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Robinson, Mark (Somerton)

Roe, Mrs Marion (Broxbourne)

Rowe, Andrew (Mid Kent)

Ryder, Rt Hon Richard

Sackville, Tom

Sainsbury, Rt Hon Tim

Scott, Rt Hon Nicholas

Shaw, David (Dover)

Shaw, Sir Giles (Pudsey)

Shephard, Rt Hon Gillian

Shepherd, Colin (Hereford)

Shersby, Michael

Skeet, Sir Trevor

Smith, Sir Dudley (Warwick)

Soames, Nicholas

Speed, Sir Keith

Spencer, Sir Derek

Spicer, Sir James (W Dorset)

Spicer, Michael (S Worcs)

Spink, Dr Robert

Spring, Richard

Sproat, Iain

Squire, Robin (Hornchurch)

Stanley, Rt Hon Sir John

Steen, Anthony

Stephen, Michael

Stern, Michael

Stewart, Allan

Streeter, Gary

Sumberg, David

Sweeney, Walter

Sykes, John

Tapsell, Sir Peter

Taylor, Ian (Esher)

Taylor, John M. (Solihull)

Taylor, Sir Teddy (Southend, E)

Temple-Morris, Peter

Thomason, Roy

Thompson, Sir Donald (C'er V)

Thompson, Patrick (Norwich N)

Thornton, Sir Malcolm

Thurnham, Peter

Townend, John (Bridlington)

Townsend, Cyril D. (Bexl'yh'th)

Tracey, Richard

Tredinnick, David

Trend, Michael

Trotter, Neville

Twinn, Dr Ian

Vaughan, Sir Gerard

Walker, Bill (N Tayside)

Waller, Gary

Ward, John

Wardle, Charles (Bexhill)

Waterson, Nigel

Watts, John

Wells, Bowen

Wheeler, Rt Hon Sir John

Whitney, Ray

Whittingdale, John

Widdecombe, Ann

Wilkinson, John

Willetts, David

Wolfson, Mark

Wood, Timothy

Yeo, Tim

Young, Sir George (Acton)

Tellers for the Noes :

Mr. Timothy Kirkhope and

Mr. Robert G. Hughes.

Question accordingly negatived .

Mr. Gary Waller (Keighley) : I beg to move amendment No. 248, in page 5, line 2, after 1996', insert

, or such later date as may be appointed by order made by the Secretary of State,'.

The amendment would enable the period during which the regulator is obliged to take account of advice issued by the Secretary of State to be extended by order. It would create some additional flexibility in the process of introducing competitition. I suppose that the Secretary of State's advice cannot be predicted, but it could cover the factors that the regulator will have to take into account in determining his policy on access to the rail network. My hon. Friend the Minister for Public Transport will recall that the Bill, as originally published, did not make provision for the Secretary of State to issue any advice to the regulators.

Clause 4(4)(a), which requires the regulator to take such advice into account until 31 December 1996, was introduced by the Government in Committee. Ministers justified their amendment on the ground that the success of the first round of franchising would depend on franchisees being offered some degree of exclusivity. I presume that the Secretary of State's advice to the regulator will require him to take that objective into account when he considers access agreements between the franchising director and Railtrack. That advice will counterbalance the requirement for the regulator to promote competition, in the light of the Government's acceptance that, at least initially, competition will need to be qualified.

9.15 pm

The amendment is needed if certain eventualities are to be met. First, there is the possibility that the first round of franchises will not have been let by 31 December 1996. It appears that the Bill, as drafted, would not enable the

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Secretary of State to require the regulator to accept that, beyond that date, competition must be qualified. I wonder whether the Government are confident that potential conflicts between franchising and open access services will have been overcome by that date. Secondly, there is the possibility that, in the light of developments, the Government will come to the same conclusion as the Select Committee--that open access and franchising are not compatible. The Bill does not seem to provide any mechanism to deal with that eventuality.

The amendment would not require the regulator to have regard to advice issued by the Secretary of State beyond 1996 ; rather, it would provide a degree of additional flexibility for safeguards to be brought into effect if the Secretary of State considered them necessary. Until the franchises are working, it will not be possible to be certain whether, and to what extent, it will be necessary to regulate competition. Clearly, my hon. Friend the Minister believes that some constraints will be needed in the first round of franchises to encourage franchisees to go into the market. That can certainly be achieved through guidance. To set, at this stage, a date governing the regulator's duty to take guidance into account offers an unnecessary hostage to fortune. That is why I move the amendment.

