Clauses 186 to 189: Securing provision of railway services and assets etc

174. Under clause 186 the Authority has power to enter into agreements for the purpose of securing the provision, improvement or development of any railway services or assets or for any other railways related purpose. This includes a power to give grants, loans or guarantees for any purpose relating to any railway or railway services.

175. The clause also provides certain restrictions on this power. Payments for franchised services may only be paid under the franchise agreement. In Scotland, the Authority will have no powers with regard to freight where something falls within a scheme which it has notified to the Scottish Ministers. These schemes (which are intended to replace the freight grant and track access guarantee schemes in sections 137 and 139 of the 1993 Act) will be administered in Scotland by Scottish Ministers only.

176. In this clause, "railway" means a railway, tramway or transport system, which uses another mode of, guided transport but which is not a trolley vehicle system. This is what is meant by railway in "its wider meaning" (see subsection (5) of the clause and section 81(2) of the 1993 Act.) The expression "railway", "tramway" and "transport system" have, in turn, their meaning under section 67(1) of the Transport and Works Act 1992.

177. Clause 186 would enable the Authority, for example, to:

• provide grants to local authorities (including Passenger Transport Authorities ("PTAs")) in support of railway services provided or funded by them (including such services provided under franchise agreements to which the relevant Passenger Transport Executive ("PTE") is a party);

• fund the integration of light rapid transit systems with the heavy rail network; and

• make grants or enter into contracts in respect of the enhancement of railway infrastructure which is not commercially viable but in the public interest.

178. Grants to PTAs would provide a substitute for the special grant which the Secretary of State makes to them each year, under the general power in section 88B of the Local Government Act 1988. The power in clause 186 is in addition to the Secretary of State's power in clause 134 to make such payments.

179. The power in clause 186 relates to anything connected with railways as a mode of transport. It relates, for example, to anything connected with the type of railway services which are provided (such as networks, carriages, stations), the types of railway assets involved (such as the network and trains) and facilities connected with railway travel (such as parking outside stations).

180. Schedule 14 provides a transfer scheme for the administration of grants for freight from the Secretary of State to the Authority.

181. Clauses 187 and 188 govern the Authority's powers to secure or provide railway services. The clauses meet the commitment in A New Deal for Transport (paragraph 4.19) to retain the capability for the public sector to take over franchises "as a last resort" (for example, if a franchise was terminated or there were no acceptable private sector bids).

182. Clause 187(1) and (2) make technical amendments to the Railways Act 1993 to facilitate franchising. The amendment requires the Authority to designate passenger services which ought to be secured by franchise unless they are exempt services and not merely to designate services which may be eligible for franchising. Clause 187(5) enables the Regulator to refuse to grant access rights if they might impede the provision of a service which has been designated.

183. Clause 187(3) specifies the procedures which the Authority will need to follow before it can act as the operator of last resort for services which have been designated for franchising.

184. Where the Authority has issued an invitation to tender for services which have been designated for franchising but receives no tender at all, the Secretary of State may either direct the Authority to issue new invitations to tender or direct that the service should be secured otherwise than by a franchise (by the Authority or a private contractor).

185. Where the Authority has issued an invitation to tender for services which have been designated for franchising and has received tenders for a franchised service, but considers that the services could be provided more economically and efficiently other than by a franchise agreement, the Secretary of State is required either to direct the Authority to select a franchise or to conduct a further tendering exercise. He may not, at this stage, direct the Authority not to seek to secure provision of a franchise under a franchise agreement. If a further tendering exercise results in no tenders, or tenders are received but the Authority remains of the view that services could be provided more economically or efficiently other than under a franchise agreement, the Secretary of State may, at this stage, direct the Authority not to award a franchise. Where tenders were received, the Secretary of State still has the option to direct the Authority to re-consider these.

186. Clause 187(4) makes it clear that the Authority must provide services if a direction not to seek a franchise has been made by the Secretary of State or a franchise comes to an end or is terminated without a new agreement being in place. This duty remains until there is a new franchise, although it does not apply if there are already adequate services, nor does it prevent closure procedures.

187. Clause 188 gives the Authority limited additional powers to run goods or undesignated passenger services where it acquires an obligation to provide that service in consequence of a former obligation of the British Railways Board or they are no longer being provided by another person. It gives the Authority the necessary associated powers (such as storing goods) to run that service.

