HC Deb 23 March 1998 vol 309 cc7-8W
Mr. Webb

To ask the Secretary of State for the Environment, Transport and the Regions when plans by First Group plc to take over Great Western Holdings were submitted to the Director General of Passenger Rail Franchising; what powers the Director General has in such cases to prevent takeovers; what range of conditions he can impose on such takeovers; what are the duties of consultation of the Director General before determining such conditions; and if he will make a statement. [35419]

Ms Glenda Jackson

[holding answer 20 March 1998]: The first intimations that First Group were considering the takeover of Great Western Holdings Ltd. (GWHL) were given to the Franchising Director orally in the latter part of January 1998. The Franchising Director confirmed to the First Group that any change of control would require his approval; that in considering his approval he would take into account the Objectives, Instructions and Guidance (OIG) issued to him on behalf of the Secretary of State on 6 November 1997 (a copy is in the Library of the House) which, in his view, obliged him to ensure that benefits were secured for passengers if the change of control were to be allowed; and that the Office of the Rail Regulator and the Office of Fair Trading would deal with competition aspects of the proposed takeover. He was not party to the properly private discussions between First Group and GWHL. He heard from First Group on the evening of 3 March that, in view of Press speculation, they wished to announce on 4 March that they were in advanced discussions with GWHL. On 4 March the Franchising Director met First Group to discuss the passenger benefits to be provided under the 3 franchises involved, Great Western Trains and North Western Trains (which First Group seek to acquire) and Great Eastern (which First Group already own).

The Franchising Director's powers are contractual. Under the franchise agreements for Great Western Trains and North Western Trains his prior consent to change of control must be obtained. He has unfettered contractual discretion to refuse or attach conditions to his consent.

Having taken the view that, as a result of the proposed takeover none of the terms and condition of the franchise agreements would be changed the OIG obliged him to ensure that additional benefits were secured for passengers if the takeover were to be allowed. The Franchising Director announced on 6 March 1998 various benefits on the basis of which, subject to contract, he proposes to approve the takeover. These will include additional rolling stock; station improvements, including the provision of wheelchair access and bicycle facilities; security cameras and greater bus/rail through-ticketing. He is discussing details of the package with PTEs who, as parties to the North Western Trains franchise agreement, he is required to consult on issues affecting them. The Franchising Director has general obligations under his OIG to consult and liaise with other bodies. He has no specific duties of consultation about conditions to his consent to a change of control.