines the purposes for which a railway administration order may be made. These are to provide for the transfer to another company or companies as a going concern of so much of the undertaking of the company under the order as is necessary to ensure that the "relevant activities" may be carried on and to provide for the carrying on of those relevant activities pending the making of the transfer. The "relevant activities" are defined in subsection (5) (b), which states:
in the case of a company which is the holder of a passenger licence, the carriage of passengers by railway; or in the case of a company which is the holder of a network licence, a station licence or a light maintenance depot licence, the management of a network, a station or a light maintenance depot, according to the description of licence in question".So for a passenger operator subject to a railway administration order the purpose of the order would be to secure the continued provision of passenger services. For a station operator it would be for the continued operation of the station and so on. The purpose of the special railway administration order regime is wholly aimed at providing for the continued provision of necessary passenger services in terms of continued operation of the trains, the track, the stations and the light maintenance depots involved should any of the operators of those services or facilities become insolvent or should they be about to become insolvent.If the franchisee is in breach of a franchise agreement it will be open to the franchising director to terminate the agreement. In that case under Clause 26 he will be under a duty to secure the provision of those 1449 services until they are refranchised. The franchising director then has powers under Clause 43 to enter into agreement with railway operators to provide services. The noble Lord, Lord Clinton-Davis, was right to say that it might not necessarily be British Rail which will be called upon by the franchising director to operate a service in the event of a railway administration order. As was mentioned the other night, the railway operator might be Clinton-Davis Railways plc. That company might be the most suitable company to take on the service as it would be a highly reputable, soundly based and financially solvent company. I have no doubt of that. However, it may well be that in order to achieve the continuation of the passenger service the franchising director will turn to whoever he thinks is the best person to provide that service.
Of course, there is the question of the relevant assets. We spoke earlier about the power of the franchising director to ask a future franchisee to take on a lease of rolling stock. I said that I would look at that point again. But by those various means we believe that we have provided for the continuation of passenger services in the event of a franchisee becoming insolvent or being about to become insolvent.
At this point I should like to draw the attention of the Committee to the government amendments which we shall deal with in the near future. They are basically technical amendments but they are designed to strengthen these provisions and to make sure that they are workable.
I fear that the noble Lord may still have some anxiety. My door is open. I should be very happy for the noble Lord to come in and to discuss these matters with me. We are discussing a somewhat hypothetical situation which might be better dealt with in the office.
§ 6.30 p.m.
§ Lord Clinton-DavisI am very grateful to the Minister. When I come to see him can I come with the entire company—Clinton-Davis plc?
The Earl of CaithnessProvided the noble Lord brings his franchise agreement with him, that will be welcome.
§ Lord Clinton-DavisThere will be no difficulty in persuading the franchising director to grant my company a franchising agreement.
The Minister has not satisfied me in relation to the practicalities. One is likely to be dealing with an emergency. Where a franchisee has failed, perhaps through no fault of his own, who is likely to want to fill that position immediately, particularly in the context of running a railway franchise, which is a fairly newly conceived operation? I believe that in practical terms it would be extremely difficult to imagine any party other than British Rail coming in. Even British Rail could have immense difficulty in continuing the operation of a service under those conditions. It would be bound to impact on other operations. After all, according to the Government's plans, BR will be a service of last resort in any event. Here it would have to attempt a rescue operation. How would it go about that? The franchising director 1450 has limited resources. He has a budget which is available for a variety of purposes, but to what extent will it be available to help mount a rescue operation? What impact would that have on the franchising director's duties in other regards?
There are major implications here, and I do not believe that this situation can be equated with an ordinary business failure. In that case there is a liquidation, or a receiver continues to operate a business under certain conditions or there is an administration order. These are different circumstances. Here we are making provision for filling in for what has become a monopoly service but one which has been transferred to the private sector.
Whatever meetings may take place between the Minister and myself—and I am always glad to see him and shall he more than happy to take up his offer—even if he satisfied me, I doubt very much whether he would satisfy the railway community at large. I am not a great expert on matters of insolvency but I perceive real difficulties here. I hope that the Minister will be able to reflect further on the matter before Report. stage. Perhaps he can satisfy me. I hope that he can.
Having said that, I conclude by saying that I am grateful to the Minister for being very open about the situation. In the circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§
Lord Clinton-Davis moved Amendment No. 110A:
Page 61, line 43, leave out from ("to") to ("as") in line 44 and insert ("the Board").
