Railways Bill

HL Deb 10 February 2005 vol 669 cc927-78

1 p.m.

Lord Davies of Oldham

My Lords, I beg to move that this Bill be now read a second time.

The railway network is a vital part of our public transport system. It is important that trains provide a fast, reliable and efficient service for the benefit of passengers and freight.

When the railway industry was privatised in the mid-1990s there was a widespread view that rail travel was in decline. Privatisation was based on that assumption, as was investment. History has proved that assumption wrong. As the economy has grown and demand for travel has increased, rail has played an important role in meeting that demand.

The number of journeys by rail has grown by over 27 per cent since 1997. More than 1 billion journeys were made in 2003—the first time that that milestone has been reached since the early 1960s. We expect that the number of journeys will have continued to rise in 2004. Trains are also carrying 45 per cent more freight than in 1995, helping to stop lorries clogging up our motorways. We want to see that success continuing.

To help tackle the longstanding problems that the railways face, the Government have put in place record levels of investment over a long period. That is starting to have an impact, but it will take time to mitigate the effect of underinvestment that has blighted the railways for decades.

But even with this commitment to long-term investment, the structures and organisations put in place at the time of privatisation have proved inadequate to meet the demands of a growing railway. That is why in January last year the Secretary of State for Transport announced a wide-ranging review of the railway industry. On 15 July 2004, the conclusions of that review were published in a White Paper, The Future of Rail. The White Paper outlined a new blueprint for the railways on which the Government had worked closely with the industry to develop over the preceding months.

The new structure was based on the principle of public and private partnership. It recognised rail's status as a public service, with strategy set by government and delivery executed by the private sector. The Railways Bill puts in place the legislation necessary to make those changes. It will put the Government in charge of setting the strategy for the railways; increase the role of Scottish Ministers, the National Assembly for Wales and the London Mayor and promote more local decision-making in England; and rationalise the regulation of the rail industry, transferring safety regulation from the Health and Safety Commission to the Office of Rail Regulation.

Although the Bill takes forward the legislative elements of the changes that we are making to the rail industry, other reforms outlined in the White Paper do not require legislation. Those reforms are no less important than the changes in the Bill, and the legislation should be viewed in the context of all the work under way. That includes giving Network Rail clear responsibility for operating the network and for performance; ensuring that track and train companies work more closely together, assisted by reducing the number of franchises and aligning them more closely with Network Rail's regional structure; and delivering a better deal for freight to enable the industry and its customers to invest for the long term.

I should now like to go through the legislative and non-legislative changes in more detail and explain the benefits that those reforms will bring to the rail industry and the public. There has been some criticism in another place that there is nothing explicit in the Bill that says that the Government must set strategies for the railway. I should like to explain why the Bill is drafted as it is. The entire thrust of the Government's policy on rail is about taking responsibility and setting the strategy. The Secretary of State already has strategies on the future of transport, rail and aviation. He does not need a statutory duty to be put on him to do that. He is accountable to the British public, and no Government could get away with not having a strategy for rail.

In that respect, Ministers will have an advantage over the Strategic Rail Authority. Since Ministers are responsible for all forms of transport, they will be able to produce strategies that are joined up across the piece. They will also be able to take into account the wider government agenda, such as regeneration and growth areas. The Strategic Rail Authority, responsible for only one form of transport, was never well placed to do that.

The railways are largely funded by the public purse. Over £73 million is spent every week to improve the railways in this country. Therefore it must be for Ministers, accountable to Parliament and the electorate, to take responsibility. That was a fundamental principle behind the rail White Paper. The White Paper summarised the problems caused by the fragmentation of responsibility between Ministers, the SRA and the ORR. That is why the Government propose to abolish the SRA and redefine the relationship between Ministers and the ORR.

The winding up of the Strategic Rail Authority (SRA) means that its strategic and financial obligations will pass to the Government. It will be for Ministers to set the strategic direction and to decide how much money is available and the size and shape of the network.

As part of the access charges review process, the Secretary of State and Scottish Ministers will be required to provide the regulator, the Office of Rail Regulation (ORR), with information on what they want the railways to achieve and how much public funding will be available.

As the independent economic regulator, the Office of Rail Regulation would then price those outputs and satisfy itself that they are reasonable. Network Rail would then be responsible for delivery. If a future Secretary of State's ambitions go beyond his purse then the regulator will say so and the Secretary of State will have the opportunity to think again. That will ensure that the railway industry has clear and timely information about the strategic outputs that government want the railway to deliver in exchange for the public funds that they are prepared to make available. The process will be open and transparent.

Network Rail, working within the framework set by the Office of Rail Regulation, and train operators will have increased freedom to make the day-to-day operational decisions on how to use these resources to deliver the strategy and how to run the railway. Ministers and civil servants should not, and will not, get involved in those day-to-day decisions. That is far more meaningful than putting an obligation in the Bill for the Secretary of State to produce a glossy strategy annually, for instance, which is a concept that has been canvassed in some quarters. The last thing that the rail industry wants is ever-changing strategies. Stability and a long-term approach are needed.

The Department for Transport is now working to create a new DfT rail group to take on the new role. The structure of the new group has been announced and recruitment has begun. The new group will combine considerable expertise from the department, the SRA and other sources.

Another central element of the White Paper was that it was only right that a greater role be given to the devolved administrations. The devolution to Scotland and Wales under the Bill is not identical. Scottish Ministers are to be given virtually the same role in relation to railways in Scotland as the Secretary of State for Transport will have in England and Wales.

The Railways Bill would devolve to Scottish Ministers additional powers and functions to determine railway strategies; to let, monitor and manage the ScotRail franchise; to specify rail infrastructure needs in Scotland, and to support rail freight. They will also be able to set fares and fund improvements to the railway. Only some functions—principally, safety and the licensing of railway operators—will remain reserved to UK Ministers. As part of that devolution of executive functions, which is the largest transfer of responsibility since the 1998 devolution settlement, Scottish and UK Ministers recently announced a long-term funding agreement to put Scotland's railways on a stable footing.

The Bill will give the National Assembly for Wales the right to be a co-signatory to the Wales & Borders franchise with the Secretary of State. The Secretary of State will be able to enter into a franchise that provides services wholly within Wales only if the Assembly joins him as a party to the agreement. The Assembly will also be given broad powers to provide financial assistance to improve the provision of railway services for Wales. That could include assistance to other franchise operators, Network Rail and freight operators.

The Assembly's new role will enable it to specify the local and regional passenger services that it wants for Wales under the Wales & Borders franchise and to make decisions about funding the franchise. That is similar to the current role of the Scottish Executive in relation to the ScotRail franchise.

The difference between how powers are devolved to the Scottish and Welsh administrations reflects the more discrete nature of railway services in Scotland. The Welsh network is much less discrete, with a number of shared routes, inside and outside Wales. Some Wales & Borders services operate wholly within England. These factors make it difficult to devolve more to the Welsh Assembly.

The Bill also proposes changes to the current arrangements in England. The passenger transport executives in our major urban areas and Transport for London will be put on an even footing. That will help to promote more integrated transport solutions in our urban centres. The role of PTEs will be modified so that they may, subject to the Secretary of State's approval, enter into agreements with train operating companies. This could include being party to franchise agreements.

The Secretary of State will also have a duty to consult PTEs when preparing to let a franchise that involves services to, from or within the area covered by the passenger transport executive. The Government have set out a future strategy for rail which has at its heart a set of clear and consistent principles. One of these is that responsibility for decision-making must be tied together with clear financial accountability. The problem is that the current procurement arrangements for PTEs give responsibility without the commensurate accountability.

We are committed to devolution of responsibility but this can happen only where there is clear financial accountability so that decisions are made on a level basis. The new financial accountability within the structure means that we are able to give PTEs greater flexibility to make genuine choices about the balance of public transport in their areas.

The PTEs will have the right to buy additional rail services or to reduce rail services in their areas and retain the savings to invest in other local priorities. The measures in the Bill do not mean that PTEs can never be co-signatories to franchise agreements.

Earl Ferrers

My Lords, will the Minister be kind enough to explain that point again? He keeps talking in acronyms. I do not know whether he is saying PTEs, PTAs or what; I do not understand them either.

Lord Davies of Oldham

My Lords, I apologise to the noble Earl. There is a great danger in the interests of making the speech in the time that I am allowed to use those symbols familiar to all of us involved with the industry. I recognise that I owe the House the courtesy of explaining the acronym. I am talking now about the passenger transport executives. I am referring to PTEs, and I am sorry if my enunciation is not as precise as it should have been. I hope that the noble Earl will forgive me.

The measures in the Bill do not mean that the passenger transport executives can never be co- signatories to franchise agreements or that they will be immediately removed from the current franchises. However, it is right that PTEs should be co-signatories only where their role clearly contributes to the White Paper aims of driving up performance and controlling costs.

In relation to London, the Bill will give the Mayor a greater role. It replaces the Mayor's ability to issue directions and guidance to the Strategic Rail Authority with a duty on the Secretary of State to consult Transport for London before issuing an invitation to tender. As with the passenger transport executives, Transport for London would be able enter into agreements with franchised train operators, subject to the Secretary of State's agreement. This could include being party to franchise agreements.

London has by far the most extensive and complex public transport network in Britain. There is potentially much to gain from better integration within and between different forms of transport. That is why the White Paper also identified some specific London issues. The Government have set up a working group to explore these issues, including rationalising fare structures and ticketing technology across different forms of transport; and whether the Mayor should be given a greater role in relation to services and infrastructure that operate only within London. These issues are being considered and no decision has been taken.

We are also looking at the options in terms of giving Transport for London a role on the rail network in an area slightly beyond the Greater London Authority boundary. Passenger transport executives already have a role up to 25 miles outside their area. I assure your Lordships that no decision will be taken on the matter without full consultation with the Greater London Authority and neighbouring local and regional bodies.

However, if it is decided that Transport for London should have a role outside London, the Bill includes provision to require the Mayor to appoint two additional members to the TfL board to represent the interests of rail passengers outside Greater London.

I turn to the parts of the Bill that move safety regulation from the Health and Safety Commission to the Office of Rail Regulation. The proposal has been warmly welcomed by those in the industry, stakeholder groups and in the other place. I would like to make a commitment that there will be no reduction in safety standards or loss of expertise as a result of the move. I know that that is a most important issue with regard to the railways.

The board of the Office of Rail Regulation has begun thinking about how the organisation should be structured when it becomes both safety and economic regulator. The ORR has published its initial thoughts: copies are available in the Library; and it will begin wider consultation shortly.

I would now like to touch on an issue to which I have not so far referred: the reform of the Rail Passengers' Council. Under the Bill the RPC would be established as a single national body reporting to the Secretary of State and the federal structure of the regional committees would be dissolved. The railway industry has changed and we want to see a strong voice within industry representing passengers. We want the Rail Passengers' Council to provide this, but currently there is very little public awareness of its work.

More than 90 per cent of passengers do not know that the RPC exists. The changes proposed in the Bill will allow the Rail Passengers' Council to address this and create a more effective organisation. The current chair, Stewart Francis, has announced plans to reform the structure of the council. The Government support his proposals and he is currently working to deliver them. But he continues to welcome the views of interested parties on the future direction of the new organisation.

Around a third of the clauses in the Bill refer to network modifications. That aspect of the Bill has led to cries in some places of "Beeching mark 2" and suspicion that there is a hidden agenda for widespread closures. I should like to reassure the House that that is simply not the case. There is no secret agenda of closures and it is certainly difficult to hide 22 clauses in the Bill.

The changes to the current closure procedures set out in the Bill are mostly a result of the other changes to organisations and structures that I have already discussed. Under the current system the Strategic Rail Authority has an important role to play. With its abolition, and the greater level of devolution in relation to rail, changes have to be made. The dissolution of the rail passengers' committees also means that changes are needed.

As part of these we are moving away from a test based on passenger hardship towards an appraisal taking account of a broader range of factors, similar to other transport appraisals. Guidance on this will be produced by the Secretary of State and Scottish Ministers. The Bill does not set out the contents of the guidance. However, we have indicated that it is intended that proposers of closure will be required to undertake an assessment based on the standard approach for assessing value for money for transport projects and policies, covering environmental, economic and safety issues, accessibility and integration. The effects on passengers will be a key part. Compliance with the guidance will be assessed by the independent regulator.

The Bill ensures that people's rights to be consulted if a proposal affects them will be maintained. That would include train and freight operators and there continues to be a strong role for the passenger voice, since the Rail Passengers' Council will be a statutory consultee. Ministers have provided the House with their initial views of what could be included in the guidance and, as required by the Bill, there will be full consultation before it is finalised.

I should now like to talk briefly about the aspect of the Bill that refers to buses. Under the Bill we are increasing the scope for passenger transport authorities to introduce bus franchising in their areas. Under the current legislation PTAs can introduce bus quality contracts only as a means of implementing their bus strategy. The Bill widens this to allow them to consider bus franchising for the substitution of rail services.

This will give the passenger transport authorities greater flexibility to make choices about the balance of local transport provision in their area. They will have the right to buy additional rail services or reduce rail services in their areas and retain the savings to invest in other priorities.

There is one element of the work underway to encourage local transport authorities to develop quality contract schemes. For instance, from March the minimum time between making a scheme and bringing it into force will be reduced from 21 months to six months.

I mentioned that Network Rail will become more directly responsible for the day-to-day running of the railway, including operating the network, and for its performance.

This is not in the Bill, but it is important to see the Bill in the context of the wider work that is under way in this respect. Network Rail is starting to work more closely with train operators to deliver a more reliable service for passengers. It has set up a number of joint control centres together with train operators, in order to work more closely together to improve day-to-day operations and quickly recover normal services following disruption.

Network Rail is a private company, but it operates in the public interest in accordance with the terms of its network licence and of its contracts with train operators. In particular, condition 7 of its licence requires Network Rail to operate, maintain, renew and enhance the network in a timely, efficient and economical manner so as to satisfy the reasonable requirements of its customers and funders. Network Rail's delivery of those requirements is monitored, and where necessary enforced, by the Office of Rail Regulation.

