House of Commons Hansard Debates for 1 Nov 1993

The Minister for Transport in London (Mr. Steve Norris) : I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Michael Morris) : With this, we will take Lords amendments Nos. 70, 71 to 123, 325, 326 and 453.

Mr. Norris : The amendments build on the existing closure procedures. Those procedures will apply, as at present, to the complete cessation of passenger services to

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a station or on a line. Consumer committees will continue to report on any hardship arising from a proposed closure and may, of course, hold public hearings. Some changes will be made to the procedures, mainly to reflect the new structure of the railways. The operational control of certain facilities, networks, stations and light maintenance depots may not in future rest with train operators, so the closure procedures will also need to apply to proposals to terminate the use of such facilities. Decisions on closures will be for the regulator, but there will be a right of appeal to the Secretary of State. There will also be a simplified procedure for minor infrastructure closures.

The amendments would substantially improve the closure provisions of the Bill. The majority are drafting, technical and consequential amendments, but one or two are of substance. I emphasise that most of the proposals were tabled by Opposition Peers, or introduced by the Government in response to Opposition concerns. Let me detail the most significant of them.

Amendment No. 108 is the most important in the group. It removes the 26- week limit on any further period that the Secretary of State may allow the regulator to make his decision. We have repeatedly said that the restructuring of railways does not lead to more closures but, inevitably-- as has always been known on the railways--there will be a few over time as railways adjust to changing demand, just as there will be additions to the network for the same reason. Most of the closures will not be particularly important but it is conceivable that there may be controversial closures and the closure procedures have to cater for that eventuality, too.

The Bill as drafted permits the regulator a maximum of one year in which to make his decision. It is acceptable to argue that, in an especially controversial case, that limit might be tested severely. Amendment No. 108 will remedy that potential difficulty.

Amendments Nos. 107, 112 and 325 would enable the rail users consultative committees to publish their reports to the regulator ; would ensure that the RUCCs were informed of the designation by the franchising director of those services that were experimental ; and would permit the Secretary of State to place conditions on consents to closure given under the alternative closure procedures set out in schedule 4. All those amendments followed representations made on behalf of the Central Transport Consultative Committee, and I am sure that hon. Members on both sides of the House will agree that they would improve the Bill.

Amendment No. 453 would make transitional provision for closure proposals-- that is, provision for closure proposals which might be in the pipeline when the new procedures replace the old. It provides that such a proposal should be processed under the old procedure. It also ensures that the channel tunnel services are included in the consumer committees' responsibilities.

Amendments Nos. 97 and 104 introduce the new clauses that are needed to cover a particular circumstance in which a closure might be proposed that was not covered by the Bill as amended in this House. If consent to close a network or a facility such as a maintenance depot is refused, the franchising director must secure its continued operation, and is likely to do so by engaging someone to do it on his behalf. The new clauses will simply enable him to repropose closure of those networks or facilities if in later years he wishes to do so.

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Other amendments in the group include a recasting of clause 33, which deals with proposals to close franchise services, so as to align it with the new clause introduced by amendment No. 97--proposals to close networks operated on behalf of the franchising director--and amendments to ensure that the removal of track is not treated as a closure provided that at least a single track remains. That last amendment carries forward the position under the existing closure procedures and ensures that routine track alterations can take place without triggering any part of the new closure procedures. All the amendments are fairly technical and I again emphasise that the majority were either introduced by Opposition Peers or by the Government in response to demands from groups such as the user committees or Opposition Members.

Lords amendment No. 123 adds a new clause to the Bill which deals with exclusion of liability for breach of statutory duty. The new clause is exactly the same as the provision in section 3(4) of the Transport Act 1962 which provides that nothing that is contained in sections 3(1) or 3(2), which places a duty on BR to provide railway services in Great Britain, shall impose

"any form of duty or liability enforceable by proceedings before any court to which the Board would not otherwise be subject." In broad terms, the duties of the franchising director in respect of securing continuity of service are not to give rise to any liability for breach of statutory duty. That fairly straightforward principle is in the 1962 Act and is simply replicated in this legislation. However, to avoid doubt, that does not mean that we are seeking to exclude any proceedings for judicial review in respect of those duties of the franchising director.

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Similarly, any obligation on an operator not to discontinue services or the operation of a network, station or light maintenance depot without giving due notice, is not to be enforceable through proceedings for a breach of statutory duty. Those obligations will be enforceable by the regulator who will use his enforcement powers in the Bill.

It is also important to recognise that, in moving that tht 1962 places a duty on the franchising director analogous with the duties on the British Railways Board under the 1962 Act, we are not excluding liability of operators for breaches of contract or negligence. All those powers remain in place should it be appropriate for them to be used.