188. Clause 189 confers on the Authority certain powers associated with passenger services - so that passengers can be transported by road during temporary disruptions to the rail service. If a service has been discontinued then the Authority must invite tenders for the substitute service.

Clauses 190 to 193: Functions of Franchising Director, Regulator and Board

189. Clause 190 and Schedule 15 transfer to the Authority all the functions, property, rights and liabilities of the Franchising Director (including any rights and liabilities relating to staff appointed by the Franchising Director). Once this transfer is effected the office of the Franchising Director will be abolished and the Schedule makes the necessary amendments to the 1993 Act and other enactments.

190. Clause 191 and Schedule 16. It has been a criticism of the current regulatory system that there is no clear division between the respective roles of the Rail Regulator and the Franchising Director in relation to the consumer. The Bill transfers responsibilities for consumer protection to the Authority as the successor to the Franchising Director. The types of matters which are considered consumer protection include telephone enquiries, through ticketing, security, the protection of the interests of disabled people and penalty fares.

191. Where the protection of consumers is secured through a licence the Authority will be responsible for the content of the licence as its relates to consumer protection (through being able to refuse the grant of a licence which does not make adequate provision for the protection of consumers), for the enforcement and modification of consumer protection provisions in a licence (if the Regulator also approves) and for the revocation of a licence where the licensee is in persistent contravention of these provisions. However, when it is exercising this responsibility the Authority will be under the same duties and will need to have regard to the same considerations as the Regulator.

192. For existing licences the Secretary of State may make a scheme which has the effect of separating out those parts of the licence which relate to consumer protection and enabling them to be enforced by the Authority. For new licences the split will be made in the licence when it is granted.

193. Schedule 16 also transfers the administrative responsibility for the Rail Users' Consultative Committees and the Central Rail Users' Consultative Committee to the Authority (who are renamed in clause 202 - see paragraph 210 below). The Authority will inherit the Regulator's code of practice for protecting the interests of disabled railway users and the duty to revise it from time to time and encourage its adoption and implementation. The Authority will inherit the Rail Regulator's power to make rules for penalty fares.

194. The final part of Schedule 16 allows the Secretary of State to make schemes to transfer property, rights and liabilities (including any rights and liabilities relating to staff appointed by the Rail Regulator) from the Rail Regulator to the Authority. This will provide the administrative support for the Authority to take on these previous functions of the Regulator.

195. Clause 192 and Schedule 17 transfer functions of the British Railways Board in relation to the British Transport Police ("BTP") to the Authority, with associated property, rights and liabilities. Provision for the transfer of staff is made. Clause 182 is disapplied in relation to the Authority's BTP functions because these provisions are not appropriate to police functions. Instead, the Authority has a general duty relating to efficiency and effectiveness.

196. Clause 193 and Schedule 18 make provision for the transfer of all the other properties, rights and liabilities of the British Railways Board to the Authority. Those which are not required by the Authority are to be disposed of and the Authority is permitted to maintain and manage property or to develop it for sale. Provision is made for the transfer of staff.

Clauses 194 to 197: Other Powers

197. Clause 194 and Schedule 19 change the current system whereby byelaws are made by the individual train companies and Railtrack and are then confirmed by the Secretary of State. Instead, the Authority will have the power to make uniform byelaws for the whole railway network.

198. Clause 195 and Schedule 20 give the Authority powers to transfer any of its property, rights, liabilities and staff to a wholly owned company, the Secretary of State or a franchise company. This includes the transfer of franchise assets after a franchise comes to an end.

199. Clause 196 gives the Authority powers to promote Bills relating to railways and to oppose Bills. This provision also enables the Authority to promote or oppose orders under the Transport and Works Act 1992, by virtue of section 20 of that Act. This will give the Authority the power to promote new railway schemes where there is no other appropriate sponsor.

200. Clause 197 gives the Authority incidental powers and restrictions on its powers. Powers include entering into agreements, acquiring and disposing of property, investing money and promoting publicity.