As part of the reforms set out in the rail White Paper, Network Rail will be taking over responsibility for preparing route utilisation strategies which are currently produced by the SRA. The purpose of these strategies is to study those parts of the network where capacity is currently under pressure, or may come under pressure in the future, and to identify how to make the best possible use of the available capacity in the public interest. The strategies look around 10 years ahead. The Office of Rail Regulation intends to bring forward an amendment to Network Rail's licence, in order to ensure proper governance of this crucial new role.

As I said in my opening remarks, the railways are not just about passengers. The transport of freight by rail can bring real benefits. Efficient freight transport is essential to our economy and to our prosperity. There is not a huge amount in the Bill about freight, but there does not need to be. Freight is rightly a matter for the private sector. Nothing in this Bill overrides the contractual rights of freight operators. The Government's role is to ensure that the right environment exists for freight operators and their customers to be confident about investing in rail freight. The Government have worked closely with the industry and the regulator to agree the basis for long-term access contracts and greater certainty about rights of access to the network.

The Office of Rail Regulation is now consulting on proposals for access contracts for freight operators of up to 10 years. That will help to provide the increased stability and certainty that rail freight needs in order to continue to thrive in the future.

Taken together, the changes laid out in this Bill and the other steps outside legislation that the Government are taking to implement the rail White Paper will deliver a robust structure that will stand the test of time. Ultimately, the increased investment and improved structures will deliver stability for all those involved in the industry. That in turn will deliver what people really want—improved performance. Passengers should come first. We believe that these are the right changes and that they will lead to better performance and a better service for all rail users. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Davies of Oldham.)

1.22 p.m.

Lord Rotherwick

My Lords, I thank the Minister for introducing the Bill. It is a Bill that has been the subject of lively debate in another place and I am sure that we will see some continuation of that in your Lordships' House.

It has been suggested that the Bill has been introduced to put right aspects of privatisation. I would like to reiterate the point already made in another place that that is not so. The Bill has had to be introduced to put right one of Her Majesty's Government's own blunders in the past seven years—the creation of the Strategic Rail Authority. Five years ago, the Deputy Prime Minister said: The Strategic Rail Authority will put railways at the centre of an integrated transport system". Today we are witnessing a U-turn as the Government destroy their own creation—a creation that has cost the taxpayer £250 million and provided failure in return. Twice as many trains now run late as in 1997.

We welcome the abolition of the SRA. It is an organisation that has been too top-heavy. However, I would like to point out to the Minister that representatives of the Local Government Association state that they, remain to be convinced that the Department for Transport will be any more adept than the SRA at identifying the need for investment in, and enhancement of, the network".

On a more conciliatory note, we on these Benches accept the transfer of the functions of the Health and Safety Executive to the Office of the Rail Regulator. I am sure that your Lordships have heard the same horror stories of rolling stock being confined to a siding because a light bulb needs changing. I understand that the HSE has been too heavy-handed and we welcome this change. However, that is as far as we go. There are various parts of this Bill—some may argue the majority of it—to which we have strong objections. This Bill gives politicians and bureaucrats far too much say in the running of our railways.

We believe that railways should be run without political interference to make life better for the passengers: something that the Bill arguably does not do. An example is the clauses relating to London and the passing of powers to the Lord Mayor. With more than two out of three of all train journeys beginning or ending in London, giving the Mayor a direct say in the running of trains in the Greater London area in Clause 15 (7) will have serious—

Lord Faulkner of Worcester

My Lords, I apologise for interrupting the noble Lord, but I think he means the Mayor of London and not the Lord Mayor of London, who does not run any trains anywhere.

Lord Rotherwick

My Lords, I am grateful to the noble Lord and 1 am sure that he will see that everything becomes clear later on, particularly regarding accountability. There will be serious and unconsidered consequences, especially in accountability. As I understand it, we can hold a Minister in this House accountable—or at least try to—for trains or railways in England and Wales, but not Scotland or Greater London, if this Bill is passed.

I am puzzled by the contradiction in Her Majesty's Government's policies. In the Traffic Management Bill, as he will remember, the Minister argued for the management of strategic roads by an overseeing body, not local authorities. Now he is trying to persuade us that the Mayor of London—only one authority within the UK—should have a say over the main strategic rail routes. Will the Minister please explain why one option is acceptable for rail and not for road?

We are also concerned about the results of restricting the jurisdiction of the Office of the Rail Regulator under new Schedule 4 introduced in Clause 4, which relates to, use of access charges reviews". This clause and schedule appear to allow the long arm of the Treasury to cap budgets and pass the buck on network repair, maintenance and enhancement. In the mean time, Network Rail is gaining responsibilities, but it remains unclear exactly to whom it is accountable. In response to a question on this issue posed by Which?magazine, the Secretary of State said: Yes. [they will hold Network Rail to account] In addition, the Office of Rail Regulation has a duty to enforce the conditions of Network Rail's licence". This is in fact flawed and I will probe the matter more in Committee.

We are also particularly concerned with what appears to be a stealth agenda of rail closure, or as the Minister said, a secret agenda. He also said that it was a "second Beeching". I take that as a sign that financial constraints will come before passengers and freight demands because this Bill not only makes it easier to close local and regional services but, in practice, passes the responsibility for potentially difficult decisions about cuts to local and regional government. I expect that stretched budgets, not passenger wishes, will sway their decisions. I fear that unless funds are raised to meet the gap between what is allocated and the cost, we will see the demise of many rural and small railways, affecting both passenger and freight services. This is an issue that we will scrutinise carefully in Committee.

We will also address two smaller but not insignificant points raised in the other place. I refer first to the issue of unused assets belonging to the railways, such as unused sidings that may be well suited for conversion into safe car parks. That would encourage the greater use of trains. Secondly, and closer to my heart because of my children and on behalf of many Harry Potter fans, there is the possible end of the Hogwarts Express. I understand that there is a call for black boxes to be installed in heritage rail vehicles at a cost of £55,000 per engine. Rail specialists fear that it could mark the end of heritage rail services, something with which Members on these Benches strongly disagree. I have but touched on a wide range of issues that we intend to look at in depth in Committee. We want to ensure that the travelling public and the British economy will not have to pay the price of the Government's rail policy, one that puts, closures and cost cutting above serving passenger needs".

1.31 p.m.

The Earl of Mar and Kellie

My Lords, I am glad that we have the chance to debate the place of the railways in our society and economy and hence to measure the Railways Bill against that environment. In so doing, we want to find out how much strategic significance there is in the Bill.

Members on these Benches believe in the railways. Throughout the world, rail should do all that it can to move people and freight, thereby removing them from the road, sea and air networks wherever possible. The benefits of such rail substitution are: decongestion, particularly on the road network; reduction in air pollution and fuel consumption; increased safety and comfort; and what an O-level economist might call "greater utility". Does the Bill seriously advance that global strategy?

I regret that my noble friend Lord Bradshaw is not present for this Second Reading debate. However, given where he is, I doubt whether he regrets not being in London today. I am grateful to my noble friend Lady Scott of Needham Market for returning to the transport Bench, momentarily diverting herself from scrutiny of the Office of the Deputy Prime Minister. I also welcome my noble friend Lord Glasgow back to the speakers' list and to the transport Bench. I strongly suspect that his long-standing criticism of railway privatisation will drive his interventions.

The Bill brings welcome constitutional change. The devolution of most railway activity in Scotland is the first major modification to Schedule 5 to the Scotland Act 1998. I am very pleased about that, and I welcome the complicated and lesser devolution of the rail passenger franchise to the National Assembly for Wales.

In Scotland, the rail network is given considerable priority by the Scottish Executive, aided by the disproportionately generous grant that Gordon Brown sends north each year. Although I believe that ultimately the policy will fail, that largesse, for as long as it lasts, will secure the Union as we know it.

The Bill is loud on rail closures—or "Network modifications etc."; I love euphemisms. As the Minister pointed out, those provisions take up 22 clauses out of a total of 59. I looked with interest for a mention of railway openings and reopenings, but found the Bill silent on those.

My interest in 12-inch to the foot scale railways started in 1964. I recall being at the Grange Road level crossing in Alloa and seeing a Gresley J38 lifting a coal train out of the new Alloa marshalling yard, and then making its way to the Kincardine-on-Forth power station. I think it was a class 65924. That railway closed in 1972. Next year, thanks to the determination of Clackmannanshire Council and the Scottish Executive, along with the blessing of an Act of the Scottish Parliament, I look forward to being back in Grange Road to see coal trains making their way from Hunterston through Alloa to Longannet power station just beyond Kincardine-on-Forth; only this time it will be a class 66 providing the head end power.

Returning from future anecdote to the Bill, after the Scottish and Welsh devolutions, we have the other new relationships between the Department for Transport and London and with the passenger transport executives. Clause 15, which provides for the, Duty of the Secretary of State and Transport for London to co-operate", sounds like a need for marriage counselling, while the PTEs seem to have been sent divorce papers, about which they are smarting and wondering what is wrong with the current situation. Perhaps there is a need for awareness counselling or, to be more serious, the answer to the substantial question of why the Secretary of State seeks to be devolutionary for Scotland, Wales and London but reservationist towards the rest of England. Will the centralisation be wise or efficient?

On the subject of the PTEs, I have been lobbied by Strathclyde PTE. Instinctively, I want to be of help to the executive, especially after having turned down its tram scheme. But this Parliament must not devolve control of the railway to the Scottish Parliament while dictating how the Scottish Executive must do the job. We have to confine ourselves to recognising that SPTE runs the second largest suburban rail network in Britain; that rail history has left some empty tunnels in Glasgow that could be filled with trains; and that SPTE must negotiate its new relationship with the Scottish Executive. We should wish it well.

I also want to speak about economic regulation, Network Rail and strategies. The railway privatisation was different from the other privatisations. Whereas the normal set-up is that the producers are on one side and the consumers are on the other with an economic regulator in between to ensure fairness to both sides, the privatisation of the railways had two different types of consumer; that is, passengers and freight customers, and the Government. The latter do not like being told by the regulator how much they should pay into the industry. The Bill seeks to alter the arrangement, allowing the Secretary of State to dictate how much the Department for Transport will pay. No doubt the Secretary of State and the Minister will plead the sovereignty of Parliament and get away with it, but if rail passengers and freight customers pled the sovereignty of the people, the whole edifice of economic regulation would collapse: sauce for the proverbial goose.

Network Rail is to be given control over timetables, but the Bill is silent about the strategy that it should maintain. Although we want maximum usage of the network up to its viable capacity, Network Rail's instinct could be to preserve the track by reducing usage and providing only the bare minimum. We must be assured that that will not happen. There is no requirement on the Secretary of State to publish a strategy, or even to have one, but at least Clause 5 states that Scottish Ministers may have a strategy and that, if they do, they must publish it. Why does the Secretary of State seek to be excused from having a strategy? I suspect that my noble friend Lord Bradshaw and the noble Lord, Lord Berkeley, will table amendments to remedy that omission. Perhaps we will hear a little more about that later in the debate.

Among the issues that the Secretary of State might put into a published strategy would be the good sense promoted by Transport for London concerning the greater use of suburban interchanges. Transport for London has drawn my attention in particular to Clapham Junction and Stratford. Requiring long-distance trains to stop at those stations could speed up commuting journeys. In the case of the Great Eastern service, a commuter from Norwich to Canary Wharf could save 30 minutes by changing at Stratford rather than going into Liverpool Street. The latter is the kind of issue that the Railway Grouping Act 1922 was intended to sort out. Why do we still have to talk about it some 83 years later?

I conclude by saying that the Bill may well rebalance the rail industry so far as the Government are concerned, but as always the acid test is the delivery of the most viable rail network giving the greatest user and non-user benefits. I look forward to closer and more detailed debates in Grand Committee.

1.40 p.m.

Lord Beaumont of Whitley

My Lords, on the whole, the Green Party very much welcomes the Bill. I thank the Minister for his clear exposition of what is in it. I do not think he would expect me to let him get away with all the statements he made. He said at one time that no government could get away with not having a rail strategy. In 36 years in your Lordships' House I have seen governments, in one way or another, get away with not having strategies for practically everything that they should have had one for. This Government seem to be particularly good at getting away with things.

Rail is a preferred form of transport for greens. I suppose the ultimate green form of transport is to stay exactly where you are. Going one up from that, you then move on to horse-drawn barges on the canals—and the canals, of course, are a very important form of transport—and sailing ships on the oceans.

But trains are very important—not only for passengers but for freight—and, in considering the Bill, it is essential that we ensure that freight is heavily emphasised. The SRA has a duty to promote the railways for both passengers and freight. This duty is not to be transferred to any other body when the SRA is abolished. It should be transferred to the most obvious body—that is, the Department for Transport and the Secretary of State.

The Bill makes line and station closures easier and removes some of the safeguards that have kept lesser-used stations open. These safeguards should be retained. It would be a great pity if they were to be taken away. Powers are taken away from the passenger transport executives. They should, on the whole, retain them—certainly in metropolitan areas—and Transport for London should gain equivalent powers in London.

There seems to be encouragement in the Bill for bus substitution for rail services. This is not a good idea and should be opposed. Such bus services usually prove to be unattractive to users and are often withdrawn after a few years, which isolates communities. A reliable train service with reliable timetables is much the most attractive system for isolated communities.

The SRA has a duty to protect potential rail freight depot sites adjacent to rail lines and to prevent their sale for non-rail development. Some body—possibly the Office of Rail Regulation—should take over this function.

There should be a duty to expand the rail network, both in extent and capacity, for passengers and freight services. The public sector should be allowed to operate passenger franchises. Currently the SRA is running South Eastern Trains. A publicly owned body should be able to continue to operate franchises after the SRA is scrapped.

During the later stages of the Bill we shall be looking carefully at many of its details. Basically it is a good Bill and we certainly give it a warm welcome.