Mr. Freeman : I should like to respond concisely to my hon. Friend, for whose comments I am grateful. He is certainly a doughty supporter of rail interests, not only as a constituency representative but as someone speaking on behalf of the Association of Metropolitan Authorities.

My hon. Friend was quite right in saying that the purpose of the amendment which was accepted in the Standing Committee was to empower the Secretary of State to give guidance to the regulator for a limited period--up to the end of December 1996. The aim was to make sure that the first franchises were let satisfactorily. That will probably mean what we call moderation of competition, which is the denial of certain open access rights.

I cannot recommend that the amendment be accepted, as it is inevitably a compromise between fettering the independence of the regulator and ensuring that the initial franchising is a success. I think that we have got the balance right.

Mr. John Gunnell (Morley and Leeds, South) : The system will operate for only 32 months before the clause, as drafted, takes effect. Does the Minister believe that the franchising process will be completed in that time? Everything said so far suggests that the matter will be proceeded with gradually. Although the publication of the franchise maps has taken the process forward a little, it is unlikely that 32 months will be sufficient. Given the Minister's arguments in Committee, increasing flexibility would seem to be entirely sensible.

Mr. Freeman : I appreciate that two and a half years is a relatively short time, but we expect to let a significant number of franchises by then. Completing the pattern for the whole of Great Britain will clearly take considerably longer.

As to the franchises that are let subject to the views of the regulator acting on guidance from the Secretary of State, one is looking at a period of anything up to 10 years after the given date, during which time the franchisee will have some degree of exclusivity. That will almost certainly

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apply in the case of Network SouthEast services, for operational reasons--because additional services cannot be run into London stations during peak hours. I suspect that it would not be possible at peak hours to thread in open access services.

I cannot commend my hon. Friend's amendment to the House because if we are to encourage the development of open access services that are not under the franchise regime, at some stage they must be given the right to compete for train paths and to challenge for the right to provide rail passenger services.

I probably have not convinced my hon. Friend, but when we drafted the amendment for the Committee stage, we faced a difficult choice as to where the cut-off point would be. If we had extended it to 10 years, that would have stifled independent railway operation. If we had limited it to six or 12 months, that would not have been effective in launching the first round of franchises in this Parliament.

Mr. Gunnell : Does not the Minister accept the Transport Select Committee's view that open access will mean paying a higher subsidy to secure franchisees in the first place?

Mr. Freeman : It is extremely important to get the first franchises off the ground properly. We will learn from experience and, because it will be a gradual, market-led initiative, the franchising director, from his own experience, will undoubtedly modify or amend some of his policies.

We are determined that the first group of franchises will operate successfully and that the quality of services available to the travelling public will improve. The cut-off point is a matter of judgment, but I believe that the Government have got it right and I ask my hon. Friend not to press his amendment to a Division. We will certainly take on board my hon. Friend's comments on behalf of the AMA about non-statutory guidance to the franchising director and discussions with the regulator. However, the regulator must be independent, and it is most important that after December 1996 he will be able to operate entirely unfettered. Notwithstanding that, I know that my right hon. Friend the Secretary of State will maintain close contact with the franchising director.

Mr. Waller : I find it difficult to understand why my hon. Friend feels that the regulator would be compromised by the option, in the light of possible future uncertainties, to extend the period during which he can be given advice on a statutory basis and heed that advice. Nevertheless, I listened carefully to my hon. Friend's remarks about non-statutory guidance to the regulator. Given his other assurances, I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.

Clause 5

General duties of the Franchising Director

Amendment made : No. 160, in page 6, line 13, leave out and' and insert--

(aa) any payments which the Franchising Director may make with a view to securing--

(i) the provision of any services, or

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(ii) the operation of any network, station or light maintenance depot, or any part of a network, station or light maintenance depot, in pursuance of any provision of sections --(Failure to secure subsequent franchise agreement) --, 32 to 35 and --(Contracts between the Franchising Director and the Board for the provision of non- franchised railway passenger services) -- below ; and'.-- [Mr. Freeman.]

Mr. Freeman : I beg to move amendment No. 3, in page 6, line 16, at end insert--

(3) Where the Secretary of State gives the Franchising Director any objectives under subsection (1)(a) above, the Secretary of State shall--

(a) lay a copy of a statement of those objectives before each House of Parliament ; and

(b) arrange for copies of that statement to be published in such manner as he may consider appropriate.'.

Mr. Deputy Speaker : With this it will be convenient to discuss amendment No. 1, in clause 19, page 21, line 5, leave out

send a copy of the approval'

and insert--

publish the approval and shall send a copy of it'.

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