CHAPTER II: OTHER PROVISIONS ABOUT RAILWAYS

Clauses 198 and 199: The Rail Regulator

201. Clause 198 gives new powers to the Rail Regulator, on the application of the Authority (or another person with the consent of the Authority) to give a direction for the improvement of railway facilities (such as tracks or stations) or for the provision of new facilities. The clause provides that the person directed is to be a person who is in an appropriate position carry out the direction. The Regulator may only give a direction if he is satisfied that the person directed will be adequately rewarded for these improvements and facilities and the Regulator must consult the person, and others as he thinks fit, before giving the direction. The person directed must do all that he reasonably can to comply with the direction made by the Regulator. This new power of direction does not affect any existing obligations (eg licence conditions). The Secretary of State may, after consulting the Regulator, exempt specified railway services from the Regulator's direction making power.

202. Clause 199 amends the 1993 Act so as to require the Regulator to facilitate furtherance of the strategies of the Authority, and contribute to integrated transport and sustainable development. His duty to promote competition is redefined to be for the benefit of users of railway services. The clause also amends the duties of the Secretary of State to reflect the fact that he is no longer exercising privatisation functions under the 1993 Act. The Rail Regulator has a new duty to take account of general guidance from the Secretary of State about railway services or other matters relating to railways. This general guidance must be published.

Clauses 200 and 201: Enforcement regime

203. Clauses 200 and 201 modify the enforcement regime available under the 1993 Act.

204. Monetary penalties will be payable for contraventions of licence conditions, franchise requirements and the provisions of orders made to secure compliance with an operating licence or passenger service franchise. In contrast to the 1993 Act, these will cover past breaches as well as those which are continuing.

205. There is no specific limit on the penalty which may be imposed, but it must be of a reasonable amount. In calculating a penalty the appropriate authority (the Rail Regulatory or the Authority) must take account of policies which it has published with regard to penalties. Such policies may include policies of having regard to the need to secure compliance, the consequences of the breach and deterrence of other breaches. A rail operator may apply to pay in instalments.

206. There are requirements as to the procedure, including the giving of notices with prescribed information.

207. The operator may make an application to the court to question the validity of a penalty order on prescribed grounds. The requirement to pay a penalty is suspended until the case is determined. The court may cancel or reduce the penalty or extend the timescale to pay. It may also require interest to be paid on a reduced penalty.

208. The 1993 Act is amended to allow the appropriate authority, if it thinks fit, to refrain from taking action requiring compliance with a relevant licence condition or franchise requirement where an operator is taking appropriate steps to comply or where a breach would not adversely affect railway users or lead to an increase in public expenditure.

209. Clause 201 reduces the period for a rail operator to make representations or objections to enforcement action from not less than 28 to not less than 21 days; it reduces the period on modifications to a compliance order from not less than 28 to not less than 7 days; and on revocation from not less than 28 to not less than 21 days. But the Regulator or Authority can allow more time for representations to be made where that would be appropriate.

Clauses 202 to 204: Consultative Committees

210. Clause 202 renames the Central Rail Users' Consultative Committee as the Rail Passengers' Council and renames the Rail Users' Consultative Committees as the Rail Passengers' Committees. Schedule 21 makes consequential amendments to legislative references.

211. Clause 203 extends the functions of the renamed bodies. These will be extended to passenger services which are not provided under a franchise agreement. New duties include keeping under review matters affecting the interests of the public in relation to the passenger railway, making representations to and consulting such persons as they think appropriate and co-operating with other bodies representing public transport users. This might, for example, mean co-operating with a bus users' group. The Secretary of State may exempt certain services from their remit.

212. Schedule 22 makes new financial and procedural provisions for the bodies. This includes their financial relationship with the Authority.

Clauses 205 to 207: Access contracts

213. Clause 205 enables the Rail Regulator to give general approvals for access contracts of a specified class or description and makes provision for their publication and revocation.

214. Clause 206 enables the Regulator to direct that an access agreement or network installation contract be amended to permit more extensive use of the railway facility or network installation in question. The clause also applies procedures in Schedule 4 of the 1993 Act to these new direction powers.

215. Clause 207 enables the Regulator to act in relation to contracts for the use of railway facilities or network installations which are proposed to be constructed or in the course of construction.

Clauses 208 to 212: Closures

216. Clauses 208 to 212 simplify the provisions in the 1993 Act relating to the closure of railway services, network, stations etc. In particular, the Rail Regulator's functions are transferred to the Secretary of State, so that when major closures are proposed these will be determined by the Secretary of State.

