Railways Bill

HL Deb 03 November 1993 vol 549 cc1090-134

3.20 p.m.

The Minister of State, Department of Transport (The Earl of Caithness)

My Lords, I beg to move that the Commons amendments and reason be now considered.

Moved, That the Commons amendments and reason be now considered—(The Earl of Caithness.)

On Question, Motion agreed to.

AMENDMENTS AND MOTIONS MOVED ON CONSIDERATION OF COMMONS REASON AND AMENDMENTS

[Page and line references are to Bill 107 as first printed for the Lords.]

LORDS AMENDMENT

1 Clause 22, page 24, line 37, at end insert:

("(1A) Nothing in subsection (1) above shall prevent—

1. (a) the British Railways Board (in this Act referred to as "the Board"); or
2. (b) a wholly owned subsidiary of the Board, from being a franchisee.")

The Commons disagreed to the above amendment but proposed the following amendments in lieu—

2 Page 24, line 40, at end insert:

'(3) Subject to the following provisions of this section, subsection (1) above shall not prevent—

1. (a) the British Railways Board (in this Act referred to as "the Board"), or
2. (b) a wholly owned subsidiary of the Board, from being a franchisee.

(4) Subject to the following provisions of this section, whenever the Franchising Director proposes to issue invitations to tender under section 23 below in respect of any particular services for the carriage of passengers by railway, he may, after consultation with the Board and the Regulator, determine that neither the Board nor any wholly owned subsidiary of the Board shall be eligible for inclusion among the persons to whom the invitations are to be issued or who may be selected as the franchisee.

(5) The Franchising Director shall not make a determination under subsection (4) above unless he considers that it is desirable to do so—

1. (a) for the purpose of promoting competition for franchises;
2. (b) for the purpose of promoting the award of franchise agreements to companies in which qualifying railway employees have a substantial interest;
3. (c) for the purpose of encouraging new entry to the passenger railway industry; or
4. (d) for the purpose of preventing or reducing the dominance of any person or persons in the market for the provision in Great Britain, or in a part of Great Britain, of services for the carriage of passengers by railway.

(6) The Franchising Director shall—

1. (a) give notice of any determination under subsection (4) above to the Board; and
2. (b) publish notice of the determination in such manner as he thinks fit.

(7) Nothing in subsection (5) above shall be taken to affect the matters which the Franchising Director may take into account in determining the other persons whom he invites to tender for franchise agreements or whom he selects as franchisees.

(8) No objectives, instructions or guidance shall be given under section 5 above by the Secretary of State to the Franchising Director with respect to the exercise of his functions under this section.

(9) In this section—

"competition for franchises" means competition to become franchisees under franchise agreements;

"encouraging new entry to the passenger railway industry" means encouraging private sector operators who do not currently provide services for the carriage of passengers by railway to commence doing so;

"qualifying railway employees", in the case of any franchise agreement, means persons who are or have been employed in an undertaking which provides or provided the services to which the franchise agreement relates at a time before those services begin to be provided under that franchise agreement.'.

The Earl of Caithness

My Lords, I beg to move that the House do not insist on their Amendment No. 1 to which the Commons have disagreed, and do agree with the Commons in their Amendment No. 2 in lieu thereof.

It may be for the convenience of the House if I speak at the same time to Amendments Nos. 3 and 4. I indicated on Third Reading that the Government had decided. to accept the principle that BR should be eligible to be a franchisee but that, because of BR's dominant position as the sole monopoly supplier of passenger railway services, additional legislative provision would be needed in respect of BR's role in the franchising process.

Amendment No. 2 fulfils that commitment. Your Lordships will note that new subsection (3) preserves the wording of the amendment moved by my noble friend Lord Peyton in Committee. The remainder of the amendment gives the franchising director a power to determine in certain circumstances that BR should not be invited to bid for particular franchises. The franchising director may exclude BR from bidding, but only when he considers it desirable to do so in the interests of promoting competition for franchises; of promoting management and employee bids; of encouraging new entry into the industry; or of preventing or reducing market dominance in the provision of passenger railway services.

The government amendment strikes a careful balance between meeting the concerns underlying my noble friend's original amendment that BR should not be ruled out of the franchising process and the Government's concern, which I believe is shared by many of your Lordships, that giving BR a free hand in bidding for franchises would deter other bidders and, in particular, make it very difficult for management and employee teams to bid for franchises.

The Government's proposal will in effect leave it to the franchising director's discretion to decide whether or not BR should be invited to bid. But he will be able to exclude it only if he considers it desirable for the four specific reasons set out in the new subsection (5). He will be completely independent in the exercise of his power, although he is required to consult the BR board and the regulator before making a determination. I draw your Lordships' attention to new subsection (9) which makes it clear that the Secretary of State will not be able to use his powers in Clause 5 of the Bill to give objectives, guidance and instructions to the franchising director in the exercise of his power to determine that BR should not be invited to bid. That is important because it guarantees the franchising director's independence.

I hope that your Lordships will agree that the Government's amendment is a positive response to the concern expressed by this House. We are preserving the wording of my noble friend's amendment. We are accepting the principle that BR should be eligible to be a franchisee, and we are incorporating sensible safeguards to ensure that private sector interest in operating franchises is not deterred by the prospect of bidding against a powerful public sector incumbent operator. I commend Amendment No. 2 to your Lordships' House. I beg to move.

Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed, and do agree with the Commons in their Amendment No. 2 in lieu thereof.—(The Earl of Caithness.)

AS AN AMENDMENT TO COMMONS AMENDMENT No. 2

2A Subsection (4), line 2, leave out from first ("to") to ("in") in line 3 and insert ("award a franchise under this Part").

Lord Marsh

My Lords, I beg to move Amendment No. 2A as an amendment to Commons Amendment No. 2.

It is an especially attractive time for the Minister to be speaking in this debate: today is his birthday. The issue has been controversial. One is entitled therefore to expect a degree of understanding and co-operation not always apparent in some of his previous speeches. He mentioned that the Government's amendment was designed to be helpful. One accepts that on its face value. The noble Earl got it wrong, but the intention was there. One could say that it is the thought that counts, except that the whole point of our arguments has been missed. What happened, of course, is that when the Bill went to the other place with the Lords amendment, the Government decided to make an amendment, as we know, today. The amendment was clear. It said that British Rail being able to bid in circumstances where no one else had bid was regarded as sensible and acceptable. It is difficult to think who else, other than BR, could be given the franchise in those circumstances. It has not moved the matter forward a great deal; but what it does is to underline the feature of the Government's present position which is to see BR, for some time to come, as the operator of last resort; to offer its tens of thousands of employees the management that the Government believe is capable of running the system after it is privatised but incapable of running it while it is still running as it has run for years. On that basis, those people have nothing to do except work in an environment where they plan, for years, for their own demise, because no one thinks that it will be short term.

The Minister and the Government missed the most significant elements of the debate in the House on the amendment which they subsequently accepted, partly out of the goodness of their heart, because they said clearly that they did not believe in it, and partly because they knew that there was no conceivable possibility of their getting it through in the other place.

While the issue of whether BR should have the right to bid for the franchise has been, and is, a major issue of dispute for the Minister and the Department of Transport, it has never, in the course of our debates, been a party political dispute in the sense of the Government versus the Opposition. That is unusual. The amendment which the Government subsequently accepted could not have succeeded without strong support from the Cross Benches, the Bishops' Benches, and the support of many distinguished and dedicated members of the Conservative Party.

To suggest that the supporters of the original amendment were a bunch of wild lefties, motivated by a Luddite desire to destroy the Bill and having some doctrinal objection to privatisation, is grotesque. Most of BR's problems stem from its total dependence upon the Treasury and the complete absence of a consistent policy from its ever-changing political masters. There are many of us—I am one, and I know that I am not the only one by a very long chalk—who see the injection into BR of a considerable element of private enterprise and private equity important, not in terms of achieving some mystical return to the good old days of the long-dead regions, but of having an organisation which could see some sort of long-term, consistent future, and which would have the ability to bid. That, it has been demonstrated beyond doubt, is not possible in the present situation where the railway is owned totally by the Government and is subject to the vagaries of government policies as they come and go.

Our concern is that the Minister's present proposals could merely change an already unsatisfactory situation into a chaotic mess, because there is no transfer of the system, as such, and no injection of the outside element which is so necessary. It will be in little pockets all over the place. The bulk will remain with the Treasury, under political control, except that some of BR's key managers will have been lost on the way. Unlike any private-sector company in that situation, the Government, faced with upheaval in this massive organisation, have decided to offer financial inducements to the best and the brightest managers to work for somebody else. That is an extraordinary thing to do in the name of management buy-outs.

Many noble Lords have had experience of commercial undertakings and know that, faced with that experience, those undertakings would not offer that inducement but would offer what are known in the trade as "golden handcuffs". They would lock those managers into the organisation at very large sums of money. They would do so because they would be fully aware that when an organisation is in difficulty—that is a time when frequently commercial companies sell off part of their organisation—the one thing you do not want after the sell-off is to find that in the process you have lost all the key managers. I shall return to the question of management buy-outs, upon which the Government are placing so much dependence.

Contrary to the Government's initial view, we now accept that there is unlikely to be a wide variety of bidders from which to choose. When we started on this long road of privatisation the air was full of the voices of hundreds of bidders from all over the place. There was Richard Branson, Ocean Containers and a whole range of other people. They seem to have fallen away a little; some of them do not see the privatisation as the investment opportunity of the year. The Government and the Treasury do not and that is why they want. to get rid of British Rail at any price. Nonetheless, they believe that innocents in the City will buy it. They will buy parts of it provided that they are paid for doing so, which will be an even more interesting proposition. We now find that bidders do not exist in large numbers. We are in the market to sell off franchises for chunks of the railway and the job spec for applicants is anybody who is around and willing to take it, and if you want to haggle about it we will pay you to take it away.

There are four categories of bidder. First, there are the bus operators, but, not surprisingly, they continue to view their bus operations as their core business. If bus operators buy pieces of the railway they will do so for the synergy that it will provide for their bus operations. That is a sensible reason; there is nothing wrong with that at all. For that reason they will be interested in particular in the smaller franchises.

I turn now to the second category of bidder. The Government view as slightly eccentric and perverse the idea of British Rail bidding; that people who have done nothing in their lives except run railways can actually bid to take over their management. They believe that they cannot be allowed to bid but any foreign rail operator can bid. I warned the Minister that he should not rely upon them too heavily. If one harks back to the Select Committee report one sees that many of them gave evidence and not a single one had a good word to say about the Government's proposals. But quite apart from that, all those operators have problems of their own. We have said throughout the debate that the problems of railways are unique to railways and they are worldwide. Therefore, it is highly unlikely that the Deutsche Bundesbahn or the SNCF will be taking over chunks of the British Rail system. So we cannot rely on them.

Perhaps non-transport companies will see possibilities. But again they will approach the franchises on the primacy of their core business. The railway will be an add-on and, sensibly and legitimately from their commercial point of view, they will be interested in the possibilities of property development, land development and many aspects related to their businesses. I am not sure that at the end of the day that is the most attractive form of ownership from the point of view of the railway passengers because in most cases the railway will come second.

Finally, there are the management-employee buy-out schemes. As a result of a lack of interest elsewhere, the focal point of the Government's proposals is management-employee buy-outs. Of course there are British Rail executives who will do a good job and they will probably become very rich in the process. Good luck to them; I hope that they succeed. But the number of management buy-outs which fail is large. Normally management buy-outs occur when a whole company is being sold and the key managers go as a group. Here bits of the organisation are being sold and only bits of the management groups will go with them. Perhaps I may say in passing that I should regard it as irresponsible in the extreme to put too much pressure on people who have never managed commercial businesses in their lives to take second mortgages on their houses and to pledge every halfpenny on this investment.

There are people in British Rail who can mount a convincing management buy-out. Incidentally, they are British Rail's best managers, and therefore that will be a bit of a problem. In that circumstance one will be faced with an increasing reliance on numerous groups of managers taking over a multiplicity of small sections of the network, and that is a recipe for financial disaster. It would be far safer and more sensible to allow one or two well-organised and well-financed management bids and at the same time allow British Rail to bid on condition that no public money other than that already committed as a result of the current operation of the system is required. That is provided for in our amendment. That would mean that there would be no cross-subsidisation; the whole bid would be completely transparent. In those circumstances, the inevitable pressure on British Rail would be to seek partners in the private sector which would have more flexibility.

In those circumstances, there can be no justification for complaints from other bidders. The strong likelihood is that after a short franchise period the service will be proven and there will be plenty of outside funds available for a full management bid and serious private-sector involvement in the longer term. That would at least involve the staff and keep the existing system, which is already being called by the railway cynics "rump rail". That is not a particularly good omen for the travelling public.

There is a trend and a degree of circumstantial evidence to show that this Government are not infallible, surprise them though that may. It is clear that sometimes they can be wrong and that their Back-Benchers and Members on the Liberal Democrat and Labour Benches in this House and in the other place can be right. All we ask is that the Government look at the matter. We believe that the amendment will ensure that the vast bulk of the British Rail management who will remain in the first instance with BR can be highly motivated to make the new policy a success. As I said at the beginning of my remarks, the alternative is a management which for many years will have no purpose except to supervise its own decline and the decline of the service which will be available to the public. To do that by accident would be disgraceful; to do it deliberately, out of sheer arrogance, would be near criminal. That could be avoided easily if sufficient Members in this House passed the amendment. I beg to move.

Moved, That Amendment No. 2A, as an amendment to Commons Amendment No. 2, be agreed to.—(Lord Marsh.)

Lord Peyton of Yeovil

My Lords, I support the arguments of the noble Lord, Lord Marsh. I merely wish to give your Lordships an apology for the number of amendments which the noble Lord, Lord Marsh, and I have tabled between us. However, our excuse is readily available out of the procedures which we discussed a few moments ago. We are at the tail end of this Bill which finished its proceedings yesterday, late at night, when theOfficial Report was not wholly available. Therefore, we have not had an opportunity to read, digest or study the debates which took place. We had to table amendments yesterday which came from a number of sources. Therefore, there is a plethora of amendments which your Lordships may find to be something of a plague. I apologise but I do so in the confidence that I have an awfully good excuse that has been provided to me by the Government.

Lord Harmar-Nicholls

My Lords, I wish to ask your Lordships whether we are here as experts on the running of railways—

Lord Richard

The noble Lord, Lord Marsh, is an expert.

