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Mr. Quinn: The hon. Gentleman mentioned the water industry. There is a regulation vacuum in our railway industry that, in the water industry, was filled by regulation containing a linkage to service delivery. As the hon. Gentleman favours such a linkage, surely he will agree that the SRA will provide us with an even better and more modern railway. I should also tell him that I did not attack proposals for putting extra money into the railways--far from it.
Mr. Howarth: The Bill is all about providing a different form of regulation. As I heard the Secretary of State say today, the SRA will inherit the powers of existing bodies. Therefore, the SRA will not obtain many more powers, but will inherit the powers of existing bodies and bring them together under one roof. However, there are proposals for some new powers, which I shall mention in a moment.
Some of the powers will be transferred from an independent organisation, which is not subject to political pressures, to the Secretary of State. The issue of closures is one that will be transferred to him. All I can tell him is that he had better look out, because if any closures are mooted he will be the beneficiary of all the deputations and representations on them. We shall then be back to the
pork-barrelling of the 1970s, when factories were closed and Labour Members trooped off to Harold Wilson to try to stop the closures in their constituencies. The same thing might happen again, so that the Secretary of State will have to make political rather than commercial judgments. I do not think that that would necessarily be the best thing for passengers.
We have to recognise that the Bill will give the Secretary of State responsibility that is currently held by an independent organisation. Although he said that the powers will generally be unchanged, how will they be used? Currently, the powers are exercised by those who are railways practitioners and who are interested not in politics but in efficient railway operation.
As my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) said, if the new regulator's role will be to second-guess the commercial judgment of train operating companies, surely the regulator will fail. The jury is very much out on that issue, but I have grave fears that we are entering a period in which politicians will take over and substitute their judgment for that of commercial operators.
Mr. Geraint Davies:
Will the hon. Gentleman give way?
Mr. Howarth:
No. I do not wish to be discourteous to the hon. Gentleman but, if he will forgive me, time is getting on.
Although the Secretary of State assures us that he is against renationalisation, we know that the hon. Member for Hornchurch is in favour of it. Moreover, the Bill will give the Secretary of State the power to renationalise. As Conservative Members have always argued on defence matters, it is not intention--which could change overnight--but capability that counts.
In the Bill, capability is provided in clause 16, enabling the authority to do anything that it considers necessary or appropriate, and, in particular, to form
I remind my hon. Friends of the Industry Act 1972, which was supported by my right hon. Friend the Member for Henley (Mr. Heseltine) and which we thought was designed to help the Government to promote industry, but which turned out to be the vehicle by which the Labour party could nationalise things after being elected in 1974. We have to be beware of the capabilities that this Bill will provide and the powers that it will confer on Ministers.
Clause 19 deals with the retrospective nature of penalties that may be imposed on operators who fall below required standards. The Bill contains no less than three and a half pages on penalties that may be imposed, which perhaps says something about the attitude of the Secretary of State and those who drafted the Bill.
The Association of Train Operating Companies is concerned about the way in which retrospection will work. When the Minister for Transport replies, I hope that she will deal with the association's specific concerns. To summarise, the ATOC is worried that it does not know what past failures will be taken into account in applying
penalties. As David Morphet, the director general of the rail industry umbrella body, the Railways Forum, has said, performance
On clause 10, the ATOC has expressed concern that the Government could reject bidders. The Minister should spell out exactly how she sees the powers in clause 10 being used. I draw the right hon. Lady's attention to new section 25A(1), which reads:
Mr. Geraint Davies (Croydon, Central):
The new Labour Government inherited a pig's breakfast of a rail network. There was a fragmented and unco-ordinated service in the aftermath of a rip-off sell-off. As the National Audit Office report testifies, the flotation of Railtrack raised about £1.9 billion. It is now worth more than £8 billion. As I said earlier, the selling price was 10 times oversubscribed. The NAO suggested that if Railtrack had been sold off in parts we would have raised an extra £1.5 billion in addition to the £1.9 billion. The flotation was bad value for the public. The sell-off took place in political haste as we approached the general election. The way in which that happened was scandalous.
Railfreight was more than given away before the election. We gave £242 million of public money for a company to take Railfreight off our hands at a time when the amount of freight moving to rail was escalating. The Labour party was looking towards constraining the growth of road building, and there is evidence that, to some extent, the Conservatives would have taken that approach.
At the same time, there was enormous growth in the movement of people and freight. Market expectations for more freight have been delivered, as would have been the trend anyway according to analysis. That shows that the British public were ripped off.
The right hon. Member for Wokingham (Mr. Redwood) made the ridiculous suggestion at the beginning of the debate that the Labour party talked down the price of the sell-off. In reality, there was no obligation on the previous Administration to sell straightaway. If the Conservatives had regained power and then sold, they would have secured a much better price. That would have been a fair and honest thing to do. Of course, they did not do that.
The idea before us is that of a Strategic Rail Authority that will have some regulating and co-ordinating powers across the fragmented network that we have inherited, in order to enable a proper network to operate and to give teeth to the regulator so that there is an operator of last resort. There need be no apology because if the private sector falls down in individual instances, the SRA should be able to act. It will be an authority that can administer fines to reinvest in the system.
We heard from the right hon. Member for Wokingham that the SRA should have less power than the British Railways Board. He expressed concern about the lending and borrowing that could occur for tactical reinvestment in areas where the network is not delivering for the public, and he seemed to think that that was somehow morally wrong. Although Conservative Members pay lip service to the Strategic Rail Authority, their policies have no continuity--they are a paper tiger that would not deliver anything.
The challenge for the Strategic Rail Authority is,apart from anything else, to facilitate and administer a partnership approach to the delivery of investment where it is needed. In an intervention, I gave the example of a modern light railway and getting partners together in a private-public partnership to create solutions to these problems. Surely that is the way ahead, but Conservative Members continue to hurtle towards privatisation. As we heard last week, one of their solutions to the problem of transport financing is to sell off the London tube. That would raise only £500 million, and they would never raise the money that is needed for reinvestment if they used the procedures that they used previously.
The Opposition's position on financing and delivering a successful transport strategy is completely incoherent. On the one hand, they want to abolish the fuel escalator; on the other, they want to get rid of traffic jams. They have displayed that incoherence again today and they provide no substantive opposition because they are playing a game of opposition: in their hearts, they know that it is right to have some co-ordination across a fragmented service and that the Government should be able to intervene where the market is failing.
"bodies corporate or acquire or dispose of interests in bodies corporate".
Such a power could be used to run railway lines, to bid for franchises or to buy up railway companies. The authority will have borrowing powers of £3 billion, and the provision gives it other powers to use it.
"will improve with or without the threat of fines . . . the penalties are something of a blunt instrument . . . and the railways need a period of measured sustained investment".
They do not need a load of new penalties. The Minister must answer that.
"This section applies where the Authority has issued an invitation to tender for the provision of any services under section 26 above but . . . it receives no tenders"--
that is fair enough--
"or . . . it receives one or more tenders but determines that the services could be provided more economically and efficiently otherwise than under a franchise agreement entered into pursuant to any of them."
Will the right hon. Lady tell the House what those more economical and efficient ways might be other than a franchise agreement? Would this be the state setting up its own railway franchise company? We should know the answer.
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