HL Deb 17 July 2000 vol 615 cc703-23

(" .—(1) The Authority shall publish regular performance measures on all scheduled passenger services.

(2) For franchised services, the Authority shall maintain a public performance measure covering all scheduled services.

(3) For services not subject to franchising agreements, the Authority shall procure from operators and their employing authority equivalent information and publish it alongside those of franchised services.

(4) For international services, performance information applies to the UK part only.

(5) Exemptions from performance measures may be granted to heritage railways.

(6) The Authority shall publish minimum standard levels for each franchise operator together with levels of performance at which penalties apply and at which a franchise holder may be—

  1. (a) deprived of his franchise, or
  2. (b) prevented from applying for other franchises for specific periods.").

The noble Lord said: In moving Amendment No. 286 I shall speak also to Amendment No. 286A. My concern in tabling the amendment is that in the past I have perceived a great gulf between what the previous government and the franchising directors have said about what a wonderful passenger service they were creating and what it is like to travel on such a service.

We are getting better now at measuring delays, cancellations and overcrowding. However, one still reads pretty horrendous stories. I am a little concerned at the response from my noble friend to a Written Question I tabled which asked what levels of poor service to passengers would exclude franchise operators from being awarded new or extended franchises. My noble friend responded, stating that past performance is one of many criteria that will be taken into account. Is that enough?

The SRA has recently put on its website a rather better and more comprehensive performance measurement, certainly of cancellations and delays. I thought that it would be useful to try to structure an amendment to put that on the face of the Bill. I refer to paragraphs (1) and (2) of Amendment No. 286. I hope that it will also include overcrowding, which can be solved simply by building more trains. That may sound trite, but I think that is so.

I also think the provision should be extended to services which are not subject to franchise agreements. I refer, for example, to Heathrow Express. I expect it is very reliable but there is no reason why the SRA should not report on it. It should be required to provide reports. I refer also to Eurostar. I suppose I tabled the amendment having got up early one morning to catch the 6.15 train from Waterloo only to find that it had been cancelled. I wondered who measures and publishes performances of the Eurostar trains.

I felt that heritage railways should probably be exempt. Then I thought that, possibly in paragraph (6) of the amendment, there must be a standard below which the franchisee should not, under any circumstances, be awarded another franchise. I do not know what that standard would be. However, if we are to attract more people on to the railways, we should give them information, comfort and the knowledge that they will get from A to B with as much reliability that we can achieve.

I turn briefly to Amendment No. 286A. This idea goes back to Amendment No. 283, tabled by the noble Baroness, Lady Thomas of Walliswood, concerning unmet needs for railway services. The Railway Reform Group produced an interesting document suggesting that many more people would be attracted to using the railways if there was a clockface departure timetable throughout the day, including the rush hours.

That happens in the Netherlands and Switzerland. It has proved extremely successful in attracting more people to rail on the basis that they do not need to consult a timetable. For people who are not used to them, timetables can be difficult to read. If trains to London, Manchester or Derby depart at a certain time past the hour or half hour throughout t he day, that would provide a useful means of attracting more people to use the trains. This adds to the matters which the Strategic Rail Authority should be considering to encourage more people to use rail. I beg to move.

Earl Attlee

I rise to speak to Amendment No. 287, tabled in my name, in this grouping. Clause 206(2) sets out the objectives of the authority in exercising its functions. It includes the promotion of through ticketing between passenger service operators. However, it does not appear to cover through ticketing across different forms of transport. The amendment makes explicit the need to promote such through multi-mode ticketing schemes. It also provides for the promotion of integrated information and ticket booking facilities.

The integration of information and booking facilities is a vital element in a modern, integrated transport system. With the sophisticated technology now available, it should be possible for passengers to obtain from one outlet information as to the scheduled times of trains, up-to-date information on their running, the range of fares and the cheapest fare for the particular journey, similar information on the bus and other connections and the ticket itself. It should be a major task of the authority to encourage such systems.

11 p.m.

Lord Macdonald of Tradeston

These amendments all have the laudable aim of making journeys easier and standards more transparent. For various reasons though we consider them unnecessary or undesirable.

I shall start with the amendment in the name of my noble friend Lord Berkeley. He is totally right that good information about the standards that the railway service providers are delivering is worth while, even though I do not agree that the amendment itself would be helpful. The shadow Strategic Rail Authority publishes regular bulletins of performance information, including the standards set and outputs against them. It has set a public performance measure for franchised services which includes the performance of all trains, on all days, with no exceptions. That is a clearer, more meaningful measure than the previous Passenger's Charter.

Franchise agreements include a threshold level of operational performance below which the franchising director has the power to terminate the agreement automatically. And franchise operators' current performance is a key factor that is being taken into account by the shadow SRA when considering bids under the franchise replacement process. Obligations to publish performance information for franchised services, and to take current performance into account when re-negotiating existing franchises, are included in our instructions and guidance to the franchising director. We expect to publish similar requirements for the SRA.

The existing level of standard setting, monitoring and reporting in respect of franchised operators therefore already covers what my noble friend wishes to put in the Bill. I do not believe that the amendment is necessary. Moreover, to add this level of detail to the Bill would be restrictive. The details of publication of information is properly a matter for the SRA to manage, with any directions and guidance from the Secretary of State as he may deem necessary.