217. Clause 209 gives a new power for conditions to be imposed on a minor closure. Clause 210 widens the definition of minor closures (where less stringent procedures are required to be followed), so that it can include the track within stations and depots. Clause 211 allows the Authority to make a general determination of a class or description that shall be considered minor closures, rather than having to determine each case separately. Where such a general determination is revoked this does not affect the validity of the status of a minor closure already determined by the general determination.

218. Clause 212 makes it clear that where a non-franchised passenger service is to be closed, the operator must continue the service until closure. This will ensure that the burden of maintaining the service does not fall on the Authority.

Clauses 213 and 214: The British Railways Board

219. Clause 213 and Schedule 23 allow the transfer to the Secretary of State of any property, rights or liabilities of the British Railways Board. This is in addition to the power to transfer to the Authority - where it is intended that most rights and liabilities will be transferred.

220. Clause 214 provides for the winding down and the abolition of the British Railways Board. Abolition will be effected when all its residual liabilities, properties and rights have been transferred to the Authority or the Secretary of State.

Clause 215: Passenger Transport Executives

221. Clause 215. PTEs may make statements to the Authority under section 34(5) of the 1993 Act specifying their passenger service requirements in their area. Clause 215 provides that the Authority must not, without a direction from the Secretary of State under section 34(18) of the 1993 Act, carry out the requirements in the statement if it would prevent or seriously hinder the Authority from complying with directions and guidance given by the Secretary of State or Scottish Ministers. Nor must they comply with the statement if it would have an adverse effect on the provision of railway passenger or goods services or, unless there are special reasons for doing so, increase the amounts which the Authority must pay to franchise operators.

Clauses 216 to 220: Miscellaneous

222. Clause 216 gives powers to the Scottish Ministers and the NAW to provide financial assistance for freight in Scotland and Wales. These powers must be exercised in accordance with schemes which have been notified to them by the Authority.

223. Clause 217 makes it clear that the Rail Regulator may exercise functions under the Competition Act 1998 concurrently with the DGFT in relation to agreements etc for the supply of rolling stock and certain other railways related contracts and arrangements.

224. Clause 218 enables the Authority to give certain guarantees to trustees of an occupational pension scheme.

225. Clauses 219 makes provision for stamp duty and stamp duty reserve tax in respect of transfer schemes made under powers contained in Part IV of the Bill.

226. Clause 220 abolishes the requirements for certain Treasury approvals for the remuneration of the Rail Regulator's officials and chairman and members of the rail users' consultative bodies.

Clauses 221 to 223: Supplementary

227. Chapter III and Schedules 24 and 25 make minor and consequential amendments to other enactments, provide for transitional provisions and interpretation.

PART V: SUPPLEMENTARY PROVISIONS

228. Clause 224 provides that where an offence is committed by a company with the consent or connivance of, or due to the negligence of, a director or manager or officer, that person as well as the company commits an offence.

229. Clauses 225 to 227 provide for repeals, commencement (by commencement order) and transitional provisions.

230. Clause 228 permits the making of further consequential amendments by order.

231. Clause 229 summarises the financial provisions for the Bill.

232. Clause 230 deals with extent. Part I has United Kingdom extent. Parts II and III extend only to England and Wales. Part IV extends to England and Wales and Scotland.

FINANCIAL AND MANPOWER EFFECTS OF THE BILL

233. Income from the partial sale of NATS to a strategic partner could raise in the region of £350 million. Against that, NATS has outstanding loans of around £300 million which will need to be settled, either by refinancing from the private sector, repayment or writing off. The total cost of establishing a public-private partnership for the provision of air traffic services will be approximately £35 million.

234. Part I of the Bill makes provision for a special administration regime should it prove necessary for the Government to step in to maintain air traffic services (eg in the case of insolvency or a serious breach of licence). In these circumstances the Bill provides for the possibility of Government grants, loans or guarantees in order to secure uninterrupted provision of the services.