1.44 p.m.

Lord Morris of Manchester

My Lords, I congratulate my noble friend on both the manner and content of his presentation of the Bill. He was as ever reasonable in tone and phrase, lenient to the listener in length and spoke with all his customary candour. By common consent and for the reasons he gave, the Bill is one of very considerable importance to the economic and social life of this country.

To say the very least, our rail industry has had a chequered recent history and this measure is about putting in place a legislative framework which, together with the wider rail review and able leadership, can give the focus needed to deliver rail services of a standard that those who work in the industry and use its services want and deserve.

When I first came to Westminster 41 years ago—from which it might be deduced that I am now beginning to get the hang of things—the timetabling of Bills in the House of Commons was extremely rare, strictly limited in scope, condemned as "gagging" and widely abhorred. Now it is almost as much the order of the day as the Order Paper itself.

Here in this House there is no timetabling and my principal purpose today is to draw your Lordships' attention to the concerns of passenger transport executives—not least those of Greater Manchester PTE—about provisions of the Bill, all amendments to which were unceremoniously guillotined in the House of Commons on 27 January.

Nothing could explain more succinctly, or more starkly, the importance of the role of this House vis-à-vis this Bill. I applaud the Government's declared intention to devolve responsibilities to the PTEs, which was clearly stated in last year's White Paper and repeated in ministerial Statements on many occasions since then. For local decision-making is the key to providing high quality public transport services. Who is best placed to understand the needs of Manchester? Ministers and officials in Whitehall, or the people who live and work there and know most about its highly complex transport requirements?

I pose that rhetorical question today because PTEs are concerned that Clauses 13 and 14 of the Bill appear to take power away from them by removing their right to specify what levels of services should go into a rail franchise.

Under the new "streamlined" franchising process, that is to say when the process is wholly driven by the Department for Transport after the abolition of the Strategic Rail Authority, the department would consult the relevant PTE when a franchise is proposed. But the PTEs understand that, under the Bill as now drafted, there would be no requirement on DfT to adopt the results of consultation with them, in which case any recommendations made about specifications would not find their way into the contract.

I take but one example. Where a PTE had quite genuine concerns about the level of service being proposed and asked for clarification of the passenger forecast being used, there would be nothing to compel the proposed franchisee to engage with the PTE. So in order for a PTE to press its case, it would have to negotiate with the prospective train operator via DfT officials acting for the Secretary of State.

How would that be a more straightforward process than the one that exists now, which allows a PTE to negotiate as a partner to the contract? How could PTEs be expected to plan and integrate transport services within their area with any confidence? Again, how would what is proposed fit with ministerial Statements made about the importance of local decision-making when it would mean power being centralised rather than devolved? I know my noble friend will want to address these concerns in replying to the debate.

The powers bestowed in 1968 upon the PTEs by my late ministerial colleague Barbara Castle, as she then was, have stood the test of time in the protection of services and investment in the rail network to the benefit of millions of people in local communities. My noble friend will recall, as a former Greater Manchester MP, that it was in the face of scepticism by British Rail and the DfT that Greater Manchester pioneered a rail link to Manchester airport and beyond that has built and refurbished 34 rail stations. Who now would argue that our airport rail link was unnecessary, carrying, as it does, 1.5 million passengers a year and sustaining the prosperity of Greater Manchester and the wider region? Indeed, as my noble friend will know, it is planned to extend the airport rail facility.

The Bill as drafted would also remove the right of PTEs to be co-signatories to rail franchise agreements. In future, as my noble friend said, a PTE would be a co-signatory to a franchise only with the consent of the Secretary of State. This also is an issue of concern, since it is the statutory right to be co-signatory partners to rail franchises in their area that has given PTEs the continuity and certainty to develop railway services there as successfully as they have.

Future Secretaries of State may not be as enlightened as my good friend Alistair Darling, and there is fear among the PTEs that consent to co-sign future franchises may not always be forthcoming. Inevitably, this would undermine their ability to invest and develop services with any confidence.

In another place, it was suggested that one of the reasons for proposing to diminish the powers of PTEs was that an unnamed PTE somewhere had, at some stage, used its negotiating position to increase public expenditure. Yet Ministers seemed unable to offer any hard evidence of the case, or where or when it happened. Most certainly, it was not in Greater Manchester; and I hope that my noble friend can tell us whether any evidence of what is alleged to have happened has yet been uncovered.

It was also suggested in another place that one PTE had delayed a franchise being let by holding up the co-signatory process. However, after investigation, it was discovered that the PTE in question, Strathclyde, had negotiated on service specifications which had not resulted in any delay to the franchise. No other evidence has been identified of a PTE being alleged to have misused its negotiating powers. Here again, I know that my noble friend will inform the House if any evidence has yet been found of misuse, for without such evidence, the whole raison d'être for the proposed change disappears.

There is one further issue causing concern about the provisions of the Bill as they affect PTEs: namely, that they could pave the way for the railways to be closed, or services withdrawn, more easily than is now the case. I have no wish to get involved in debate about the technical aspects of railway closures but, like the PTEs, I note that the Bill would enable local authorities to enter into bus quality contracts to substitute bus services where a rail service has been withdrawn.

This could perhaps be described, but disingenuously, as "integration" because it would allow passengers still to undertake their journey by public transport, albeit by bus rather than train; but that, although better than nothing at all, would prompt more and more people to reach for their car keys and make a mockery of integration, properly so-called.

Finally, I pay warm tribute to the achievements of the Greater Manchester Passenger Transport Executive. Listen to any Mancunian and they will tell you that no one contributed more to the huge success of the Commonwealth Games held in Manchester than the men and women who now, as they did then, lead our PTE. I am sure that my noble friend will want to do all he can to respond positively and helpfully in addressing their concerns on this important Bill, just as I know that he will seek to respond in the same way, when he can, to the concerns that I have raised with him today on behalf of the Royal National Institute of the Blind, details of which I have drawn urgently to the attention of the department.

1.54 p.m.

The Earl of Glasgow

My Lords, it seems to me that the Bill is another step in the process of trying to repair the damage done by the previous Conservative government's act of vandalism—that ill conceived and iniquitous Railways Act 1993, in which British Rail was privatised, and privatised in the most clumsy and destructive way imaginable. Of course, British Rail had become very rundown and was in dire need of capital investment. But for all its shortcomings. it was, at least, a fully integrated network. It was cheap and it was customer friendly.

However, as noble Lords may remember, in the 1990s, "privatisation" was the answer to all the country's problems. When the 1993 Act was debated in this House, the majority of speakers, including many on the Conservative Benches, could see that the fragmentation of the rail network into a hundred private companies was a recipe for disaster—a bonanza for lawyers and chaos for the travelling public.

Well, the present Government cannot be blamed for the mess they have inherited. Renationalisation in any form would have been impossibly expensive and, besides, this is not a Government who like to be seen as going backwards. So their only recourse is to try to repair as much of the damage as possible. If they have made mistakes, as the noble Lord, Lord Rotherwick, implied, they are at least excusable ones.

Because the rail network will always have to be an integral part of any government's transport policy—and, thus, the Government's responsibility anyway—bringing as much as possible back under direct government control seems only sensible. The Bill, then, is a step in the right direction, and it certainly has my support.

I am a passionate believer in the railways. It is surely time they were given a higher political profile. They should be right up there with health, education, law and order and asylum seekers. Many European countries are judged on the quality of their railway services. An efficient railway network can make you feel better about your country. It is the only civilised way of travelling—potentially, anyway. The hassle and frustration of travelling by car or aeroplane will only get worse. And, most importantly, railways are the only relatively non-polluting means of travel—the only one that is not accelerating the speed of global warming.

So far, we are told that only 6 per cent of the population go by train. We must aim at least to double that number. But in order to sell railways to a society which cannot bear to be separated from its car for one moment, we need a railway service that is not only reliable but also convenient and, above all, relatively cheap. There are hopeful signs that railways are gradually becoming more reliable. There is a growing awareness that they will have to become more convenient—by that, of course, we mean frequency of trains, adequate parking at railway stations, and so on. However, there is no sign and certainly no indication in the Bill, that train travel will get any cheaper. In fact, the implication is that a safe and reliable service can be bought only with increased fares.

Unless rail travel can be perceived as better value for money, the vast majority of our countrymen will still prefer to suffer motorway congestion and waiting in soulless airport lounges for their delayed cut-price aeroplane to arrive, than the relative comfort and relaxation of a journey on the train.

Incidentally, when I came to London from Scotland the day before yesterday, on the supposedly more reliable British Airways, my flight was cancelled. The next aircraft, to which I was transferred, was grounded for an hour and a half because of an unidentified piece of luggage in the hold. By the time that had been sorted out, we had missed our take-off slot, so I got to London more than three hours late. However, your Lordships will be pleased to hear that British Airways apologised for any inconvenience. I do not know why I did not take my own advice and come by train.

I welcome the Bill as a necessary step towards the reintegration of a still unnecessarily fragmented railway network. But the Government must make plans to make rail travel cheaper. If that can be achieved only by more government subsidies, then that is the way it must be done. It will be money far better spent than building more new roads or, more absurd still, widening existing motorways to encourage more motorists. The Government need the courage to resist the powerful and vociferous road lobby. Their transport budget must favour the railways: high-speed trains, local trains, commuter trains, freight trains, underground trains and even, perhaps, trams. They must seriously consider the expensive business of reopening some of the old railway lines. There really is only one way forward if we are to solve Britain's transport problems and that, I hope the Government agree, lies in the efficient management of the railways.

2 p.m.

Lord Bhattacharyya

My Lords, the Railways Bill is an important piece of legislation. Even for those of us who use the railways infrequently, their future in Britain is of great importance. There is no doubt that, as the most environmentally friendly mode of transport, they should play a growing role in satisfying Britain's economic and transport needs.

At the risk of sounding like a train spotter, I must say, as an engineer, that the names of the great British railway engineers were very familiar. I knew the work of Oliver Bulleid of the Southern, Charles Collett and George Churchwood of the Great Western, and the two great railway knights, William Stanier of the London, Midland and Scottish and Nigel Gresley of the London and North Eastern. There is no doubt that the major routes of the empire were covered in railway infrastructure engineered in Derby, Swindon, Glasgow or York. As far as I was concerned, Britain was the home of railway engineering. My view was to change when I travelled to Japan in 1964, the year of the Tokyo Olympics. A technological marvel of railway engineering—the Tokaido Shinkansen—demonstrated the birth of modern Japan. It has become known as the "bullet train". I am sure that that was part of the spur for the electrification of the West Coast Main Line in the late sixties. Meanwhile, Japan has taken the technological lead from us.

Japan had some advantages in railway investment. Its railways did not initially face the competition from road transport that railways faced in Britain. None the less, the year that saw the birth of the bullet train also saw Japanese national railways sinking into the red for the first time. Japan may have been 10 years behind us in facing competition between road and rail but, once the effect was felt, it had a dramatic impact. By 1987, Japan Railways had a debt of 25 trillion yen. Clearly, something had to be done.

In choosing privatisation, Japan went from 10 years behind to 10 years ahead. They did so with vigour, dividing the railways into six passenger companies and a freight company. Today, that structure is still bedding down. Privatisation in Japan has proved to be a success. Managers liberated from the dead hand of the national bureaucracy have been able to innovate and to improve services. As noble Lords know, Japanese companies and the Japanese Government have a very fuzzy relationship. There is little transparency. The number of Japanese rail passengers is up, rail companies are profitable and fares have been held down.

There are challenges associated with large-scale infrastructure that, as in all countries, cannot be solved without a long-term transport plan from the national government. In this country, we are schizophrenic about privatisation and the railways. There is great nostalgia for the pre-war private companies that ran the railways. Sadly for their shareholders, they never made any money and, despite the high-profile express trains, services were always underinvested. In 1947, when the railways were taken into public ownership, it was because they were clapped out. The government did not prove to be a particularly good owner. The railways struggled for investment, but at least they were run as a public service. In that environment, industrial relations became politicised.

In the right circumstances, I support privatisation and liberalisation. Governments are not good at running businesses and at being responsive to consumers. However, privatisation is not a magic process. It cannot turn a pig's ear into a silk purse. The present Secretary of State for Transport has acknowledged that decades of underinvestment reduced the railways to the state that they were in at privatisation.

Immediately post-privatisation, a combination of imaginative marketing by the new private railway companies, general economic growth and road congestion led to an increase in passenger numbers. That turned out to be a mixed blessing. Increased wear and tear on the infrastructure at a time of reduced maintenance had the inevitable consequence, a process known as, "flogging a dead horse". It has taken years to recover from that collapse in the infrastructure. An improvement in reliability and punctuality is only now being seen, following a massive increase in investment.

Reliability is only partly a function of business structure. After all, the old BR structure was often inefficient, complicated and bureaucratic. Reliability is a function of technology: we should consider the reliability that is being achieved in the modern automotive and aerospace industries. In the airline industry, that reliability has been driven by tough international regulation. Reliability is determined by the quality of the rolling stock, the track and the line-side equipment and is a function of the quality of investment in engineering.

It requires skilled people to make the quality investment decisions and, once they are made, it needs skilled technicians to ensure that the details of products and processes are taken care of. There has been a threefold increase in investment in the railways in recent years, but the skills that we need are in short supply. For all the faults in British Rail, railwaymen had a certain pride and passion about the railway. It is not the MBAs in smart suits in head office, following the latest management fads, who deliver the service; it is skilled technicians at every level. We know to our cost the price of a flaw in any link in the chain. Skills are an important issue that must be addressed. We must get the blend right, and there is no quick fix. It must also have the degree of external validation that other sectors in transport have.