The amendment also covers non-franchised services and for those a different set of circumstances applies. There will not be the same public interest, in a regulatory sense, to put a requirement on the authority to publish performance information on a statutory basis. That is consistent with the position in other transport industries such as aviation.

Amendment No. 286A is rather different in nature and would mean that, when promoting through journeys by rail, the SRA would also have to promote what are known as "clockface timetables"; that is to say, timetables and connections on the basis of regular patterns of service. The SRA will be a strategic body. Because of its responsibility for franchising, the SRA will have a major influence on the timetable. Franchisees must deliver a timetable that incorporates the agreed passenger service requirements (PSRs), including connections where those are franchise conditions. However, it would not be appropriate for the SRA to have the specific duties in respect of the timetable contained in Amendment No. 286A. That level of detail is for the industry to undertake within the regulatory and contractual framework.

At a more practical level, services should relate to demand rather than a specified regular pattern. Co-ordination of a regular timetable on a national basis would be an onerous task, with no guarantee of success. Regular patterns may disadvantage customers on less well used services. Where a regular pattern of service is desirable, the industry's timetable planning process should be sufficient to achieve the benefits for the passenger. The National Timetabling Conference, set up by the industry after the first Rail Summit, is providing a mechanism for balancing the previously fragmented process for timetable planning. The important thing is to maximise capacity through good "slot management".

Amendment No. 287 would mean that when promoting through journeys by rail, including through ticketing, the SRA would also have to promote inter-modal ticketing and the integration of the railway information and ticket booking facilities. I welcome the approach to integrated transport of Members opposite. Under Clause 204(c) it is a primary purpose of the SRA to contribute to the development of an integrated transport system. There is therefore no need to specify on the face of the Bill all the aspects of integration to which the SRA is to have regard.

I can assure noble Lords opposite and my noble friends that integrated ticketing and integrated information are a vital part of integrated transport. The SRA will promote such schemes, which are growing in number. For example, we have asked the franchising director, when he examines franchise replacement bids, to give due weight to the extent to which integrated transport measures both within the rail network and between rail and other transport modes can be achieved, including integrated public transport information.

As regards integrated ticketing, my noble friend Lord McIntosh of Haringey referred in Grand Committee to examples of multi-modal ticketing schemes in over 130 towns and cities, so such schemes are already quite commonplace. We should like to see them extended. As for integrated information, later this year we shall be launching a single telephone service to give people timetable information on all forms of public transport. That will meet another of the commitments in our transport White Paper.

I fully understand the points made by noble Lords opposite that, having moved towards integrated ticketing and integrated information, the next step is to bring the two elements together to provide passengers with a one-stop shop.

Commercial factors are already encouraging train operators to address the problem that rail information and ticketing is not readily available from a single source. A number of train companies' Internet sites already provide a combined information and booking facility. Examples of online booking services offering discounted tickets and information include those offered by First Great Western, First North Western and Virgin.

As far as concerns government action, a single telephone service for public transport timetable information is a good start. We shall build on this in the future, continuing to work with operators and local authorities to exploit the Internet. The Government's objective is a comprehensive travel information and retailing service. In the light of my response, I hope that noble Lords will not press their amendments.

Lord Berkeley

I am most grateful to my noble friend for his comprehensive reply. However, I was surprised when he said—I believe I recall his words correctly—that he did not think there was a public interest issue in knowing about how many cancellations or delays there were for Eurostar or the Heathrow Express. It seems to me that members of the public are very interested in knowing whether or not such trains run on time. It is perhaps something that will have to be done through persuasion, if there is no legal means of doing so. I believe that that could be a big hole in a totally integrated transport service. But having said that, I am grateful to my noble friend and beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 206 [Manner of exercise of functions]:

[Amendments Nos. 286A and 287 not moved.]

Lord Berkeley moved Amendment No. 288: Page 121, line 4, at end insert— ("( ) to promote measures designed to facilitate the transport of goods by rail and its integration with other transport modes,").

The noble Lord said: There are four amendments tabled in my name in this grouping. Amendment No. 288 is designed to provide the same information requirement of the SRA—namely, to promote measures designed to facilitate the transport of goods by rail"— as set out in the previous paragraph of the clause in respect of passengers. I tabled this amendment as a matter of completeness.

I turn next to Amendment No. 289. I felt that experience in the industry during the past five years has shown that, if and when growth occurs, there is a distinct danger that there will not be enough people, equipment or trained staff to enable such growth to take place. The best example is probably in signalling. Two years ago, Railtrack announced such a shortage of signalling staff that it had to have its signal systems designed in Australia. However, a year later the signalling industry in this country was laying off staff for lack of work. Indeed, we are not quite sure where we are at present.

It would be nice to think that the SRA could try to encourage—I put it no stronger—a reasonable level of development of businesses by gently increasing orders, if that is appropriate, be it in signalling or in anything else. It would be of great benefit to the industry and is something that would fit in very nicely with the strategic role of the SRA.

Amendment No. 292 is another attempt to ensure that the SRA and the local authorities work together in the local transport plans and that they consult widely and try to achieve consensus. It also seeks to ensure that the SRA is given a clear duty to acknowledge the close relationship of its policies with those of local transport plan producing authorities, and to co-operate with them.

Amendment No. 293 puts the same argument in respect of regional transport strategies. It is terribly important that everyone works together. The SRA is on top, so to speak, but it is important that it works together with the regional and local authorities. I beg to move.