235. The local transport provisions are mostly enabling powers for local authorities, and will therefore depend on the timing and extent of their use by local authorities. They are not likely to have significant financial or manpower implications. Increased spend by local authorities on bus priority measures was anticipated by the increase in local authority transport funding in the CSR. Improved quality of bus services, passenger information etc could be expected to have some impact on bus operators but should in turn generate increased patronage over time.

236. The local authority road charging and parking levy schemes might generate up to £1 billion net annually by 2005, although this will depend on the extent to which local authorities choose to take up these powers. When published, individual local authority schemes will include estimates of the likely revenue and of the costs of introducing and running them, which will be funded from the revenue raised. Trunk road charging will be limited in scope and is unlikely to have significant financial or manpower implications. It is not possible to forecast the likely revenues as these will in most cases be dependent on local authority schemes. The Government has no plans to charge on trunk road bridges and tunnels which are not currently tolled. The powers to charge on new trunk road tunnels or bridges should make these expensive infrastructure items more affordable. Consideration will be given, on a case by case basis, as to whether or not to charge on new roads, tunnels or bridges.

237. The creation of the Strategic Rail Authority is not expected to create any significant requirement for additional public expenditure. It will combine the current posts in the Office of the Director of Passenger Rail Franchising, the British Railways Board and some posts from the Office of the Rail Regulator and Department of the Environment, Transport and the Regions. There may be some additional staff costs involved with setting up the SRA supporting its strategic role. This is expected to be around £5 million a year for each of the three years 1999/2000-2001/2002.

SUMMARY OF THE REGULATORY APPRAISAL

238. The proposed public-private partnership for NATS will remove the constraints which currently apply in relation to its investment and management decisions, due to the application at present of Government finance rules. The Bill would permit investment decisions to be made in future on a commercial basis. It would also provide more transparency in charges, clearly separate regulation from service provision, and provide NATS with the opportunity to develop business, for example by expanding overseas. NATS' customers are the airlines and others within the aviation industry; the proposals will have no direct impact on other businesses or charities.

239. The local transport provisions are intended to facilitate partnership between local authorities and bus operators in the interests of improving bus travel: they provide scope for local authority discretion, for example, as to standards to be set for Quality Partnerships. Impact on bus operators will depend on the extent to which local authorities choose to exercise their powers, and the extent to which operators choose to participate in partnership schemes. Operators should generally benefit, since measures to promote buses ought to lead to higher bus use and increased revenues. There should be no impact on other businesses or on charities.

240. Local authorities will have new discretionary powers to address congestion through road user charges or a levy on workplace parking. Charging on trunk roads will be introduced in two specific cases: to support local authority charging schemes, and for trunk road bridges and tunnels of at least 600 metres in length. These are defined circumstances where charging can be introduced in the short term to deal with local congestion or to fund costly structures. Reducing congestion, and thereby cutting journey times and increasing journey reliability, will be of direct benefit to business (current estimates indicate that road congestion involves considerable costs for businesses). Impacts on businesses and charities will, however, depend upon the manner in which local authorities exercise their new powers. There is not yet enough understanding of the effects of larger scale trunk road charging, and the technological systems which would operate such schemes are not yet developed enough, for more widespread powers to be appropriate at this stage.

241. The regulatory impact assessment demonstrates that there will be no significant costs to business arising from the establishment of the Strategic Rail Authority and the proposals for a more effective and accountable regulatory framework. The precise financial effect of the enhanced enforcement powers depends on the extent to which the industry complies with its contractual and licence obligations. Both the Strategic Rail Authority and the Rail Regulator will be required to act in a manner which enables the provider of rail services to plan their businesses with a reasonable degree of assurance.

242. A copy of the regulatory impact assessment may be obtained from DETR Free Literature, PO Box No 236, Wetherby L23 7NB (telephone 0870 1226 236).

COMMENCEMENT

243. The Bill will come into force in accordance with provision made by order or orders. (See clause 226.)

EUROPEAN CONVENTION ON HUMAN RIGHTS

244. Section 19 of the Human Rights Act 1998 requires the minister in charge of a Bill in either House of Parliament to make a statement before second reading about the compatibility of the provisions of the Bill with the Convention rights (as defined in section 1 of that Act). The Rt Hon John Prescott, Deputy Prime Minister and Secretary of State for the Environment, Transport and the Regions, made the following statement:

In my view the provisions of the Transport Bill are compatible with the Convention rights.