Despite the lessons of the Japanese experience, the privatisation of British Rail was based on a misconception. It was envisaged that there could be competition between operators on the same track. That has proved to be impossible in practice. It would require penalty and performance regimes that are far too difficult and expensive to administer. It is not even in the management books; it was just an excuse to privatise. The separation of infrastructure and rolling stock was implemented to facilitate mythical competition, thereby leading to the fragmentation of BR into almost 100 companies. Railtrack, the infrastructure manager, was segregated from the 25 train-operating companies and three freight operating companies. The rest of British Rail was divided up into three rolling stock-leasing companies; an extensive supply chain behind Railtrack that included 13 infrastructure service companies; and many other support organisations: TOCs, Roscos and Iscos—a whole new disaggregated language. The Japanese went for a vertically integrated organisation, and our decision to move away from such an approach, not privatisation, has left us with the failings of the system.

The separation of infrastructure and rolling stock, done to facilitate non-existing competition, has proved fatally flawed. The interface is so crucial for safety and reliability. Those, after all, are crucial issues for the rail user. People travelling from my home city of Birmingham to London are not much bothered if the journey time is 90 or 110 minutes. What they care about is whether the train leaves New Street at its appointed time and arrives at Euston as per the timetable. What drives travellers on the railways around the twist is an erratic service. Messed-up connections and missed business meetings do not make for satisfied customers.

The liberalisation of supply and service contracts has also proved to be a difficult process to manage. The effective subcontracting of rail, rolling stock and track maintenance and renewal requires a significantly large number of technically skilled managers. At the time of privatisation, they simply did not exist. Continuity in the local management of local areas is vital for track maintenance. Knowledge of the true state of the network is essential—knowledge that was lost at privatisation. The current framework blurs responsibility and accountability for policy and services and is not fit for purpose. So you can see where I am looking for improvements to the structure and processes of the industry from the Bill.

There is another problem, however. Much as I would want to propose yet another dramatic restructuring, there is no doubt that further change would be disruptive. We have to face the fact that freight carriers and passengers have had about as much disruption as they can take. The Bill addresses a number of my concerns. It is important that we do not lose what we have learnt along the way. I welcome the fact that the Government are taking charge of setting the overall strategy for the railways. Wherever the Government have not done so, the strategy has been doomed and has failed.

Rail policy cannot be divorced from decisions about overall public spending, which is the clear responsibility of the Government. It cannot be passed off to a regulatory body. I am pleased that the number of rail franchises is to he reduced and the overall responsibility for the network will be passed to Network Rail. I have met some of the managers for Network Rail, and they are excellent.

Economic regulation to protect investors, railway customers and the Government remains with the Office of the Rail Regulator. That is wonderful. It is a good thing that decisions on support for commuter routes will be taken at a local level.

I am pleased to see that rail freight is specifically addressed in the Bill. Where rail freight works, it works very well. For example, one train takes 260 BMW Minis from Cowley to Portishead for export every day. Seventy-five per cent of all Jaguars built are moved to the ports by rail for export. Some 900,000 tonnes of steel pass through Wolverhampton steel terminal every year, for use in the Black Country. Those operations take a huge number of trucks off our already overcrowded roads. It is essential, however, that we ensure that rail freight operators get long-term access agreements and that routes are identified on which freight operators are assured rights of access.

The Bill is a smaller step than many would want. Given the impact of yet more disruption, however, it is a pragmatic step in the right direction. There is always the possibility that railways will never be profitable in the private sector, and the Government will have to have a watching brief on the industry.

Our railway engineering is first class. The quality can already be seen in the Channel Tunnel and its rail link. The modernisation of the West Coast Main Line, while keeping it in action, has been and continues to be a terrific feat of engineering. In a way, this highlights part of the problem. In the short term, while improvements and modernisation are taking place, they add to disruption and unreliability before any benefits are felt.

I am confident that, given a continuity of investment and a simplified structure in which to exercise their engineering skills, our engineers will give us a world-class railway that we can all be proud of, driving up efficiency at appropriate cost. As soon as the words "minimum cost" are mentioned, then, although efficiency can be achieved in the short term, it will be jeopardised in the long term.

I hope that, as in the past, the engineers will become household names and no longer be subject to the whims and fancies of lawyers and management consultants peddling the latest management wheezes, when all they want to do is build a better railway. That is what the Government are supporting with their transport policy and with this Bill.

2.14 p.m.

Lord Faulkner of Worcester

My Lords, I am conscious that the conventions of the House do not allow me to congratulate the noble Earl, Lord Glasgow, on a maiden speech, but as someone who agreed with every single word of it I must say how pleased I am that he is back among us and contributing to debates on railways. I hope that there will be many other opportunities to hear the sort of wisdom that we heard from him this afternoon.

I should declare my three unpaid interests. I am a vice-president of Transport 2000, the environmental public transport campaigning group. I am a non-executive director of the West Somerset Railway, winner of the 2004 heritage railway of the year award, which I can assure the noble Lord Rotherwick, has every intention of running steam trains for the indefinite future. Since the beginning of December, I have been the chairman of the Railway Heritage Committee.

As many noble Lords are aware, I have been an unashamed supporter of the railways all my life. In the 27 years in which I have been involved with transport policy issues, I have lost count of the number of Secretaries of State and Ministers who have come and gone. At one point, I counted 12 former Ministers on the Conservative Benches alone who have occupied that job, and policy has changed numerous times as well. However, despite all that upheaval, the setbacks and the difficulties, the relationship between the British public and the railways has endured.

The public have demonstrated year after year their wish to maintain the railway network and to use it. The Association of Train Operating Companies says that last year—and I believe that I have more up-to-date figures than the Minister used—1.05 billion journeys were made on the railways. That is the highest figure since 1959, when the network was almost twice as large as it is today. ATOC also tells us that ours is the fastest growing railway in Europe. We are a long way from the low point in the 1980s when, as some of my noble friends will recall, a senior civil servant from the department joined the British Railways Board as a member and told everyone that his remit was to preside over the orderly rundown of the railways. By contrast, the background against which the Government have introduced this Bill is one of growth, some success and modest optimism.

As no one else has given any credit today to the work of the Strategic Rail Authority and its former chairman Richard Bowker, I at least would like to put on record my appreciation of the way in which, under his leadership, the SRA got the West Coast Main Line modernisation programme back under control with regard to budget and timescale. I also welcome the Secretary of State's decision last week to pick up the SRA's original proposal for a new north-south high-speed line, operating at the same speeds as the Channel Tunnel rail link. A journey time of under three hours to Scotland and 90 minutes to Manchester is a really attractive proposition. I hope that that study goes well and that it will include the benefits that would flow from the transfer of passenger traffic from the airlines to the high-speed line, particularly in terms of the environmental savings that would flow from more people taking the trains and fewer flying.

I also support wholeheartedly the community railways initiative undertaken by the SRA under the direction of Mr Chris Austin who, for many of us, is the epitome of the dedicated public service railwayman. I have no problem with the SRA's objectives of reducing the running costs of the services, of encouraging volunteer involvement or of attracting support from local authorities and others, or with all the other measures to increase usage and secure a long-term future for them. We have moved on from the original Beeching report and from Beeching mark 2, as well as the Serpell report and all the other various attempts over the past 30 years to reduce the size of the railway network.

When I worked at the British Railways Board, a ridiculous amount of time was wasted in dreaming up unworkable and unpopular bus substitution proposals. All of them came to nothing, for two reasons. One was the public outrage at the proposed closures; the other was political prudence on the part of Ministers, who could see the aggravation that would be caused by trying to go ahead with them and the fact that that would outweigh any potential cost savings. These, as the SRA has repeatedly pointed out, are always far less than expected because of residual liabilities to maintain the infrastructure.

The test that we should apply to this Bill today is whether it will encourage continued growth in the use of the railways and facilitate higher levels of investment in new services and rolling stock. Of course, I accept completely the assurance given by my noble friend that there is no secret agenda on closures contained in the Bill. Yet there are concerns, inside the industry, that some of the centralisation of the finances within the Department for Transport could allow for a closure programme to take place under a Secretary of State less enlightened and progressive than the present one.

I suggest that there are two amendments which the Minister might like to consider in Committee. I am not asking for it to be required of him to produce what he calls a glossy strategy for the railway. There is no need for that. It would do no harm, however, for the Government to restate their commitment to promote the use and development of the railways. That was contained in the Railways Act 1993—not a piece of legislation of which I am particularly fond—which imposed such a duty on the Secretary of State and the regulator, in these words, to promote the use of the railway network in Great Britain for the carriage of passengers and goods, and the development of that railway network, to the greatest extent that he considers …practicable". That was reconfirmed in the Transport Act 2000, when the duty was taken on by the Strategic Rail Authority. It would be a huge reassurance if a restatement of the duty to promote the use and development of the railway were to be incorporated into the Bill.

My noble friend should also be aware that there are concerns about the provisions in Clause 4, relating to the reviews by the Office of the Rail Regulator, of access charges and licence conditions. I received a letter this week from George Muir, the director general of ATOC, whose concerns may be summed up in this sentence: The risk to train operators is that a cash-constrained ORR Periodic Review will lead to a less effective railway—closures, reduced line speeds, less reliability, etc. If this happens, passengers would be pushed"— the grammar is a little strange— (and) put off travelling by rail, revenue would fall and operators would lose money". I hope the Government will address and reply to that concern.

The third difficult area concerns the passenger transport executives. I will not attempt to repeat any of the arguments used by my noble friend Lord Morris of Manchester, who spoke so eloquently about Greater Manchester. There is much concern that the PTEs are losing the right to be co-signatories on local rail franchises, and that the Bill provides that they will no longer be able to specify service levels, service quality requirements and fares. I am certainly one who takes the view that the PTEs are one of the most enduring and successful legacies of Barbara Castle's 1968 Act. They have facilitated the opening of new lines and stations in all conurbations where they exist. They have encouraged some huge increases in passenger numbers—for example, up by 40 per cent in West Yorkshire since 1997.

What PTEs have also done is to recreate a travelling by rail culture. That was important, particularly in the 1970s and 1980s, when cutback and retrenchment was the pattern elsewhere on the railway system. So we shall need to look at the future of the PTEs and their relationship again when we consider the Bill in its later stages. Finally, I turn to a much less controversial area. That is the future of the Railway Heritage Committee, which I have the honour to chair. As a child of the SRA, the Railway Heritage Committee would have been left an orphan after the SRA's abolition. I am delighted that the Minister, Mr. McNulty, met me and two colleagues on Monday to discuss these matters. As a result of that meeting, I hope I can express some confidence that my noble friend will be able to present a formula in Committee which will allow the RHC to continue its work of safeguarding the nation's railway heritage through its transformation into a non-departmental public body. Perhaps, when winding up, the Minister will indicate that the Government are intending to bring forward amendments in Committee.

This is an important Bill, much of which I welcome as it is positive. Yet there are a number of issues which we will need to look at in Committee. I hope that we can all be reassured that there is nothing in the Bill that will damage the continued growth and popularity of our railways, and the contribution they make to our transport system.

2.24 p.m.

Lord Harris of Haringey

My Lords, first, I declare an interest as an adviser to the board of Transport for London. Perhaps I should preface my remarks by making it clear that, unlike some of your Lordships here today, I did not, as a boy, have the fascination with rolling stock and the arrangements of the railway system that has clearly motivated some of the interests and expressions of view that we have heard during the course of this debate.

However, looking at the Bill and the implications that it has for the way in which transport services are operated in London, I am able to say that it demonstrates that there is a commitment to offer an opportunity to create a genuinely integrated transport system in the London area and one that is fully equipped to meet the demands of London's growing population and workforce.

I think that the Bill will lead towards the delivery of much-needed improvements. In particular, enabling the Mayor of London and Transport for London to have greater influence over national rail services in and around the capital through the ability to specify rail services, fares and station standards within a defined area and the freedom to fund additional improvements will be an enormous step forward.

The noble Lord, Lord Rotherwick, believes that the possible transfer of responsibility for some of these matters to the Mayor of London—I assume that he did not wish to see Ken Livingstone ennobled, as he seemed to imply during the course of his speech—is causing concern in some quarters. I find that a surprising position for anyone to take, for a number of reasons.

First, giving the Mayor of London clear responsibilities in this way demonstrates a line of accountability that will be clear and apparent to all Londoners and to all who use the transport networks in the London area. That line of accountability is one about which I would have expected Conservative Members of this House to be enthusiastic. Only today, the Leader of the Opposition has been talking about the importance of directly electing accountable people to be responsible for the police service. Surely there should be similar accountability for transport services and so I am surprised at the position being taken. I suspect that there is also concern about London appearing to have some kind of special treatment. I shall turn to that in a moment.

The second reason why it is important that the Mayor of London should have these responsibilities is that over the past five years, as a result of the direct election of the Mayor of London and the creation of Transport for London, we have seen significant improvements in the areas for which Transport for London has a responsibility. We have seen a real and genuine expansion of the bus network, and that is reflected in the number of people using the buses. We have also seen the successful implementation of the central London congestion charge, which demonstrates that Transport for London can deliver complex projects and sustained service improvements. The five-year investment programme now put forward by Transport for London sets out a clear programme to upgrade London's transport infrastructure through current organisational structures, and that means that, unfortunately, its scope is relatively limited on London's national rail network. Through this Bill, there is the possibility of changing that.

Why, then, should London have this slightly different status in the Bill? It is my contention that efficient and affordable rail services are vital for London and its future development. Because of London's pivotal importance in the national economy, they are also vital for the well-being of that national economy. Already more than 30 per cent of all rail journeys made in the United Kingdom are made wholly within London. People living or working in the city make seven times more rail journeys than those in other UK cities. Londoners account for more than 50 per cent of all UK rail journeys, but they have been the recipients of only part of the total subsidy of £1.3 billion over the past financial year. London's rail passengers received only £73 million, or less than 6 per cent of the subsidy.

