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Mr. Prescott: That is yet another example of Railtrack's failure to live up to its promises and to take account of our integrated investment priorities. That is why we believe that a Strategic Rail Authority and a powerful regulator could play an important part, not only in establishing network investment but in ensuring that it is carried out.
We often hear public statements by Railtrack about the many billions of pounds that it intends to invest. The previous regulator's complaint to me was that although those promises had been made, he could not ensure that they were kept. That was a weakness, and it is a reason why we have proposed a Strategic Rail Authority that will do much more to ensure that we have a network better than the one about which my hon. Friend is complaining.
When we took office we found a fragmented railway that was all too ready to pass the buck when things went wrong.
Mr. John Redwood (Wokingham):
Will the right hon. Gentleman give way?
Mr. Prescott:
Very well, but this must be the last intervention because I want to get on with my speech.
Mr. Redwood:
The Secretary of State is being generous in giving way. My point relates to the one that
Mr. Prescott:
There is nothing new in that proposal. I made that proposal for the channel tunnel rail link. If the previous Government had done the same for the Jubilee line extension, I would not be facing an extra £1 billion cost on a lousy contract that was not implemented properly. I brought Bechtel in on that contract to improve and tighten up the Jubilee line facilities and production, which it has done. I invited Bechtel to become involved in the channel tunnel rail link operation and I asked it to restore that operation following the contractor's request for an extra £1 billion as a result of the lousy contract entered into by the previous Administration.
I learned from that experience to ensure that there is a good project organiser. That is why I have made it clear that I would not leave the tube contract solely in Railtrack's hands and that I expect a project management company to be involved. I have said that from the beginning; it is nothing new. The need for a good project organiser is the lesson that I learned from the inadequacies of the previous Administration's contract negotiations. They were part of the inheritance that I was faced with when I first began to renegotiate some of those contracts.
We found that after an initial improvement in services following privatisation, there was an unacceptable deterioration two years later, which caused great concern. We found that disgruntled passengers did not know who to turn to when their trains were late, cancelled, dirty or overcrowded. We found a rail freight industry that was eager to expand but held back by red tape and underfunding. We found a lack of investment throughout the network and historical underfunding, and parts of the industry felt no sense of urgency about making up lost ground.
In the first 12 months, the franchising director and the Rail Regulator told me that their sanctions were unwieldy and lacked teeth, so they could not enforce them and make the rail companies live up to their promises. Finally, we found that the passenger's voice was neglected.
We took stock of that inheritance. We assessed the problems and the different solutions and then took decisive action. We set the franchising director new objectives, instructions and guidance to ensure high standards of punctuality, reliability and the protection of the passenger's rights. I made it clear that I expected a passenger dividend from franchise changes such as a change of control of a franchise company.
With my encouragement, the Rail Regulator negotiated a voluntary change, called condition 7, to Railtrack's licence to ensure that Railtrack meets the reasonable demands of train operators and funders such as the Office of Passenger Rail Franchising and passenger transport executives.
The new franchising director and Rail Regulator are working closely together, but I would prefer them to do so in the new, powerful framework that the Bill will provide. Last November, I made it clear to the rail
industry that performance was unacceptable and that I would call its representatives to a summit the following spring to report on the commitments that they made.
The rail summit in February was a turning point. The Prime Minister and I made it clear to the industry that things had to change. To its credit, the industry has started to respond. At the summit, it committed itself to year-on-year improvements in quality, particularly punctuality, which is what passengers value most. The industry committed itself to renewing half the entire rolling stock fleet by the end of 2002, and it is recruiting 800 new drivers. Having got rid of thousands of drivers, the industry found itself to be desperately short, which caused great delays. It has now started a recruitment programme. It has also set up a hit squad to tackle the 50 worst black spots in the railway system.
The shadow Strategic Rail Authority started on 1 April, in the form of the franchising director and the British Railways Board working together under new leadership to get a grip not just on short-term performance, but on long-term planning.
The Office of Passenger Rail Franchising will, from tomorrow, operate under the title of shadow Strategic Rail Authority. The franchising director and the British Railways Board will, of course, continue to exist as separate statutory entities with their own functions and responsibilities.
