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Mr. Redwood: I shall be crystal clear, as I have been on the powers and the conduct of these proceedings. The Opposition believe that there is a role for sensible regulation of the railway and support good regulation of it for as long as there continues to be monopoly elements and the power to use fares as surrogate taxation. It is most important to have a regulatory power. We do not support the creation of this regulator with these massive powers because the Secretary of State is trying to create not just a regulator but an actor, an investor and a business as well. In my experience, when the role of a regulator is muddled with that of someone providing services or interfering with service provision, one gets into difficulties, which can damage the taxpayer and the passenger or customer.
Mr. Graham Stringer (Manchester, Blackley): Does the right hon. Gentleman accept that it was a great mistake not to regulate the rolling stock companies when the railways were privatised? One witness told the Select Committee that ROSCOs were receiving a guaranteed income stream and profit under contracts that did not require them to invest, which led to their sale at double the price that the public got for them and their making a third of their capital value in profit? Does he accept that that was a huge mistake of the Conservatives' privatisation?
Mr. Redwood: I am not sure how that problem is covered by the Bill. Perhaps the Committee disagrees with the Government in that area. We have already discussed at some length the history of privatisation, to which the Labour party, with its clumsy intervention, did much damage.
Clause 8 sets out the functions. It states that the authority may
"make grants, make loans, or give guarantees, for any purpose relating to any railway or railway services."
"Railways" for these purposes include tramways, and in certain conditions, bus and taxi services too. So this body will be enormously powerful and wide ranging. The grant, loan or guarantee may be subject to any conditions as the authority considers appropriate:
"The Authority may enter into agreements for the purpose of securing the provision, improvement or development of any railway services or railway assets."
The powers are even stronger in clause 9, which states that the authority may provide
"services for the carriage by railway of passengers and goods as the Authority considers desirable."
In other words, the Bill creates not just a regulator but a body that can take public money, with the Secretary of State's consent, and run passenger and goods railway services. Clause 9 states that the authority may include in that the provision and operation of
"network services, station services and light maintenance services, entering into agreements . . . for . . . carriage . . . acquiring the whole or any part of an undertaking, and storing goods and consigning them from any place to which they have been carried by rail."
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That is the kernel of our case--the power is a very wide-ranging one, allowing the backdoor--or frontdoor--renationalisation of the railways, should the Secretary of State be so inclined, and should he be able to persuade the Prime Minister and the Treasury of the need to do so.
Mr. Redwood: I certainly agree with that statement in the light of the fact that the Secretary of State would be pulling the strings and providing the advice.
Mr. Redwood: Perhaps the right hon. Gentleman would like to explain.
Mr. Prescott: We propose transferring already existing powers. The regulator is already able to require Railtrack to invest in the public interest, as that was a condition of the licence. If the regulator is not satisfied that Railtrack is meeting its requirements, he is able to enforce those requirements. Therefore, under powers created by the previous Administration, the regulator is able to act by asking for further investment. The powers are already there.
The right hon. Gentleman should say what new extra enforcement powers he thinks could be created for the regulator. The complaint about both the previous and the current regulator is that, although powers were available to them, they did not use them. However, this one intends to use them.
Mr. Redwood:
The proposed power is a very new one, and it is much wider and stronger. It is one thing to say that a regulator is able to instruct a private sector company to make a bigger investment because it is in the regulated sector, but it is quite another to give a power to an authority to do anything that it considers desirable for the purposes of the provision of railway services. The proposed power is extremely wide ranging--
Mr. Redwood:
I hope that the Secretary of State will look again at the drafting, because that is not how it reads in the Bill. He may now be claiming that his intentions are rather more modest than they seem to be in the Bill. I therefore hope that he will re-examine that point.
In Committee, the burden of the Opposition's argument will be that we wish to narrow the regulator's powers to that range of limited powers that the Secretary of State says that he wants and are necessary, so that the regulator--the authority--falls short of playing trains on a huge scale--which I still believe it would be entitled to do under the provisions of this very wide-ranging legislation.
If the Secretary of State would like to look atclause 16, he would see how the powers are emphasised and underlined still further. The clause states that
Most sinister of all--but then it is the little bit of new Labour creeping in--is the power to spend public money, collected by the authority and borrowed by the Government, on spinning at the taxpayer's expense.
Mr. Prescott:
I am grateful to the right hon. Gentleman for giving way; he is generous with his time. However, is he really arguing that, if a private company were not prepared to continue the franchise or were offering a very bad deal, that the public sector should not, in the taxpayer's interest, have the right to maintain and run that service? The previous Administration accepted that argument. In their legislation, they gave the British Railways Board the right--which the Bill will be transferring--to intervene to secure such services. Such an intervention would be made by the public sector when the private sector failed to produce promised services.
Mr. Redwood:
We have now, at last, teased out of the Secretary of State the power's importance. In Committee--if the Bill reaches that stage--we shall be pressing hard to try to limit the power rather more than he has done.
Currently, the power is far too wide ranging, and the Bill does not make it clear that it will be used only in extremis, after something has gone horribly wrong--something far worse than has yet happened in the privatised industry. I think that it is very unlikely that something will go wrong on that scale. If the Secretary of State saw fit, the power could be used in totally different conditions--and it is to that that I and my right hon. and hon. Friends shall be objecting. I hope that the Secretary of State now has a clear understanding of the Opposition's view of the Bill. We believe that it needs a fundamental rewrite. We are all in favour of sensible regulation, but we think that the Bill goes far too wide.
Mr. Matthew Taylor:
I am still not absolutely clear about the official Opposition's position. Do they wish to keep the present regulatory structure as set up at the time of privatisation, or do they accept that that has proved inadequate and that there needs to be a strengthened regulatory structure, albeit not the one presented today?
Mr. Redwood:
We would be happy to examine a sensible revision of the structure. It is always possible to
We are suspicious of the costing of £5 million per annum for the authority. That may prove to be an underestimate given the enormous range of strategies and functions that the authority will have foisted upon it. We wish to return to the question of £3 billion. It is most important to know how much of that money will be available to do the sometimes worthy things that are demarked in the Bill.
We are worried about the length of franchises and we believe that decisions are pending. These decisions have been delayed for many months and this is becoming an impediment to proper investment and success in the railway industry. I have heard complaints from those in the industry that decisions have been sitting in the Secretary of State's "in" tray for many months. That is a great pity. I thought that there was cross-party support for the idea that the privatised industry should be given its head to make the necessary investments. We are all impatient to see new rolling stock and better services.
"The Authority may do anything which it considers--
That gives the authority the power to run railways, to buy assets, to build stations, to own track, to own rolling stock and to run services. I do not see how the Secretary of State can deny that.
(a) is necessary or appropriate for or for facilitating . . . its functions.
In particular, the Authority may
(a) enter into agreements,
(b) acquire or dispose of property,
(c) invest money,
(d) form bodies corporate or acquire or dispose of interests in bodies corporate, and
(e) promote or assist in the promotion of publicity."
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