I appreciate that that is another example of the grotesque way in which people who live in rural areas in this country are subsidised by the rest of us. I suppose that that is not likely to change as a consequence of this piece of legislation or anything else, but I simply note it as another example of the way in which London suffers in order to fund those who live in rural areas. All those people who live in rural areas who perhaps feel I am being derogatory about them ought to remember that London contributes £160 billion a year to the United Kingdom's gross domestic product and supports four million jobs. Delays in transport systems cost an estimated £140 million annually. Therefore anything we can do to mitigate that and improve those services is important. There is another reason why the emphasis on London in the Bill is so important. We need to recognise that within perhaps 11 years an extra 800,000 people will be living in the London area and there will be up to 650,000 additional jobs. With so many travellers dependent on rail services, the proposals in the Bill to increase the capacity and reliability of the national rail network are clearly important. Without any real influence over national rail services in the capital, control of transport is fragmented and the ability of the Mayor and Transport for London to make long-term improvements is limited.

The case for integration and regional control of rail services in London has been properly recognised in the Bill. The Railways Bill should remove legislative barriers to Transport for London assuming additional responsibilities for those services. Specific London responsibilities are to be addressed in a memorandum of understanding between the Secretary of State and the Mayor for London. Perhaps when my noble friend responds to the debate he will be able to give some indication of the timetable for agreeing and finalising such a memorandum of understanding.

Giving Transport for London greater influence over national rail services would create a more co-ordinated transport system. Closer integration between different forms of transport is an important objective as half of national rail passengers interchange with Transport for London modes as part of their journey. Thirty-six per cent transfer to the Underground and 15 per cent to bus services.

In that context anomalies are created if the Mayor and Transport for London do not have a role in the national rail network. The first element of this is in respect of the need for a simpler fares structure. Discrepancies would be removed in fares for journeys of a similar type by bringing rail fares fully within the integrated TfL zone one to six fare structure.

Depending on where people live in London, they may be disadvantaged by the fact that they can only complete their journeys on the national rail system and, as a consequence, they tend to pay more. Extending Oyster card ticketing to London rail services would provide passengers with the benefit of cash-free through ticketing on public transport and speed up ticket-buying at stations.

Transport for London is currently developing detailed proposals to ensure that using an Oyster card and pre-paying would be capped, so that the cost would be no more than the cheapest set of routes and the cheapest price available through the course of the day. This would mean a decision does not have to be made at the beginning of the day whether or not to buy a Travelcard or use an Oyster card. Currently, this is made more difficult by the refusal of many of the train operating companies to see the Oyster card system extended to their part of the network. I believe that is retrograde and unhelpful. Control of fares would enable innovative fare pricing to relieve peak-time congestion and encourage off-peak travel.

The other area I wish to speak about is the importance of station and security enhancements. By bringing responsibility for transport together under one authority, it will be easier to improve stations and maintain consistently high standards of security, cleanliness and accessibility for mobility-impaired passengers.

Improving the amenities of stations, particularly for vulnerable groups, has been a key priority for TfL and there has been significant progress. Expenditure has focused on passenger security, with specific improvements to CCTV, passenger help points and improved lighting on platforms, subways and entrances and improvements to station buildings. In addition, about £500,000 is being made available to provide the equivalent of 30 extra British Transport Police officers on the Silverlink Metro network. Until last June, I represented an area that was highly dependent on the Silverlink network: what used to be part of the Bakerloo line and the London Underground was some time ago transferred to Silverlink services from Queen's Park through to Harrow and Wealdstone and on to Watford. Those stations were noticeably in a worse state of repair and less secure because of the failure of integration. The possibilities made available by the Bill will enable improvements to take place.

It is also important that we see improvements to interchange stations in outer London, such as Stratford and Clapham Junction, to encourage orbital journeys, so that fewer passengers have to travel through busy central London stations. Additional capacity for up to 6,000 people per hour could be created by stopping longer-distance South West Trains services at Clapham Junction during peak periods. As well as relieving overcrowding, interchange opportunities to Victoria and West London Line services would be increased. Similar benefits could accrue from more longer-distance services calling at Stratford. That would also improve access to Docklands and the Stratford regeneration area and remove the need for workers in those places to travel to Liverpool Street and back out again, with considerable time savings.

It is possible by simplifying services, stopping patterns and timetables on the suburban network to increase capacity as by as much as 5 per cent on some routes. That is where the investment that will be possible under the Bill will be important. Few rail services are self-contained within London and many extend a short distance beyond the Greater London Authority boundary to terminate at places such as Watford and Dartford. Those services form an integral part of London's rail network, as well as providing important links for people travelling between London and the home counties.

Therefore, any extension of Transport for London's responsibility for rail services operating a short distance outside Greater London would be welcome, so I am pleased to see those provisions in the Bill. Obviously, that will be subject to consultation. I appreciate that some may be fearful about the implications of that, but it is about the sensible planning of an integrated service. I understand that proposals in the Bill would provide additional board members for Transport for London, so that they could advise on the needs of passengers who travel to the capital from areas beyond the Greater London boundary.

If we acknowledge that many rail facilities are shared between local London services and longer-distance services, then mechanisms to ensure that longer-distance services are not unnecessarily disadvantaged by Transport for London's proposals will be essential. The Bill provides the opportunity to improve London's rail services and to integrate them more effectively with other forms of public transport. In turn, that will ensure that rail passengers indeed, all passengers—get a better deal. That will be good not only for London but the national economy.

2.37 p.m.

Lord Berkeley

My Lords, I declare an interest as chairman of the Rail Freight Group. In doing so, I very much welcome the Bill and especially the opening remarks of my noble friend Lord Davies of Oldham about freight. I am very grateful for them.

It is great to see the noble Earl, Lord Glasgow, back with us, but I worry about his statement that the railways need to be high profile, like asylum, because the only time that rail freight got a high profile was caused by the asylum seekers almost wrecking the service through the Channel Tunnel due to the complete lack of action by the British and French governments, who tried to suggest that all railway workers become frontier guards overnight. So one must be very careful about that, but the noble Earl's intentions are laudable.

One important aspect of the Bill concerns getting rail expenditure more under control. Many noble Lords may have seen a report in the Guardian today about alleged threats by the Strategic Rail Authority two or three years ago that much of the network would have to be closed if the Government did not drastically increase the amount of money available. I recall that that is the kind of thing that British Rail used to do but, as other noble Lords have said, it got quite efficient towards its end.

Occasionally, we need reminding about expenditure by the Government on the railways. There is a variety of figures but the noble Earl, Lord Glasgow, and the noble Lord, Lord Bhattacharya, both said that it is high. I think that it is about four times as high as it was under British Rail. Many good things have been done but they have certainly not been freight-friendly. It was a shame that the SRA did not take more action on cost. It appointed a chief engineer—an excellent one—only four years after its creation. After he was appointed, he and his colleagues did a great deal to challenge Network Rail's costs and their causes, but that is a failure which we have not got over today.

The causes of costs are some of the things that I continue to worry about. The transfer of safety responsibility to the Rail Regulator should help, but I worry about the continuing behind-the-scenes activities of the Health and Safety Commission and Executive, who appear to be trying to undermine government intentions.

The latest report I have seen is in the Railway Magazine of March 2005 about the Health and Safety Executive's attitude to the Rail Accident Investigation Branch. Many noble Lords will remember debating this two or three years ago. The key of the RAIB is that it can collect evidence quickly while memories are still fresh and can give absolute assurance that any evidence and witness statements will not be used in evidence against people in subsequent prosecutions.

That was accepted, both by the British Transport Police and the Health and Safety Executive. But now I see a letter in the magazine from the Health and Safety Executive chairman, Mr Callaghan who has said to the RAIB: In the interests of criminal justice, HSE will need to make an application on every occasion when legal proceedings are under consideration to the court for such evidence to be made public. I am sure noble Lords will agree that this was not the intention at all. I hope my noble friend will take action to reign in the excitement of the HSE, because it is going to lose responsibility for safety to the ORR. It will have nothing to do with the HSE in future and I hope that the HSE is told that because otherwise it will prevent the RAIB doing its job and will restrict measures to keep costs down.

The new structure within the Department of Transport looks good. But it must be an informed buyer and keep up the pressure on the railway industry towards greater efficiency. There are still some in the industry who think that the Government owe the railways a living. We all love the railway, we all want it to grow and be more successful, but it must be on the basis that it has its costs under control. That applies equally to the HSE and to other activities which I shall move on to. I hope that to do that the Government will take on some of the expertise currently with the Strategic Rail Authority, which in many ways has done a good job.

If the Government had not liked what the SRA was doing, one option would have been to have got rid of the senior management and issue directions and guidance. But we are where we are and I accept that the restructuring is a good idea. Let us hope that it works. I very much hope that it does.

One of the consequences of the restructuring, as my noble friend said, is that Network Rail is taking on more responsibility. It must continue to ensure that it does not remain risk averse. One often gets the feeling that it does not want to do anything at all. Its objective should be to follow government strategies, which I shall come to. It is important that the independent regulator continues in his independent role.

I have listened carefully to many speeches about devolution, be it Scotland, PTEs or London. It is essential that there are common standards, capability and access rights right across the network—not only for freight, but for open access passenger operators. It is also reasonable to accept that local delivery should be allowed to develop with local responsibility.

I was in Scotland talking railways last Friday and I thought, "Isn't it nice in Scotland? They have responsibility. They have quite a few devolved powers. And they have plans and strategies." There are tweaks that have to be made, but they are doing well. We, and central government, must be cautious about the general assumption that everything that central government do is good and everything that anybody else does is unreliable and spendthrift. There may be cases where it is true, but in others it may be untrue.

I remind my noble friend, in the nicest possible way, of Transport Direct's new, helpful website, which tells users how to get from one place to another. Modern Railways says that, when it tried to get from Greenock to Gourock in Scotland, it was sent by one ferry and two air journeys, when there is a perfectly good bus service. That lovely system has so far cost £30 million, whereas Transport for London operates a similar system that works extremely well and costs £2. That is one example of where local and regional organisations can do better. Perhaps we should reflect on that when debating what the PTEs, London and Scotland should do.

Many noble Lords have spoken about duties and strategies. The Minister said that strategies must be set by government; in that case, why are they frightened of writing them down? As many noble Lords have said, it was one of the fundamental principles of the 1994 Act. The Rail Freight Group, of which I am now chairman—I was not at that time—fought very hard to have the words "and freight" included. I will need a lot of convincing that those words are no longer necessary, because I think that they are as necessary now as everything else.

Many other strategies resulted from the 2000 Act, including the promotion of the use of the Channel Tunnel for passengers and freight. The SRA and the Government have singularly failed to do that, but it is still a good strategy. The open access directives, which relate mainly to the Channel Tunnel, are two years late; they should have been transposed into domestic legislation by March 2003. Next month will be the second anniversary of that failure. In three months' time, at the end of April, rail freight through the tunnel could stop unless there is an agreement between the Government, Eurotunnel and EWS Railway to continue the minimum usage charge payment while everything else is resolved. It does not give much long-term comfort to investors looking three months ahead, when everything could stop completely.

A lot could be done through strategies. One of those is an extension of what my noble friend Lord Harris of Haringey said about interoperability of ticketing. Mersey Travel is keen to have an ITSO-standard interoperable smart media ticket, which Chiltern has. I am sure that my noble friend will be able to correct me if I am wrong. Interoperable tickets are vital to encourage passengers to use trains. It is a small contribution.

I shall study my noble friend's comments, both before and after this speech. I shall now talk about assurances, strategies and so on. Another problem with not having a strategy is the uncertainty about what the railways are for. My noble friend Lord Harris quoted persuasive statistics about how important the railways are for London, and the noble Earl, Lord Glasgow, talked about flying down from Scotland. But do we need to spend £10 billion getting to Glasgow half an hour quicker by train, which would cost £100, when you can fly for £10? We need a debate on that. I always got the impression that the SRA was keener to develop intercity travel than it was to encourage regional and local travel. That debate ought to be held. A government strategy or consultation is needed to get that message across.

Getting rid of the strategies will send all the wrong messages to private-sector industry. If strategies, of which the SRA has nine, are suddenly cancelled and no more are created, what will industry think about long-term planning? Local authorities and regional authorities also need strategies to provide an input to their thinking.

What happens if the Secretary of State and the Rail Regulator cannot agree on how much money Network Rail needs to keep the network going to the level that the Secretary of State would like? As the Bill stands the regulator will decide which parts of the network to cut. It may mean branch lines or putting a 50 mph speed limit on all the intercity lines to save money.

The Bill says that the regulator makes the decision, but noble Lords will remember that this started three or four years ago when the then Secretary of State—I think it was Mr Byers—said that it was unacceptable for an unelected body to make decisions about what happened to the network. To me that is what is in the Bill today. It would be better if the regulator made an appraisal of what could or could not be delivered and recommended it to the Secretary of State, so that he took the political decision on whether to close the West Coast Main Line or the East Coast Main Line or whether to give more money. I leave that for future debate.

Those who suffer as a result of changes to the network input or output such as speed limits on main lines—which may be the freight companies or open access passenger operators—will be looking for compensation if their business is seriously affected by changes in legislation. I am grateful to the Minister and his colleagues and officials for our discussions. This is an important issue to which I shall try to return in Committee, I hope with something nearly resolved.

In conclusion, I support the Bill. It will bring more clarity and transparency to the structure of the railways. I hope that it will enable the Government to have a greater grip on costs. A few areas will need amendments to improve the Bill in its later stages. I pay tribute to the support and assistance that I have received from Ministers and officials in my discussions. My noble friend has one of the best teams of officials on a Bill that I have ever come across. I thank him.

2.52 p.m.

Lord Rosser

My Lords, I declare an interest as a beneficiary of a railway trade union pension fund.

The railway industry has a potentially bright future, provided that it avoids scoring own goals and sooner rather than later there is stability in organisational structure. Running a successful railway requires all involved to be singing from the same hymn sheet. The fragmentation of the industry in the mid-1990s was an act of crass stupidity because the architects of that nonsense did not understand that basic point.

The common objective for the railway industry should be the provision of safe, reliable services operated within a sound financial framework with timetable schedules and fares and pricing policies that encourage, not discourage, the use of passenger and freight services. That means people carrying out a wide range of activities, co-operating and working together to deliver that common objective. There also needs to be someone in overall charge to make decisions in line with the common objective, where there appear to be actual or potential conflicting priorities.