Baroness Thomas of Walliswood

I support the amendments. They give an indication of what one hopes to see, not so much in the strategy itself but in the way in which the SRA conducts its business on a day-to-day basis. They represent patterns of behaviour, attitudes and approach which would enormously help in reducing the boom/bust syndrome which has bedevilled rail development in the past few years.

Lord Macdonald of Tradeston

These amendments seek to add to the areas that the authority must consider when exercising its functions with a view to furthering its purposes.

Amendment No. 288 would require the authority to facilitate the transport of goods by rail and the integration of goods with other transport. As I have said, we have already given the SRA specific purposes to promote the use of the railway network for the carriage of passengers and goods and to contribute to the development of an integrated system of transport. It will then have to develop particular strategies to carry out those purposes and everything which it does will need to be with a view to furthering those purposes. An obligation to promote measures designed to facilitate the transport of goods by rail and its integration with other transport modes seems somewhat superfluous. It would not add to the existing obligations on the authority to have proper regard to freight.

Amendment No. 289 would require the authority to enable persons providing services and equipment to the railways to plan their businesses with a reasonable degree of assurance. I have sympathy with the needs of the supply industry, even if I do not believe that we should add the amendment to the Bill. Clearly we want healthy businesses to supply service providers, to keep our railway running and to help it grow. The authority will give strategic direction to the industry, which has been lacking since the industry was privatised. This will provide certainty to business and enable both operators and suppliers to plan their businesses with more confidence.

I do not believe that it would be appropriate to extend the authority's remit in the Bill specifically to include railway suppliers. Suppliers are commercial businesses which are not subject to the regulatory framework that applies to the operators. Their success depends upon the general health of the railway industry and the ability of railway operators to develop and maintain effective business with suppliers. The Bill gives the authority a wide remit to develop and promote the railway, and gives it specific obligations in relation to how it regulates operators. Provided operators' businesses can be planned with a reasonable degree of assurance—and with the longer franchises that the Shadow Strategic Rail Authority is seeking, they will be able to plan their businesses over a more credible timescale—the operators should be able to plan effective business with suppliers, and give some degree of the assurance to the suppliers which my noble friend seeks.

Amendments Nos. 289A and 292 require the authority to facilitate the implementation of, and to have regard to, local transport plans. Amendment No. 293 requires the authority to have regard to the regional transport strategies. Of course, we expect the SRA to formulate its strategies and to exercise its functions in the light of local transport plans and regional strategies. However, the process needs to be a two-way one, so that local plans and strategies are consistent with the national framework. This is a task for local authorities as well as the SRA. This is why it is preferable to deal with the relationship in our guidance on local transport plans, and in directions and guidance to the SRA, rather than on the face of the Bill as the amendments seek to do. There are, of course, a lot of plans to which the SRA should have regard and it would be inflexible and unwieldy to try to specify them all in the Bill. Moreover, it would cast doubt on the status of any which were not so specified.

The authority's role will be to promote rail use within an integrated transport system. This is a national role. Consistent with this national framework the SRA will take account of the views of local and regional bodies. This will involve extensive consultation to identify the opportunities for rail.

I can assure noble Lords that this process of consultation is already under way and the shadow SRA is devoting considerable effort to developing relationships with local authorities. The shadow authority is starting to receive local transport plans and to assess them, and will continue to consider all local transport plans now that the new regime is in place. On franchise replacement, the Franchising Director has an extensive programme of consultation. Local authorities' aspirations are being cross-checked against franchise owners' bids. The shadow SRA is also involved in giving written and oral evidence on regional planning guidance and in developing a dialogue with regional development agencies. I hope that, given those considerations, my noble friend will withdraw the amendments.

Lord Berkeley

As ever, I am grateful to my noble friend. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 289 and 289A not moved.]

11.15 p.m.

Earl Attlee moved Amendment No. 290: Page 121, line 19, after first ("it") insert ("and").

The noble Earl said: In moving Amendment No. 290 I shall speak also to Amendments Nos. 291 and 296 to 299.

Clause 206 gives the Strategic Rail Authority power to invest in bodies corporate. Amendment No. 290 seeks to remove this power. The authority is supposed to be a strategic planning body. What on earth is it doing taking shares in companies? There is no discernible need for such investment in order for the authority to be able to perform its duties. Worse, to acquire shares in this way could give rise to serious conflicts of interest.

Turning to Amendment No. 296, Clause 210 is a crucial clause in the Bill. It provides wide-ranging powers for the SRA to give financial assistance and secure improvements to the railway. Through this amendment, we aim to find out from the Government what exactly this role involves. Our concern is that the clause has a potential to undermine the commercial judgments of Railtrack and the train operators. The Strategic Rail Authority must take a strategic role, and we are concerned that this clause allows it to interfere in the day-to-day operation of the railway.

We are also concerned that the Secretary of State will have considerable powers to give directions to the SRA. The clause is so broadly drawn that we need Ministers to clarify exactly when they would give such directions and we seek assurances that the Secretary of State's involvement would be only in limited circumstances. Perhaps it would be helpful if the Minister could give some examples.

Amendment No. 296 would ensure that any involvement by the SRA would be on the basis of competitive tendering, ensuring that it does not step in at any opportunity but only when there genuinely is no alternative or when necessary to deal with a possible market abuse situation.