§ The noble Lord said: The purpose of the amendment is to give some emphasis to the difficulties that have arisen in relation to the operation of administration orders. First, there is the possible loss through bankruptcy or insolvency of the network element, which is the main virtue of British Rail. There is also the question of retention of assets and equipment within the British Rail family. The third point is the maintenance of consistent safety standards during the transition period.
§ I stress that it will and should be the responsibility of BRB to run services which are not franchised. Therefore, it seems only logical that the board should retain the assets and the network facility should a franchisee go under. If assets which were crucial to the smooth running of the railway network were to become embroiled in rows with creditors of a defunct operator, the worst possible scenario would develop. The natural balance of branch lines feeding passengers into main lines could well be broken and the living railway could be cut off from its source. stilled into decline and ultimately into decay. Therefore, for the sake of an interest repayment the company is lost; for the sake of a company the franchise is lost; for the sake of the franchise the line is lost; and for the sake of the line the railways are lost. It is not fanciful to put the matter in those terms.
§ We highlight this aspect of the Bill in order to demonstrate that the fears of nearly all the customer and staff organisations are well founded. Those anxieties have been well expressed to us arid I am sure that they have been expressed to the Minister.
1451§ So far as concerns safety standards the Minister has accepted the Health and Safety Executive's considerations about safety in relation to the Bill. We are happy that he has done so. However, handing over an ongoing operation to another company on a temporary basis is far from satisfactory even if that company holds a licence. I wonder to what extent that situation has been contemplated by the Health and Safety Executive. I fear that I have not had time to look into that element of the matter. Perhaps the Minister could let us have his views.
§ We say that the BRB should take over such operations, with additional funding provided by the Secretary of State, because it will not be satisfactory simply to leave it to the franchising director and his budget.
§ Again, I am seeking to elicit from the Minister his thinking about these matters. It is not my intention to divide the Committee. If he sought to negative the matter I would say "So be it" on this occasion. I hope that he will not because I am seeking simply to gain some further information from him this evening about this crucial element of the Bill. I beg to move.
The Earl of CaithnessI agree with the noble Lord that this is a crucial area of the Bill. It is important that we get it right and I welcome the opportunity to discuss these matters in the Committee and at later stages if necessary.
I am not sure that there is very much that I can add to what I said in relation to the previous amendment. With this amendment the noble Lord, Lord Clinton-Davis, wants to make British Rail the only party which could take on a passenger service in the event of an emergency. I concede to the noble Lord that initially BR will have the stock, capacity, expertise and wide distribution to be the prime choice to fill in in an emergency. However, there may come a time in the future, when the franchises have proved the success that we believe that they can be, when there are many franchisees other than British Rail. It would then seem illogical for the board to be the only party which could step in in such a situation.
I believe that the flexibility in the Bill which provides for the franchising director to go either to BR or to another franchise operator is the logical option. It will help the franchising director to fulfil his obligation to continue the passenger service.
The franchising director will obviously have to operate very quickly in such circumstances. Therefore the greater discretion and flexibility that we can give the franchising director, the better. I believe that it would be better therefore to stick with the words in the Bill which give the franchising director the choice of BR or another franchising operator rather than tying it solely to BR.
§ Lord Clinton-DavisI am grateful to the Minister. Clearly the issue will form part of the discussion between us. In those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
§
The Earl of Caithness moved Amendment No. I lOB:
Page 62, line 7, at end insert:
( ) Without prejudice to paragraph 11 of Schedule 5 to this Act, the power conferred by section 411 of the Insolvency Act 1986 to make rules shall apply for the purpose of giving effect to the railway administration order provisions of this Act as it applies for the purpose of giving effect to Parts I to VII of that Act, but taking any reference in that section to those Parts as a reference to those provisions.").
§ The noble Earl said: In moving the amendment, with the leave of the Committee I shall speak also to Amendments Nos. 110C to 110E, 110G, 110J to 110T inclusive, 110AF to 110AL inclusive, and 110AQ. At first flush, the amendments look like a large raft of amendments changing the Bill quite substantially. As I said earlier, they are largely technical but nonetheless important amendments. They will help to ensure that the railway administration order procedure applies effectively to the operation of all protected railway companies in Great Britain and thus provides for the continuity of essential passenger services which, as we know from the last two amendments, all Members of the Committee are seeking. If the Committee wish me to go into detail on any of the amendments I shall do so. However, considering their technicality, I beg to move.
§ On Question, amendment agreed to.