Lord Harmar-Nicholls

My Lords, I grant that. The noble Lord, Lord Marsh, held high office in the railways and my noble friend held office as a Minister for Transport. They are entitled to their view, which should be heeded. But as regards the rest of us, are we here as experts or as parliamentarians? I believe that at this stage of the Bill we should look at the matter as parliamentarians.

What has happened? I believe that the noble Lord, Lord Marsh, showed that he was slightly on the wrong track this afternoon when he said that the Government had riot recognised the significance of previous arguments at various stages of the Bill. I believe that the Government recognised the significance of what was said and have now decided that they do not agree with it. They say, "From our point of view those arguments which sounded significant to you are not significant to us in the light of our other knowledge and views. We must deal in our way with the problem of what the future may hold for the railways. We wish to exclude, for obvious operative reasons, the present British Rail organisation from being able to take over our railway system, which would make hardly any difference". The Government have said that they do not agree with the noble Lord, Lord Marsh, and my noble friend Lord Peyton. They believe that their way is better.

I ask as a parliamentarian which side we are going to believe. We have been through all the stages of the Bill and have heard all the arguments in detail. We have reached a point at which two of our experts and perhaps several others have said that they feel that the ultimate conclusion which the Government ask us to accept is not right. The Government say that with their present knowledge and view of the situation, they believe they have chosen the right course. Therefore, noble Lords must decide which side to support and what they are supporting.

I believe that parliamentary procedures come into this matter. We have had Committee stage, Report stage and Third Reading in both Houses. These issues have been examined in detail. Unless your Lordships feel that the Government—and these words were used by the noble Lord, Lord Marsh—are saying out of arrogance and big-headed stubbornness that they will not accept our point of view, although we may believe it, then we should go into the Lobbies to support the amendment.

Your Lordships may believe that there is no question of the Government being arrogant and stubbornly big-headed. But rather, having taken into account all aspects as they see them, they believe that their point of view should be given the benefit of the doubt by those who may not be expert in such matters.

Why do I say that with such confidence? If the Government are arrogant and stubborn and do not face up to obvious facts which should be faced up to, why have they accepted so many of our amendments? There has been no question of them saying that they refuse to pay any attention to what the House of Lords has said. Noble Lords may remember the arguments which we had on Report and in Committee. I joined in those arguments. I urged my noble friend not to push the matter to a vote because there had been an offer to meet again and hold further discussions to see whether a conclusion could be reached which would be unanimous on both sides. On that occasion, my noble friend accepted that.

3.45 p.m.

Lord Peyton of Yeovil

My Lords, do not wish to contradict my noble friend, but I assure him that it was not his advice which made up my mind.

Lord Harmar-Nicholls

My Lords, my noble friend tries to turn off my point with a very witty joke. He is good and effective in doing just that. But on this occasion, I ask seriously whether we wish to operate the parliamentary system as it exists and as it has grown up so far. There are experts on one side who genuinely believe a view—and they most certainly do—and the Government with all their expertise and influence have come to a different point of view. The Bill has gone through all its parliamentary stages and everything has been examined in detail. Therefore, at the end of the day, how does a Back-Bencher who has no claim to be expert at all know on which side he should come down?

My sympathies throughout this matter have been very much on the side of the noble Lord, Lord Marsh, and my noble friend Lord Peyton. However, at this stage I do not believe that we should send a message that we believe that the Government have been arrogant and stupid when all the evidence is that they have been the opposite.

I in no way criticise the strongly-held views of my noble friend and the noble Lord, Lord Marsh. Having sent this matter once to another place, I believe that on this occasion we should give the Government the benefit of the doubt and accept their advice.

Lord Tordoff

My Lords, I should be surprised if, on any occasion, the noble Lord, Lord Harmar-Nicholls, did not give the Government the benefit of the doubt. It is always interesting to hear his interventions at various stages of Bills in a fairly erratic kind of way. But I believe that he makes a mistake to suggest that this matter is simple and is merely a clash of experts, because I believe that that is the point which he makes. He says that we have been through all this before and we must now trust the Government. It is the job of Parliament to control the Executive and not the other way round. That is the function which we are trying to exercise today.

The position which we have now reached is that we sent the Bill to another place and, following discussions which we had at an earlier stage, the Government gave an undertaking that they would accept the principle behind the amendment in the name of the noble Lord, Lord Peyton. They said that they would amend it. They did not believe it to be perfect and it would be amended. But the trouble is that they have amended it out of existence in practical terms. Indeed, they have so hedged it about with qualifications that the chances of British Rail ever successfully bidding for the tender, except in a disaster scenario, are very limited. That is why the noble Lord, Lord Marsh, is right.

One of the most important points about the amendments now before the House is the need to maintain the morale of BR staff and management. Whatever happens, they will be around for a long time. But are we going to treat them as if they were incompetent fools picking up the crumbs—if any exist—from the rich man's table? That is what the Bill is saying at present.

I believe that we have a final chance to say to another place, "You have gone too far in modifying the amendment of the noble Lord, Lord Peyton; you have amended it practically out of existence". I believe that the amendments standing in the names of the noble Lords, Lord Marsh and Lord Peyton, will in fact redress the balance. They are modest amendments. They do not seek to put British Rail into a privileged position; in fact, BR is still in an under-privileged position. Nevertheless, this is the only chance that we have of maintaining a viable British Rail during the period when it will be needed by the country—namely, the next few years. I hope the House will support the amendments.

Lord Renton

My Lords, I wonder whether I may be so bold as to remind your Lordships of our position in the constitution. Basically, we are a revising Chamber which has the power and the right to ask another place—and, indeed, to ask the Government—to think again on the principles and, if necessary, the drafting (the form) of legislation. After much consideration and discussion in your Lordships' House during the various stages of the Bill, amendments were moved by my noble friend Lord Peyton with which I have some sympathy and which the Government have accepted in principle to a very great extent, but subject to a modification which they persuaded another place to accept.

We have the right to ask another place to think again; but not again and again. We find ourselves today at what is expected to be the day but one before the prorogation of the current Session. I do not think that we should be attempting to persuade the other place to go into further and very fine detail on the issue. Some of the points concern the mere drafting of the amendments, although I agree that one of them is an amendment of greater substance. I give way to the noble Lord, Lord Tordoff.

Lord Tordoff

My Lords, the noble Lord says that we do not have the right to ask another place to consider the matter again and again; but we do indeed have that right. We have that right under the Parliament Act. It is rarely exercised, but I believe that this is an occasion when the country is behind the House in asking the other place to think again as often as is necessary.

Lord Renton

Yes, my Lords; technically we have the right to ask the other place to think again and again. I have been a Member of your Lordships' House for only 14 years. However, I was in the other place for 34 years. In all the years since 1945 your Lordships' House has exercised great restraint, especially in matters of controversy and in particular under the Salisbury doctrine in any matter that is a manifesto commitment, which this was.

In the manifesto upon which the Conservatives won the last election, we undertook to introduce legislation to privatise British Rail. That is what the Government are doing. They have reached what I would hope is a final conclusion in the spirit of compromise—the kind of spirit which we expect Governments to accept when we ask them to think again. I suggest to your Lordships that we would be abusing our position and overstepping the mark if we did not accept the position that another place has now presented to us.

Lord Clinton-Davis

My Lords, perhaps I may, first, join the noble Lord, Lord Marsh, in wishing the noble Earl, Lord Caithness—though not his party—many happy returns.

I should like to take on board immediately the argument just adduced by the noble Lord, Lord Renton. I find it very surprising. It seems to have no grip of the reality of what has happened.

What has happened is that, after many hours of debate, we are debating for the first time in this House the government amendment now before us. When the noble Lord says that it is a spirit of compromise that is being exemplified by the Government on this occasion, I take issue with him. I believe that what the Government have done—as, indeed, I said when the noble Earl announced what he was proposing but did not have the amendment before him at the time—is to produce an amendment which is a blatant attempt to subvert the amendment of the noble Lord, Lord Peyton. It has put us back to the situation where to talk in terms of British Rail being given the opportunity to bid for franchises is fanciful.

There are so many qualifications here which the noble Lord, Lord Renton, does not seem to have recognised. He said that it was a manifesto commitment. Yes, that is perfectly true there was a manifesto commitment to privatise British Rail. However, nothing was said about BR not being permitted to enter the bidding for franchises. Indeed, not a word was said. Of course, if I am wrong in that respect I am sure that the noble Lord will put me right. However, I notice that he does not seek to do so.

The truth is that British Rail has been put into a position where it can bid only when no one else wants to do so. But that is precisely the position BR was in when we started debating such issues. Therefore, nothing has changed. Thus the argument put forward by the noble Lord is, I am afraid, in conflict with reality.

From the time that the Government put forward the new proposal—and I use the word advisedly—the main concentration has been on management-employee buy-outs and how advantageous they would be but that if BR were permitted to enter the franchising stakes it would cause great prejudice to such buy-outs. But are people actually queueing up to bid?

A poll was conducted just the other day which showed that 92 per cent. of rail managers were opposed to privatisation. Further, it showed that 77 per cent. were in favour of BR retaining the ability to bid for franchises; in other words, 77 per cent. of managers are still in favour of the very amendment that we are at present discussing. I see that the noble Lord, Lord Harmar-Nicholls, wishes to intervene. I give way.

Lord Harmar-Nicholls

My Lords, I am much obliged. In view of what the noble Lord has just said, does he stand by the opening statement of his speech today that this is the first time that we have dealt with the amendment? The points he is now making are points that have been made again and again all the way through the various stages of the Bill.

Lord Clinton-Davis

My Lords, I believe that the noble Lord is referring to what has become known nationally as the "Peyton amendment". However, what we are now discussing is a different amendment, which has been put forward by the Government. I am surprised that the noble Lord, with all his experience, even makes such an intervention.

Not only do we have the results of the poll to which I referred, but it is also interesting to note, as was revealed in another place, that a discussion took place between senior management and Mr. Roger Freeman at which certain civil servants were present. I should point out that Mr. John Welsby, BR's chief executive, was present. He warned the Government strongly that their, privatisation plans were fundamentally flawed and risked backfiring". He also told them: You are in a hole and still digging. I don't see how there will be anything still to sell; certainly not the cake—just the cherries". That was the view—and, indeed, the memorandum was very much longer—of one of the most experienced men in British Rail; namely, the chief executive.

At the end of the day the franchisees, after what may well be quite a short franchise, will have no assets and no land. They will have nothing at all. That is hardly a great inducement for management/employee buy-outs. The legal position is very tenuous. I wish to stress that because it is an important point when one is asking people to part with what may be a substantial part of their personal finances. For a management/employee buy-out to qualify, the persons concerned must have a substantial interest in the matter. When the Minister in another place was asked what he meant by a substantial interest, he said, only the other day: I shall not attempt to define that. The courts may wish to adjudicate upon the matter if a case comes before them".—[Official Report, Commons, 1/11/93; col. 39.] That is an astonishing proposition; namely, that our legislation is so imperfect and so imprecise that it has to be left to the courts in test case after test case to determine whether the management/employee buy-out will qualify.

The Government say that they wish to avoid a dominant or monopoly position. However, whoever wins the franchise will have a monopoly or a dominant position in the market. Then there is the whole question of competition law. I raised the matter in recent debates it deserved an answer. It was dealt with in the most derisory way by Mr. Roger Freeman who said that he was satisfied that competition law had not been offended. The noble Earl, Lord Caithness, also referred to the matter. I have taken the trouble not only to research the matter myself but also to have informal contacts with Directorate General IV of the European Commission. I have also taken a view from my noble friend the shadow Lord Chancellor. We are all worried—particularly the Commission—that this matter is offensive to the competition articles.

I dealt with the issue at some length on a previous occasion, but I must add that the Government ignore the difficulty that there is a plain duty on the face of this Bill to invoke some form of distortion of competition. The Bill puts the Government into conflict with competition law. There can be no question about that. For the Government simply to assert that they are satisfied that everything will be all right and that the Commission may grant exemptions is really not good enough.

It is interesting that the Government apparently contemplate issuing 20 million leaflets to try to explain what these half-baked proposals are all about. That will be done at some astronomical cost. It will certainly cost many millions of pounds. It is hardly surprising that they have to do that when they have truncated debate so savagely in another place. That did not do Parliament a service. The Government have not done Parliament a service either in repeatedly and substantially amending the provisions of the Bill as it has progressed through Parliament. The Government have not taken sufficient trouble to establish that their Bill is technically competent. This is not an academic point. The country as a whole will pay for the Government's behaviour. If the Bill disestablishes and fragments—as it almost certainly will—the ability of British Rail to function effectively, the country will certainly pay a heavy price.

4 p.m.

Lord Boyd-Carpenter

My Lords, this is a serious debate and there are really two separate or separable issues. There is, first of all, the obvious issue concerning the degree of privatisation for which the Bill will provide. Secondly, there is the question of the relationship between your Lordships' House and another place. I wish to say a few words on that issue.

We have discussed the merits of this matter again and again without, I believe, convincing each other of the rightness of our argument. I do not wish to waste time by going over that again. However, before your Lordships reach a decision on the matter, I wish to put to the House the possible effect, if we adopt the amendment, on relations with another place. We had a full debate at an earlier stage. We amended the Bill quite drastically and sent it to another place. Another place could simply have rejected our amendment and sent it back. However, that did not occur. The other place produced a compromise. It made an attempt to meet what were thought to be the wishes of your Lordships' House; indeed to meet the effect of the amendment which your Lordships' House had put into the Bill.

I agree that the importance of the compromise is a matter which could be argued at great length. One could split a great many hairs. However, the fact remains that the Bill still contains the possibility of British Rail securing the franchise, with the agreement of the franchising director, if the attempt fully to privatise the railways fails. That is a considerable change because, as your Lordships will recall, the Bill as it came to us originally completely eliminated the possibility of British Rail taking over any part of the system under the new situation.

What do your Lordships think the reaction of another place will be if we simply revert to our previous attitude, reject its compromise amendment and send the Bill back in that shape? Even more important than the Bill—I do not dispute for a moment that it is important—is that the two Houses should work together and that the good system under which we make amendments and consider a Bill, send it back to another place and ask it to consider our amendments, should prevail. However, if we give the impression that, when we have done that and another place has sought to meet us by way of compromise, we still—somewhat obstinately, as another place may think—reject that compromise and insist on our earlier attitude, it is not difficult to see that that will not help the working of the system. Without going further into the merits of the immediate issue, I want your Lordships, before reaching a decision, to have in mind the potentially serious consequences on the working of our constitution and the working of the relationship between the two Houses if we were to accept the amendment and persist in rejecting the attempt of another place to compromise.