As I said earlier, the other amendments in the group are largely technical. It is reasonable to say that they all improve the Bill by common agreement, having received the support of Opposition Members when moved, and I trust that the House will agree to them.

Mr. Bayley : The Opposition welcome Lords amendment No. 108, which deletes the 26-week cut-off period for extensions of consultation in respect of closures. However, unlike the Minister and Conservative Members, we fear that it will have to be invoked because the privatisation is not just a sale of the railways, it is likely to be a closing down sale of the railways.

It is disingenuous of the Minister to say that the closure procedures set out in the Lords amendments simply build on the existing procedure. It is also misleading to say that the Government are introducing a simplified procedure for

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dealing with minor closures. The minor closure procedure, which we have not had before, reduces the public's right to object if they are to be disadvantaged by a closure. In the past, the transport users consultative committees decided whether a closure was so minor that they had no comment to make. In future, the committees will not have that choice and the regulator will make that decision.

Nothing illustrates better the way in which the Government have approached privatisation, by making it up as they go along, than the way in which they have dealt with the closure procedures. We had a full day's debate on the matter in Standing Committee and ended up with 17 pages of legislation on the issue in the Bill that we sent to another place. A further 14 pages of legislation have come back. They are changes which were not thought of by the Government in Committee. They have arisen subsequently.

It all seemed so easy in the White Paper. The closure provisions were summed up in two very short paragraphs. Paragraph 71 stated : "There is no reason to believe that the Government's proposals will lead to closures of services. But if in future, as a result of change in demand, the Franchising Authority decided that a service was no longer socially necessary and there was no case for continuing that service then the same statutory closure procedures would apply as now. In such cases the final decision about whether a service should be retained or withdrawn will continue to be taken by the Secretary of State."

Sadly, those commitments were not to be. First, the commitment to the social railway has been deleted--it does not appear in the Bill. Secondly, the commitment to provide the same statutory closure procedures as we had previously does not appear. We have tighter time limits and a new concept of a "minor closure". There used to be a requirement to advertise in two local newspapers. That is now changed to one local newspaper, although in another place an amendment was passed that there had to be two advertisements in one newspaper. If, as seems likely with privatisation, in respect of services from Seamer to Bridlington to Beverley to Hull, if that east coast line were to close, where would one advertise? Would it be the Scarborough Evening News, the Hull Daily Mail or the Bridlington local newspaper? It is not good enough to limit it to one newspaper. In the White Paper, we were promised that the decision on the closure would be made by the Secretary of State, as now. In fact, it is not the Secretary of State but the regulator who will make the decision. In some cases, there is a right of appeal to the Secretary of State, but what we were promised in the White Paper is not in the Bill.

The threat of closure is real. Regional Railways has published a map on which it highlights a wide range of lines that are threatened with closure. Apart from the Scarborough to Hull service, there is the Middlesbrough to Saltburn service, the Middlesbrough to Whitby service, the Grimsby to Cleethorpes service, and the Sheffield to Barnetby service. Apart from Yorkshire, the Carlisle to Barrow service is marked in red on the map as threatened with closure. Other services include Barrow to Silverdale, Aberystwyth in Wales to Shrewsbury, Llanelli to Craven Arms and so on throughout the country, including Lowestoft to Ipswich, and, in the south- west, the Exeter to Barnstaple and the Par to Newquay services. All those services are highlighted as at risk.

Those lines do not make a profit, they provide a public service, and their future depends on whether the franchising director's budget, after other calls on it to make

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main franchise services profitable for private operators, will contain enough money to maintain services. British Rail currently has 10,600 miles of passenger track. On Second Reading, the Secretary of State said that, after privatisation, the extent of the network would remain nearly the same as it is now. In Committee, the Minister said that there would not be a significant reduction in the franchised services compared with the May 1994 pre-privatisation timetable. I should like the Minister to reiterate the commitment that the basis of services post-privatisation--the basis of the franchising agreement--will be the same as the services set out in the May 1994 timetable. I should like him also to comment on use of the phrase "substantially the same as in the timetable". Time and again, we have asked for a definition of what "substantially" means in that context, but we have never received one. Does it mean that 90 per cent., 95 per cent. or 99 per cent. of services will be protected?

What about the quality of service that is provided to the travelling public? The service can decline quite substantially without the closure procedures being introduced. I notice that in amendment No. 90, which the Minister described as a small technical tidying-up matter, there is a specific new provision that, if a line is changed from dual-track working to single-track working, it will no longer count as a closure at all. So the service can be radically reduced and undermined in a major way, which, in the past, would have resulted in a full and proper closure procedure, and, with the appointment of a regulator, even the Secretary of State can now get off the hook.