Amendment No. 297 follows on from the previous amendments and seeks to limit the wide powers of both the Secretary of State and the SRA and to ensure that the railway industry retains the commercial freedom to run and develop the railway. We are seeking a reassurance that the Government are not intending to use this clause to intervene in the day-to-day running of the railway. We believe that privatisation has brought considerable improvements to the running of the railway and levels of investment have doubled since British Rail days. That can continue only if there is stability and the railway industry is left to make its own judgments on the interests of passengers, to whom it is closest. I beg to move.

Lord Macdonald of Tradeston

These amendments challenge the SRA's powers to give financial assistance to the railway industry. Perhaps I may deal first with some specifics and then turn to the wider issues.

Amendment No. 297 would remove the power of the authority to give grants, make loans, give guarantees and invest in bodies corporate. Bluntly, this would emasculate the SRA. We intend the authority to be the main conduit for franchise payments, for freight grants and for the rail passenger partnership scheme, all of which are inherited functions that involve paying grants. In addition, it must be able to support the industry, should this be necessary, when there is no other viable source of strategic investment.

Amendment No. 296 would require the authority to run a tendering exercise for any financial assistance which it gives. But this is unnecessary and to some degree inappropriate. The authority already has a duty to exercise its functions in the most economic and effective manner. That may often involve a process of competitive tendering; sometimes it will not—for instance when the SRA pays freight grants in accordance with a published grant scheme.

Amendment No. 299 is a requirement that any agreements made by the SRA must be consistent with its strategies. This also is unnecessary because Clause 206(1) requires the authority to exercise its Clause 206 powers in accordance with the strategies it has formulated.

Amendments Nos. 290, 291 and 298 would remove the power for the authority to enter into agreements, or other arrangements, to invest in bodies corporate as a means of financial assistance. That restriction would be undesirable because it would limit the flexibility available to the SRA and reduce its ability to invest in the railway itself, or to get others to do so.

Amendment No. 298A would insert a provision that the authority may only put terms on its financial assistance provided that these, do not interfere with commercial practices which are essential to industrial investment". That is unnecessary as Clause 206(2)(f), which determines the manner in which the authority must exercise its functions, states that it must, enable persons providing railway services to plan the future of their businesses with a reasonable degree of assurance". That incorporates the concept behind the amendment and would protect commercial practices.

Flexibility is at the heart of the clause. We want to ensure that public sector financial support is available from the SRA when it is needed in whatever form is most appropriate to the particular case. That is why the powers in the clause are wide and extend to grants, loans, guarantees and direct investment.

I should make it clear that we do not envisage any change in the existing system of franchise payments to passenger train operators. That is how the core of all public funding reaches the railway network and it will remain so. But the franchising system was originally designed to support a "steady state" railway. It is not necessarily the only way, or perhaps in some cases even the best way, to promote investment in, and development of, the network. We want the SRA to be able to develop new approaches to investment where they seem worthwhile and we want the Bill to enable it to do so.

I am reluctant to offer specific examples. But there is nothing unique about the idea that investment by the public sector in projects may help to lever in private funding. In principle, it provides some degree of assurance to investors and can help to bridge any gap between the scale of investment required and the likely returns on that investment. That may be particularly relevant in the railway industry where major capital projects require all the investment up front and pay back literally over decades. I ask the noble Earl to withdraw the amendment.

Earl Attlee

I am extremely grateful to the Minister for that response. I shall read carefully what he has said. I may return to the matter. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 291 to 293 not moved.]

Clause 206 agreed to.

Clause 207 [Directions, guidance and advice by Scottish Ministers]:

Baroness Thomas of Walliswood moved Amendment No. 294: Page 121, line 45, leave out ("or with the Authority's financial framework").

The noble Baroness said: In moving Amendment No. 294, I shall speak also to Amendment No. 295. Clause 207 allows Scottish Ministers to give directions and guidance to the authority in relation to passenger rail services which start and end in Scotland and for passenger rail services which either start or end in Scotland, and advice to the authority in relation to services which either start or end in Scotland and are provided under a franchise agreement. The authority can decide not to comply with these directions. Amendment No. 295 adds at the end of Clause 207, Where the Authority propose not to comply with the directions or guidance of Scottish Ministers they shall notify the Scottish Ministers of this and their reason for so doing", and, Where Scottish Ministers do not agree with the reasons given by the Authority for not complying with their directions they may refer the matter to the Secretary of State".

There has been correspondence between the Minister's colleague in another place, Mr Keith Hill, and the passenger transport authority most closely associated with the amendments. I understand that that passenger transport authority is satisfied that the amendments have gone as far as they can go. But for the benefit of those who may want to know more, and to know more from the public record, about what has happened in relation to the amendments, I should be most grateful if the Minister could, as it were, read into the record some of the reasons that his colleague gave to that passenger authority for not accepting the amendments and the assurances that he was able to give on that matter. I beg to move.

Lord Macdonald of Tradeston

As requested, it may be helpful to explain why the devolution provisions in the Bill are constructed as they are. We have given considerable thought to the issues raised, which, as has been said, were also raised in another place, but we and the Scottish Ministers remain assured that the present construction is both the most workable and the most effective in terms of devolution.

The Committee will be aware that railways remain largely a reserved matter. The reason for that is to ensure that there is a Great Britain strategic policy framework for railways. That is a very real concern. The fragmentation brought about by privatisation left the industry with no direction and no ability to develop the network as a whole to respond to increasing demand, still less to encourage demand. The problems which that structural weakness has created are one of the main reasons that we need Part IV of the Bill. Where devolution is appropriate—for example, for roads—we have provided for it, so it should not be thought that the reservation for railways is due to any lack of confidence in devolution; far from it. In the case of railways, even within the reserved framework we have agreed an appropriate level of devolution, but we must not lose sight of the overarching need for a national infrastructure in order to ensure that we meet the needs of the whole nation.