Lord Simon of Glaisdale

My Lords, I wish only to deal, so far as I can, with the parliamentary and constitutional points that have been raised. However, I should say to begin with that the gravamen, as I understood it, of the amendment moved by my noble friend Lord Marsh is that what is described as a compromise is no such thing it is an emasculation of the amendment made by your Lordships' House.

The first parliamentary point is that the two Houses must agree on this Bill down to the last word; otherwise the Bill is lost for the Session. That puts your Lordships in a strong parliamentary position if you think it right to adhere to the view expressed earlier in response to the amendment of the noble Lord, Lord Peyton of Yeovil.

It is said that the constitutional function of this House is merely to act as a revising Chamber and to ask the other place to think again, and that having done that once your Lordships should shut up. Many of us do not accept that the sole function of your Lordships' House is to act as a revising Chamber. On the contrary, your Lordships' House is a council of state, uniquely well endowed by experience to express views on matters of generality and of detail. However, it is not worth pursuing that point because what is sought through this amendment is precisely to revise an amendment proposed by the other place. Your Lordships would not be going beyond that.

To state that the function of your Lordships is limited to asking the other place to think again is a most misleading euphemism. It suggests that MPs, faced with your Lordships' amendments, sit down and excogitate from the beginning on the issues which have been raised and rationally consider the matter anew in the light of your Lordships' amendments. That only has to be said for its absurdity to be recognised. In any case, does one really think again rationally if one has been whipped into a Lobby by the Government Whips? Does one think rationally if a guillotine is about to descend? That is what happened in this case. Though one talks of the other place thinking again, it is of course the Government, with their whipped majority, who are supposed to do the thinking.

I go slightly beyond that. At present, very worryingly, parliamentary institutions are being called into question. That concerns the Government, the House of Commons and Whitehall. Your Lordships have a duty as parliamentarians to show that the parliamentary system is still a reality and can still stand up against the Government. In fact, your Lordships' House generally, and certainly with its present composition, reflects better the political colour of the country at large than any other institution. Nor do I consider for a moment that your Lordships need apologise for the hereditary element in the House, which again and again proves its value.

It seems to me that on that basis your Lordships are entitled to form a dispassionate view on the merits, apart from the constitutional aspect, of the amendment moved by my noble friend.

4.15 p.m.

Lord Monkswell

My Lords, I rise to speak following the wise intervention of the noble and learned Lord, Lord Simon, following the noble Lords, Lord Renton and Lord Boyd-Carpenter, who asked whether we had the right in this House to question the will of the other place.

Lord Boyd-Carpenter

My Lords, I thank the noble Lord for allowing me to intervene. I did not raise the question of whether we had the right to do so. Of course we have. I raised the question of whether it would be sensible and serve good relations between the Houses so to do. That is quite a different point.

Lord Monkswell

My Lords, I take the point. It is a question of how the noble Lord's contribution is interpreted. The noble and learned Lord, Lord Simon, demonstrated effectively the constitutional position of this House vis-à-vis the other place as organs of state. I want to raise another point for your Lordships' consideration.

That point is the basis on which we are present in this House and Members are present in the other place. It seems strange that someone in my position should have to remind the House that we are all summoned to give advice to our sovereign on arduous affairs of state. In our Writ of Summons we are called to give advice as individuals. We tend to forget that and to get bogged down in the collective presentation of our views rather than thinking of each and every one of us individually having the duty to respond to that summons to give advice. It worries me when noble Lords say that our job is to revise. I humbly submit that our job is to give advice.

On the basis of the contributions on the text of the amendments that we have in front of us I shall vote with my conscience. The amendment in the name of the noble Lord, Lord Marsh, supported by the noble Lord, Lord Peyton, seems to me an eminently sensible way of going forward with this Railways Bill.

Viscount Caldecote

My Lords, I want to support my noble friends Lord Renton and Lord Boyd-Carpenter. I have had the privilege of being a Member of your Lordships' House for more than 45 years. My mind goes back to the days of the post-war Labour Government and the Salisbury doctrine. We had then the right to throw out Bills, put to us here by the Labour Government, which were distasteful to us. We did not throw them out because, although, as the noble Lord, Lord Tordoff, and others have said, we had the right to do so, we felt that that would not be responsible. Therefore, we went along with the Bills put forward from the other place, although they were exceedingly distasteful.

Although I have great sympathy with the points made by the noble Lord, Lord Marsh, and my noble friend Lord Peyton, and I have some experience of their point of view having served as a member of the British Rail Board for six years, in the present circumstances I believe that it would be quite wrong to pass the amendment and, as my noble friend Lord Boyd-Carpenter said, jeopardise relations between this House and the other place.

The Earl of Caithness

My Lords, I have listened with great care to what has been said today. In all my time in this House I have never heard a debate such as this at this stage of a Bill. I believe that it is the first time that we have not actually discussed the amendments before us. The noble Lord, Lord Marsh, did not explain the amendments, although he gave a very good Second Reading speech, and I enjoyed listening to it. My noble friend Lord Peyton made it absolutely clear that whether or not the amendments are agreed to he dislikes the Bill. That is the crux of the issue.

Lord Peyton of Yeovil

My Lords, I am sorry to intervene. My noble friend must not mislead the House or misjudge me. My position is that the Government have nibbled seriously at my original amendment. All we are trying to do with these amendments is to undo a little of the damage which the Government have done to my amendment. It is nothing very fundamental.

The Earl of Caithness

My Lords, if my noble friend were honest he would admit that he has told my right honourable friend the Secretary of State and me personally—and the media—that he dislikes the Bill. That is the point that I made. (Perhaps the noble Lord, Lord Tordoff, will wait a moment before intervening.) I did not say that with these particular amendments my noble friend Lord Peyton was criticising the Government for amending the amendment which was passed at Committee stage. I was making a more general point, which the noble Lord did not address; namely, that he dislikes the Bill.

Lord Tordoff

My Lords, I merely rise to say that the noble Earl may have said something that he did not intend. He said, "If my noble friend were honest." It must be assumed that noble Lords on all sides of the House are honest. That is not a phrase that we should use in your Lordships' House.

The Earl of Caithness

My Lords, I apologise. I said that if my noble friend Lord Peyton were to answer the specific point about the general proposition that he dislikes the Bill, that puts into context what has been said on the amendments. If my noble friend Lord Peyton, and the noble Lord, Lord Marsh, wish to go back to the position on the Bill after Committee stage, that is what they should have done.

Let me make the matter absolutely clear to the noble Lord, Lord Tordoff. We have not amended the original Peyton-Marsh amendment out of existence. That is a travesty of the true position. It is not the Government's intention to prevent BR bidding in all cases. Our amendment does not do that. The franchising director's power is discretionary. I cannot say how he will exercise that discretion, but, contrary to what the noble Lord, Lord Clinton-Davis, said, there will clearly be circumstances in which the franchising director takes the view that it would be beneficial, perhaps in the interest of stimulating competition, to allow BR to bid against private sector bidders.

Let me turn, if I may, for the first time in the debate, to the detail of the amendments before us. The main thrust of Amendments Nos. 2A, 2B and 2C is to relate a determination, not to BR's eligibility to bid for a franchise, but its eligibility to be awarded a franchise. I do not believe that that would be a sensible change. It would not be in the interests of private sector bidders or of the BR Board and would simply add confusion to the franchising process.

The amendments proposed by the noble Lords would allow BR to bid in all cases, even where, because of the application of the criteria in new subsection (5), they were highly unlikely to be awarded the franchise. I do not believe that it would be fair to expect BR to incur the expense in terms of time and money to prepare bids which might have little or no chance of success.

Moreover, other bidders would be deterred by uncertainty over whether a BR bid would be eligible or not. In particular, the noble Lords' proposal does nothing to resolve the difficulties facing management and employee teams who would still face the prospect of bidding against the board. The Government's amendment agreed in the other place allows the franchising director to determine in advance which services BR may bid for. Then everyone knows where they stand and can plan accordingly. Surely that is common sense.

The noble Lords' Amendment No. 2C would also delete from the criteria which the franchising director is to take into account the promotion of competition for franchises and insert instead a requirement that the transfer of services to the private sector should not significantly increase the franchising director's costs. I would regard it as regrettable to lose the criterion of competition for franchises. But I have no difficulty with the sentiment behind the amendment and it is, of course, relevant to the franchising director's decision about whether or not to award a franchise to a particular bidder. However, it is not directly relevant to the issue of whether BR should be invited to bid.

The franchising director will, in all cases, whether or not BR has submitted a bid, want to compare bids received with the cost of allowing BR to continue operating the service. He will be able to do that because he will have access to BR's historical record of the cost of providing the service as a shadow franchise. But the point at which to make the comparison is when assessing the bids with a view to awarding the franchise, and, as I have explained, the Government's proposal would give the franchising director the power to make a determination in relation to invitations to bid, not the awarding of franchises.

The noble Lords' Amendments Nos. 2E, 2G and 2F make a number of changes to subsection (5) (d) which relates to the criterion of dominance. Some of the changes are mutually contradictory. Amendment No. 2E would limit the application of the criteria to the person in relation to whom the determination is made, presumably BR or its subsidiaries, while Amendment No. 2F would specifically exclude the application of the criteria to the BR Board or a wholly owned subsidiary. Finally, Amendment No. 2G would limit the application of the concept of dominance to market dominance in Great Britain. We believe that the wider, more general formulation in the amendment as agreed in another place is more appropriate. If one accepts that the principle of dominance in the provision of passenger railway services is a relevant criterion, then it is logical to apply it irrespective of the operator in question. Furthermore, dominance in a part of Great Britain seems particularly relevant because of the regional or local nature of many franchises. A local monopoly can have just as pernicious an effect on a local market as monopoly power across the country as a whole.

Amendment No. 2D would have the result that the franchising director would not make a determination unless he considered it necessary rather than desirable to do so for the purposes set out in subsection (5). I believe that that is too restrictive a test. Those matters are essentially judgmental and, if one accepts that the criteria in subsection (5) are important and relevant to determining whether BR should be allowed to bid, then desirability is in my view the proper test of whether a determination should be made.

Finally, Amendments Nos. 2H and 4A would require the franchising director to publish reasons for making a determination. That issue was considered yesterday in another place. As my right honourable friend the Minister of State said, the franchising director will be required to give an account of his activities in the annual report which is submitted to Parliament. We do not believe that there is a separate need to publish reasons in every case when he makes a determination. It would not be right to impose such a formal and bureaucratic procedure on the franchising director in the exercise of that function. His decisions will be subject to judicial review and a requirement to publish reasons could give rise to all sorts of possibly vexatious challenges.

The effect of the noble Lords' amendments would be to make quite radical changes to the amendment agreed in another place. As I have explained, I fear that they risk introducing greater uncertainty and confusion into the franchising process with no clear beneficial effect. The advantage of the amendment as it stands is that the franchising director's power of determination will ensure that everyone will know where they stand before they start preparing bids and not after. BR will know whether it can bid. Management buy-out teams will know whether they are likely to have to bid against BR, and private sector bidders will know whether they are going to have to compete against BR.

Amendment No. 2 was accepted in another place by a clear majority of 30 after several hours of debate. It strikes a careful balance to enable private sector bidders to compete against a powerful incumbent monopoly provider. The government amendment levels the track when it comes to bidding. If the noble Lord, Lord Marsh, wishes to put the matter to a vote, I hope that your Lordships will vote on the amendment and not on the principle of the Bill.

Lord Peyton of Yeovil

My Lords, would my noble friend repeat that last sentence? Is he talking about voting on Amendment No. 2A only and not the amendments to follow?

The Earl of Caithness

My Lords, that is correct.

Lord Marsh

My Lords, I have no problem with the noble Earl suggesting to Members of the House that they might vote on the amendment. I certainly do not wish to become involved in the constitutional argument except to say that I rest happily on my conviction that the noble and learned Lord, Lord Simon of Glaisdale, did an impressive demolition job.

The noble Lords, Lord Renton, and Lord Harmar-Nicholls—they are old friends—take a surprising view about the rights of this House. I am not moving a constitutional issue. The noble Lord, Lord Harmar-Nicholls, said that Government did not agree with the noble Lord, Lord Peyton, and myself. I do not blame Government for that. I have been a member of governments who did not agree with me. To have someone else's government disagreeing with me is no great issue.

However, with great respect, the noble Lord states the position wrongly, and fundamentally wrongly. The Government did not agree or disagree with the noble Lord, Lord Peyton, and myself. When we debated the issue, the Government did not agree with a clear majority drawn from all quarters of this House. I find it very surprising that when, after that debate, the Bill moved to another place and the Government then produced an amendment It is—as my noble and learned friend Lord Simon of Glaisdale said—by any standards an emasculation. If the noble Earl convinces himself that it places BR and the competition on a level playing field, he will never get a job as an Olympic umpire. On some decisions he may well, but on this decision he would not.

The Government then decided to neuter the amendment, and I believe that it is perfectly legitimate that we should have this opportunity of not deleting the Government's amendment, which is what the noble Earl suggested might have been done. That was considered and rejected precisely because it would be seen that it was unnecessarily provocative and challenged the Government's basic policy head on. That was why there was not a simple amendment to throw the whole thing out.

What in fact we have debated this afternoon—though it is difficult to believe that it is so—is a very simple amendment. It is not a wrecking amendment. It is extraordinary to seek to place it on a par with legislation coming from Labour Governments in the 1940s. It is an amendment which we believe was designed to be a positive amendment and which does not challenge the Government's basic objectives. That is the view which was expressed before with a much stronger amendment. The Government took it and watered it down.

This small amendment this afternoon is designed simply to help. It does not wreck the Bill; it simply ensures, among other things, that British Rail can be awarded a franchise, provided that it does not involve additional public moneys, which in turn means that the whole exercise will be transparent. There will be no cross-subsidisation.

I repeat that this is not an argument—the noble Lord, Lord Peyton, and I do not have egos of that size. It is a view which, rightly or wrongly, is held by a large number of people in this Chamber who come from all parties and no parties in the House. There is nothing whatever wrong in giving them the opportunity to express their view on the matter, and I hope that they will. I commend the amendment to the House.