The commitments that we were offered in bland and breezy terms in two paragraphs of the White Paper have not been met in the relevant 17 pages of the Bill that went to the Lords or in the further 14 pages of amendments that have come back to us. What does the Minister say about the failure to honour the commitments contained in the White Paper?

Mr. Norris : It always strikes me as quite extraordinary that one of the more incredible flights of fancy indulged in by Opposition Members when considering this Bill is that they assume that somehow the pattern of railway services in Britain has remained immutable, unchanged and as written on tablets of stone for the past 45 years. If that had been the case, it would be worrying if the Government proposed anything to suggest that in the future those tablets of stone might be shattered.

The hon. Member for York (Mr. Bayley) is obsessed with that notion. He meanders constantly around this complex Hornby OO service--an immutable service which has not altered since time began--and he believes that the slightest movement on it will upset terrestrial equilibrium. Of course, that is and always has been nonsense. The hon. Gentleman purports to know something about railways, but I have not been able to judge whether he does know anything in the 150 hours of debate that we have had, and I remain to be convinced. The hon. Gentleman should know that the pattern of railway services has altered in every year that the railways have been in operation.

Mr. Alex Carlile (Montgomery) : Mostly for the worse.

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Mr. Norris : That is a matter for the hon. and learned Gentleman and others to judge. Railway services have altered under Governments of both complexions--bits have been added to and removed from railway services-- which is exactly what one would expect to happen as railway patterns reflect changes in demand.

Mr. Carlile : Will the hon. Gentleman give way?

Mr. Norris : If I may finish the sentence, the hon. and learned Gentleman will be welcome to enliven our proceedings, as he always does.

Let us take the extraordinary proposition that what might happen in the future is exactly what has happened in every year that the railways have existed. There will, no doubt, be minor closures and minor openings. The local press will make more of the closures than of the openings, but that is in the nature of things. We want a procedure to deal with the closures, to ensure that whenever a closure is proposed it is exhaustively debated, and all the relevant information about a service's usefulness to the local community is taken into account.

The Bill not only takes forward the current provisions for closure, but makes them wider and more comprehensive. It gives the user committees more powers in relation to the publication of their reports, the disclosure of the information that they have and the observations that they can make on the closures. It is illogical and absurd to argue that because the Bill contains provisions for closures it breaches a new dyke in railway administration.

Mr. Carlile : Of course one cannot exclude the possibility of closures from time to time--that is an ordinary incident in the commercial life of a nationalised or private industry--but does the Minister not agree that, after the railways have been privatised, inevitably it will be the rural lines that are forced into closure? A privatised regime, by its own hypothesis, will be opposed to the continuation of railways in areas where there are not many customers. Should not the Government address the issue of the social need for railways and their affect on rural areas, some of which have important towns, such as Aberystwyth, on their periphery?

Mr. Norris : I have a great deal of respect for the hon. and learned Gentleman, but I do not honestly believe that any sensible reading of the Bill could lead one to conclude that the privatisation of services proposed in it has any relevance to decisions on the closure of rural or busy lines.

My reasoning is straightforward. I am sure that the hon. and learned Gentleman would agree that, in the past 40 years, there have probably been more line closures than openings, but I remind him that those took place in a nationalised industry.

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Dame Elaine Kellett-Bowman (Lancaster) : When my right hon. Friend the Minister for Public Transport was good enough to visit Lancaster, he made it quite clear that socially necessary lines and rural ones would receive a subsidy. He has since confirmed that assurance in writing to me. That means that it is highly probable that the west coast main line will be eligible to receive a subsidy. That line covers many rural areas.

Mr. Norris : I am grateful to my hon. Friend for making that point, because her remarks underline the heart of the Bill. I understand that it is in the political interests of

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Opposition Members not to understand that point or to take it on board, because the minute they do so three quarters of the debate in which they have been engaged for the past months will explode. The hypothesis is straightforward. The franchising director sets out a pattern of services that he requires the franchisee to undertake. In answer to the hon. Member for York, the timetable on which that pattern is based will, as has frequently been stated, be that operating at the time the franchise is offered. It may be the 1994 timetable or one for a later date. The important thing is that it will offer a replication of the current services.

We have used the word "substantially" according to its straightforward English meaning. In other words, the new service will be the same in every material respect as that currently on offer. That is why the hon. and learned Member for Montgomery (Mr. Carlile) should understand that the issue of the vulnerability of rural lines is not affected by the Bill. On the contrary--there will now be an open incentive to a private operator, who has already contracted with the franchising director to provide a range of relevant services, including services to some rural stations, to think about how to maximise his or her profits. The operator will wish to do that by looking at services which are currently under-used to see what can be done to make them more attractive, thus attracting extra revenue to those lines.