§
The Earl of Caithness moved Amendment No. 110C:
Page 62, leave out lines 26 and 27 and insert:
(""the court", in the case of any protected railway company, means the court having jurisdiction to wind up the company;
the railway administration order provisions of this Act" means this section, sections 54 to 58 and (Application of the railway administration order provisions to unregistered, unlimited or foreign companies) below and Schedules 5 and 6 to this Act.").
§ On Question, amendment agreed to.
§ Clause 53, as amended, agreed to.
§ Schedule 5 [Railway administration orders]:
§
The Earl of Caithness moved Amendments Nos. 110D and 110E:
Page 141, line 21, leave out from second ("administrator") to end of line 24.
Page 141, line 32, leave out from beginning to ("and") in line 36.
§ On Question, amendments agreed to.
§
The Earl of Caithness moved Amendment No. 110F:
Page 141, line 45, leave out from beginning to end of line 6 on page 142 and insert:
("(b) if the company is the holder of a passenger licence under Part I of the Railways Act 1993, by the Director of Passenger Rail Franchising with the consent of the Secretary of State;").
§ The noble Earl said: In moving the amendment, with the leave of the Committee, I shall speak to Amendments Nos. 110H, 110U, 110W to 110Z inclusive, 110AA to 110AE inclusive, 110AM and 1 IOAN.
1453§ This group of amendments alters the scope of the railway administration order procedure, the way in which railway administration orders are applied for and the persons who may apply for them.
§ On reflection, we concluded that the situation in which a licence would be revoked would not occur overnight, and that there will be sufficient forewarning to enable the franchising director to make alternative arrangements for the provision of any services run by the licensee which he considers to be essential. The special provisions of Clauses 53 to 58 will not be necessary in those circumstances.
§ The railway administration order regime is therefore now to apply only in the case of insolvency, and not in the case of breach of a licence or failure to abide by the provisions of enforcement orders made under Clauses 49 to 52 of the Bill. This involves mainly the deletion of Clause 54(2)(a) and (b).
§ In refining our policy we have concluded that a railway administration order should be made only on the application of the Secretary of State or, in the case of a protected railway company which is the holder of a passenger licence, the franchising director, with the consent of the Secretary of State. It is no longer proposed that the regulator should have any functions under the railway administration order regime. That is entirely appropriate, since unlike the franchising director, the regulator will have no role in securing the provision of services, is not to be a "competent authority" for the purposes of securing socially necessary rail services under EC law, and will therefore have no subsidy budget. It would be inappropriate for him to have a role in the making of applications for railway administration orders when he has no role in funding or procuring such services.
§ Lastly, the railway administration order procedure (and the prohibition on winding up, etc.) is no longer to come into play automatically in the case of a protected railway company, but is to be dependent in all cases on the Secretary of State or (as the case may be) the franchising director making an application to the court for a railway administration order. This will allow the Secretary of State or the franchising director to take a view on the merit of maintaining the services of the insolvent company, and of choosing not to apply for an order if this seems unnecessary or undesirable.
§ That change in no way diminishes our commitment to continue to secure socially necessary services, and to safeguard the railway facilities—stations, networks and light maintenance depots—necessary for the running of those services. Let me be absolutely clear on that. However, it does recognise that unnecessary expense could be incurred in invoking the railway administration order procedure when there was really no need to do so. For example, it may be that an open access operator has been particularly successful at securing a sizeable market share since the franchise in question was first let, and is providing adequate alternative transport services to those of the franchisee. Alternatively, there may be two light maintenance depots in competition with one another, one of which has become insolvent, whilst the remaining depot is able to meet the light maintenance 1454 requirements of train operators. In those cases, there may well be no need to apply the railway administration regime procedures.
§ I commend these amendments to the Committee:.
§ 6.45 p.m.
§ Lord Clinton-DavisI thank the Minister for that explanation. I shall certainly read with care what he said, and the helpful letter that he sent to my colleagues and myself on 5th July. However. the Minister may be a little optimistic when he states that the question of breaches of the franchising conditions will not occur suddenly. I believe that some breaches could occur suddenly. A company might be advised that it would be trading while insolvent if it were to continue with certain uncommercial activities including, for example, some aspect associated with the conditions of the franchise.
The Minister may be right in stating that it would not occur generally in that way. I believe that he incorporated the word "generally" in his remarks. It is certainly in the letter. I believe that there could be circumstances in which such a breach could occur suddenly. There is no point in reiterating the argument because it refers back to the earlier debate. If such a breach were to occur, a serious situation could arise.