4.32 p.m.

On Question, Whether Amendment No. 2A, as an amendment to Commons Amendment No. 2, shall be agreed to?

Their Lordships divided Contents, 170; Not-Contents, 160.

Division No. 1
CONTENTS
Ackner, L.	Carter, L.
Addington, L.	Castle of Blackburn, B.
Airedale, L.	Chorley, L.
Allen of Abbeydale, L.	Cledwyn of Penrhos, L.
Alport, L.	Clinton-Davis, L.
Archer of Sandwell, L.	Cochrane of Cults, L.
Ashley of Stoke, L.	Cornwallis, L.
Attlee, E.	Croham, L.
Auckland, L.	Cross, V.
Aylestone, L.	Dahrendorf, L.
Baldwin of Bewdley, E.	Dainton, L.
Banks, L.	Darcy (de Knayth), B.
Barnett, L.	David, B.
Beaumont of Whitley, L.	Dean of Beswick, L.
Beloff, L.	Donaldson of Kingsbridge, L.
Blake, L.	Donoughue, L.
Bonham-Carter, L.	Dormand of Easington, L.
Boston of Faversham, L.	Dundonald, E.
Bottomley, L.	Eatwell, L.
Bridges, L.	Ennals, L.
Broadbridge, L.	Ezra, L.
Brooks of Tremorfa, L.	Falkender, B.
Bruce of Donington, L.	Falkland, V.
Buchan, E.	Fisher of Rednal, B.
Callaghan of Cardiff, L.	Fitt, L.
Carmichael of Kelvingrove, L.	Foot, L.

Gallacher, L.	Milner of Leeds, L.
Geraint, L.	Molloy, L.
Gilmour of Craigmillar, L.	Monkswell, L.
Gladwyn, L.	Monson, L.
Gould of Pottemewton, B.	Morris of Castle Morris, L.
Graham of Edmonton, L. [Teller.]	Mountevans, L.
Greene of Harrow Weald, L.	Mulley, L.
Greenhill of Harrow, L.	Munster, E.
Greenway, L.	Murray of Epping Forest, L.
Grey, E.	Nicol, B.
Hampton, L.	Ogmore, L.
Hamwee, B.	Palmer, L.
Hanworth, V.	Park of Monmouth, B.
Harris of Greenwich, L.	Parry, L.
Harrowby, E.	Perry of Walton, L.
Haskell, L.	Peston, L.
Hayter, L.	Peyton of Yeovil, L. [Teller.]
Healey, L.	Pitt of Hampstead, L.
Hilton of Eggardon, B.	Plant of Highfield, L.
Hirshfield, L.	Polwarth, L.
Hollick, L.	Prys-Davies, L.
Hollis of Heigham, B.	Raglan, L.
Holme of Cheltenham, L.	Rea, L.
Hooson, L.	Redesdale, L.
Houghton of Sowerby, L.	Richard, L.
Howell, L.	Rochester, L.
Howie of Troon, L.	Russell, E.
Hughes, L.	Sainsbury, L.
Hunt, L.	St. John of Bletso, L.
Hylton, L.	Seear, B.
Hylton-Foster, B.	Sefton of Garston, L
Irvine of Lairg, L.	Serota, B.
Jay, L.	Shannon, E.
Jenkins of Putney, L.	Shepherd, L.
John-Mackie, L.	Simon of Glaisdale, L.
Judd, L.	Slim, V.
Kagan, L.	Stallard, L.
Kennet, L.	Stedman, B.
Kilbracken, L.	Stoddart of Swindon, L.
Kinloss, Ly.	Strabolgi, L.
Lawrence, L.	Taylor of Blackburn, L.
Lester of Herne Hill, L.	Taylor of Gryfe, L.
Listowel, E.	Tenby, V.
Llewelyn-Davies of Hastoe, B.	Thomson of Monifieth, L.
Lloyd-George of Dwyfor, E.	Thurlow, L.
Lockwood, B.	Thurso, V.
Longford, E.	Tonypandy, V.
Lovell-Davis, L.	Tordoff, L.
Macaulay of Bragar, L.	Turner of Camden, B.
McGregor of Durris, L.	Wallace of Campsie, L.
McIntosh of Haringey, L.	Waverley, V.
Mackie of Benshie, L.	Wedderburn of Charlton, L.
McNair, L.	Wharton, B.
Mais, L.	White, B.
Mallalieu, B.	Wigoder, L.
Marsh, L.	Williams of Elvel, L.
Mayhew, L.	Williams of Mostyn, L.
Merlyn-Rees, L.	Wilson of Rievaulx, L.
Meston, L.	Young of Dartington, L.
NOT-CONTENTS
Aberdare, L.	Brabazon of Tara, L.
Abinger, L.	Brougham and Vaux, L.
Addison, V.	Bruntisfield, L.
Alexander of Tunis, E.	Butterworth, L.
Allenby of Megiddo, V.	Caithness, E.
Archer of Weston-Super-Mare, L.	Caldecote, V.
Arran, E.	Campbell of Croy, L.
Ashbourne, L.	Carnegy of Lour, B.
Astor, V.	Carnock, L.
Astor of Hever, L.	Carr of Hadley, L.
Barber, L.	Chalker of Wallasey, B.
Barber of Tewkesbury, L.	Charteris of Amisfield, L.
Belhaven and Stenton, L.	Chelmsford, V.
Belstead, L.	Clanwilliam, E.
Bessborough, E.	Clark of Kempston, L
Blatch, B.	Cockfield, L.
Blyth, L.	Colnbrook, L.
Bolton, L.	Constantine of Stanmore, L.
Boyd-Carpenter, L.	Cork and Orrery, E

Craigavon, V.	Manchester, D.
Cranborne, V.	Marlesford, L.
Crickhowell, L.	Melville, V.
Cullen of Ashbourne, L.	Merrivale, L.
Cumberlege, B.	Mersey, V.
Davidson, V.	Middleton, L.
Dean of Harptree, L.	Miller of Hendon, B.
Denham, L.	Milverton, L.
Denton of Wakefield, B.	Monk Bretton, L.
Dixon-Smith, L.	Mottistone, L.
Downshire, M.	Nelson of Stafford, L.
Dudley, E.	Norfolk, D.
Eccles, V.	Norrie, L.
Elles, B.	Northbourne, L.
Elliot of Harwood, B.	O'Cathain, B.
Elton, L.	Onslow, E.
Erne, E.	Oppenheim-Barnes, B.
Erroll of Hale, L.	Orkney, E.
Flather, B.	Orr-Ewing, L.
Forte, L.	Oxfuird, V.
Fraser of Carmyllie, L.	Pearson of Rannoch, L.
Fraser of Kilmorack, L.	Peel, E.
Gainford, L.	Pike, B.
Gisborough, L.	Prentice, L.
Goschen, V.	Radnor, E.
Gowrie, E.	Renton, L.
Gray of Contin, L.	Renwick, L.
Gridley, L.	Rippon of Hexham, L.
Grimston of Westbury, L.	Romney, E.
Grimthorpe, L.	Sainsbury of Preston Candover, L.
Hacking, L.	St. Davids, V.
Haig, E.	Seccombe, B.
Hailsham of Saint Marylebone, L.	Selborne, E.
Harding of Petherton, L.	Sharples, B.
Harmar-Nicholls, L.	Shaughnessy, L.
Harmsworth, L.	Shrewsbury, E.
Hayhoe, L.	Skelmersdale, L.
Henley, L.	Skidelsky, L.
Hesketh, L.	Stanley of Alderley, L.
Holderness, L.	Stevens of Ludgate, L.
HolmPatrick, L.	Stodart of Leaston, L.
Hooper, B.	Strange, B.
Howe, E.	Strathclyde, L.
Huntly, M.	Strathmore and Kinghorne, E.
Jenkin of Roding, L.	[Teller.]
Johnston of Rockport, L.	Sudeley, L.
Killearn, L.	Swinton, E.
Kimball, L.	Tebbit, L.
King of Wartnaby, L.	Terrington, L.
Knollys, V.	Teviot, L.
Lauderdale, E.	Thomas of Gwydir, L.
Layton, L.	Torrington, V.
Leigh, L.	Trefgarne, L.
Lindsay, E.	Trumpington, B.
Lindsey and Abingdon, E.	Tugendhat, L.
Liverpool, E.	Ullswater, V. [Teller.]
Long, V.	Vaux of Harrowden, L.
Lucas, L.	Vivian, L.
Lyell, L.	Wakeham, L.
Mackay of Ardbrecknish, L.	[Lord Privy Seal.]
Mackay of Clashfern, L.	Wise, L.
[Lord Chancellor.]	Wynford, L.
Macleod of Borve, B.

Resolved in the affirmative, and Amendment No. 2A agreed to accordingly.

AS AN AMENDMENT TO COMMONS AMENDMENT No. 2

2B Subsection (4), line 6, leave out from ("for") to end of subsection and insert ("selection as the franchisee.").

4.43 p.m.

Lord Marsh

My Lords, I beg to move Amendment No. 2B as an amendment to Commons Amendment No. 2.

Moved, That Amendment No. 2B, as an amendment to Commons Amendment No. 2, be agreed to.—(Lord Marsh.)

On Question, Whether Amendment No. 2B, as an amendment to Commons Amendment No. 2, shall be agreed to?

Their Lordships divided: Contents, 165; Not-Contents, 159.

Division No. 2
CONTENTS
Ackner, L.	Healey, L.
Addington, L.	Hilton of Eggardon, B.
Airedale, L.	Hirshfield, L.
Allen of Abbeydale, L.	Hollick, L.
Alport, L.	Hollis of Heigham, B.
Archer of Sandwell, L.	Holme of Cheltenham, L.
Ashley of Stoke, L.	Hooson, L.
Attlee, E.	Houghton of Sowerby, L.
Auckland, L.	Howell, L.
Aylestone, L.	Howie of Troon, L.
Baldwin of Bewdley, E.	Hughes, L.
Banks, L.	Hunt, L.
Barnett, L.	Hylton, L.
Beaumont of Whitley, L.	Hylton-Foster, B.
Birk, B.	Irvine of Lairg, L.
Bonham-Carter, L.	Jay, L.
Boston of Faversham, L.	Jenkins of Putney, L.
Bridges, L.	John-Mackie, L.
Broadbridge, L.	Judd, L.
Brooks of Tremorfa, L.	Kagan, L.
Bruce of Donington, L.	Kennet, L.
Buchan, E.	Kilbracken, L.
Callaghan of Cardiff, L.	Lawrence, L.
Carmichael of Kelvingrove, L.	Lester of Herne Hill, L.
Carter, L.	Listowel, E.
Castle of Blackburn, B.	Llewelyn-Davies of Hastoe, B.
Chorley, L.	Lloyd-George of Dwyfor, E.
Cledwyn of Penrhos, L.	Lockwood, B.
Clinton-Davis, L.	Lovell-Davis, L.
Cochrane of Cults, L.	Macaulay of Bragar, L.
Cornwallis, L.	McGregor of Durris, L.
Croham, L.	McIntosh of Haringey, L.
Cross, V.	Mackie of Benshie, L.
Dahrendorf, L.	McNair, L.
Dainton, L.	Mallalieu, B.
Darcy (de Knayth), B.	Marsh, L.
David, B.	Mayhew, L.
Dean of Beswick, L.	Merlyn-Rees, L.
Donoughue, L.	Meston, L.
Dormand of Easington, L.	Milner of Leeds, L.
Dundonald, E.	Molloy, L.
Eatwell, L.	Monkswell, L.
Ennals, L.	Monson, L.
Ezra, L.	Morris of Castle Morris, L.
Falkender, B.	Mountevans, L.
Falkland, V.	Mulley, L.
Fisher of Rednal, B.	Munster, E.
Fitt, L.	Murray of Epping Forest, L.
Foot, L.	Nicol, B.
Gallacher, L.	Ogmore, L.
Geraint, L.	Palmer, L.
Gilmour of Craigmillar, L.	Parry, L.
Gladwyn, L.	Perry of Walton, L.
Glenamara, L.	Peston, L.
Gould of Potternewton, B.	Peyton of Yeovil, L.
Graham of Edmonton, L. [Teller.]	Pitt of Hampstead, L.
Greene of Harrow Weald, L.	Plant of Highfield, L.
Greenhill of Harrow, L.	Polwarth, L.
Greenway, L.	Prys-Davies, L.
Grey, E.	Raglan, L.
Hampton, L.	Rea, L.
Hamwee, B.	Redesdale, L.
Hanworth, V.	Richard, L.
Harris of Greenwich, L.	Rochester, L.
Harrowby, E.	Russell, E.
Haskel, L.	Sainsbury, L.
Hayter, L.	St. John of Bletso, L.