It was against that background that, during the passage of the Scotland Act, the "McLeish settlement" was agreed. That settlement, among other matters, provided for the Scottish Ministers to have power to issue directions and guidance to the SRA about passenger services which start and end in Scotland—essentially the services currently provided by Scotrail. The settlement also promised that the Scottish Ministers would have the power to give directions and guidance on Scottish sleeper services, provided that there was no impact on other passenger or freight services or on the non-Scottish budget. Furthermore, it was agreed that the Scottish Ministers should be able to give what was then called "non-binding guidance" on other cross-Border services. In the Bill that is called "advice". I am happy to say that the Bill delivers on those promises.

In all cases it was agreed that the powers of the Scottish Ministers should be exercised "within the GB policy framework". It was agreed between ourselves and the Scottish Ministers that the best way to preserve the GB policy framework was to ensure that directions and guidance from the Scottish Ministers were not inconsistent with directions and guidance from the Secretary of State. That is not a watering down of the McLeish settlement. Scottish Ministers will be addressing Scottish specific issues and they are content that we have delivered on the McLeish settlement.

I turn to the specific concerns addressed by the amendments. Amendment No. 294 would remove the requirement that the SRA may not comply with the Scottish Ministers' directions and guidance when those conflict with the authority's financial framework. Amendment No. 295 would set up a new structure so that where the SRA decides there is a conflict between the Scottish Ministers' directions and guidance and those of the Secretary of State, the Secretary of State is brought in to arbitrate.

I should like to address Amendment No. 295 first. The concern, I understand, is that it is felt that the unelected authority should not be able to judge between two conflicting sets of directions and guidance from elected Ministers and act, thereby, as "judge and jury". However, I consider that this is a misapprehension. The SRA can in no way act as judge and jury. The Bill is crystal clear: the SRA must carry out the Scottish Ministers' directions and guidance unless they are inconsistent with those of the Secretary of State, in which case they must not carry them out. There is no discretion here; no power of an unelected body over an elected one. The SRA simply looks at the facts and takes a view of what it must do on the facts and only on those facts.

In reality, I expect that this position will never arise because the Secretary of State and the Scottish Ministers are not likely to be giving directions, guidance, or advice without first talking to one another. If, however, there is any doubt about a matter, the SRA will always be able to ask the Secretary of State or the Scottish Ministers for clarification. However, should the SRA interpret its directions, guidance or advice in a way in which no reasonable body could, anyone adversely affected may seek a remedy in the courts. This is far more effective devolution than giving additional arbitration powers to the Secretary of State. I can imagine how that suggestion would play in the Scottish Parliament.

Moreover, as I have already suggested, the case of conflict between two sets of directions and guidance is hypothetical and all parties will be able to ensure that it does not happen.

Amendment No. 294 looks to the financial framework and takes away the provision that the authority may not carry out the Scottish Ministers' directions and guidance where they conflict with the SRA's financial framework. Perhaps it may help noble Lords if I explain that the financial framework is another form of direction from the Secretary of State. It has been separately mentioned in the Bill because it does not deal with strategies and only indirectly with the manner in which the SRA is to carry out its functions and the other directions and guidance powers are linked to the SRA's strategies and functions.

The financial framework will be a type of direction which specifies the rules and principles which the authority is to observe when exercising its functions in relation to financial and employee matters. It will incorporate such housekeeping matters as salaries, pensions and budgetary management. It will be an essential document in order to ensure the proper working and accountability of the authority as a non-departmental public body, and, frankly, it is normal good management practice for these matters to be directed by one person. As the SRA remains a reserved body, it is proper that the Secretary of State be the person to give directions about these issues. This is entirely consistent with the McLeish settlement and the Scottish Ministers are content with this approach. As the matters covered are housekeeping, I can reassure noble Lords that the possibility of any inconsistency with the Scottish Ministers' directions and guidance, which are about railway services, is very remote.

1 apologise for the length of my reply, but I was invited to respond so that these matters could be placed on the record. I hope that, with those reassurances, the noble Baroness will feel able to withdraw her amendment.

11.30 p.m.

Baroness Thomas of Walliswood

I am grateful to the noble Lord for his wide and precise response to my question and for the fact that he was willing to read it into the record. I beg leave to withdraw the amendment.

Lord Lyell

Before the noble Baroness withdraws the amendment, perhaps I may ask for clarification. As one who uses sleeper and other rail services which begin and end in Scotland, can he enlighten me on whether there is any possibility of a clash taking place between Scottish Ministers and the Secretary of State as regards aspects such as financing, particular services and timing?

The Minister will remember that I served on a committee that looked into the redevelopment of Waverley station in Edinburgh. We were told that, over the coming four to five years, Great North Eastern Railways were hoping to double the number of trains departing from Waverley for King's Cross.

Can the Minister tell me whether it would be possible for clashes to occur as regards departures and so forth between the Secretary of State and Scottish Ministers?

Lord Macdonald of Tradeston

I do not think that at this late hour it would be prudent to speculate on where future clashes might occur. The noble Lord has already pointed out that the areas where that form of guidance will be most appropriate will be on which days and times services will run, stopping places and so forth. Those are the normal operational functions of a train service and would be subject to discussion, consultation and resolution.