The Minister and I will discuss the issue. I do not wish to prolong the debate. However, what he said in that respect was not wholly in keeping with what might be the practicalities.
On Question, amendment agreed to.
§
The Earl of Caithness moved Amendment No. 110G:
Page 142, line 32, leave out sub-paragraph (3).
On Question, amendment agreed to.
§
The Earl of Caithness moved Amendment No. 110H:
Page 143, line 7, leave out from ("or") to end of line 14 and insert ("if the company is the holder of a passenger licence under Part I of the Railways Act 1993, by the Director of Passenger Rail Franchising with the consent of the Secretary of State,").
§ On Question, amendment agreed to.
§
The Earl of Caithness moved Amendments Nos. 110J to 110T:
Page 143, line 23, leave out ("(i) if the company is a limited company,").
Page 143, line 25, leave out from ("companies"") I to second ("and") in line 27.
Page 143, line 30, leave out ("(i) if the company is a limited company,").
Page 143, line 31, leave out from ("companies"") to end of line 33.
Page 143, line 40, leave out ("(i) if the company is a limited company,").
Page 143, line 42, leave out from ("companies"") to second ("and") in line 44.
Page 143, line 47, leave out ("(i) if the company is a limited company,").
Page 143, line 48, leave out from ("companies") to end of line 50.
Page 144, line 18, leave out from ("(e)") to ("to") in line 20.
Page 144, line 40, leave out from ("(e)") to ("the") in line 41.
§ On Question, amendments agreed to.
§
The Earl of Caithness moved Amendment No. 110U:
Page 145, line 6, leave out from ("or") to end of line 12 and insert ("if the company is the holder of a passenger licence under Part I of the Railways Act 1993, the Director of Passenger Rail Franchising with the consent of the Secretary of State").
§ On Question, amendment agreed to.
§
The Earl of Caithness moved Amendment No. 110V:
Page 145, leave out lines 23 to 27 and insert:
("(1C) Where an application is made under subsection (1) in respect of a company in relation to which a railway administration order is in force—
(3) Subsection (3) (order not to prejudice or prevent voluntary arrangements or administrator's proposals) shall be omitted.
(4) In subsection (4)(provision that may be made in an order), the words "Subject as above" shall be omitted and for paragraph (d)there shall be substituted—
(d) without prejudice to the powers exercisable by the court in making a railway administration order—
(5) For subsection (6) there shall be substituted—
(6) Where a railway administration order is discharged in consequence of such provision in an order under this section as is mentioned in subsection (4) (d) (i), the special railway administrator shall, within 14 days after the date on which the discharge takes effect, send an office copy of the order under this section—
and if, without reasonable excuse, the special railway administrator fails to comply with this subsection, he is liable to a fine and, for continued contravention, to a daily default fine."").
§ The noble Earl said: The amendment should be warmly welcomed by the Committee since it is aimed at protecting the interests of the creditors of a railway company subject to a railway administration order.
§ The aim of the amendment is to ensure that the creditors of a company do not lose out because of the making of a railway administration order. They should not be in any worse position than they would have been had the company not been a protected railway company—that is to say, had normal insolvency procedures run their course. That is only right and proper. Securing the continued provision of passenger services is a public policy goal; but the interests of creditors should not be ousted by that policy goal.
§ The amendment therefore provides that on the application of a creditor of a company in respect of 1456 which a railway administration order has been made, the court should be able to grant relief in the form of an order discharging the railway administration order unless specified steps are taken for the protection of creditors' interests. That might include the exercise by the Secretary of State of his powers to make grants and loans to the insolvent company under Clause 57 of the Bill. I believe that this measure will be of great help in encouraging investment in the rail industry, particularly in rolling stock. For that reason alone I believe that the Committee will welcome the amendment. I commend it to the Committee and beg to move.
§ On Question, amendment agreed to.
§ Schedule 5, as amended, agreed to.
§ Schedule 6 [Transitional provision on transfer of relevant activities]:
§
The Earl of Caithness moved Amendments Nos. 110W to 110Z:
Page 146, leave out lines 21 to 29.
Page 146, line 47, leave out ("the appropriate authority") and insert ("in a case where the existing appointee is a protected railway company by virtue of section 53(5)(a)(i) of this Act, by the Franchising Director.").
Page 147, line 2, leave out ("appropriate authority") and insert ("Franchising Director,").
Page 147, line 19, leave out ("appropriate authority") and insert ("Franchising Director,").