Seear, B.	Thurso, V.
Sefton of Garston, L.	Tonypandy, V.
Serota, B.	Tordoff, L. [Teller.]
Shannon, E.	Turner of Camden, B.
Shepherd, L.	Wallace of Coslany, L.
Simon of Glaisdale, L.	Waverley, V.
Slim, V.	Wedderburn of Charlton, L.
Stallard, L.	Westwood, L.
Stedman, B.	Wharton, B.
Stoddait of Swindon, L.	White, B.
Strabotgi, L.	Wigoder, L.
Taylor of Blackburn, L.	Williams of Elvel, L.
Taylor of Gryfe, L.	Williams of Mostyn, L.
Tenby, V.	Wilson of Rievaulx, L.
Thomson of Monifieth, L.	Young of Dartington, L.
Thurlow, L.
NOT-CONTENTS
Aberdare, L.	Gowrie, E.
Abinger, L.	Gray of Contin, L.
Addison, V.	Gridley, L.
Alexander of Tunis, E.	Grimston of Westbury, L.
Allenby of Megiddo, V.	Grimthorpe, L.
Archer of Weston-Super-Mare, L.	Hacking, L.
Arran, E.	Haig, E.
Ashbourne, L.	Hailsham of Saint Marylebone,
Astor, V.	Hanson, L.
Astor of Hever, L.	Harding of Petherton, L.
Barber, L.	Harmar-Nicholls, L.
Barter of Tewkesbury, L.	Harmsworth, L.
Belhaven and Stenton, L.	Hayhoe, L.
Belstead, L.	Henley, L.
Blatch, B.	Hesketh, L.
Blyth, L	Holderness, L.
Bolton, L.	HolmPatrick, L.
Boyd-Carpenter, L.	Hooper, B.
Brabazon of Tara, L.	Howe, E.
Braine of Wheatley, L.	Huntly, M.
Brougham and Vaux, L.	Jenkin of Roding, L.
Bruntisfield, L.	Johnston of Rockport, L.
Butterworth, L.	Killearn, L.
Cadman, L.	Kimball, L.
Caithness, E.	King of Wartnaby, L.
Caldecote, V.	Knollys, V.
Campbell of Croy, L.	Lane of Horsell, L.
Carnegy of Lour, B.	Lauderdale, E.
Carnock, L.	Layton, L.
Carr of Hadley, L.	Leigh, L.
Chalker of Wallasey, B.	Lindsay, E.
Chelmsford, V.	Lindsey and Abingdon, E.
Clanwilliam, E.	Liverpool, E.
Clark of Kempston, L	Long, V.
Colnbrook, L.	Lucas, L.
Constantine of Stanmore, L.	Lyell, L.
Cork and Orrery, E.	McColl of Dulwich, L.
Craigavon, V.	Mackay of Ardbrecknish, L.
Cranborne, V.	Mackay of Clashfern, L.
Crathorne, L.	[Lord Chancellor]
Crickhowell, L.	Macleod of Borve, B.
Cullen of Ashbourne, L.	Manchester, D.
Cumberlege, B.	Marlesford, L.
Davidson, V.	Melville, V.
Dean of Harptree, L.	Merrivale, L.
Denham, L.	Mersey, V.
Denton of Wakefield, B.	Middleton, L.
Dixon-Smith, L.	Miller of Hendon, B.
Downshire, M.	Milverton, L.
Eccles, V.	Monk Bretton, L.
Elles, B.	Mottistone, L.
Elliot of Harwood, B.	Nelson of Stafford, L.
Elton, L.	Norfolk, D.
Erne, E.	Norrie, L.
Erroll of Hale, L.	Northbourne, L.
Rather, B.	O'Cathain, B.
Forte, L	Onslow, E.
Fraser of Carmyllie, L.	Oppenheim-Barnes, B.
Fraser of Kilmorack, L.	Orkney, E.
Gainford, L.	Orr-Ewing, L.
Gisborough, L.	Oxfuird, V.
Goschen, V.	Pearson of Rannoch, L.

Peel, E.	Strange, B.
Pike, B.	Strathclyde, L.
Prentice, L.	Strathmore and Kinghorne, E.
Radnor, E.	[Teller.]
Renton, L.	Sudeley, L.
Renwick, L.	Swinton, E.
Rippon of Hexham, L.	Terrington, L.
Romney, E.	Teviot, L.
Sainsbury of Preston Candover, L.	Thomas of Gwydir, L.
St. Davids, V.	Torrington, V.
Seccombe, B.	Trefgarne, L.
Selborne, E.	Trumpington, B.
Sharpies, B.	Ullswater, V. [Teller.]
Shaughnessy, L.	Vaux of Harrowden, L.
Shrewsbury, E.	Vivian, L.
Skelmersdale, L.	Wakeham, L.
Stanley of Alderley, L.	[Lord Privy Seal]
Stevens of Ludgate, L.	Wynford, L.
Stodart of Leaston, L.

Resolved in the affirmative, and Amendment No. 2B agreed to accordingly.

4.53 p.m.

The Lord Chancellor (Lord Mackay of Clashfern)

My Lords, before I call Amendment No. 2C, I should point out that if it is agreed to I cannot call Amendment No. 2D.

AS AN AMENDMENT TO COMMONS AMENDMENT No. 2

2C Subsection (5), line 1, leave out from ("shall") to end of paragraph (a) and insert ("only make a determination under subsection (4) if a transfer of services to the private sector would not significantly increase the cost to the Franchising Director of providing the service and if he considers that it. is necessary to make such a determination to facilitate such a transfer and-").

Lord Marsh

My Lords, Amendment No. 2C was spoken to with Amendment No. 2A. I beg to move.

Moved, That Amendment No. 2C, as an amendment to Commons Amendment No. 2, be agreed to.—(Lord Marsh.)

On Question, Whether Amendment No. 2C, as an amendment to Commons Amendment No. 2, shall be agreed to?

Their Lordships divided: Contents, 161; Not-Contents, 159.

Division No. 3
CONTENTS
Ackner, L.	Callaghan of Cardiff, L.
Addington, L.	Carmichael of Kelvingrove, L.
Airedale, L.	Carter, L.
Allen of Abbeydale, L.	Castle of Blackburn, B.
Alport, L.	Cledwyn of Penrhos, L.
Archer of Sandwell, L.	Clinton-Davis, L.
Ashley of Stoke, L.	Cochrane of Cults, L.
Attlee, E.	Cornwallis, L.
Aylestone, L.	Croham, L.
Baldwin of Bewdley, E.	Cross, V.
Banks, L.	Dahrendorf, L.
Barnett, L.	Dainton, L.
Beaumont of Whitley, L.	Darcy (de Knayth), B
Birk, B.	David, B.
Bonham-Carter, L.	Dean of Beswick, L.
Boston of Faversham, L.	Donoughue, L.
Bottomley, L.	Dormand of Easington, L.
Bridges, L.	Dundonald, E.
Broadbridge, L.	Eatwell, L.
Brooks of Tremorfa, L.	Ennals, L.
Bruce of Donington, L.	Ezra, L.
Buchan, E.	Falkender, B.

On Question, Motion agreed to.

Falkland, V.	Meston, L.
Fisher of Rednal, B.	Milner of Leeds, L.
Fitt, L.	Molloy, L.
Foot, L.	Monkswell, L.
Gallacher, L.	Monson, L.
Geraint, L.	Morris of Castle Morris, L.
Gilmour of Craigmillar, L.	Mountevans, L.
Gladwyn, L.	Mulley, L.
Glenamara, L.	Munster, E.
Gould of Potternewton, B.	Murray of Epping Forest, L.
Graham of Edmonton, L. [Teller.]	Nicol, B.
Greene of Harrow Weald, L.	Ogmore, L.
Greenhill of Harrow, L.	Palmer, L.
Greenway, L.	Parry, L.
Grey, E	Perry of Walton, L.
Hampton, L.	Peston, L.
Hamwee, B.	Pitt of Hampstead, L.
Hanworth, V.	Plant of Highfield, L.
Harris of Greenwich, L.	Polwarth, L.
Harrowby, E.	Prys-Davies, L.
Haskel, L.	Raglan, L.
Hayter, L.	Rea, L.
Healey, L.	Redesdale, L.
Hilton of Eggardon, B.	Richard, L.
Hirshfield, L.	Rochester, L.
Hollick, L.	Russell, E.
Hollis of Heigham, B.	St. John of Bletso, L.
Holme of Cheltenham, L.	Seear, B.
Hooson, L.	Sefton of Garston, L.
Houghton of Sowerby, L.	Serota, B.
Howell, L.	Shannon, E.
Howie of Troon, L.	Shepherd, L.
Hughes, L.	Simon of Glaisdale, L.
Hunt, L.	Slim, V.
Hylton, L.	Stallard, L.
Irvine of Lairg, L.	Stedman, B.
Jay, L.	Stoddart of Swindon, L.
Jenkins of Putney, L.	Strabolgi, L.
John-Mackie, L.	Taylor of Blackburn, L.
Judd, L.	Taylor of Gryfe, L.
Kagan. L.	Tenby, V.
Kennet, L.	Thomson of Monifieth, L.
Kilbracken, L.	Thurlow, L.
Lawrence, L.	Thurso, V.
Lester of Home Hill, L.	Tonypandy, V.
Listowel, E.	Tordoff, L. [Teller.]
Llewelyn-Davies of Hastoe, B.	Turner of Camden, B.
Lloyd-George of Dwyfor, E.	Wallace of Coslany, L.
Lockwood, B.	Waverley, V.
Lovell-Davis, L.	Wedderbum of Charlton, L.
Macaulay of Bragar, L.	Westwood, L.
McGregor of Durris, L.	Wharton, B.
Mcintosh of Haringey, L.	White, B.
Mackie of Benshie, L.	Wigoder, L.
McNair, L.	Williams of Elvel, L.
Mallalieu, B.	Williams of Mostyn, L.
Marsh, L.	Wilson of Rievaulx, L.
Mayhew, L.	Young of Darlington, L.
Merlyn-Rees, L.
NOT-CONTENTS
Aberdare, L.	Brabazon of Tara, L.
Abinger, L.	Braine of Wheatley, L.
Addison, V.	Brougham and Vaux, L.
Alexander of Tunis, E.	Bruntisfield, L.
Allenby of Megiddo, V.	Butterworth, L.
Archer of Weston-Super-Mare, L.	Cadman, L.
Arran, E.	Caithness, E.
Ashbourne, L.	Caldecote, V.
Astor, V.	Campbell of Croy, L.
Astor of Hever, L.	Carnegy of Lour, B.
Barber, L.	Carnock, L.
Barber of Tewkesbury, L.	Carr of Hadley, L.
Belhaven and Stenton, L.	Chalker of Wallasey, B.
Belstead, L.	Chelmsford, V.
Blatch, B.	Clanwilliam, E.
Blyth, L.	Clark of Kempston, L
Bolton, L.	Colnbrook, L.
Boyd-Carpenter, L.	Constantine of Stanmore, L.

Craigavon, V.	[Lord Chancellor.]
Cranborne, V.	Macleod of Borve, B.
Crathorne, L.	Manchester, D.
Crickhowell, L.	Marlesford, L.
Cullen of Ashbourne, L.	Melville, V.
Cumberlege, B.	Merrivale, L.
Davidson, V.	Mersey, V.
Dean of Harptree, L.	Middleton, L.
Denham, L.	Miller of Hendon, B.
Denton of Wakefield, B.	Milverton, L.
Dixon-Smith, L.	Monk Bretton, L.
Downshire, M.	Mottistone, L.
Dudley, E.	Nelson of Stafford, L.
Elles, B.	Newall, L.
Elliot of Harwood, B.	Norfolk, D.
Elton, L.	Norrie, L.
Erne, E.	O'Cathain, B.
Erroll of Hale, L.	Onslow, E.
Flather, B.	Oppenheim-Barnes, B.
Fraser of Carmyllie, L.	Orkney, E.
Fraser of Kilmorack, L.	Orr-Ewing, L.
Gainford, L.	Oxfuird, V.
Gisborough, L.	Pearson of Rannoch, L.
Goschen, V.	Peel, E.
Gowrie, E.	Pike, B.
Gray of Contin, L.	Plummer of St. Marylebone, L.
Gridley, L.	Prentice, L.
Grimston of Westbury, L.	Radnor, E.
Grimthorpe, L.	Renton, L.
Hacking, L.	Renwick, L.
Haig, E.	Romney, E.
Hailsham of Saint Marylebone, L.	Sainsbury of Preston Candover, L.
Hanson, L.	St. Davids, V.
Harding of Petherton, L.	Seccombe, B.
Harmar-Nicholls, L.	Selborne, E.
Harmsworth, L.	Sharples, B.
Hayhoe, L.	Shaughnessy, L.
Henley, L.	Shrewsbury, E.
Hesketh, L.	Skelmersdale, L.
Holderness, L.	Stanley of Alderley, L.
HolmPatrick, L.	Stevens of Ludgate, L.
Hooper, B.	Stodart of Leaston, L.
Howe, E.	Strange, B.
Huntly, M.	Strathclyde, L.
Jenkin of Roding, L.	Strathmore and Kinghome, E.
Johnston of Rockport, L.	[Teller.]
Killearn, L.	Sudeley, L.
Kimball, L.	Swinton, E.
King of Wartnaby, L.	Tebbit, L.
Knollys, V.	Terrington, L.
Lane of Horsell, L.	Teviot, L.
Lauderdale, E.	Thomas of Gwydir, L.
Layton, L.	Torrington, V.
Leigh, L.	Trefgarne, L.
Lindsay, E.	Trumpington, B.
Lindsey and Abingdon, E.	Tugendhat, L.
Liverpool, E.	Ullswater, V. [Teller.]
Long, V.	Vaux of Harrowden, L.
Lucas, L.	Vivian, L.
Lyell, L.	Wakeham, L.
McColl of Dulwich, L.	[Lord Privy Seal.]
Mackay of Ardbrecknish, L.	Wise, L.
Mackay of Clashfem, L.	Wynford, L.

Resolved in the affirmative, and Amendment No. 2C agreed to accordingly.

5.3 p.m.

[Amendments Nos. 2D to 2H, as amendments to Commons Amendment No. 2, not moved.]

The Lord Chancellor

My Lords, the Question is that the House do not insist on their Amendment No. 1 to which the Commons have disagreed, and do agree with the Commons in their Amendment No. 2, as amended, in lieu thereof.

FURTHER COMMONS AMENDMENT IN LIEU OF LORDS AMENDMENT No. 1

3 Clause 46, page 54, line 36, after '20' insert '21, 23'.

The Earl of Caithness

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 3.

Moved, That the House do agree with the Commons in their Amendment No. 3.—(The Earl of Caithness.)

FURTHER COMMONS AMENDMENT IN LIEU OF LORDS AMENDMENT No. 1

4 Clause 65, page 72, line 2, at end insert:

`() every notice of a determination under section 22(4) above;'.

The Earl of Caithness

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4.

Moved, That the House do agree with the Commons in their Amendment No. 4.—(The Earl of Caithness.)

[Amendment No. 4A, as an amendment to Commons Amendment No. 4, not moved.]

[Amendment No. 6A not moved.]

LORDS AMENDMENT

5 Clause 121, page 121, line 32, at end insert:

("() Nothing in this Act shall relieve the Secretary of State of any duty imposed by section 52D(2) of the Transport Act 1980.")

The Commons disagreed to this amendment for the following reason—

6 Because the Commons do not consider it appropriate that the Secretary of State should be precluded from making, and laying before Parliament, orders of the kind to which the said Amendment made by the Lords relates.

The Earl of Caithness

My Lords, I beg to move that the House do not insist on their Amendment No. 5 to which the Commons have disagreed for the reason numbered 6.

Moved, That the House do not insist on their Amendment No. 5 to which the Commons have disagreed for the reason numbered 6.—(The Earl of Caithness.)

LORDS AMENDMENT

7 Schedule 10, page 170, line 51, at end insert:

("(1B) After the section 52A inserted by sub-paragraph (1A) above, there shall be inserted—

"Power to substitute obligations under this section for liabilities under s.52(1).