The franchise operator is already contracted with the franchising director, and in so doing has presumably built in the basic rate of return that would be required by his shareholders. Any improvement in the take-up of services will be to the benefit of the franchising operator. The hon. and learned Member for Montgomery would agree, of course, that that will also benefit passengers.

I must make it clear that I do not accept the argument put forward by the hon. Member for York. The new regime is a substantial improvement on the one which currently operates. It will not detract in any way from the ability of local communities to object to the closure of lines. On the contrary, it replicates and expands the existing system. On that basis, I have no hesitation in commending the amendment to the House.

Lords amendment agreed to.

Clause 7

Exemptions from section 6.

Lords amendment : No. 7, in

Page 8, line 1, leave out subsection (6) and insert--

("(6) If any condition (the "broken condition") of a licence exemption is not complied with--

(a) the Secretary of State, in the case of a licence exemption under subsection (1) above, or

(b) the Regulator, in the case of a licence exemption under subsection (3) above,

may give to any relevant person a direction declaring that the licence exemption is revoked, so far as relating to that person, to such extent and as from such date as may be specified in the direction.

(6A) For the purposes of subsection (6) above--

"condition", in relation to a licence exemption, means any condition subject to compliance with which the licence exemption was granted ;

"relevant person", in the case of any licence exemption, means a person who has the benefit of the licence exemption and who--

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(a) is a person who failed to comply with the broken condition or with respect to whom the broken condition is not complied with ; or (b) is the operator of any of the railway assets in relation to which the broken condition is not complied with.")

Mr. Freeman : I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Speaker : With this we may take Lords amendments Nos. 8 to 18, 24, 178 to 181 and 187.

Mr. Freeman : There are two aspects of this group of amendments that I shall draw to the attention of the House. First, the principle amendments Nos. 7 and 24 deal with the powers of the Secretary of State or the regulator to revoke licence exemptions when breaches occur. The Bill needed improvement to make it plain that when an undertaking that has been given and formally recognised in the licence is breached, for example, the failure to honour a commitment on through ticketing, which is to be a condition of a licence agreement and a most important network benefit, then the regulator--in certain cases the Secretary of State will grant the licence--has the power to revoke the licence exemption where an exemption has been granted.

The more important reason for amendments Nos. 8 and 16 is to do with where there is a particular group of railway lines that involves both licensed and exempt activities. We realise that there may well be examples of that and I shall cite one in a moment : the Heathrow Express, which is most important. There may well be examples on the network where the running of trains is subject to the licensing regime because the railway service is plying for hire, carrying passengers on the track infrastructure and, also, where the same railway service runs are on exempt--privately owned--track. That may well also be the case for preserved railways.

The Heathrow Express example is the best that I can cite at the present time. The Heathrow Express service has reached the stage where an agreement has been concluded and we hope that construction will start shortly. The Heathrow Express is a spur from the western mainline connecting new stations at Heathrow central and terminal four to Paddington. The House will know that that service will run on licensed main track on the Great Western railway for most of its journey. It is a joint venture between the British Airports Authority and British Rail on 70-30 equity terms, with the majority coming from BAA in the private sector. Heads of agreement were agreed in March and the detailed agreement has now been concluded. Four trains per hour will run during the day on the 16-minute journey between Paddington and Heathrow central. Fares are to be set commercially by the joint venture and the level of fares presently contemplated are £9 single and £14 return. Contracts are now being tendered and let and main contruction will be under way soon. Services are expected to commence by the end of 1997. Approximately £300 million including the cost of the rolling stock will be invested.

The group of amendments, especially Nos. 8 and 16, deals with where it is expedient for public policy purposes not to control the fares on the whole service between Paddington and Heathrow. It is a non-stop service, partly running over track that would normally carry only licensed

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services and partly over a private spur. We do not think that it is sensible in any way to interfere or regulate fares that will be and should be set commercially.

The amendments also provide for the transfer of the licences, including the Heathrow Express licence, but for that to occur there needs to be the consent of the Secretary of State or the regulator. At some stage in the future, that joint venture or others that benefit from the group of amendments may need to be sold or transferred, and there is a mechanism for that. Access to Heathrow by crossrail at some stage in the future will be possible, but the commercial agreement of the partners will clearly be needed for the joint venture.

