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Mr. Eric Pickles (Brentwood and Ongar): I understand that the budget for the Strategic Rail Authority has not yet been determined. We will not hold the Secretary of State to the odd £10 million, but could he give us a rough idea of the figure?

Mr. Prescott: The current Opraf expenditure will remain, as the body is transferring to the Strategic Rail Authority. We estimate that the extra cost for the authority will be about £5 million a year. That is why the House is to consider a money resolution.

Clause 9 gives the authority the basic power to secure or provide railway services. That preserves the capacity to run services in the public sector in the last resort, as identified in our integrated transport White Paper. Clause 10 makes it clear that if there are no bids for franchises, or if the bids received are unacceptable, or in the event of a failure, the authority will become the operator of last resort.

Many of the authority's powers, of course, will be inherited from the franchising director, the British Railways Board, the regulator and the Secretary of State. All the franchising director's functions and all the British Railways Board's property and liabilities will transfer. Transfers from the British Railways Board will include responsibility for the British Transport police.

The shadow authority has considerable powers to do much of what is being done in the Bill, although perhaps in a different way. We do not have to wait for the Bill to be enacted to get on with modernising the railways.

Mr. Bill O'Brien (Normanton): Will my right hon. Friend give way?

Mr. Prescott: Yes, but can I make this the last time?

Madam Speaker: The right hon. Gentleman has been very generous. He has taken about 10 interventions in 15 minutes. I have them written down here.

Mr. O'Brien: I appreciate the co-operation that my right hon. Friend has shown to Back Benchers.

I am concerned about land in the ownership of the British Railways Board and the fact that, under the previous Administration, instructions were given to sell that land as quickly as possible. It is important to retain the land because we may need to open lines, especially in the north where we often travel east-west rather than

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north-south. I hope that my right hon. Friend will seriously consider requiring the Strategic Rail Authority to retain the land in case further development is required.

Mr. Prescott: It will indeed, and I have given instructions to that effect. Some land contracts have already been let, but I have made it clear that land that could be used for expansion of the rail system should be retained.

The powers that the authority will inherit include those of the franchising director and the British Railways Board, and they will be sufficient for it to begin work. The authority will also acquire responsibilities for consumer protection from the regulator, and for administering freight grants. The office of the franchising director, and the British Railways Board, will be abolished.

All staff who transfer to the SRA will do so with their existing conditions of service preserved. Staff transferring are also assured that there will be full protection of pensions. Nothing in the Bill will override the statutory protection for pensioners in the Railways Act 1993, for which we fought so hard in opposition. The SRA will also assume responsibility for the continuity of the rail industry staff concessionary travel schemes.

Part II of the Bill amends the regulatory regime set up under the Railways Act 1993. Clause 17 allows the SRA to ask the Rail Regulator to direct facility owners to provide enhancements to existing station and rail facilities--a point raised by my hon. Friend the Member for Normanton (Mr. O'Brien). That power could be used to achieve greater rail capacity in the network or even to secure new network.

The 1993 Act has left the regulator acting in isolation, because the Secretary of State's power to give guidance expired in December 1996. I am pleased that the new regulator and the shadow SRA have already begun to work more closely together, and the Bill will confirm that. I have said already that the authority will need to consult the regulator on its strategies, and clause 18 provides for the regulator to facilitate the SRA's strategy. As Secretary of State, I will also have the power to give general guidance to the regulator. The measures will ensure that a coherent railway policy can be decided and then carried out consistently by the SRA and the Rail Regulator.

Mr. Redwood: I am grateful to the Secretary of State for giving way, but I think that my question will help our deliberations. If the plans go ahead as described, will he say how much of the borrowing limit of £3 billion will be available in the first full year?

Mr. Prescott: I have already made it clear that debts of about £1 billion will remain after the transfer. However, the right hon. Gentleman has asked a proper question, and I intend to make a statement shortly about how the debt will be managed and about the borrowing powers available to the Strategic Rail Authority.

Clause 18 also provides that the duty on the Rail Regulator to promote competition will now be balanced by a requirement that competition must be for the specific benefit of railway users. The Rail Regulator needs to balance competition against the public interest of network provision. We are not concerned solely with the promotion of competition.

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The previous franchising director and Rail Regulator complained about the weakness of their powers to enforce the promises of train companies and Railtrack. The enforcement regime is tightened by the Bill. Monetary penalties, which must be of a reasonable amount, will be payable for all contraventions of licence conditions, franchise requirements and contraventions of orders made to secure compliance with a licence or franchise agreement.