Amendment, by leave, withdrawn.

[Amendment No. 295 not moved.]

Clause 207 agreed to.

Clauses 208 and 209 agreed to.

Clause 210 [Financial assistance etc.]:

[Amendments Nos. 296 to 299 not moved.]

Lord Berkeley moved Amendment No. 300: Page 123, line 16, at end insert— ("( ) The repeal of sections 137 and 139 of the Railways Act 1993 (as set out in Schedule 30) shall not come into effect until similar or wider schemes have been brought into operation; and the Authority shall consult the industry on the content of such schemes.").

The noble Lord said: In moving this amendment, it may be for the convenience of the Committee if I speak to Amendments Nos. 340 and 341.

Amendment No. 300 is a probing amendment. Sections 139 and 141 of the Railways Act 1993 provide the framework for giving freight facilities and track access grants for rail freight. Schedule 30 to the Bill repeals those sections. The amendment seeks confirmation from my noble friend the Minister that they will not be repealed until similar provision—it is to be hoped bigger and better—is put in their place and that consultation will take place first. I understand that the SRA is about to begin consulting on such provision. Nevertheless, it would be sad if there were a one or two-year gap between the repeal of Sections 139 and 141 of the Railways Act and the introduction of replacement provision.

Amendment No. 340 is of more substance. It proposes a rail freight council alongside the rail passenger council although much smaller. The amendment states that the council should be statutory and that it should provide representation for the industry.

The reason behind the amendment is that, whereas the passenger councils are statutory consultees and can find out about things, in the rail freight industry the only people who find out what is going on are the train operators, and not all train operators. There is a particular piece of information about terminals which is available only to members of the so-called "10 per cent club"—those who have 10 per cent or more of the business. In other words, the customers, the hauliers, the logistic service providers and others have no right to consultation on matters affecting the provision of the services. They must rely on their own efforts or the pressure of trade organisations such as the Rail Freight Group or the Freight Transport Association. But neither of those organisations has a locus.

The approach is not working. I shall not bore the Committee with too many examples; perhaps I may give just two. The last site which might have been suitable for a railroad interchange at Holyhead was a passenger siding. The local authority wanted to close the siding under a compulsory purchase order and build a new road to the port, which we thought odd as the Welsh authority's policy was to encourage rail freight. We only heard about it through some friends on the passenger consultative committee and we are still pursuing the matter. There is no locus for anyone in the freight industry to protest against that proposal, any more than there is in relation to the sale of infrastructure.

A network change proposal may again seem somewhat abstruse to Members of the Committee, but there is a proposal to close a rail freight terminal in Aberdeen and build two more in its place. The one that is being closed is directly next to the port, and the port says that it wishes to start rail freight. Again, the only two organisations that are consulted on that proposal are Railtrack and EWS railway, both of which, I believe, have a commercial interest in the new development.

That is not good enough if the wish of the Government is to get more freight onto the railways. It will mean more operators and more customers. It is a wide-ranging and a disparate industry—in the nice sense of the word. Therefore, I tabled the amendment with a view to trying to create something along the lines of the passenger council but very much smaller with a small secretariat and the members of the council not being paid, which I thought was appropriate.

Amendment No. 341 is an attempt to put into words a duty on Railtrack and others who may wish to close lines, services or anything else to consult with the rail freight council, assuming it exists, before the closure. That sad experience is all too common at present. I beg to move.

Earl Attlee

I support the noble Lord, Lord Berkeley, in his Amendment No. 340 and wish that I had thought of it myself. He has made some powerful arguments and I look forward to the Minister's response.

Baroness Thomas of Walliswood

I share the envy expressed by the noble Lord, Lord Attlee, of the excellent scheme thought up by the noble Lord, Lord Berkeley.

Baroness Wilcox

I tabled Amendment No. 357A on behalf of private consumers, to deal with concerns raised recently that current legislation is inadequate for ensuring that passengers are properly informed and consulted about service alterations. There was a reluctance recently to display notices at railway stations in relation to Thameslink 2000 closures—as had previously been the custom and practice. Although the authorities were eventually persuaded, some notices were in less than satisfactory locations. That episode highlights the lack of a statutory requirement to ensure notification of service changes.

Although changes may be advertised in local newspapers, the posting of notices at stations is optional. How many people read their local newspapers to learn of changes to their rail services? Such information should be available at the point at which the public regularly use the service. Passengers ought to be fully informed about changes to publicly funded services and have the opportunity to comment.

11.45 p.m.

Lord Whitty

Amendment No. 300 relates to payments and grants for freight and seeks to keep the 1993 Act regime, which is to be repealed by this Bill, in place until the authority has set up a new scheme—which it will have the powers to do under Clause 210. It is the intention of the Government and the authority that there should be no hiatus in the provision of grants for freight, so I am happy to give my noble friend the reassurance he seeks.

I have greater difficulty with Amendment No. 340, for the establishment of a rail freight council more or less along the lines of the rail passengers council. Rail freight is not in the same position as rail passenger services, yet the amendments would give the proposed freight council much wider powers than those in the Bill for the rail passengers council.