§ On Question, amendments agreed to.
§
The Earl of Caithness moved Amendments Nos. 110AA and 110AB:
Page 147, line 28, leave out ("the appropriate authority") and insert ("in a case where the existing appointee is a protected railway company by virtue of section 53(5)(a)(i) of this Act, the Franchising Director").
Page 148, line 3, leave out ("the appropriate authority") and insert ("in a case where the existing appointee is a protected railway company by virtue of section 53(5)(a)(i) of this Act, of the Franchising Director.").
§ On Question, amendments agreed to.
§ Schedule 6, as amended, agreed to.
§ Clause 54 [Railway administration orders made on special petitions]:
§
The Earl of Caithness moved Amendments Nos. 110AC to 110AL:
Page 62, leave out lines 30 to 36 and insert:
("(b) if the petition relates to a protected railway company which is the holder of a passenger licence, by the Franchising Director with the consent of the Secretary of State,").
Page 62, line 37, leave out ("any one or more") and insert ("either or both").
Page 62, line 43, leave out from beginning to end of line 8 on page 63.
Page 63, line 12, leave out ("440 of the Companies Act 1985") and insert ("124A of the 1986 Act").
Page 63, line 20, leave out ("Insolvency Act 1986 ("the 1986 Act")") and insert ("1986 Act").
Page 63, line 26, leave out ("and (4)") and insert ("(4) and (5)").
Page 63, line 40, leave out ("limited").
Page 63, line 43, after ("company") insert ("within the meaning of Part V of the 1986 Act,").
Page 63, line 47, after ("section") insert: (""the 1986 Act" means the Insolvency Act 1986;").
§ On Question, amendments agreed to.
1457§ Clause 54, as amended, agreed to.
§ Clause 55 [Power to make railway administration order on winding-up petition]:
§
The Earl of Caithness moved Amendment No. 110AM:
Leave out Clause 55 and insert the following new clause:
Restriction on making winding-up order in respect of protected railway company
(".—(1) Where a petition for the winding up of a protected railway company is presented by a person other than the Secretary of State, the court shall not make a winding-up order in relation to that company on that petition unless—
(2) Where a petition for the winding up of a protected railway company has been presented—
may, at any time before a winding-up order is made on the petition. make an application to the court for a railway administration order in relation to that company; and where such an application is made the court may, if it is satisfied as mentioned in section 54(1) above, make a railway administration order instead of a winding-up order.(3) Where, on a petition for the winding up of a protected railway company, the court makes, or proposes to make, a railway administration order by virtue of subsection (2) above. subsections (4) and (5) of section 9 of the Insolvency Act 1986 (powers on application for administration order) shall apply on the hearing of that petition as they apply on the hearing of a petition for an administration order.
(4) In this section "the court" has the same meaning as in section 53 above.").
§ On Question, amendment agreed to.
§ Clause 55, as amended, agreed to.
§ Clause 56 [Restrictions on voluntary winding up and insolvency proceedings in the case of protected railway companies]:
§
The Earl of Caithness moved Amendment No. 110AN:
Leave out Clause 56 and insert the following new clause:
Restrictions on voluntary winding up and insolvency proceedings in the case of protected railway companies
(" .—(1) No resolution for voluntary winding up shall be passed by a protected railway company without leave of the court granted on an application made for the purpose by the company.
(2) No such leave shall be granted unless—
(3) Where an application for leave under subsection (1) above has been made by a protected railway company—
may, at any time before leave has been granted under subsection (1) above, make an application to the court for a railway administration order in relation to that company; and where such an application is made the court may, if it is
1458
satisfied as mentioned in section 54(1) above, make a railway administration order instead of granting leave under subsection (1) above.(4) Where, on an application for leave under subsection (1) above, the court makes, or proposes to make, a railway administration order by virtue of subsection (3) above, subsections (4) and (5) of section 9 of the Insolvency Act 1986 (powers on application for administration order) shall apply on the hearing of that application as they apply on the hearing of a petition for an administration order.
(5) No administration order under Part II of the Insolvency Act 1986 shall be made in relation to a protected railway company unless—
(6) Where an application for an administration order under Part II of the Insolvency Act 1986 has been made in the case of a protected railway company—
may, at any time before such an order has been made on that application, make an application to the court for a railway administration order in relation to that company; and where such an application is made the court may, if it is satisfiecl as mentioned in section 54(1) above, make a railway administration order instead of an administration order under Part II of the Insolvency Act 1986.(7) No step shall be taken by any person to enforce any security over a protected railway company's property, except where that person has served fourteen days' notice of his intention to take that step on—
(8) In this section—
the court" has the same meaning as in section 53 above;
resolution for voluntary winding up" has the same meaning as in the Insolvency Act 1986;
security" and "property" have the same meaning as in the Insolvency Act 1986.").