The shadow Strategic Rail Authority is monitoring delivery of the summit commitments. It has also started the process of franchise renegotiation to put in place the high standards that the last Government sacrificed in their dash for cash and privatisation. The shadow Strategic Rail Authority is also developing a proper strategic plan for the railways, planning for the growth of freight as well as passenger traffic. We have revitalised the freight grants scheme, with awards totalling £60 million over the past two years--double the amount given by the previous Administration.
The new Rail Regulator has already started asking some very searching questions of Railtrack: about the robustness of the statements in the network management statement about freight; about the absence of costed options for the freight routeing strategy; and about the robustness of proposals for gauge enhancement. He has asked for answers by 13 August. Railtrack will have to demonstrate that its investment plans are up to the task of creating an expanding railway.
We have achieved a great deal within the constraints of the framework that we inherited. However, only primary legislation can remedy the fundamental flaws that I described earlier.
I turn now to the Bill's main provisions. Part I of the Bill makes provision for the Strategic Rail Authority, and clauses 1 to 4 provide for its establishment. Clause 5 sets out the primary purposes of the Strategic Rail Authority: to promote the use of the railway network for the carriage of passengers and goods; to secure the development of the railway network; and to contribute to the development of an integrated system of transport of passengers and goods.
Clauses 5, 6 and 7 impose a new duty on the Strategic Rail Authority to develop a strategy for implementing these objectives in consultation with the regulator.
Clauses 8 to 17 confer on the Strategic Rail Authority the various powers, in the form of functions, which it can use to work towards its purposes and to achieve its
strategies. It must use these powers in the manner best calculated to balance various considerations as listed in clause 7, subject to directions and guidance from the Secretary of State, and any payments which it makes must achieve value for money.
Mr. Colvin:
When will we see the new guidelines to the authority for the issuing of new franchises? Will any provision be made for the ending of existing franchises in the near future, or for renewed, extended franchises--perhaps for a 10-year period--to encourage the operating companies to invest in the new rolling stock required? I gather that some 7,000 wagons are possibly on order, but my constituents--like many others--are fed up with being treated like cattle and want to see the new rolling stock. The investment in rolling stock ought to be a criterion in granting the new licences.
Mr. Prescott:
The criteria to be considered in the renegotiating of franchises have been spelt out, and it is a pity that those criteria were not put in the earlier franchise agreements--the hon. Gentleman would not then be complaining to the House. My complaint is that promises were made but were not written into contracts. One of the advantages of having a contract is that those concerned can be held to it. If the contract makes no requirement for new investment, there is a difficulty.
One of our major changes will be to consider the extension of franchises, although that does not necessarily mean that they will be in exactly the same form. However, the commitment to investment, quality and value for money for the taxpayer will be put in guidance to the Strategic Rail Authority for the negotiations, which are in their final stages. When these are completed, I will let the House know. As we said at the summit, that would be our broad approach to the renegotiation of franchises.
Many of the franchises are set at seven years and they will all be up for renewal in one rush, a few years into the new millennium. I want the franchises to be spread out, so we can negotiate them individually to secure not only what is best for the passengers and for investment in the railway system but best value for the taxpayer, who is constantly involved in one way or another.
If the hon. Gentleman waits for the guidance, he will see that it is very much in line with what he wants. It is a pity that such guidance was not issued in the first place, but the franchises were rushed through without any such requirement, and he voted for that. I am happy to say that we will do what we think is necessary to produce a good-quality railway system. That is what the Bill and the powers are about.
I assume that the Opposition will support the Bill, although I cannot be sure what line new Conservatism will take. I know what old Conservatism did. I do not know whether the hon. Member for Croydon, South (Mr. Ottaway) is new or old Conservative, but he said:
"Such a complex privatisation needs constant fine tuning."
That is certainly true. He continued:
"The previous Government would have concluded that a strategic rail authority was necessary during this Parliament."--[Official Report, 25 March 1998; Vol. 309, c. 452.]
That was old Tory; I await with interest to see whether new Conservatism is the same.
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