52B.—(1) The Minister may make a substitution order in relation to any occupational pension scheme—

1. (a) which is a new scheme, within the meaning of Schedule 10 to the Railways Act 1993;
2. (b) which is designated under paragraph 9(1) of that Schedule (designation of schemes which are to be treated as B.R. pension schemes for certain purposes of this Part); and
3. (c) in relation to which a guarantee has been given by the Secretary of State under paragraph 9A of that Schedule;

and any reference in this section to a "guaranteed pension scheme" is a reference to such an occupational pension scheme.

(2) The Minister may also make a substitution order in relation to any section of a new scheme, within the meaning of Schedule 10 to the Railways Act 1993, if the section is one—

1. (a) which is designated under paragraph 9(1) of that Schedule; and
2. (b) in relation to which a guarantee has been given by the Secretary of State under paragraph 9A of that Schedule;

and the following provisions of this section (and sections 52C and 52D) shall apply in relation to any such section of a new scheme as if any reference to a guaranteed pension scheme included a reference to such a section.

(3) For the purposes of this section, a "substitution order" is an order under this section the effect of which is—

1. (a) to terminate, from the termination date, the Minister's liability to make. to the persons administering the guaranteed pension scheme in question payments under section 52(1) in relation to the scheme; and
2. (b) to impose on the Minister, in substitution for that liability, an obligation to make to those persons, subject to and in accordance with the following provisions of this section, one or more other payments (the "substitution payments") in relation to that scheme.

(4) Subject to the following provisions of this section, the amount of the substitution payments to be made in the case of a guaranteed pension scheme shall be equal in the aggregate to the sum of—

1. (a) the amount specified pursuant to subsection (5) (a) as the capital value of the unfunded obligations in the case of the scheme; and
2. (b) the aggregate amount of any interest which is dealt with as mentioned in subsection (8) (b) (ii) in the case of the scheme.

(5) A substitution order must specify—

1. (a) the capital value of the unfunded obligations in the case of the guaranteed pension scheme in question, as at the termination date; and
2. (b) the date which, for the purposes of this section, is to be the termination date in relation to that scheme, being a date not earlier than one month after the coming into force of the substitution order.

(6) Any determination for the purposes of this section of the capital value of the unfunded obligations in the case of a guaranteed pension scheme shall either—

1. (a) be made by the Minister; or
2. (b) if the Minister so requires in the particular case, be made by the actuary to the guaranteed pension scheme in question and approved by the Minister.

(7) A substitution order may specify—

(a) the amount or amounts, or the method of determining the amount or amounts, of the substitution payments,

(c) circumstances (which may, if the Minister so desires, be defined by reference to the opinion of any person) in which substitution payments are to be made,

and may provide for the obligation to make substitution payments to be discharged if the guaranteed pension scheme in question has, in the opinion of a person specified or described in, or nominated under, the order, been wound up.

(8) A substitution order must provide—

1. (a) for interest to accrue from the termination date on the outstanding balance of the capital value for the time being at such rate, and at such intervals, as may be specified in, or determined under or in accordance with, the order; and
2. (b) for any such interest which accrues—

(ii) to be added to the outstanding balance of the capital value,

(or to be dealt with partly in one of those ways and partly in the other);

and the provision that may be made by virtue of paragraph (a) includes provision for the rate of interest to be calculated by reference to any variable or to be such rate as the Minister may from time to time determine and specify in a notice to the persons administering the scheme in question.

(9) For the purposes of subsection (8), the "outstanding balance of the capital value", in the case of a guaranteed pension scheme, means the capital value of the unfunded obligations in the case of the scheme, as specified pursuant to subsection (5) (a),—

1. (a) reduced by the amount of any substitution payments made in relation to that scheme; and
2. (b) increased by any additions of accrued interest under or by virtue of subsection (8) (b) (ii) in relation to that scheme.

(10) Nothing in this section affects the liability of the Board in respect of any relevant pension obligations.

(11) Any sums required for the making of payments under this section by the Minister shall be paid out of money provided by Parliament.

(12) In this section—

"the capital value of the unfunded obligations", in the case of any guaranteed pension scheme, means such amount as is, in the opinion of the person determining that capital value pursuant to subsection (6), the capital equivalent of the payments that would, apart from this section, have been expected to be made by the Minister under section 52(1) in relation to that scheme after the termination date in the case of that scheme;

"occupational pension scheme" means an occupational pension scheme as defined in section 1 of the Pension Schemes Act 1993;

"the terminal period", in the case of any guaranteed pension scheme, means—

1. (a) if a financial year of the scheme ends with the termination date, that financial year; or
2. (b) in any other case, so much of the financial year of the scheme in which the termination date falls as ends with that date;

"the termination date", in the case of any guaranteed pension scheme, shall be construed in accordance with subsection (5) (b);

"the termination year", in the case of any guaranteed pension scheme, means the financial year of the scheme which consists of or includes the terminal period;

"trustees", in relation to a guaranteed pension scheme, includes a reference to any persons who, under the rules of the scheme, are under a liability to provide pensions or other benefits but who are not trustees of the scheme.

Adjustments arising in connection with orders under s.52B.

52C.—(1) As soon as practicable after the termination date in the case of any guaranteed pension scheme, there shall be determined, for the terminal period, what proportion of the pensions, increases and expenses payable under, or incurred in connection with, the scheme corresponds to the relevant pension obligations.

(2) Any determination under subsection (1) shall either—

1. (a) be made by the Minister; or
2. (b) if the Minister so requires in the particular case, be made by the actuary or auditor to the guaranteed pension scheme in question and approved by the Minister.

(3) The Minister may give a direction to the persons administering a guaranteed pension scheme requiring them to determine the aggregate amount of the pensions, increases and expenses payable under or incurred in connection with the scheme for the terminal period or the termination year and to notify him in writing of their determination.

(4) As respects the termination year of a guaranteed pension scheme, the extent of the liability of the Minister to make payments under section 52(1) in relation to that scheme shall be restricted to a liability to make payments of an amount (the "termination year amount") equal in the aggregate to the product of—

1. (a) the proportion determined under section 54(1) for that scheme;
2. (b) the proportion determined pursuant to subsection (1) in the case of that scheme; and
3. (c) the aggregate amount of the pensions, increases and expenses payable under or incurred in connection with that scheme in the terminal period;

and payments by way of adjustment shall be made by the Minister to the persons administering the scheme, or (as the case may be) by those persons to the Minister, before the expiration of the period of six months beginning with the date of the last of the determinations made under subsection (1) or (3) with respect to the scheme.

(5) Where, in the case of a guaranteed pension scheme, the funding of the relevant pension obligations has, by virtue of subsection (3) of section 54, been left out of account in making a determination under subsection (1) of that section, the termination year amount in the case of that scheme shall be the difference between—

1. (a) what that amount would have been, apart from this subsection; and
2. (b) the amount of any income accruing for the terminal period which may be applied towards the payment of such of the pensions, increases and expenses payable under or incurred in connection with the scheme as correspond to those obligations.

(6) The Minister may give a direction to the persons administering a guaranteed pension scheme requiring them to determine the amount mentioned in subsection (5) (b) and to notify him in writing of their determination.

(7) Where payments by way of adjustment fall to be made, interest shall be payable, as from the termination date, by the person liable to make those payments, at the rates and intervals from time to time applicable for the purposes of section 52B(8) (a) in the case of the scheme in question, on so much of the aggregate amount of the payments in question as for the time being remains unpaid.

(8) So much of—

1. (a) any payment by way of adjustment which falls to be made, or
2. (b) any interest accrued under subsection (7), as has not been paid shall be treated as a debt due.

(9) Any sums required for the making of payments under this section by the Minister shall be paid out of money provided by Parliament.

(10) In this section, "payments by way of adjustment", in the case of a guaranteed pension scheme, means—

1. (a) if the Minister has made payments under section 52(1) in relation to that scheme for the termination year which, in the aggregate, exceed the termination year amount, payment to the Minister by the persons administering the scheme of an amount equal to the excess;
2. (b) if the Minister has made no payments under section 52(1) in relation to that scheme for the termination year, payment by the Minister to those persons of the termination year amount; or
1121
3. (c) if the Minister has made payments under section 52(1) in relation to that scheme for the termination year which, in the aggregate, fall short of the termination year amount, payment by the Minister to those persons of an amount equal to the shortfall.

(11) Expressions used in this section and in section 52B have the same meaning in this section as they have in that section.

Orders and directions under sections 52A to 52C supplemental.

52D.—(1) Any power to make an order under section 52B shall be exercisable by statutory instrument made by the Minister after consultation with the trustees of the guaranteed pension scheme to which the order relates.

(2) The Minister shall not lay before Parliament a statutory instrument containing an order under section 52B unless he has first obtained the written agreement of those trustees that it is appropriate in the circumstances for the order to be made.

(3) A statutory instrument containing an order under section 52B shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(4) At the time when a statutory instrument containing an order under section 52B is laid before each House of Parliament pursuant to subsection (3), the Minister shall, if he has not already done so, also lay before each House of Parliament a copy of the guarantee mentioned in subsection (1) (c) of that section; but this subsection is without prejudice to the validity of the order in question.

(5) Any power to make an order under section 52B includes power, exercisable in the same manner, to make such incidental, supplemental, consequential or transitional provision as may appear necessary or expedient to the Minister.

(6) Any order under section 52B may make different provision for different cases or for different classes or descriptions of case.

(7) It shall be the duty of any person to whom a direction is given under section 52A or 52C to comply with and give effect to that direction; and compliance with any such direction shall be enforceable by civil proceedings by the Minister for an injunction or interdict or for any other appropriate relief.

(8) Any power to give a direction under section 52A or 52C includes power to vary or revoke the direction.

(9) Any direction under section 52A or 52C shall be given in writing

(10) In this section—

"guaranteed pension scheme" has the same meaning as in section 52B;

"trustees", in relation to a guaranteed pension scheme, has the same meaning as in section 52B."").

The Commons agreed to the above amendment with the following amendment—

8 Leave out subsection (2) of the new section 52D inserted into the Transport Act 1980.

Baroness Turner of Camden

My Lords, I beg to move that the House do disagree with the Commons in their Amendment No. 8 to the Lords Amendment No. 7. I did not move Amendment No. 6A because it seemed to me, after the discussions we had had on constitutional issues, not to be particularly relevant and in any event it is a paving amendment for something much more substantial.

This is absolutely the last opportunity we shall have in this House before the Bill becomes law to allay the fears of prospective and present pensioners. We have already indicated to the Government on a number of occasions in your Lordships' House what we think about the need to assure people out there of the security of their pension provision. The name of Maxwell has cropped up occasionally during our discussion. Unfortunately, it seems impossible to talk about security for pensioners without it being mentioned somewhere or other. I accept that the Government have come some way towards meeting our concerns. We have a funding guarantee which, although flawed, is better than would have happened had it not been for the persistence of the, noble Lords, Lord Peyton and Lord Marsh, whose efforts I commend. Nevertheless, that guarantee as it stands gives a future Secretary of State the tight to make conditions which are unspecified since they seem to give him the right to amend the rules and other matters.

What the Government have done in the Commons is to remove from the amendment that was before the Commons a very important subsection: The Minister shall not lay before Parliament a statutory instrument containing an order under section 52B unless he has first obtained the written agreement of those trustees that it is appropriate in the circumstances for the order to be made". It seems to me that that is entirely in line with what was agreed in the memorandum of understanding which we have discussed on a number of occasions because the memorandum of understanding refers to agreement by the trustees. Of course it is much stronger than consultation, to which reference is made elsewhere in the Bill, and a requirement for which has been written into the Bill in the section dealing with the funding guarantee in accordance with the promise made when this was debated at Third Reading. Nevertheless, concerns still remain and it still seems that the chairman of the trustees, judging from the debate in the other place yesterday, has concerns about the security and about the assurances that have been given. Therefore, I should like to take this last opportunity to move that we disagree with the way in which the Government have pursued this matter in the Commons.

We managed to ensure that an undertaking relative to the trustees could be written into the Bill, but that has been watered down by the removal of the subsection of the amendment in discussion in the Commons. I therefore hope that your Lordships will agree with me that for the future peace of mind and security of pensioners and prospective pensioners of BR it is important to write this into the Bill and not to accept what the Government have done in the Commons.

I remind your Lordships that we are talking here about relatively poor people. I have a letter from one of the pensioners who reminds me that 70 per cent. of BR pensioners receive pensions of less than £40 a week. It is for us to endeavour to do everything we can to protect the poor and the vulnerable. I hope that we shall do so.

Moved, That the House do disagree with the Commons in their Amendment No. 8 to the Lords Amendment No. 7.—(Baroness Turner of Camden.)

Lord Peyton of Yeovil

My Lords, this amendment raises very serious issues. Your Lordships passed an amendment which the other place has now rejected. Perhaps I may call attention to the Commons reason, given at the bottom of page 3 of the Marshalled List: Because the Commons do not consider it appropriate that the Secretary of State should be precluded from making, and laying before Parliament, orders of the kind to which the said Amendment made by the Lords relates". Those are not particularly stirring words. They do not suggest that there is anything very vital in your Lordships' amendment. But my real difficulty stems from two issues which arise here. The first is the memorandum of understanding, frequently quoted in your Lordships' House, which was signed by a Minister of the Crown and the chairman of the railway trustees. That memorandum was absolutely clear. It was perhaps the first draft in which the requirement of the trustees' agreement appeared. Therefore, it was a matter for serious discussion to which those on both sides of the question clearly applied their minds. What was required was the trustees' agreement to the phasing of payments under the 1980 Act. As I understand, it had always been a matter of considerable satisfaction to the trustees that those payments had been made to coincide and match the payments out of the fund. Therefore, there were no worries for the trustees in the performance of their duties.

Subsequently, the Government became uncomfortable with what they had agreed. Although they had said in your Lordships' House that they would be bound by the memorandum of understanding, they found that the terms of it, requiring the agreement of the trustees, represented an unpalatable condition. Therefore, the notion that the trustees would merely be consulted took the place of agreement.

This is a very real concern. I do not feel particularly comfortable, and I do not enjoy raising the matter at all. I believe, however, that when governments sign formal and important documents it is of the utmost and of crucial importance, if they are to continue to enjoy the trust which all governments need, that changes should never be made unilaterally and very particularly perhaps if those involved on the other side of the argument are trustees. That is my first point.