The nature of freight services and the relationship between the customer and the service provider is different from that of passenger services. Freight operators already have a strong incentive to listen to their customers and resolve any problems they may encounter. The role of the rail passengers council and committees will be to speak up for passengers. Freight services tend to be used by private companies that are better placed to represent themselves and to take up complaints directly with the freight operator concerned. My noble friend is a good example of vocal advocacy for the industry. I do not see an equivalence between freight and passenger services in the way that my noble friend suggests.

My noble friend's amendment would also give the rail freight council power to specify that it must be consulted on any matter which it considered relevant to its duty. That is a very wide remit, which goes beyond any equivalent powers in relation to passenger services that are enjoyed by the rail passengers' council or its committees. To make such a council a statutory consultee on all matters relating to rail freight—major and minor closures, infrastructure sales, network changes and so on—goes rather further than the equivalent on the passenger side and may place an inappropriate and onerous burden on the authority. Therefore, I cannot accept my noble friend's amendments as drafted.

Amendment No. 341 goes on to require the authority to consult the rail freight council on proposed closures. It would give the authority a statutory power to require Railtrack to retain infrastructure, or take whatever steps are necessary to ensure that the infrastructure can be reopened. The authority is charged with supporting freight interests. It will be able to take freight interests into account when considering passenger-related closure proposals. The authority will be able to define its own reasonable requirements of Railtrack in respect of the strategic capability of the network. The setting up of controls on freight assets and their disposal can be pursued through existing routes: the track access conditions and the existing conditions of Railtrack's network licence.

In addition, the rail regulator is currently considering a new licence condition which would impose on Railtrack controls for the disposal of relevant assets, including the disposal of land. Therefore, I believe that the objectives of my noble friend's proposed new clause are already met through the Rail Regulator.

Amendment No. 357A tabled by the noble Baroness, Lady Wilcox, would require the authority to publish notices of proposed railway closures at all the stations. We have some sympathy with this amendment, but there is a problem. The Bill makes the authority responsible for publishing proposed major closures. However, the difficulty in requiring the authority to publish notices is that it does not have power to do so without the station operators' consent. There are mechanisms within the existing framework to require operators to co-operate. Perhaps they should be examined further. However, the amendment makes me a little uneasy in that it places a statutory burden on the SRA to do something which it will be able to do only subject to a franchising provision, or licensing mechanism, which does not appear on the statute book. I prefer the arrangement to be symmetrical, whether it is done within or without the legislation. However, the noble Baroness makes an important point and, with her agreement, I should like to take the amendment away for further consideration.

With those reassurances, I hope that my noble friend will withdraw his amendment and that we may return to the amendment tabled by the noble Baroness.

Lord Berkeley

I am grateful to my noble friend for his usual comprehensive response, particularly his observations on Amendment No. 300. As to Amendment No. 340, I am sorry that I went over the top and tried to propose stronger measures than those possessed by the body concerned with passengers. My noble friend said that there was a strong incentive for operators to listen to their customers. That is true of passenger operators. Some Members of the Committee have said that that does not always happen. I believe that that is why there is a rail passengers' council. The same applies to freight. As we have heard in other debates, there are a large number of small operators out there. There are some large and small train operators. However, the small customers need a voice.

I shall read my noble friend's response carefully. I may well return to this matter at a later stage with a slightly different amendment. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 210 agreed to.

Schedule 15 agreed to.

Clause 211 [Securing of services by franchising]:

The Principal Deputy Chairman of Committees

In calling Amendment No. 301, I should point out that, if Amendment No. 303 is agreed to, I cannot call Amendment No. 304.

Earl Attlee moved Amendment No. 301: Page 123, line 36, at end insert— ("(2C) The Authority shall not exercise its powers under subsections (2A) and (2B) unless necessary for the purpose of its existing powers under section 30."").

The noble Earl said: In moving Amendment No. 301, it may be convenient to speak to Amendments Nos. 302 to 306. We are concerned that Clause 211 gives the SRA stronger powers to run trains. It goes further than the provisions of the Railways Act 1993 and appears to provide for more state interference in the running of the railway. The amendment would ensure that the SRA would have such powers only as a truly last resort.

Amendment No. 302 deals with subsection (2), which enables the authority to vary or revoke the designation of services as eligible for franchises. It provides that such power may be used only for the purposes of enabling the authority to provide or secure the provision of services in the circumstances set out in subsection (5). The authority should not have carte blanche to remove sectors of the railways system from the franchising process. Such power should be used only in circumstances where the authority is permitted by the Bill to provide services direct or to secure provision of them.

I turn to Amendment No. 303. Section 26(1) of the Railways Act 1993 allows the Secretary of State, when the authority selects the franchise, to direct otherwise. The amendment removes that power. The Secretary of State should not be able to substitute his choice of franchisee for that of the authority. That would expose him to all kinds of difficulty, especially as under subsection (3) he also takes power to direct how the appointment is to be made so that the proper tendering process can be bypassed. This provision has not proved to be necessary and, given that it is open to abuse, it should be removed.

If the amendment is not agreed, perhaps my Amendment No. 304 may be helpful to the Committee. New subsection (3) gives the Secretary of State wide powers not only to substitute his choice of franchisee for that of the authority but also to detect the method of selection of the franchisee. Amendment No. 304 limits the powers of the Secretary of State to prohibit the authority's choice of franchisee to where he has evidence that the person selected is not suitable to be a franchisee. In that case, the authority must give the franchise to another tenderer or retender.