Undoubtedly, the licence conditions--the Lords amendments clarify the position--can apply, for example, to the provisions for through ticketing or to other common operating procedures. There has been some anxiety that some of the arrangements for common operation between two franchisee companies might fall foul of either the licensing conditions or other legislation. We have made it plain in the Lords amendments that such arrangements are appropriate and can be included in the licence conditions.

I should be glad to answer detailed questions on any of the other Lords amendments in the group. I commend the amendments to the House.

Question put and agreed to.

Subsequent Lords amendments agreed to.

Clause 15

Facility owners to permit use ofrailway facilities by other persons

Lords amendment : No. 19, to leave out clause 15 and insert the following new clause Access agreements : directions requiring facility owners to enter into contracts for the use of their railway facilities--

(" .--(1) The Regulator may, on the application of any person, give directions to a facility owner requiring him to enter into an access contract with the applicant for the purpose specified in subsection (2) below ; but no such directions shall be given if and to the extent that--

(a) the facility owner's railway facility is, by virtue of section 16 below, an exempt facility ;

(b) performance of the access contract, if entered into, would necessarily involve the facility owner in being in breach of an access agreement or an international railway access contract ; or (c) as a result of an obligation or duty owed by the facility owner which arose before the coming into force of this section, the consent of some other person is required by the facility owner before he may enter into the access contract.

(2) The purpose for which directions may be given is that of enabling the beneficiary to obtain (whether for himself alone or for himself and, so far as may be applicable, associates of his) (a) from a facility owner whose railway facility is track, permission to use that track for the purpose of the operation of trains on that track by the beneficiary ;

(b) from a facility owner whose railway facility is a station permission to use that station for or in connection with the operation of trains by the beneficiary ;

(c) from a facility owner whose railway facility is a light maintenance depot, permission to use that light maintenance depot for the purpose of obtaining light maintenance services for or in connection with the operation of trains by the beneficiary, whether the facility owner is to provide those services himself or to secure their provision by another ;

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(d) from any facility owner, permission to use the facility owner's railway facility for the purpose of stabling, or otherwise temporarily holding, rolling stock in connection with the operation of trains on any track by the beneficiary ; or

(e) from any facility owner, permission to use the facility owner's railway facility for or in connection with the operation of a network, station or light maintenance depot by the beneficiary ;

but this subsection is subject to the limitations imposed by subsection (3) below.

(3) In subsection (2) above--

(a) paragraph (a) does not extend to obtaining permission to use track for the purpose of providing network services on that track ; (b) paragraph (b) does not extend to obtaining permission to use a station for the purpose of operating that station ;

(c) paragraph (c) does not extend to obtaining permission to use a light maintenance depot for the purpose of enabling the beneficiary to carry out light maintenance ;

(d) if and to the extent that the railway facility mentioned in paragraph (e) is track, that paragraph does not extend to obtaining permission to use that track for the purpose--

(i) of providing network services on that track, or

(ii) of operating any network in which that track is comprised, except where the purpose for which directions are sought is to enable the beneficiary to operate on behalf of the Franchising Director a network in which the track in question is comprised ; (e) if and to the extent that the railway facility mentioned in that paragraph is a station, that paragraph does not extend to obtaining permission to use that station for the purpose-- (i) of providing station services at that station, or

(ii) of operating that station,

except where the purpose for which directions are sought is to enable the beneficiary to operate the station on behalf of the Franchising Director ;

(f) if and to the extent that the railway facility mentioned in that paragraph is a light maintenance depot, that paragraph does not extend to obtaining permission to use that light maintenance depot for the purpose--

(i) of carrying out light maintenance at that light maintenance depot, or

(ii) of operating that light maintenance depot,

except where the purpose for which directions are sought is to enable the beneficiary to operate the light maintenance depot on behalf of the Franchising Director.

(4) Any reference in this section to a person operating a network, station or light maintenance depot "on behalf of the Franchising Director" is a reference to his operating the network, station or light maintenance depot in pursuance of any agreement or other arrangements made by the Franchising Director for the purpose of performing a duty imposed upon him, or exercising a power conferred upon him, under or by virtue of this Part to secure the operation of that network, station or light maintenance depot.

(5) Nothing in this section authorises the Regulator to give directions to any person requiring him to grant a lease of the whole or any part of a railway facility.

(6) In this Part--

"access contract" means--

(a) a contract under which--

(i) a person (whether or not the applicant), and

(ii) so far as may be appropriate, any associate of that person, obtains permission from a facility owner to use the facility owner's railway facility ; or

(b) a contract conferring an option, whether exercisable by the applicant or some other person, to require a facility owner to secure that--

(i) a person (whether or not the applicant or that other), and (ii) so far as may be appropriate, any associate of that person,

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