The fragmentation of the industry created a large number of separate independent companies whose priority was not the overriding objective of the provision of quality rail services but rather the interests of each company and its shareholders. Normally, one might argue that with able people the defects of an inadequate organisation structure could be overcome. However, the fragmented contract-based railway organisation structure introduced in the mid-1990s was so alien to the basis on which a successful railway operates that it promoted conflict; created a climate where what counted was what the contract said rather than what was needed; and resulted in a blame culture and narrow short-term thinking designed to protect backsides.

The situation was made worse by the fact that there was no one in overall charge able to bang heads together. The company with responsibility for the infrastructure—Railtrack—decided to contract out to other firms all responsibility for maintenance of the infrastructure for which it was responsible. The result was that Railtrack slowly lost the in-house knowledge and expertise to deal on equal terms with its contractors and became too reliant on their views and opinions about the state of the infrastructure, when and what work should be done and the costs involved.

What we have been seeing since the late 1990s is the industry slowly being put back together again. The Strategic Rail Authority was created, as the fragmentation of the 1990s did not envisage any requirement for a medium-or long-term strategy for the industry. There was certainly no hope of the numerous individual companies getting together and producing an agreed strategy, as they were too busy trying to resolve differences of opinion between themselves and competing with each other for contracts or franchises.

The inability of the multitude of different companies to work together in harmony is perhaps best illustrated by the failure to develop a powerful railway industry lobby to match the roads lobby. If there was one thing that privatisation of the industry should have guaranteed it was the ability of the industry, now out of the public sector, to campaign and argue its case in public and raise its public profile. It has failed to do that. Indeed, the body that has done most to make the case for rail has been the Strategic Rail Authority.

Railtrack has disappeared and been replaced by Network Rail. Network Rail has recognised the problems of contracting out responsibility for maintenance and has taken the work back in-house. It is achieving reductions in inflated costs as a result of putting part of the railway industry together again. The number of different train operating franchises is being cut, which is a further step in the right direction of reducing the number of different players involved. In future, the Department for Transport will make decisions on franchises. Doing that effectively will involve a knowledge of the issues associated with operating rail services, the costs involved and the scope for running a franchise more efficiently and more imaginatively for the benefit of the travelling public.

Network Rail was clearly aware of the difficulties involved with the maintenance of the infrastructure when the detailed knowledge was with their contractors and not in Network Rail as well. Some feel that the Department for Transport would be in a better position to assess the merits of bids for franchises and the performance of existing franchise operators if the department itself had hands-on experience and knowledge in the field.

There is one franchise in the public sector—South Eastern Trains—which is providing a better service to passengers than the private sector operator that it was brought in by the Strategic Rail Authority to replace. The franchise in an extended form is now out to tender and will move back into the private sector. Those who have argued that it would assist the Department for Transport to have a public sector comparator by which to assess bids for other franchises and the performance of existing operators deserve a full answer at some stage on why their argument is flawed.

The Bill takes us a further stage down the road of reversing the adverse effects of the fragmentation of the mid-1990s. It gives an enhanced role to Network Rail in the performance of the railway system and leaves the decision-making role on strategy and franchises to the Secretary of State. Whether that is what he wants or not, the Secretary of State will find it difficult under the Bill to avoid being held increasingly accountable by rail users for the overall performance of the network. Medium- and long-term strategy and day-to-day operational performance may seem to be two different things, but day-to-day operational performance is affected by strategic decisions on investment; the priorities that determine where that investment is to be made; who should be awarded franchises; and the level of service to be provided and on organisational structure.

Not all regard the impending demise of the Strategic Rail Authority with satisfaction. Under Richard Bowker, the Strategic Rail Authority became much more proactive and began to take a direct interest in the day-to-day performance of the railway industry and those responsible for delivery, bringing together the major players on a regular basis. Some argued that the Strategic Rail Authority became too involved in that area. Others reacted with disbelief that it had not been done earlier. Some of the train operating companies were also unhappy with decisions made by the SRA including on the award of franchises and the basis on which they were made.

The activities of the Strategic Rail Authority are to be reallocated elsewhere, with the Department for Transport taking over the responsibilities for strategy. If the Secretary of State is not also going to take over the SRA's role in promoting rail, the industry itself will have to take on this job in a way and to an extent that it has not up until now. If it does not do so, it will be a disgrace and will simply confirm the suspicions of many that too many railway companies are concerned only with their own individual interests and not with the wider picture of the future success and development of the industry as a whole.

As has already been said, a considerable number of clauses are devoted to rail closure procedures, reflecting a change in the process, including who is involved and in what way. Some concerns have been voiced that the Bill makes it more likely that lines will be closed and seeks to move responsibility for such decisions away from the Secretary of State and on to the shoulders of local communities and PTEs. Only time will tell if those fears have any justification, particularly under a future, more hostile Secretary of State, or whether the Bill will increase local involvement in the development of existing and new services.

Certainly the political fallout from line closures will be considerable, and the savings a drop in the ocean compared with the real issue of continuing the drive to reduce some of the significant increases in costs, in particular those of infrastructure renewal and maintenance, which occurred as a result of the duplication and contract culture that came with the fragmentation of the industry and its responsibilities in the 1990s. It may well be that the introduction of the SRA's Community Rail Strategy will result in some searching and revealing questions about how costs are attributed to less heavily used local and rural lines and the extent to which they do or do not overstate the expenditure actually being incurred.

The PTEs have expressed their concerns about what they see as a reduction in their involvement and influence in the franchising process for services in their areas. The PTEs have been good and supportive friends of the railways, and one hopes that whatever the wording in the Bill. they will continue with that support. Likewise, one hopes that the Government will provide them with the financial resources to enable them to do that.

Finally, I want to make a comment about safety. There are concerns in some quarters about safety coming under the economic regulator for the industry on the ground that financial considerations may take priority over safety. There are safeguards to prevent that happening. Some also believe that a further reason why costs have increased in the railway industry since fragmentation has been that the consequences of that fragmentation were divided responsibilities, no one in overall charge, and a blame and buck-passing culture that has resulted, until recently, in a rather rigid application of safety requirements that has lacked the flexibility to take account of differing circumstances. If the changes provided in the Bill and the process of bringing the railway industry back together again enable that issue to be addressed, that is a plus point. There is no contribution to overall safety, if an over-rigid application of requirements for the railway industry increases costs and drives more traffic on to our roads or discourages traffic from moving over from road to rail.

The Bill represents a further stage in the recovery and rehabilitation of the railway industry from the ideological assault launched on it in the early and mid-1990s. The sound financial policies pursued by this Government have led to economic growth and stability with low levels of inflation and unemployment. Those have provided the necessary platform for growth in railway traffic and an increase in services.

The railway industry needs to remember that every additional passenger and freight customer is a potential supporter and advocate of rail. Those who sought to attack the railway industry in the early and mid-1990s, whose policies were geared to an industry with a future in decline, have not changed their spots. They have simply been thwarted in their objectives and, given half a chance, they may well want to try again. The more supporters and advocates the rail industry has, the more difficult it will be politically for an unfriendly government to deny the industry the investment it needs and instead pursue a policy of slow and gradual decline. It is for the railway industry itself to do far more than it has to date to make the case to a broadly sympathetic public for the development and expansion of the industry and, in so doing, secure its long-term future.

3.4 p.m.

Lord Burlison

My Lords, I shall speak on the part of the Bill concerning the passenger transport executives and the effect of the legislation on their powers. I suppose that my interest goes back to the very start of PTEs. A predecessor of mine in a previous incarnation, Alderman Andrew Cunningham, was chairman of the Tyne and Wear PTE. He was a brilliant chairman, and 1 now see that many of the markers that were put down at the time by that executive have come to fruition and form part of the successes that we see today.

The Bill is a positive step, and I welcome the Government's intention to simplify the structure of the railway industry and to devolve more responsibilities over local networks to local and regional bodies. The PTEs have a statutory duty to secure the public transport services necessary to meet public transport requirements in their area. I am relieved to say that there is nothing in the Bill to change that.

Yet, the Bill seeks to take away the ability of PTEs to be involved in the specification of rail services in their area. Instead, the PTEs will have to negotiate with Whitehall in the hope that their views, based on years of local knowledge, might be taken into account. I agree with my noble friend Lord Morris of Manchester that PTEs are better placed than civil servants and Ministers in London to judge what rail services best suit the needs of their own area. Of course, we all trust the Secretary of State to do what is best in fulfilling his responsibilities to ensure that this country has a public transport system that meets the needs of its citizens. But, as sad a thought as it is, current Ministers will not be in those jobs forever, and it is the responsibility of the Government to ensure that legislation is fit for its purpose and will stand the test of time.

I understand from the debates in another place that the Government have proposed to reduce PTE powers in this way because they believe that the PTEs have abused or could in the future abuse their position at the negotiating table and frustrate the process. Furthermore, the Government seem to believe that the involvement of the PTEs in the rail franchising process makes for an over-complex and bureaucratic procedure and has even resulted in additional costs. Surely, obliging PTEs to enter into separate arrangements with the Secretary of State to ensure that their voice is heard is simply another layer of bureaucracy.

We must remember that PTEs were set up by a Labour government in the late 1960s to promote and co-ordinate public transport in the metropolitan areas. In the 1970s through to the early 1990s, overall public transport infrastructure investment was extremely low, and the PTEs therefore became responsible for enhancement outside London. As your Lordships are aware, PTEs are grant-funded by the passenger transport authorities, which raise funds from a levy on their constituent metropolitan district councils. In addition to that, they receive funding from other sources.

PTEs are democratically accountable. At one time, they reported to the transport committee; now, they report to a joint board of councillors from all the district councils. I would contend that the current process has led to significant growth in the use of rail networks in the main conurbations outside London and has facilitated close integration between bus and light rail systems. To me, that would seem to be something that the Government are urging local authorities and the transport industry to do, and the PTEs have been at the forefront in seeing those improvements come to fruition. The PTEs have actively pursued measures that address the problems of social inclusion, and we must appreciate the important role that railways play in the city regions, providing access to jobs and education; lower costs and wider areas to search for employment; access to opportunity for a wide section of the community; and increased provision for disabled passengers.

Rail networks in PTE areas are hugely important to those who depend on them and are often a major mode of travel. In fact, there are 137 million trips a year in PTE areas, and that is almost twice the number carried by inter-city operations. There has been significant growth in rail passenger numbers in PTE areas of investment over the past 20 years, with the use of networks doubling during that period.

We in this House have a duty to scrutinise and improve legislation that comes before us. As conscientious parliamentarians, we need to be satisfied that seeking to change a process that has served the needs of the travelling public so well over many years is properly justified.

I know that my noble friend has already been urged to give precise examples of where and when the PTEs have been the cause of delays and increased costs. I hope that he will feel able to give your Lordships further information in his reply.

This is an important Bill, and I wish it well in its passage through the House. For too long., the travelling public have had to put up with poor rail services, with no clear direction or leadership from those running the industry. Frankly, they deserve better. However, I hasten to add that I have travelled for many years with GNER on the east coast line between Newcastle and London, and I have no complaints with either the service or the staff on what must be the best run line in the UK.

The noble Earl, Lord Glasgow, was lucky to get an apology from British Airways. The last time I flew with British Airways, it was a morning flight, and I was told they could not get me back to Newcastle that day, although there were a number of flights available, as the flight that I was booked on was cancelled. I did not receive an apology.

I feel that the Government have got it wrong with regard to PTE provisions. Amendments proposed to the Bill in another place were rejected because it was felt that they went beyond restoring the status quo and gave the PTEs even greater powers. I have some sympathy with the Government on that. However, I am sure that that was not the intention of the PTEs.

I hope that the Minister might be able to look at this again and leave the PTEs with their existing powers, which have served them so well over many years.

3.12 p.m.

Lord Tunnicliffe

My Lords, I support this Bill, but first I must declare an interest. I am employed in the railway industry as chairman of the Rail Safety and Standards Board, an organisation which facilitates agreements between parties on safety in the railway system. I also reflect from a position of 12 years with London Underground, which carried 1 billion passengers a year, and two years looking after the buses, where London Transport carried more than 2 billion passengers a year. That gives one a pretty raw relationship with public transport. I am afraid that I am not as in love with the railways as are some speakers in the debate.

Like most Englishmen, I am fond of the railways, but I do not believe that they are automatically the solution to every transport need. Indeed, I also know of the many myths surrounding the railways. Their environmental credentials are much overplayed. Railways do not pollute at point of use except with respect to noise—and if you live close to a high-speed railway, you will know that noise pollution is a real problem—but they create carbon emissions at remote power stations or in their own power car. I also know that my many friends in British Rail who ran the railways in the late 1980s and early 1990s managed to run them with very reduced amounts of money, but only by stealing from the capital base. At the end of that programme, at the point of privatisation, the railways were deeply decapitalised. They were further decapitalised in the early years after privatisation.

I know that the railways will consume a vast amount of money in the foreseeable future. There is no way around it. Today, the Government announced their funding for the railways over the next four years, and it is typically, £3 billion, £4 billion and £5 billion. If you look behind those figures to the net borrowing that is also going to Network Rail, it is more like £16 billion over three years.

The railways eat money. Despite all the efforts of Network Rail and I admire what it is trying to do to reduce costs-this is an expensive pastime. Inevitably, we must come to the conclusion that those large amounts of money must be the direct responsibility of a Minister. Essentially, that is what the Bill does. It abolishes the SRA. Unlike a number of my noble friends, I am very sad about that. The SRA has done a good job and the work that it did on strategies, Southern Region electrification and the West Coast Main Line was good for the railways. We have better railways because of the work of the SRA, especially because of the work done in recent years.