If the Government insist on keeping the right to direct the authority not to grant a franchise to the person of its choice, the right should be exercisable only where there is firm evidence that the person chosen is not suitable to be a franchisee. Nor should the Government then set about selecting a franchisee themselves or dictating how one should be selected. It should be left to the authority to appoint one from the other tenderers or to retender.

My final amendments in the group are Amendments Nos. 305 and 306. New Clause 26(1)(b) allows the authority to provide services direct where a franchise comes to an end and no new franchise agreement has been entered into. This gives the authority the power to provide all services direct by not renewing franchise agreements when they expire. The amendment limits these powers to an interim period before a new franchise is granted.

Assurances from the Minister that there is no intention to renationalise the rail network ring hollow when such wide powers are included in the Bill. The circumstances in which they can be exercised should be spelt out. I beg to move.

Lord Whitty

I detect a serious note of paranoia behind the noble Earl's intervention in the debate. He believes that the powers in the clauses are designed for renationalisation of the network. As he has already cast suspicion on previous assurances, I do not suppose that any further assurance from me would convince him.

However, if he reads the clause he will see that we are genuinely talking about the SRA operating services of last resort when all else has failed. We are not talking about backdoor renationalisation.

Apart from the noble Earl's general concern, Amendments Nos. 301 and 302 reflect a misunderstanding. They seek to tie the provisions for the designation of services eligible for franchising to the process through which the authority must travel before it becomes the operator of last resort. In fact, the two issues are rather separate.

It is a prerequisite of eligibility for franchising that a service is designated for franchising. We want designation to go further than the requirement so as to indicate not only that a service is eligible for franchising but that it should be performed as a franchised service. That is because of the benefits of franchising over open access as a mechanism for consistent service delivery. Therefore, we are amending Section 23(1) to provide that a designated service should be performed as a franchised service.

However, the current franchising map should not be set in stone. That is why the SRA needs the powers in Clause 211(2) to de-designate and re-designate services. It is that developing situation that the SRA must operate. There is no connection with the SRA's powers to operate those services under Section 30 as a matter of last resort. That section can come into play only when a designated service goes through the franchise process and that process fails to throw up an acceptable proposal or when an existing franchise operation fails. Therefore, the connection that the noble Earl makes does not really exist.

Amendments Nos. 303 and 304 would revoke the existing power of the Secretary of State to relax the strict requirement that franchisees must be selected from those who submit tenders. Alternatively, Amendment No. 304 restricts the Secretary of State's power to make such direction to circumstances where a franchisee is not suitable for the job.

This is a complex process. Before letting a replacement franchise, the franchise director proposes to obtain a direction from the Secretary of State which will allow him to award the replacement franchise without being at risk that an unsuccessful tenderer will argue that the process is not compliant with Section 26. Amendments Nos. 303 and 304 would remove the flexibility which Parliament considered necessary in 1993 and would be a significant hindrance on the SRA's ability to continue the franchising replacement programme. I do not believe that that is what the noble Earl intended but that is the effect of his amendments.

Amendments Nos. 305 and 306 seek to qualify the duty of the authority to provide services in the absence of a franchise where a franchise process is under way or proposed.

The authority's Section 30 duties, which are adapted more or less directly from the Railways Act, are there so that, should the private sector fail in its ability to provide services or fail to deliver value for money, the public sector may step in. After all, we must ensure that the trains continue to run and that there is good value for public money. It must be right that the SRA can refuse tenders where they represent poor value for money. In any negotiation it must be possible to walk away and simply say no. Without that possibility, in effect the train operating companies could make any demands that they saw fit. However, it is only possible to say no if there is an alternative public sector capacity.

The previous government accepted that in 1993 by continuing to allow the British Railways Board not only to pick up failed services but to submit a public sector bid to perform a franchised service. We intend to wind up the BRB. Therefore, there must be an alternative structure for last resort operations. That is what we provide in Clause 212(4) and (5).

With regard to Amendment No. 306, the duty in the amended Section 30(1)(b) of the Railways Act is the same as the franchise director's current duty to secure a failed service until it can be performed again under franchise. It is not necessary to spell out that the SRA has a mind to re-tender because that is implied. Unless there is a direction from the Secretary of State that the SRA must not seek to re-franchise the service, the SRA will need to look continuously to the opportunity to re-tender because the designation that the service should be performed by franchise will remain. If the SRA were to exercise its duties under this section in a manner which suggests that it rules out a re-franchising process, it would be acting unlawfully.

The duty in the amended Section 30(1)(a) will apply where a franchise competition has taken place but has proved unsuccessful, either because there were no tenders or because the tenders represented poor value. In the latter case, there will already have been two franchise competitions, because the Secretary of State cannot intervene to reject tenders at the first attempt.

The market would have been tested exhaustively and failed. At that point, the Secretary of State can be asked to revoke an SRA direction. It would be unlawful for him to be motivated by any prospect other than the fact that the franchising situation had failed. He could not be motivated simply by an overriding desire to place or keep the service in the public sector.

I hope that I have met the noble Earl's underlying suspicions. They are not appropriate. The clauses provide the SRA and the Secretary of State with a way of delivering a service when the tendering process has failed to produce an effective service.

Earl Attlee

I have listened carefully to what the Minister has said about the amendment. I shall read Hansard even more carefully. He will not be surprised to hear that I shall probably return to the issue in due course, but in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 302 to 306 not moved.]

Clause 211 agreed to.

Midnight

Earl Attlee moved Amendment No. 307: After Clause 211, insert the following new clause—