The second point relates to the cash payments themselves. I hope noble Lords will forgive me when I quote at some length from a letter written by Mr. Derek Fowler on 26th October to my right honourable friend the Secretary of State. He deals particularly with the cash payments made under the 1980 Act which, as I said, have played such a vital part in enabling the trustees to perform their duties. The letter states: The indefinite cessation of cash payments under the 1980 Act will accelerate the realisation of marketable assets to pay pensions. It is only on those assets that the Trustees can earn real increases. As those assets are realised the non-marketable Government IOU will represent a larger proportion of total scheme assets, thus diminishing the scope for real increases and disadvantaging pensioners". These are important words: I certainly did not envisage that cash payments would cease indefinitely when I signed the Memorandum, hence its reference to retiming". Mr. Fowler continues: I very much regret the need to have written to you three times in less than three weeks on fundamental differences of view between the Government and the BR Trustees. I saw the Memorandum of Understanding as a milestone on the way towards securing Government objectives to secure BR Pensions. The steady erosion of what I thought had been agreed seems to justify the sceptical approach taken by many of my colleagues and others to that Memorandum". The issue before your Lordships is of great importance. I have every sympathy with my noble friend. I add my congratulations on his birthday. What a wretched time he is having! I said to my noble friend that I hoped that he would be able to deal with the matters raised in this very serious letter from the chairman of the trustees. Because I did not wish to take any chance of misleading your Lordships, as recently as half-past two this afternoon I telephoned to ask if the concerns expressed so clearly in the letter had received an answer. They have not yet been answered although it may be that my noble friend is in a position still to quieten and relieve the anxieties of the chairman and myself.

I shall listen with great care and immense anxiety to what my noble friend has to say. I find it very difficult to accept the notion that a document signed by a Minister of the Crown can be changed, even for the weightiest of constitutional reasons, without agreement from the other side of the table. I say that particularly when it applies to trustees. I believe also that the Government have to be exceedingly careful before they upset arrangements which have worked well in the field of pensions, particularly in the light of recent experiences. On the phasing of those payments there are many people who feel that the security of their pension and their future depends.

We have had some rather strange debates. Part of the muddle and confusion has been caused by the fact that our proceedings have been so shunted together that we have had very little time to reflect upon, or to plan, anything. For any contribution that I have made to that confusion, I can only apologise. But on this issue I think that we can be exceedingly clear. It is not a party issue, but it does involve pensions, pensioners and their interests and, I believe, the long-term interests of the Government—and the regard in which they are held.

Lord Elton

My Lords, your Lordships will be grateful to my noble friend Lord Peyton of Yeovil for, on this occasion, addressing in detail the intentions of this amendment because that was singularly lacking in the previous three debates in which your Lordships appeared to be addressing yourselves to the desirability of defeating the Government or the desirability of demonstrating that that was something which your Lordships were constitutionally able to do.

Lord Marsh

My Lords, I am grateful to the noble Lord, but will he bear in mind that the debates to which we were responding have yet not appeared, as far as I am aware, in any published form? As the noble Lord, Lord Peyton, said, it was not possible for noble Lords seeking to move amendments even to get together to discuss those amendments because of the shortage of time. There has been confusion, but the idea that the Government emerge crystal clear or clean from it is a bit of an exaggeration. They must take some responsibility for the unique way in which this particular part of our debate has been conducted.

Lord Elton

My Lords, during the past 20 years I have been accustomed to the telescoping of business towards the end of a parliamentary Session. It is a tactical situation from which Oppositions, including that of my own party, always seek to gain the maximum. I congratulate the Opposition today on having gained a great deal. However, in the process nothing was said about the chapter and verse and the detailed effect of any of the three amendments which were debated. They were voted through on issues quite different from their precise effect. Therefore, I am grateful to my noble friend for, on this occasion, addressing the actual nuts and bolts.

Arising from that, I should like to ask my noble friend a question which, if it had not been for this long prolegomena, I should have asked before he sat down. He prefaced everything that he said by saying, "The Government propose to reject the amendment and the reasons are set out at No. 6", but those are the reasons for rejecting Lords Amendment No. 5. As I understand it, we are now addressing Lords Amendment No. 7, and the principal question that we are asking ourselves is whether the constraints of the new Section 52D, which puts a constraint on the Secretary of State laying an order before Parliament under Section 52B, should be applied. The questions that I want to ask my noble friend, if I have got this right, are whether the memorandum of understanding addressed that point and whether it is with the provision or the restriction of this power that the memorandum dealt. If not, everything that he said had no bearing whatever on the amendment which is before your Lordships. If it is, I shall stand corrected and I shall not be surprised because I find these things very difficult to follow. The noble Baroness, Lady Turner of Camden, certainly addressed that point. All that I am asking is whether my noble friend can show the way in which the provision which he seeks to obtain from the amendment would be protected if the memorandum of understanding was preserved in the way in which he says that it should be.

Lord Peyton of Yeovil

My Lords, I am so sorry if I have in any way misled my noble friend or quoted from the wrong bit of the wrong piece of paper. That is very easy to do under the present circumstances. What I should like to make absolutely clear is that the amendment which was passed in your Lordships' House had the following words in it. They are to be found on page 9 of the Marshalled List of amendments and Motions. Section 52D(2) states: The Minister shall not lay before Parliament a statutory instrument containing an order under section 52B unless he has first obtained the written agreement of those trustees that it is appropriate in the circumstances for the order to be made". Those words are supposed to be taken straight from the memorandum of understanding of which again, I am so sorry, but I do not have a copy with me at the moment. I am sure that one could readily be made available to my noble friend. I am sorry that I do not have it immediately to hand.

Baroness Turner of Camden

My Lords, the section of the memorandum of agreement is as follows: the Government remains committed to support payments to certain BR pension funds"— and this is the point The timing of such payments will be agreed with the Trustees and will take account of the absolute guarantee now being provided". That is the agreement to which this amendment refers. The subsection that I read out earlier states: The Minister shall not lay before Parliament a statutory instrument containing an order under section 52B unless he has first obtained the written agreement of those trustees that it is appropriate in the circumstances for the order to be made". Those are the two issues that are before the House.

Lord Elton

My Lords, the question before the House is, in fact, whether the agreement shall be written or verbal.

Lord Tordoff

My Lords, no. The question before the House is whether the agreement shall be adhered to or not. The memorandum of understanding says that there shall be agreement. The Bill as it would stand if the Commons amendment to your Lordships' amendment were carried would mean that there would be no such agreement but merely consultation. That is the difference between us.

I do not want to spend more than a minute or two on this, but it is a most important matter. It is a matter which is obviously worrying British Rail's pensioners. In the light of things that have been happening in the pensions world, as the noble Lord, Lord Marsh, mentioned at an earlier stage of our deliberations on the Bill, such as what has happened to the pensions of people who took management buy-outs with Astra who now find themselves without either a pension or redundancy payment, it is no wonder that people want to see things written on the face of the Bill which match the agreement that the Government made with the trustees. The letter from the chairman of the trustees is, I believe, a most powerful statement of the view that he takes.

It should be remembered that the trustees are to include a government nominee. One wonders why, since he has been put there to look after the Government's interests, that is not sufficient. I suspect that it is because the Government have suddenly found that, because he is a trustee, he has a fiduciary duty which might override the instructions given to him by the Secretary of State. I hope that we take this last chance of giving cast-iron guarantees to the people in the British Rail pension fund that the memorandum of understanding is going to be adhered to.

The Earl of Caithness

My Lords, my noble friend Lord Peyton said that this discussion raises serious issues. Indeed, it does, but it also raises very serious constitutional issues—if I may say so, constitutional issues in spades on the points raised by my noble friends Lord Renton and Lord Boyd-Carpenter earlier in the debate. The points that they made about the constitutional position of this House really do apply on this amendment. I agree that they did not apply on earlier amendments with the force with which they apply on this amendment, which is why did not make the point then, but I do make the point now to the House that these issues raise the question of the constitutional position of this House.

Perhaps I may deal yet again with the letter from Mr. Fowler. I dealt with this at length on Third Reading when my noble friend Lord Peyton was not here. It has been dealt with at length in the past few days in another place. If your Lordships will permit me to do so, I should like to deal with it yet again. There were four points in Mr. Fowler's letter. The first was that there should be consultation with the trustees and actuary on the terms and conditions of the guarantees. That was corrected on Third Reading and an amendment was introduced in another place. It is now before this House for agreement. I refer to Government Amendment No. 10.

The second point was that there was to be an indefinite cessation under the 1980 Act of payments for assets and that that would lead to a diminution of the scope for achieving surpluses. The Government have never proposed an indefinite cessation. Let me make that absolutely clear. I dealt with that on Third Reading and my right honourable friend the Secretary of State for Transport has dealt with it at length in the past two days, particularly yesterday. What we have done, and what is right, is that on 19th October we put to the trustees a proposal on this matter for discussion with them. We have not yet had a reply from the trustees. We look forward to receiving that reply.

The third accusation is that there has been a steady erosion of the memorandum of understanding. That, as your Lordships will know, is nonsense. We have said time and time and time again that we abide by the memorandum of understanding. My right honourable friend said it yesterday; I said it on Third Reading; I say it again today. What I can repeat, which is what I said on Third Reading, is that the chairman of BR and the chairman of the trustees have said that they abide by the memorandum of understanding.

The fourth point in the letter related to the effective control of the funds. The trustees asked for a guarantee, but they accepted that it cannot come without some government control. That is acknowledged in the memorandum of understanding. The Bill gives the Secretary of State the necessary powers, but that is all.

I hope that I have laid to rest the Fowler letter of 26th October. My right honourable friend the Secretary of State will be sending a full and detailed reply once this debate has been concluded, but there can be no doubt in Mr. Fowler's mind as to what that reply will be, given what I and my right honourable friends have said on a number of occasions between the receipt of that letter and today.

5.30 p.m.

Lord Peyton of Yeovil

My Lords, I am sorry to worry my noble friend, but this is a serious point and one which will weigh most heavily with me. I can assure him that only a few hours ago the anxieties to which I have referred were very much present in the trustees' minds: that the point raised in Mr. Fowler's letter had not been answered. They were left with the same anxieties.

I have one question, and the answer to this will influence me greatly. Is it the Government's intention to continue the phased payments as under the 1980 Act? If it is, my anxieties would to a large extent be allayed to a point where I would not wish to vote on this matter. If my noble friend cannot give that assurance, I must say that I go away from here profoundly uneasy.

The Earl of Caithness

My Lords, my noble friend does not worry me. If he will look at what I said on Third Reading, he will see the answer that I gave to that question. I have answered the question before. The situation has changed since the 1980 Act, because that Act did not give a guarantee. There is now a guarantee. That is what your Lordships wanted. That is what is on the face of the Bill. Therefore, under the new circumstances the phasing of the payments is the matter for discussion. We have put a proposal to the trustees. It is that proposal to which we return. My noble friend cannot say that the situation has not changed since the 1980 Act. It has changed it has changed to meet your Lordships' concerns.

I hope that my noble friend is more content about the situation. I do not deny that the trustees have anxieties still. Of course they have, because we are still in discussion with them; but on that point, the arrangements that we have now made for pensioners in BR's closed fund are exceptionally generous, and rightly so. They provide for a guarantee. They provide for a distribution of a surplus. The government payments will continue. It is the timing and phasing of those payments that is a matter for discussion.

Let me turn to the reasons for this discussion in view of what was said in another place, because last night the other place removed the amendment to Schedule 10 (pensions) requiring the written agreement of the trustees before any substitution order under Section 52B of the Transport Act 1980 is laid before Parliament. As I said before, we consider it totally wrong for the trustees to have an effective veto on this matter. That is the reason I gave previously for rejecting the proposal, and I repeat it. It raises two points of principle, far beyond railway pensioners.

First, so far as I know, it is unprecedented for a private person to be given an effective veto over the Government bringing forward secondary legislation. Secondly, the trustees are, in effect, seeking control over the timing of payments under the Transport Act 1980. I consider that they are asking too much in making that demand for a statutory veto in relation to public expenditure. I consider that those principles are clear. We debated them exhaustively on Report in this House. We debated them again on Third Reading. They were accepted when my right honourable friend the Secretary of State spoke in another place yesterday. It is not right for this House to challenge another place on this issue.

The amendment passed in this House on Report on 20th October was defeated last night by a substantial majority, at least by the standards of this Parliament. The Government did not just scrape through. Much of the three hours they spent yesterday afternoon debating the Allocation of Time Motion was devoted to these matters. The other place then spent nearly two hours debating this amendment. That is nearly five hours on this issue. It cannot be said that another place has not had the opportunity to debate and consider this matter. I leave this thought with my noble friend Lord Peyton and the noble Baroness, Lady Turner this is an amendment which raises constitutional issues relating to this House in a way that the previous amendments did not. We shall stick by the memorandum of understanding.

Baroness Turner of Camden

My Lords, to deal with the constitutional arguments first, I did not move Amendment No. 6A which probably would have raised constitutional issues. It is for that reason that I did not move it. Amendment No. 8A is merely: To move, That this House do disagree with the Commons in their amendment numbered 8 to the Lords amendment numbered 7 I should not have thought that that raised constitutional issues very different from the amendments we debated on the franchise question much earlier this afternoon.

I find it disappointing that the Minister should again repeat what he has said on previous occasions that if an amendment of this kind were accepted, it would be giving the trustees (external people) powers in relation to public expenditure. If the Government felt so strongly about that, why do they write into the memorandum of understanding the phrase: The timing of such payments will be agreed with the Trustees and will take account of the absolute guarantees now being provided". Unless we have something like that on the face of the Bill, people will continue to feel unsure and dissatisfied over prospects for their pension security. A great deal of legal advice has been given to everyone. It has certainly been given to pensioners and prospective pensioners. The legal advice that they have received is to the effect that they need to have the memorandum of understanding, or something like it, written into the Bill if they are to be sure for the future.

If the Government are now saying that they cannot do that at this stage, they are, in other words, saying that perhaps they do not want to abide by the agreements that they reached with the trustees, despite the fact that we have been told that it is binding. If that is so, it is a matter of government honour, a point to which the noble Lord, Lord Peyton, has already referred. I cannot accept what the Minister has said this afternoon. I am certain that it will not satisfy the pensioners.