§ On Question, amendment agreed to.
§ Clause 56, as amended, agreed to.
§ Clause 57 [Government financial assistance where railway administration orders made]:
§
Lord Clinton-Davis moved Amendment No. 110AP:
Page 65, line 9, leave out subsection (5).
§ The noble Lord said: With Amendment No. 110.AP we are probing the Government's intentions. Although the amendment has been put clown relative to Clause 57, it is of a more general purpose. In approving the estimates every year, Parliament provides implicitly for aggregate sums of expenditure by each department of state. The departmental budget then reflects the Government's policy priorities in that specific area, again presumably prescribing reasonable maxima under each expenditure heading.
§ In future, we expect that the Secretary of State for Transport will have to make rather greater provision; first, because all informed comment so far expects the cost of franchises to rise, certainly in the initial part of the operation of this scheme, should it begin to operate at all, and that it will rise above the present PSO payment to British Rail. The Minister seemed to 1459 concede that point the other day; or seemed at least (I do not want to be unfair to him) to concede that there was that possibility. Secondly, contingency provision will have to be made for additional payments, such as the grants to be made under this clause. But the important matter is that the Secretary of State will have a sum to spend on railways. Our argument is that any amounts that he does not use should sensibly be applied to developing the railway system.
§
Throughout the Bill one sees (as in subsection (5)) these words:
shall be paid into the Consolidated Fund".
That applies whenever a revenue or repayment is mentioned. I am trying to make the point that money voted for transport and applied to the railways should be used for that purpose and should not be recycled to the Treasury. It is of course the hypothecation argument. But there is a different scenario in the new system which the Government seek to develop here. I hope that the Minister will be able to tell us—not give us an assurance; I do not for one moment believe that he will concede this point tonight—how he believes these issues can be properly dealt with. It is to that extent therefore that this is purely a probing amendment.
The Earl of CaithnessI thoroughly enjoyed listening to the noble Lord, Lord Clinton-Davis, speaking on this amendment. I do not think anybody is more eloquent at wishing to change Treasury rules than art ex-Minister. I am sorry that the noble Lord, Lord Barnett, is not in his place, because the noble Lord, Lord Barnett, was Chief Secretary to the Treasury when the noble Lord, Lord Clinton-Davis was a Minister in another place. Had the noble Lord at that stage submitted an idea such as this, the rap on his knuckles from his Chief Secretary would have been painful.
I have to say to the noble Lord that I can offer him no hope on this particular amendment. As he knows, it is standard government accounting practice for the repayments of any grants and loans to go back to the Consolidated Fund, however nice it would be for a Secretary of State to be able to hold on to them. They come from the Consolidated Fund in the first place, and that is where they would return.
§ Lord Clinton-DavisI have a belief that the Government will have to eat their words in a number of respects. I have a belief that there will be the development of hypothecation on quite a substantial scale, even in the life-time of this Government, which may not be very long. I suspect that there will be a good deal of rethinking. One can allude to discussions that have taken place very reasonably in relation to environmental arguments and in relation to a whole area of road transport. The argument about hypothecation is by no means as fanciful as the Minister has suggested.
I shall not press this matter, nor shall I return to it at Report stage. But the Government should not be quite so certain about this issue as the Minister seemed to imply. However, I shall not prolong the issue now. So far as concerns my previous incarnation, the 1460 Minister is probably right in regard to the noble Lord, Lord Barnett (the noble Lord is not here) or anybody else for that matter. We had arguments—all governments have arguments—claiming that hypothecation is an appropriate way of going about such issues. The noble Lord, Lord Houghton, probably had arguments raised with him about hypothecation. But the scenario is changing to some extent. Whether it would ever be appropriate in this particular context, I could not be sure. I have said that I wish to withdraw the amendment, and I hope that the Minister will let me do that.
Amendment, by leave, withdrawn.
Clause 57 agreed to.
Clause 58 agreed to.
§
The Earl of Caithness moved Amendment No. 110AQ:
After Clause 58, insert the following new clause:
Application of the railway administration order provisions to unregistered, unlimited or foreign companies
(" .—(1) Subject to the following provisions of this section, any reference in the railway administration order provisions of this Act to a "company" includes a reference to any body corporate.