Unfortunately—or fortunately—the SRA, together with the ORR, became involved in the process of readjusting the Treasury's expectations about railway funding. I spent many years readjusting Treasury expectations. It is a brutal and turbulent process. The brutal and turbulent process that has taken place in the railways over the past two years has exposed the gaps in the present structure. The Government have been forced to address those gaps. In the Bill, it addresses the gaps by abolishing the SRA.

It is a brutal solution because it does not seem to respect the work that the SRA has done. It is also a very brave decision. Noble Lords will remember "Yes, Minister". My experience is that it was a pretty accurate programme. Ministers are usually very good at not being brave and push decisions away from them to other agencies. Over the decades, that is what governments of both hues have done.

The Bill will put the responsibility for expenditure on the railways in the hands of the Secretary of State, alongside the output from that money. No longer will people find themselves in the intolerable positions that British Rail and I found ourselves in where, on the one hand, money was specified and, on the other, vague outputs were insisted upon while the relationship between the two was ignored. Under the Bill, the Secretary of State has to set out in his high-level output statement what he wants. An independent and, I believe, effective rail regulator will say what it will cost. There will be a process of trade-offs between the two of them and, at the end of the day, the Secretary of State will have to stand up and be counted about what is delivered and will have to extract the money from the Treasury to pay for it.

I said that I am sad about the SRA. I am pleased by the Minister's assurances that the new Department of Transport capability will build on those presently in the SRA to use their best talents and to make sure that the key strategic thinking that they have initiated goes on. I believe that the rest of the team at the SRA will be dealt with equitably. I would value further assurances on that.

There has been a lot of talk about the duty of the Secretary of State to publish a strategy. I understand that he has not said that he will not. Indeed, I share the view that Secretaries of State of all kinds should produce strategies. Surely, in order to manage large departments, they must set out what they expect to do in the future and what they expect to achieve. I hope that that is what will happen.

In the high-level output statement, we will have something much better than a strategy in many ways. We will have a clear statement from the responsible politician of what the railways will produce. It will have to be fairly specific. It will not be easy for the Secretary of State to say, "I didn't really mean this" because the Office of the Rail Regulator has to be able to value and cost it. That high-level output specification will in many ways amount to a more useful and meaningful document than a glossy strategy. The processes of decision-making that go into it will be important. I hope that they will be open and inclusive.

I look forward to an open and inclusive environment, where we see and understand the decision-making criteria to be used. I am possibly the only person who will openly welcome the new closure procedures. The department, as your Lordships may know, has produced outline criteria in one of its publications. For the first time, we have closure criteria in line with the rest of the criteria for transport decision making. It is still a fairly messy scene but, when I closed railways in the past decade, we had quite separate criteria for our decisions to spend on the railway—or to grow the railway—from those we had to use for closure. I welcome bringing them together, which seems to be the intention of this Bill.

There are some concerns from local authorities and PTEs. I am not as seized as a number of their defenders with the idea of the present powers of PTEs being precisely right. I look forward to the debate in Committee with interest. The key issue is that there has to be an equity between the PTEs and Transport for London. It is absolutely essential that they should be on equal footing, and play equal roles in the development of public transport systems in this country. Stability in the relationship between local and national decision making is something we need to look forward to. It is to be hoped that the Bill will be a step towards that, particularly if the quality contracts for buses are going to be used by local government in one form or another. They must have confidence that funding diverted from railways to quality bus contracts will be sustained and will be something they can have faith in.

Railways have had a long journey over 200 years. There have been rare periods of genuine stability and, frankly, rare periods of overall success. Is this to be the moment when we see the beginning of a successful period? I am sure we all hope so. It is the best way forward, but let us not pretend it is a perfect way forward. The depth of decline of the national railway is enormous. I do not mean at the surface level, I mean in the physical assets and long periods of under-maintenance when the physical assets have declined. The task of addressing that will be enormous.

The privatisation brought about by the Railways Act 1993 was much more flawed than we realised at the time. I do not share the simplistic charges of the government of the day. The things that have not worked in it are very subtle. The failure to have good congruency between the incentives of the various bodies—the fact that the entities within the national rail network are so different in character, expectations and financial structure—has created a series of perverse outcomes which have been very difficult to overcome. The Government have decided not to address those issues, and I entirely approve of that. The railway could not take the level of change necessary to hit these issues head on. This Bill is a good step forward. I hope that the Government and the industry will take it and work together to deliver the success—for our country, for our passengers—that we all deserve.

3.24 p.m.

Baroness Scott of Needham Market

My Lords, the unavoidable absence of my noble friend Lord Bradshaw has given me the welcome opportunity to participate in the debate today.

We on these Benches share the Government's aspiration for an efficient, effective and safe railway. Unlike the Government, however, we do not believe that the Bill as it stands will be enough to achieve that. I agree with the sentiments just expressed by the noble Lord, Lord Tunnicliffe, who sees this as part of an ongoing process of reform. It is certainly true that the privatisation carried out in the 1990s has resulted in a rail industry that is fragmented and riddled with perverse incentives, which have been of no benefit to the travelling public. That was described in rather poetic terms by my noble friend Lord Glasgow and the noble Lord, Lord Bhattacharyya. I rather think that if the amounts of public money that have been spent in the past decade or so on accountants, lawyers and consultants had been invested in the railway, the passengers might be rather happier today. But the Government cannot hide behind the Conservative privatisation programme for ever, as they have had eight years to improve things.

There are some significant problems. On most of our high-speed rail network, the trains are something like 30 years old, and the new franchises on the Great Western, the Great North Eastern and Midland Mainline do not propose any replacements. By the time the next franchises come up, the trains will be almost 40 years old. When there has been investment in fast trains, such as the Pendolinos, it has often been the case that the use of fast lines by slow trains has reduced their impact.

We agree with the Government's proposition that there should be fewer franchises. However, if my noble friend Lord. Bradshaw were here, he would emphasise again that we believe that the franchises should be for a longer period to create the environment for investment that would make new rolling stock possible. Indeed, the new northern franchise not only precludes new trains but does not even allow for refurbishment.

On the specifics of the Bill, there are a number of issues about which we have concern and to which we shall return in Committee. We share the concerns expressed by the noble Lords, Lord Morris of Manchester and Lord Burlison, about the future role of the passenger transport executives as co-signatories to rail franchises. The urban conurbations are the only parts of our country that have anything that approaches a fully integrated transport system. They have a good record of managing and increasing the growth of rail networks under their management.

We do not believe that the Government have yet made the case for making such a major reduction in their powers. As my noble friend Lord Mar and Kellie said, that it sits rather oddly in a Bill that offers a very welcome devolution of powers to London, Scotland and Wales that the powers of the passenger transport executives should be curtailed. I am not sure that the PTEs will derive much comfort from the Minister's introductory comment that they could still be co-signatories, and further the aims of the Government's White Paper, because that leaves the decision-making firmly in the Secretary of State's hands, and presumably it will be his opinion which counts and not that of the local representatives on the ground.

We support the transfer of rail safety functions to the Office of Rail Regulation. A number of independent observers over the years have found a culture of gold-plating of safety standards. As the noble Lord, Lord Rosser, said, that reflects the growing blame culture that has developed in the industry. We have always believed that overzealous application of safety standards can interfere with the running of the railway to the extent that passengers are almost encouraged to leave the railway and travel by road, where they are patently less safe, or equally that money is spent less cost-effectively on the railway than it might be if it were invested in road safety.

We have some serious worries about the tone of the Bill. The mood music seems to be one of service cuts, reduction and closures. As we have heard, one third of the Bill is dedicated to describing ways in which lines or stations might be reduced, closed or partly substituted. We are not convinced that the Bill is entirely clear about who will be held responsible for those actions—the Office of the Rail Regulator, the funding authority or the Secretary of State. It has certainly never passed me by that major rounds of railway cuts in this country are always remembered by the name of the hapless civil servant who carried them out and that people do not remember which government were in power or who the Secretary of State was. We will not let you get away with that this time.

The 1993 Act, which brought in privatisation, and the 2000 Act both contained specific provisions placing a duty on government to promote the railways for passengers and goods. The Minister has said that there is no such clause in this Bill because it is not needed—that of course government have responsibility for all modes of transport and will therefore promote the railway. But he must understand that the absence of such a clause in a Bill dedicated in at least a third of its clauses to closure or reduction—or "network modification", as it is called—with not a single word about expansion, will cause suspicion.

The Minister referred to a secret agenda. Our fear is that it is not actually terribly secret. On these Benches, we wish to see policymaking in the railways which is set in its full social, economic and environmental context. The impact of closures on the overall rail network and on regional and local transport plans as a whole should be considered. We shall be looking at the guidance very carefully.

On a smaller yet still important matter, until recently, as some noble Lords will know, I chaired the LGA's transport executive. It occurs to me that during the last 12 months of my term there, the dialogue between local authorities and the SRA improved enormously. They made huge efforts to improve their relationship. I hope that the Minister can reassure me and the rest of the House that the department will continue that close liaison with local authorities.

The worry which many of us have is that cuts and closures will be regarded in the narrowest of contexts—and that we will see a repeat of the Post Office closure syndrome, which is now a routine part of local life. I am afraid that I take little comfort from the Minister's reassurances about consultation. When Post Office closures are proposed, people are fully consulted—and then ignored. The Government have set much store by their sustainable community plans and are, I understand, seriously considering bringing in road-user charging. I hope that the department considers that public transport alternatives, including rail, will have to form part of both those agendas.

My final point is that, on these Benches, we are thoroughly dissatisfied with the provision made for scrutiny by Parliament or the public. The rail network guzzles public money—some £16 billion, as we have just heard from the noble Lord, Lord Tunnicliffe. We believe that public investment on that scale must be subject to detailed public scrutiny. I respectfully suggest that the noble Lord, Lord Rotherwick, is wrong to say that there should be no political interference in the running of the railways. Of course, it is not the job of government to micro-manage, or to interfere with operational, day-to-day railway duties. Setting strategy and overseeing that sort of sum of public money, however, is absolutely the preserve of politicians. It is the job of other politicians in Parliament to scrutinise that. We join the noble Lord, Lord Berkeley, in wishing to see strategies produced by Ministers made public and the subject of debates in Parliament. Such an important part of our daily lives deserves nothing less.

3.32 p.m.

Viscount Astor

My Lords, I thank the Minister for introducing the Bill and for his extremely helpful briefing last week. I am not one to go over old ground, but he started by saying that privatisation assumed a decline in rail services. I want to make the point that it was in fact the opposite. Privatisation sought to address the long-term decline in spending on rail services and the need for growth and new investment. I hope that the Minister will agree that, since privatisation, passenger numbers have gone up, under both the Conservative government and the Minister's Government.

It is somewhat disappointing that in all today's contributions by Members of your Lordships' House, no one has really mentioned the train operating companies or the success that they have achieved. They have spent vast amounts of money improving their services, and the proof is the rise in passenger numbers. I think that it was the noble Lord, Lord Faulkner, who stated that there were now over a billion passenger journeys. We must not forget that in our debate. It is sad that it has not been focused on by any of the noble Lords who spoke.

There is sometimes a kind of collective amnesia in rail debates, as we somehow look back on the so-called glorious days of British Rail. I suppose, in those days, people looked back on the glorious days of individual rail companies. Services are now much improved from what they were under British Rail. They are faster and work better. The idea of going back to those days is, I have to say, rather extraordinary.

The Government created the Strategic Rail Authority with a great fanfare. The Deputy Prime Minister said that the Strategic Rail Authority would put railways at the centre of an integrated transport system. It appeared in the Labour Party's manifesto in 2001, which stated that the Strategic Rail Authority would provide a clear, coherent and strategic programme for the development of the railways so that passenger expectations were met. Indeed, just two years ago, it was in the Department for Transport's review of its 10-year transport plan.

So why scrap the SRA? What went wrong? Did it fail to deliver? Did it not deliver what the Government wanted it to deliver? There has been no explanation of that. The noble Lord, Lord Tunnicliffe, got nearest to bringing out the issue, but we have never quite heard the Government's reasons. I shall not oppose the abolition of the SRA, but I should like to know from the Government why they want to abolish it. Behind everything—it has only been hinted at on the government Benches—is, as the noble Baroness, Lady Scott of Needham Market, suggested, a desire to bring the railway system back under Treasury or government control. That is the purpose. The Secretary of State will now be held responsible. Perhaps that is a good thing, but we should not get away from that.

One of the most important aspects of the process will be access charges reviews. Clause 4 reduces the jurisdiction of the Office of the Rail Regulator. Access charges reviews are important for ensuring a competent and efficient working railway in the years ahead. They indicate the costs of the maintenance of the lines, and franchisees bid for the lines in the belief that the maintenance needs will be met. We want to know whether that is a way of capping the money available to implement the findings of the review and, in effect, whether it is saying that the regulator has to prioritise the needs in the budget. I believe that, effectively, it is the long arm of the Treasury. There was certainly an absence of any assurance from the Secretary of State on the subject when the Bill passed through the House of Commons.

As I am sure the Minister will argue, the regulator is not allowed to apply political criteria, as it is recognised that the application of short-term political considerations is harmful to private sector confidence and to the medium and long-term needs of the railway industry. That restriction allows the Secretary of State to overrule the regulator, and thus, in a sense, it can be regarded as political interference in the funding. We should like to hear from the Minister exactly how that will work.

Much has been said on the subject of strategy. As the noble Lord, Lord Berkeley, said, unlike the Railways Act 1993 and the Transport Act 2000, the Bill contains no duty to promote the use and development of the railways or a duty to publish such strategies. Such a duty is important for the long-term future of the railways, especially in the light of the Government's Sustainable Communities Plan and road pricing proposals, which will succeed only if there are viable public transport alternatives.

The noble Lord, Lord Berkeley, made an interesting point about the cost of different forms of transport. The public should have a clear choice between travelling on an aeroplane, a train, a coach, a bus or a car. We must have a clearer understanding of the costs involved and, indeed, of the effects of pollution and so on. The difference in the cost of the various modes of transport when travelling from one end of England to the other is extraordinary.