The Earl of Caithness

My Lords, I know that the noble Baroness is corning to the end of her speech, but I wanted to interrupt her. We all make mistakes. I made a mistake. I apologise to the noble Baroness. She was dead right on the constitutional issue on Amendment No. 8A. The constitutional issue arises on Amendment No. 6A. I apologise to her, but it does not affect what I said about the amendment.

Baroness Turner of Camden

My Lords, I thank the Minister for making that statement. I am glad to hear it. I believe that the issue is important, as the noble Lord, Lord Peyton, said. He spelt it out with a great deal of clarity—

Lord Peyton of Yeovil

My Lords, will the noble Baroness make clear the fact that independently and separately she and I received the same advice from the Public Bill Office; that in proceeding with Amendment No. 8A no vital fundamental issue of constitutional importance would be raised? I did not mention that matter.

Baroness Turner of Camden

My Lords, that is so. The noble Lord and I were advised independently that there was no constitutional issue. I am glad to confirm that to your Lordships. That having been said, I should like to take the view of the House on the amendment.

5.40 p.m.

On Question, Whether the House do disagree with the Commons in their Amendment No. 8 to the Lords Amendment No. 7?

Their Lordships divided: Contents, 146; Not-Contents, 159.

Division No. 4
CONTENTS
Addington, L.	Healey, L.
Airedale, L.	Hilton of Eggardon, B.
Archer of Sandwell, L.	Hollick, L.
Ashley of Stoke, L.	Hollis of Heigham, B.
Attlee, E.	Holme of Cheltenham, L.
Aylestone, L.	Hooson, L.
Baldwin of Bewdley, E.	Houghton of Sowerby, L.
Banks, L.	Howell, L.
Beaumont of Whitley, L.	Howie of Troon, L.
Birk, B.	Hughes, L.
Bonham-Carter, L.	Hylton, L.
Boston of Faversham, L.	Hylton-Foster, B
Bottomley, L.	Irvine of Lairg, L
Bridges, L.	Jay, L.
Broadbridge, L.	Jenkins of Putney, L.
Brooks of Tremorfa, L.	John-Mackie, L.
Bruce of Donington, L.	Judd, L.
Callaghan of Cardiff, L.	Kagan, L.
Carmichael of Kelvingrove, L.	Kennet, L.
Carter, L.	Kilbracken, L.
Castle of Blackburn, B.	Lawrence, L.
Cledwyn of Penrhos, L.	Listowel, E.
Clinton-Davis, L.	Llewelyn-Davies of Hastoe, B.
Croham, L.	Lockwood, B.
Cross, V.	Lovell-Davis, L.
Dahrendorf, L.	Macaulay of Bragar, L.
Dainton, L.	McGregor of Durris, L.
Darcy (de Knayth), B.	McIntosh of Haringey, L.
David, B.	Mackie of Benshie, L,
Dean of Beswick, L.	McNair, L.
Donoughue, L.	Mallalieu, B.
Dormand of Easington, L.	Marsh, L.
Eatwell, L.	Mayhew, L.
Ennals, L.	Merlyn-Rees, L.
Ezra, L.	Milner of Leeds, L.
Faithfull, B.	Molloy, L.
Falkender, B.	Monkswell, L.
Falkland, V.	Monson, L.
Fisher of Rednal, B.	Morris of Castle Morris, L.
Fitt, L.	Mountevans, L.
Foot, L.	Mulley, L.
Gallacher, L.	Munster, E.
Geraint, L.	Murray of Epping Forest, L.
Gilmour of Craigmillar, L.	Nicol, B.
Glenamara, L.	Ogmore, L.
Gould of Pottemewton, B.	Palmer, L.
Graham of Edmonton, L. [Teller.]	Park of Monmouth, B.
Greene of Harrow Weald, L.	Parry, L.
Greenhill of Harrow, L.	Perry of Walton, L.
Greenway, L.	Peston, L.
Grey, E.	Peyton of Yeovil, L.
Hamwee, B.	Pitt of Hampstead, L.
Hanworth, V.	Plant of Highfield, L.
Harris of Greenwich, L.	Prys-Davies, L.
Harrowby, E.	Raglan, L.
Haskel, L.	Rea, L.

Redesdale, L.	Tenby, V.
Richard, L.	Thomson of Monifieth, L.
Rochester, L.	Thurso, V.
Russell, E.	Tonypandy, V.
St. John of Bletso, L.	Tordoff, L. [Teller.]
Seear, B.	Turner of Camden, B.
Sefton of Garston, L.	Wallace of Coslany, L.
Serota, B.	Waverley, V.
Shaughnessy, L.	Wedderburn of Charlton, L.
Shepherd, L.	Wharton, B.
Simon of Glaisdale, L.	White, B.
Slim, V.	Wilberforce, L.
Stedman, B.	Williams of Elvel, L.
Stoddart of Swindon, L.	Williams of Mostyn, L.
Strabolgi, L.	Wilson of Rievaulx, L.
Taylor of Blackburn, L.	Young of Partington, L.
Taylor of Gryfe, L.
NOT-CONTENTS
Aberdare, L.	Gisborough, L.
Abinger, L.	Goschen, V. [Teller.]
Addison, V.	Gowrie, E.
Alexander of Tunis, E.	Gray of Contin, L.
Allenby of Megiddo, V.	Gridley, L.
Archer of Weston-Super-Mare, L.	Grimston of Westbury, L.
Arran, E.	Hacking, L.
Ashbourne, L.	Hailsham of Saint Marylebone, L.
Astor, V.	Hanson, L.
Astor of Hever, L.	Harding of Petherton, L.
Auckland, L.	Harmar-Nicholls, L.
Barber, L.	Harmsworth, L.
Barber of Tewkesbury, L.	Hayhoe, L.
Bauer, L.	Henley, L.
Belstead, L.	Hesketh, L.
Bessborough, E.	Holderness, L.
Blatch, B.	HolmPatrick, L.
Blyth, L.	Hooper, B.
Boyd-Carpenter, L.	Hothfield, L.
Brabazon of Tara, L.	Howe, E.
Brentford, V.	Huntly, M.
Bridgeman, V.	Jeffreys, L.
Brougham and Vaux, L.	Jenkin of Roding, L.
Bruntisfield, L.	Johnston of Rockport, L.
Butterworth, L.	Kimball, L.
Cadman, L.	King of Wartnaby, L.
Caithness, E.	Knollys, V.
Caldecote, V.	Lane of Horsell, L.
Campbell of Croy, L.	Lauderdale, E.
Carnegy of Lour, B.	Leigh, L.
Carnock, L.	Lindsay, E.
Carr of Hadley, L.	Lindsey and Abingdon, E.
Chalker of Wallasey, B.	Liverpool, V.
Chelmsford, V.	Long, V.
Clanwilliam, E.	Lucas, L.
Clark of Kempston, L.	Lyell, L.
Cochrane of Cults, L.	Mackay of Ardbrecknish, L.
Colnbrook, L.	[Lord Chancellor.]
Constantine of Stanmore, L.	Macleod of Borve, B.
Cork and Orrery, E.	Marlesford, L.
Cranborne, V.	Melville, V.
Crathorne, L.	Merrivale, L.
Crickhowell, L.	Mersey, V.
Cumberlege, B.	Middleton, L.
Davidson, V.	Miller of Hendon, B.
Dean of Harptree, L.	Milverton, L.
Denham, L.	Monk Bretton, L.
Denton of Wakefield, B.	Montagu of Beaulieu, L.
Dixon-Smith, L.	Mottistone, L.
Downshire, M.	Nelson of Stafford, L.
Dudley, E.	Norfolk, D.
Dundonald, E.	Norrie, L.
Ellenborough, L.	O'Brien of Lothbury, L.
Elles, B.	O'Cathain, B.
Elliot of Harwood, B.	Onslow, E.
Elton, L.	Oppenheim-Barnes, B.
Erne, E.	Orr-Ewing, L.
Flather, B.	Oxfuird, V.
Fraser of Carmyllie, L.	Pearson of Rannoch, L.
Fraser of Kilmorack, L.	Pike, B.
Gainford, L.	Prentice, L.

Radnor, E.	Strathclyde, L.
Rees, L.	Strathmore and Kinghorne, E.
Renton, L.	[Teller]
Renwick, L.	Sudeley, L.
Rippon of Hexham, L.	Swinton, E.
Romney, E.	Tebbit, L.
Sainsbury of Preston Candover, L.	Teviot, L.
St. Davids, V.	Thomas of Gwydir, L.
Seccombe, B.	Torrington, V.
Selborne, E.	Trefgarne, L.
Shannon, E.	Trumpington, B.
Sharpies, B.	Tugendhat, L.
Shrewsbury, E.	Ullswater, V.
Skelmersdale, L.	Vaux of Harrowden, L.
Skidelsky, L.	Vivian, L.
Soulsby of Swaffham Prior, L.	Wakeham, L.
Stanley of Alderley, L.	[Lord Privy Seal.]
Stevens of Ludgate, L.	Wise, L.
Stodart of Leaston, L.	Wynford, L.
Strange, B.

Resolved in the negative, and Motion disagreed to accordingly.

5.50 p.m.

The Earl of Caithness

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 8 to the Lords Amendment No. 7.

Moved, That the House do agree with the Commons in their Amendment No. 8 to the Lords Amendment No. 7.—(The Earl of Caithness.)

On Question, Motion agreed to.

LORDS AMENDMENT

9 Schedule 10, page 173, line 26, at end insert:

("Government guarantees to trustees of certain new schemes

9A.—(1) Subject to the following provisions of this paragraph, the Secretary of State—

1. (a) shall give to the trustees of any new scheme which satisfies the conditions in sub-paragraph (3) below, and
2. (b) may give to the trustees of any new scheme which satisfies the conditions in sub-paragraph (4) below,

a guarantee in respect of their liabilities to make payments in respect of pension rights under the scheme.

(2) This paragraph applies in relation to a section of a new scheme as it applies in relation to a new scheme; and any reference in this paragraph to a new scheme, a closed scheme, a pension scheme or a member shall be construed accordingly.

(3) A new scheme satisfies the conditions in this sub-paragraph if—

1. (a) all the members of the scheme are persons whose pension rights under the scheme are pension rights which have been transferred, so as to become pension rights under that scheme, pursuant to an order under paragraph 4 above; and
2. (b) the rules of the scheme prevent any member of the scheme from being a participant in the scheme.

(4) A new scheme satisfies the conditions in this sub-paragraph if—

1. (a) the scheme is a closed scheme; and
2. (b) at the date on which the scheme becomes a closed scheme, all the members of the scheme are—
   1. (i) participants in the scheme to whom pension rights under the scheme are accruing by virtue of their employment with a relevant employer; or
   1133
   2. (ii) pensioners or deferred pensioners under the scheme whose pension rights under the scheme derive in whole or in part from their, or some other person's, participation in an occupational pension scheme as an employee of a relevant employer.

(5) Classes or descriptions of person may be prescribed whose membership of, or participation in, a new scheme is to be disregarded for the purpose of determining whether the new scheme satisfies the conditions in sub-paragraph (3) or (4) above.

(6) The power to give a guarantee under sub-paragraph (1) (b) above becomes exercisable in the case of any new scheme if the Secretary of State is of the opinion that it is desirable to give such a guarantee for the purpose of ensuring that the trustees of the scheme are, or will be, able to meet their liabilities to make payments in respect of pension rights under the scheme as those liabilities fall to be met.

(7) The Secretary of State shall consider any representations made by the trustees of a new scheme which satisfies the conditions in sub-paragraph (4) above concerning their ability to meet their liabilities to make payments in respect of pension rights under the scheme.

(8) Any guarantee under this paragraph shall be given in such manner, and on such terms and conditions, as the Secretary of State thinks fit; and, without prejudice to the generality of the foregoing provisions of this sub-paragraph, the terms and conditions on which a guarantee under this paragraph may be given include terms and conditions—

1. (a) with respect to any matter relating to payment under the guarantee, including—
1. (i) the circumstances in which payment under the guarantee falls to be made;
2. (ii) the amounts, or the method of determining the amounts, of any payments that fall to be so made;
3. (iii) the persons to whom any such payments are to be made;
2. (b) with respect to any matter relating to the management, affairs or winding up of the scheme, including—
1. (i) the policy to be followed in relation to the investment of assets held for the purposes of the scheme; and
2. (ii) the distribution of any surplus which may arise under the scheme; or
3. (c) requiring or precluding, or otherwise with respect to, amendment of the rules of the scheme;

and the sub-paragraphs of paragraphs (a) and (b) above are without prejudice to the generality of the preceding provisions of the paragraph in question.

(9) Any sums required by the Secretary of State to fulfil a guarantee given under this section shall be paid out of money provided by Parliament.

(10) In this paragraph—

"closed scheme" means a pension scheme—

1. (a) to which no new members are to be admitted; but
2. (b) under which pensions and other benefits continue to be provided;

"deferred pensioner", in the case of any pension scheme, means a person who has pension rights under the scheme but who (so far as relating to those pension rights) is neither a participant in the scheme nor a pensioner under the scheme;

"relevant employer" means—

1. (a) the Board;
2. (b) a wholly owned subsidiary of the Board; or
3. (c) a publicly owned railway company, other than a company which is wholly owned by the Franchising Director.")

The Commons agreed to the above amendment with the following amendment—

Subsection (8). line 2, leave out 'thinks' and insert 'may, after consultation with the trustees of; and the actuary to, the scheme in question, think'.

The Earl of Caithness

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 10 to the Lords Amendment No. 9. This amendment fulfils a promise which I gave the House on Third Reading last Wednesday.

Moved, That the House do agree with the Commons in their Amendment No. 10 to the Lords Amendment No. 9.—(The Earl of Caithness.)

On Question, Motion agreed to.

Lord Richard

My Lords, perhaps I may ask the Leader of the House whether he would be good enough to tell us what the Government now see as the likely timetable for the further procedure as regards this Bill. The tapes this evening talk of the Government's timetable being in great turmoil as a result of your Lordships' decisions this afternoon. The House is entitled to know the Government's thinking and when we are likely, if we are likely, to have the Bill before us again.

Lord Wakeham

My Lords, I am most grateful to the noble Lord the Leader of the Opposition for asking that question. I suggest that the House should adjourn during pleasure until 7 o'clock in order that we may have some discussions through the usual channels as to the best way forward.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 5.52 to 7 p.m.]