The Government have agreed in principle that the Strategic Rail Authority will be able to retain income from penalties and to reinvest it in the railways. I hope that the industry and the House will welcome the fact that that income will not be returned to the Treasury. That innovative approach is a one-off exception to the normal rules for such income. We are currently developing the details of the arrangement.

It will be of interest to the House that clauses 21 and 22 amend the closure provisions, including some dealing with major closures. The Rail Regulator's functions are to be transferred to me, as Secretary of State. I, or any future Secretary of State, will be responsible for determining major closures, so I will be accountable to the House. I am sure that the House will welcome that approach.

The definition of minor closures is extended to include the track involved in a minor closure. Under clause 23, the remit of the rail users consultative committees, whose sponsorship will pass to the SRA, is widened to cover all passenger services. The committees' independence will be maintained, and I referred earlier to the welcome that the independent central users committee has given to the Bill.

Part III makes provision for the devolution of some functions to the Welsh Assembly and to the relevant Scottish Ministers. That provision delivers parts of the agreed settlement for devolution. Other elements have been handled by orders under the Scotland Act 1998. Part III also makes provision for the consequential amendment and repeal of other Acts. We will need to add to those provisions in due course.

In conclusion--

Mr. Geoffrey Clifton-Brown (Cotswold): Will the Secretary of State give way?

Mr. Prescott: No, I am in my final stages.

The way in which British Rail was privatised was a national disgrace. Our Bill brings public accountability back to the railway industry; it will allow the new SRA to plan for an expanding network; it will require those who own the network to meet their obligations; and it will require train operators to fulfil their franchise agreements.

The railway industry has had plenty of well-deserved criticism but there are now positive signs of a revival of Britain's railways. Passenger traffic is rising. Over the past five years, passenger kilometres have increased by approximately 20 per cent., and roughly 14 per cent. of that growth has occurred in the past two years. Around 1,000 extra services are being run each day to help meet that growth.

Rail freight is also increasing, and is up by roughly 20 per cent. in the past two years. The industry has promised that by the end of 2002 half the passenger fleet will have been renewed. Some 433 station car parks will

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soon have video camera surveillance. Twelve stations have been opened since May 1997, and four more are due to open this year. All that is part of the agreement that the previous Government failed to achieve with the industry. There is a new spirit of co-operation and responsibility in the industry, and a new attitude that we need to restore a national railway in the public interest.

The Bill will reinforce those trends. It will create a new guardian of the public interest--the Strategic Rail Authority. It will plug the loopholes in the last Government's rail legislation, to provide tougher enforcement and to protect the passenger.

I commend the Bill to the House.

4.6 pm

Mr. John Redwood (Wokingham): I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:

"this House declines to give a Second Reading to the Railways Bill because the introduction of this Bill now, when it will inevitably fall due to lack of legislative time and will have to be reintroduced in the next Session, is not the best use of the time of this House and represents a new definition of pre-legislative scrutiny which the Government is using as a way of side-stepping its own decision-making responsibilities and covering its doubts and internal divisions about the wisdom of the measures which the Bill contains."

I am grateful to the Secretary of State for making some of my speech for me. He concluded with sterling words about the successes of the privatised railway industry. I agree that there has been welcome progress over the past five years, and it was good of him to state that we had enjoyed the advantages of the privatised industry over that period, which takes us back to before the change of Government.

Over the past four years, the number of passenger trains has increased by 14 per cent.--one extra train for every seven previously running. Passenger miles have increased by a quarter. We all want freight to transfer from road to rail wherever possible, and freight tonne miles have risen even more impressively--by 35 per cent. during the past three years. Those are impressive figures, but we are not yet satisfied. Privatisation has many more achievements to come, provided that the Government work with the industry rather than get in its way or mess it up.

My worry is that the Bill has been drawn up by Ministers who do not like the privatised industry and who are secretly trying to find ways back to nationalisation. They do not seem to understand that the beginning of a transformation in our railway industry has occurred under Governments of both parties and as a result of privatisation. The industry never worked when it was nationalised, whether under Labour and Labour-Liberal Governments in the 1970s or under Conservative Governments in the 1980s. During the 1990s, it is beginning to work, and the Labour Government must not impede the progress of a very good Conservative policy.

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