(2) In the application of section 53(1) above in a case where the protected railway company there mentioned is a foreign company, the reference to the affairs, business and property of the company shall be taken as a reference to the affairs and business of the company, so far as carried on in Great Britain, and the property of the company within Great Britain.
(3) In the application of section 9(5) of the 1986 Act by virtue of subsection (4) of section 54 above where the company mentioned in that subsection is a foreign company, the reference to restricting the exercise of any powers of the directors or of the company shall be taken as a reference to restricting—
(4) In the application of provisions in section 10 of the 1986 Act by virtue of subsection (5) of section 54 above where the company mentioned in that subsection is a foreign company—
(5) Subsections (1) to (4) of section 56 above shall not have effect in relation to a protected railway company which is a foreign company.
(6) In the application of subsection (7) of that section where the protected railway company there mentioned is a foreign company, the reference to the company's property shall he taken as a reference to such of its property as is for the time being situated in Great Britain.
(7) In this section—
the 1986 Act" means the Insolvency Act 1986;
foreign company" means a company incorporated outside Great Britain; and
1461
the railway administration order provisions of this Act" means sections 53 to 58 above, this section and Schedules 5 and 6 to this Act.").
§ On Question, amendment agreed to.
§ Clause 59 [Amendments of the Fair Trading Act 1973]:
§ 7 p.m.
§
Lord Clinton-Davis moved Amendment No. 110AR:
Page 66, line 7, leave out ("subsection (2A)") and insert ("subsections (2A) and (213)").
§ The noble Lord said: It may be for the convenience of the Committee if, in moving this amendment, I speak also to Amendments Nos. 110AS to 110AU, which deal with monopoly and merger references.
§ These amendments seek to deal with the concern felt by a number of bus operators, who, under suitable conditions, may be interested in operating franchises, that they may be precluded from so doing by virtue of their business carrying more than 25 per cent. of the total number of public transport journeys or passenger miles in a significant area of the United Kingdom.
§ That situation would be undesirable, since the development of multi-modal passenger transport businesses needs to be encouraged in order to foster co-ordination, help control the growth of traffic and congestion and alleviate pollution from road vehicles. Large and successful bus companies which would have available the resources to take on franchises are already likely to control significant shares of the local public transport market in the franchise area. But, as public transport in total is only around 12 per cent. of the national travel market (86 per cent. is by car), removing the possibility of a monopoly reference at the time of granting a franchise is unlikely to confer significant additional possibilities of exploiting monopoly powers. The amendments simply preclude a monopoly reference just because a bus operator has successfully obtained a franchise.
§ The further amendments in my name seek to address a problem that has caused considerable anxiety in the application of competition law to the deregulated bus industry; namely, the conditions under which a monopoly of public passenger transport services exists. I should like to make a number of points in that respect.
§ Public transport services do not compete only with other public transport services. In circumstances in which the overall share of journeys by motorised modes is only 5½ per cent. for railways and 6½ per cent. for buses and coaches, compared with almost 86 per cent. for cars, it is evident that the market for public transport is very small. We do not dispute that at certain times and places—for example, commuting periods in the cities—those shares look very different. But the days of good living from railways are, regrettably, far behind us, if indeed they ever existed—a view to which the noble Lord, Lord Marsh, alluded in an earlier debate. The fact is that most passenger flows by bus and train are inadequate to sustain even a single operator, as is acknowledged by the extensive provision of subsidies. Applying the normal monopoly rule of one-quarter share of a 1462 significant area is a very large hammer to use on an insignificant nut. We need to control monopoly but the situation has to be kept in proportion.
§ The Government want to encourage bus operators to become involved in the provision of franchised rail services. Only those with large assets bases will have the power and strength to do so. That will almost certainly mean that they already control well in excess of 25 per cent. of the market for passenger transport in their home areas. As it stands, Clause 59 is likely to rule out joint operation of rail and bus services by companies, which is a development that should be encouraged as a means of developing services to combat congestion and environmental pollution.
§ With this amendment we suggest that a proportion of 90 per cent. of the total public transport market, which in most areas will be rather less than 25 per cent. of the total travel market, would be a more appropriate benchmark. I beg to move.
The Earl of CaithnessWe welcome the fact that many bus companies have expressed an interest. in bidding to run franchised passenger rail services. We believe that there could well be benefits for passengers from a bus company running a rail franchise so as to provide reliable connecting services. That is the kind of benefit we all want to see.