The issue of closures will rear its ugly head as we go through the Committee stage of the Bill. The Bill makes it difficult to open a railway line but very easy to close one. The community rail development strategy transfers more responsibility for financing rail services to passenger transport executives, but it does not transfer any extra money to do so. At the same time, it removes the power of PTEs to determine the local rail franchises that should be awarded. This part of the Bill is about making the closure of railways easier.

It is suggested that, once again, the budgets will be capped and that local authorities will then have to decide whether to make up any shortfall via their council tax income or other funds or, indeed, perhaps whether to set up an alternative bus route instead. The fear is that will be the end of many rural services. It will be the Treasury saying to local authorities, "If you want this rural service, you can have it but you have to pay extra. We won't give you the money". We need to ensure that passengers are properly protected and that a pre-closure report is published on the social, economic and environmental impacts of any such proposal.

London is a concern. The noble Lord, Lord Harris of Haringey, carefully read the main points of the Transport for London briefing that we all received. I am grateful to him for making sure that we had all read it. However, some questions arise. Under the proposals, Tfl. will have the freedom to fund additional improvements. There is no answer on who will pay for those and how that fund will be levied.

The noble Lord also said that we on these Benches should be keen on that because it gave everyone a chance to be involved in the democratic process regarding TfL and the Mayor. There is one problem in his argument: most of the people who commute into London do not vote for the Mayor because they live outside the area. They are excluded from the democratic process when it comes to Transport for London.

There will also be a memorandum of understanding between the Secretary of State and the Mayor of London. I wonder whether the Minister will tell us anything about that. That is an area that perhaps should be subject to parliamentary scrutiny. I shall certainly consider whether the memorandum should not be subject to some form of secondary legislation.

As my noble friend Lord Rotherwick pointed out, when we dealt with the Roads Bill there was A totally different emphasis on strategic routes. Will the fast train coming from Glasgow or Newcastle have to stop at every station from Hatfield into London to pick up commuters? It is an issue we shall address in Committee.

My noble friend also mentioned heritage rail and the issue of black boxes. I hope that the Minister has a satisfactory answer for us. Can the Minister tell us, now that Network Rail will be under greater government control, what incentive will there be for Network Rail to speed up the exploitation of its huge property assets to improve stations? I am thinking particularly of the creation of safe car parks to encourage train use. In certain areas, it is difficult to commute to your Lordships' House on the train because, if you leave your car in the station car park overnight, the next morning it is unlikely to be in the state in which you left it. I have some questions about the incentives for train operating companies. We all agree with the importance of longer-term franchises, subject to better and more credible performance criteria, but can the Minister say something about that?

I should also like to make a point about the SRA. It compensated train operating companies that lost revenue as a consequence of claims arising from national campaigns of industrial action. Will operators' protection be retained in the future?

The Minister said that the last thing the industry needed was "ever-changing strategies". Sadly, if only previous Secretaries of State had listened to the Minister more closely we would not have had six reviews in seven years. I have no idea what the Government's strategy really is. Are the rail services there to carry commuters, run services between big cities, maintain rural roots or carry freight? What will be the priorities?

We now know that in the past seven years, despite many improvements, there is no great improvement in punctuality. The Government's plan was to increase the amount of freight carried on the railways by 10 per cent by 2010. It is clear that that target will not be met. Also in the Government's plan was the completion of Thameslink 2000 and the east London line by 2010. It is clear that that will not happen.

Lord Berkeley

My Lords, I am grateful to the noble Viscount for giving way. Can he explain why the 10 per cent growth in freight over five years will not happen?

Viscount Astor

My Lords, there certainly seems to be no evidence that it will happen, but if the noble Lord, with his expertise in freight, can show me some evidence, I shall be happy to look at it.

Lord Berkeley

My Lords, it has grown 10 per cent in the past year.

Viscount Astor

My Lords, I am grateful for the noble Lord's intervention. He must be pleased about that increase, but the question is whether it can be sustained. We will have to look at that.

Ministers have always promised that fares would not rise faster than inflation. In practice, that has not happened. The most recent increase was 4 per cent, and that is the second 4 per cent rise in only two years. That does not exactly encourage people to use the trains.

What is important, and what the Government will be judged by—what all governments should be judged by—is what is happening to the poor old passengers. Sometimes, we ignore them and talk more about networks. At the end of the day, the railway is there to provide a service to the passengers. That is how it will be judged. We will consider that as the Bill goes through Committee. I assure the Minister that we will try to be helpful in our amendments, because we support much of the Bill, but we will have to put him under a certain amount of scrutiny.

3.47 p.m.

Lord Davies of Oldham

My Lords, this has been a most interesting and challenging debate. The principal sustenance that I derive from it is from the contribution of the noble Viscount, Lord Astor, who said that there are parts of the Bill—dare I say, the principle of the Bill?—to which he subscribes. It was certainly clear from all other parts of the House that, whereas that we will enjoy debating an enormous number of issues in Committee, the principles on which the Bill is based command general assent. That is not to say that I do not recognise that we will have a fulfilling and interesting Committee, but this is Second Reading and my job is to emphasise that we are discussing the principles behind the measure.

The only time that I thought that we might be coming close to a challenge to the Bill's principles was on the question of costs and closures. That came first from the Liberal Democrat Front Bench. The noble Baroness, Lady Scott, seems to be living in a fantasy land—where this is a Bill for closures because we have a government who are determined to run down the railway system and reduce investment in it—apparently oblivious of the Government's expenditure plans for the rail industry and the amount that we intend to invest during the next few years. She was partially followed in that—although rather more carefully, I thought—from the Official Opposition Front Bench when the noble Viscount, Lord Astor, also commented on closures. Let me make it absolutely clear: the Bill is about creating a structure in which we can invest in a modern, expanding railway.

On freight, I do not need to add a word to the point made by my noble friend Lord Berkeley: freight expansion is already healthily under way. Of course, we intend to create the conditions in which that persists.

The debate also benefited enormously from those with a real interest in the railways, who can comment on recent history with great authority. I am thinking of my noble friends Lord Tunnicliffe, Lord Rosser, and Lord Berkeley, who have spent a great deal of time in the railways. They were able to establish why it is necessary for us to create a new structure for the railways.

On the other hand, the history that we heard from the other side of the House, was a little partial, to put it mildly. It is amazing that we should be challenged about why we are abolishing the Strategic Rail Authority. We are making it absolutely clear that we intend to abolish it because, when it was conceived, the scale of the industry's problems was not as apparent as it later became. One word not mentioned by the other side: Hatfield; nor was the word Railtrack mentioned by the other side of the House, in its history of the past 10 years of rail privatisation.

As the noble Earl, Lord Glasgow, emphasised, we are struggling with the consequences of a botched rail privatisation which it has taken some time to get straight. In this Bill, the Government are creating a structure for expansion. There is one aspect I give freely to the Opposition. I appreciate the points made by the noble Lord, Lord Rotherwick, and the noble Viscount, Lord Astor, on unused assets of the railway system. We do not want to see those sold off to make a quick return, when assets which we would need for rail expansion might be sacrificed. I hope the Liberal Democrats will accept that that is our main proposition. However, we recognise that selling off some railway assets may bring resources into the industry. We need to have a clear evaluation of unused assets. I accept the point that was made.

It was suggested that the Government are not committed to putting strategy in this Bill. That view was reinforced by the noble Viscount, Lord Astor, in his summary of the debate. There was no strategy in the 1993 legislation, but there was strategy when we established the Strategic Rail Authority. It would be difficult to devolve the concept to a strategic rail authority and not say that its job is to provide a strategy—that was its role. That legislation did that, but it has not been recognised on all sides.

The purpose behind this legislation is to ensure that the Secretary of State is responsible for strategy. It does not need to be laid upon him; he is responsible to Parliament for the actions which he takes for the management of the railway. He is automatically responsible for the long-run decisions relating to the railway and its strategy. We put strategy in legislation only when it is incumbent upon subsidiary bodies and not upon Secretaries of State responsible for the overall strategies of their departments—certainly with something as significant as rail in the Department for Transport.

The Bill has been challenged on two main points: that it lacks a commitment to strategy and that it makes closures easier; and it is said that that reflects the view that this Government are about producing measures which restrict the railway. That is not so. We share the viewpoint that has been expressed fully from my own Back Benches. I have noted that there is a contrast between the number of constructive, intelligent and well presented contributions from my own Back Benches and the dearth of any contribution at all on the Opposition side. It may be that those on their Back Benches have a slightly clearer view of the past and the responsibility of the previous administration than those on the Front Benches giving vent today.

Nevertheless, we must consider certain issues. I was grateful to my noble friend Lord Morris for his point about passenger transport executives, which my noble friend Lord Burlison reinforced. We shall explore those points more fully in Committee. Of course we see a significant role for passenger transport executives; in fact, the purpose of the Bill is to increase the local dimension and to improve the relationship between the railways and local communities. It is important to have a relationship between influence and power, and accountability for costs incurred.

I could quote chapter and verse the reasons for our anxieties about the existing powers of passenger transport executives and why we must restructure them, but we will debate that in detail in Committee. I fully recognise the experience of my noble friend Lord Morris as a very important transport executive. As a former Member for Oldham in the other place, I know a little about the Manchester transport executive, of which my noble friend spoke with approval, and the issues that it is confronting.

I appreciated the remarks of my noble friend Lord Bhattacharyya about comparisons with other rail systems. No one visits Japan without appreciating the staggering quality of its rail system. That is why it is proper for the Government to try. with might and main, to improve the quality of our rail services. Recently, flag-carrying has always been related to airlines, and governments have felt happy only when their airlines perform satisfactorily; but in this age of global warming and when people seek the most effective means of transport, rail is due for a resurgence. Governments' success will be measured by the quality of the rail services that they provide.

It will take us a long time to reach the standards of Japan, but I hope that we never reach the levels of debt to which Japan descended over its rail system. Nevertheless, Japan's railways are a legendary experience, which I have enjoyed as, I am sure, other noble Lords have. I have a great advantage in that my eldest son works in Tokyo and takes me for a train ride the moment I mention the word "transport" in his presence. We must strive to match that extraordinary feature whereby one can set one's clock by the arrival of a train. The train that was intended to come in at a certain time arrives at that time. There is no doubt about the need for promptness, particularly given the vast numbers of rail commuters who use our rail system.

I was grateful to my noble friend Lord Harris for emphasising the London dimension: 30 per cent of rail journeys are made in the vicinity of London. Prompt arrival is crucial. I do not underestimate the other aspects, such as comfort and facility, but the most important dimension for people going to work is a guaranteed service that departs on time and transports them to their destination at the scheduled time.

We seek to place Transport for London four-square with the passenger transport executives elsewhere. We have not finalised the details. The noble Lord, Lord Harris, and the noble Viscount, Lord Astor, asked when the memorandum would be published. We are working towards that position. Again, the issue will be explored in Committee. The noble Viscount has given notice of his intention to raise the issue, and I know that we must respond to that point.

I hope that it will be recognised that in the Bill we seek imaginatively to approach one of the big challenges of our age: how to ensure that commuter services, certainly those coming into London, work to a much higher standard than in the past. That depends upon significant input from the local dimension. in which the Mayor of London will play a full part.

My noble friend Lord Faulkner updated my statistics. I am always grateful to him when he is able to do that; I know that he has great knowledge of the railways. The difference between his updating of the statistics and my lowly aspirations is that I can give only what is official and published and he can give what is always true but not published. I cannot match his figures until the official date of the end of March. He will therefore forgive me if I have alluded to figures not quite as attractive as those he put forward. My noble friend has the benefit of being able to give unofficial assessments that show how the railway is working better. I am grateful to him.

He also mentioned the Railway Heritage Committee, of which he is chair—I am grateful for that intervention. I know what an important role it plays and I accept his point. It would seem appropriate for the current powers of that committee, which enable it to designate records and artefacts owned by a number of British Rail successor bodies, to be extended to include new companies and bodies that have emerged since the enactment of the legislation that established the committee in 1996.

It is an important and interesting point. My noble friend had a fruitful meeting with the Minister in the other place, my honourable friend Mr McNulty. An undertaking was given that we would try to make progress by Committee stage. I shall be held to that; I have no doubt. I hope that I will have made progress by then.

In connection with heritage, the noble Viscount, Lord Astor, referred to black boxes on heritage trains. That is a matter not for primary legislation but for regulations. There are industry standards from which the heritage operators could apply for a derogation. They are not part of a measure of primary legislation. I hear the noble Viscount's point; I have great respect for all those who take an interest in our heritage railways. I hope that we will not spend too much time on an area that would not be appropriate for the primary legislation that the Bill contains.

My noble friend Lord Tunnicliffe mentioned the overall position. I emphasise that we will get into the issues of the passenger transport executives in Committee. I am all too aware of his expertise on the industry and will value his contribution in Committee. I want to emphasise that both that aspect and the role of Transport for London will inevitably be the subject of intensive debates in Committee. He will have recognised from this debate that other noble Lords have keen interests in this area and will need to develop the points.

I am conscious that I took a considerable amount of time in introducing the measure and I am probably taking too long in summing up, but this has been a most fruitful debate. I apologise if I have missed points that noble Lords have raised. It has been impossible to cover everything. I want to emphasise that, as we should at Second Reading, we have cleared the decks for some interesting exchanges in Committee. There are areas that we need to cover with care.

I want to emphasise that the merits of the legislation are such as to enable us to create a structure for proper strategic investment in the rail system and its development. Responsibility will be accounted for by the Secretary of State with a clear line of authority as regards the Office of the Rail Regulator and the operation of the industry. That is against a background where the Government's commitments in their spending plans are already feeding through towards an enhanced railway system in many areas.

There is much still to be done. We cannot make up for 40 years in a short period of time, but we have the measure here that creates a structure and we certainly have the commitment and the investment to guarantee that that structure translates into reality. On that basis, I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Grand Committee.

House adjourned at five minutes past four o'clock to Monday, 21 February.