The Government are very much aware of the anxieties that existing passenger transport operators, particularly the bus operators, have voiced about the risk of their bids being referred to the MMC, not because of the way they plan to operate services, but because of the uncertainty that the possibility of referral creates for them.
It is not possible for me to give a blanket assurance that particular operations will never be investigated by the competition authorities. I am sure that the Committee would not wish me to do so. Our policy for involving the private sector in running the railway through franchising is based on our desire to end the BR monopoly and promote competition. That is why we want the normal provisions of competition law to apply, as far as possible, to the privatised railway. That is what this clause is about.
I believe that the key point to keep in sight is that prospective bidders who are genuinely interested in running services that benefit the customer should have no fear about taking on a passenger franchise and running it in that way. It is anti-competitive, anti-passenger practices that we must. and will guard against.
Nevertheless, there is doubt in the bus operators' minds about how the Office of Fair Trading might exercise its powers to make, and advise on, references. We have drawn to operators' attention the fact that, where a bidder was concerned that by winning a rail franchise he would become liable to a referral to the MMC to see whether such a merger was against the public interest, it would, as with all mergers, be open to him to approach the OFT at the outset. The OFT is able, on a confidential and non-binding basis, to provide advice on whether or not the prospective acquisition of a rail franchise would be likely to be 1463 referred to the MMC. This is a useful procedure and prospective bidders would be wise to contact the OFT at an early stage.
The amendments of the noble Lord, Lord Clinton-Davis, take a rather radical approach to the problem. Their effect would be to ensure that a monopoly situation would simply not exist where a bus operator had won a rail franchise, and that the market share test for a merger reference to be made would he raised from one-quarter of the market to nine-tenths. I can see two problems.
First, should a bus operator win a franchise, a contract which may run for several years, it is possible that he will start out with the best of intentions but could, over time, begin to exert his dominance in the public transport market in a particular town or area in a way that did not serve passengers' interests. I do not say that that would happen, just that it could. The franchising director might be able to protect the rail passengers through the terms of the franchise agreement. But who would protect the bus passengers? Who would be in a position to look at the totality of the public transport market? Should a reference to the MMC be ruled out indefinitely, as the noble Lord's amendment would provide?
Secondly, on mergers, the one-quarter market share threshold is well established in English competition law. The Committee will know that one does not have to control 90 per cent. of a market in order to have significant market power.
The root of the concerns which these amendments raise is not so much the application of competition law, which is designed to protect the consumer, as the uncertainty of referral for bus operators and others. The Government are therefore reflecting further, in the light of the noble Lord's amendments, to see what might be done to provide greater clarity. My right honourable friend the Minister of State for Public Transport has discussed the issues with bus operators, and with colleagues in the Office of Fair Trading and the Department of Trade and Industry. He plans further discussions over the summer. I am therefore prepared to take the noble Lord's proposed amendments away and consider, without commitment, whether we might be able to address the issues they raise by amending the Bill or by other means.
I accept that there is competition between public transport and the private car. But for some sections of the population, including, as the noble Lord mentioned, commuters into urban areas, some disabled people and those who cannot afford to run a car, that choice is not available. So it makes sense to consider separately the market for public transport when looking at the question of monopoly power.
§ Lord Clinton-DavisThat is an extremely helpful reply. I am grateful to the Minister for saying that he will reflect further on the matter. I accept entirely that it would be wrong for him to enter into any commitment at this stage to come back with the certainty of an amendment along those lines. Personally, I do not believe that our amendment answers all the problems. The Minister dealt with that very convincingly in his reply. He is quite right to say 1464 that a situation could develop—it is by no means inconceivable —in which there could be an abuse of a dominant position. That is something which must be dealt with in the discussions which are to take place. I am sure that those representing the interests of the bus industry will make their position clear. They need to answer the point raised by the Minister. It is no good continuing with discussions unless they take on board the personal views expressed by the Minister on the other side of the argument.
I am delighted that the Minister, together with the DTI, the OFT and the industry have undertaken those considerations. Perhaps during the Recess, in which period I suppose the discussions will take place, and prior to Report stage—without divulging too much and certainly nothing that he would regard as confidential—the Minister could keep myself and my colleagues in touch with what is happening in the negotiations. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 110AS to 110AU not moved.]
Clause 59 agreed to.
§ Viscount GoschenI beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage on the Bill be resumed not before 10 minutes past eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.