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Mr. Deputy Speaker (Mr. Michael Lord): With this it will be convenient to discuss the following amendments: No. 414, in clause 201, page 119, line 7, leave out "him" and insert "the Authority".
No. 415, in page 119, line 8, leave out from "State" to end of line 15.
No. 416, in clause 202, page 119, line 24, leave out "is reasonable" and insert--
'shall be commensurate with the contravention and with the turnover and profitability of the relevant operator provided that the appropriate authority is satisfied that such an imposition will help fulfil the general duties set out in section 4 of this Act.'.
No. 417, in page 127, line 1, leave out Clause 208.
Mr. Jenkin: I am pleased that we have an opportunity to discuss one of the most important clauses in the railway part of the Bill. What was the Railways Bill until it was included in the Transport Bill in the previous Session has been characterised as potential renationalisation by the back door. In deference to the swoons of the Under-Secretary who has tilted his head back and cast his eyes heavenwards in a manner reminiscent of a pantomime dame suffering from a hot flush, I acknowledge that he has addressed a principal concern about franchising and the possibility of the Strategic Rail Authority taking over and running rail franchises, making clear that those powers are to be used as a last resort. The hon. Gentleman will correct me if I am wrong, but I believe that the Bill clarifies the matter.
Clause 200--which was clause 17 in the Railways Bill and clause 198 in the Transport Bill before it was amended in Committee--entitled "Directions to provide etc. railway facilities", provides for an entirely new power. The regulator, following an application by the SRA, is empowered to direct a facility owner of an existing railway facility to provide a new railway facility, or improve or develop the existing one. The regulator carries out the SRA's direction.
There is no analogous power in the existing railway set-up. In principle, we do not object to the existence of the Strategic Railway Authority, but we have a fundamental objection to it having such powers, which are an expression of the Secretary of State's immature and socialist desire to interfere with the running of the industry and to play trains. It should not be necessary to have such a power over a sophisticated industry.
It would have been absurd if, for example, following the privatisation of British Airways, the Civil Aviation Authority had maintained a power, supervised by the Secretary of State, to direct it to provide certain services or purchase certain facilities. There is no such power over BAA plc. The Minister has frequently retreated to the original Railways Act 1993, but it contains no such power, even in relation to its implementation.
Mr. Raynsford: That led to problems.
Mr. Jenkin: The Minister says that that led to problems. Certainly there are problems to be solved in relation to the railways. I hope that the Minister is prepared to debate whether direct intervention by the SRA, as envisaged in clause 200, or indirect intervention by the Secretary of State through his influence over the SRA, will help to solve those problems.
This would be a substantial change. It is worth pointing out that the power is constrained. It is surprising that only the SRA can apply to the regulator for provision, improvement or development directions under the clause.
The regulator must take into account the effect on the SRA's budget, so its views will be of considerable importance.The clause puts significantly more power into the hands of the SRA than previously, and has the potential to undermine the original arrangements in clause 17 of the Railways Act 1993. That creates the danger of an investment bottleneck, as was said by a leading firm of railway solicitors.
Mr. Raynsford: Sue, Grabbit and Run.
Mr. Jenkin: I accept that the Minister for Housing and Planning is a little light-hearted as we reach the end of our consideration of a marathon Bill, which is accompanied by a telephone directory of Government amendments and new clauses. However, we are talking about the firm of Denton Hall.
Denton Hall is the firm of solicitors from which the much celebrated rail regulator, Mr. Tom Winsor, came. I hope that that leading firm of railway solicitors, which spawned the rail regulator, who is now such a champion of the Secretary of State's policies, will not be dismissed too lightly. The firm describes the clause as
- an investment bottleneck . . . operators will not be able to bring forward their own investment schemes without obtaining the SRA's approval at the outset.
- The Regulator may, on application--
(a) made by the Authority, or
(b) made by any other person with the consent of the Authority,
give to a person who has an estate or interest in, or right over, an existing railway facility a direction to improve or develop the railway facility.
I am sure that the Minister is getting ready to tell me that there is a qualification--an obligation--on the regulator. I shall not go into too much detail because the clause is lengthy. If the railway facility provider--supposedly Railtrack--can demonstrate that it cannot earn a sufficient return from the investment, the rail regulator and the SRA cannot force the company so to invest. So, we face a curious situation: the clause compels Railtrack or any other railway facility provider to invest, but if it is not worth investing in that facility, compulsion becomes invalid.
One might ask why any company would not wish to invest in something from which it will earn a worthwhile return. The rates of return are set by the rail regulator in any case, so unless there is a falling out between Railtrack and the regulator--we hope that that falling out is being resolved, although the process is extremely lengthy; I
suggest that the Government bear some responsibility for that--or the company is perverse, it would want to invest in facilities that provide a return.The power in the clause will not increase the amount of investment that will be made. The result will be that Railtrack and every railway facility provider will want to check with the SRA whether the project is one in which the SRA would want it to invest. That is why the clause constitutes an investment bottleneck.
In voting on the amendment, the House is offered the choice between a railway that is free to make investment decisions, which business people think will best satisfy customers and provide a return for shareholders, and a railway that is constrained and corralled by a successor state bureaucracy to the British Railways Board, which so constrained the development of the railway over 45 years of nationalisation.
Let us reflect on what happened before privatisation and what has happened since. Before privatisation, there was a relentless decline in the number of passengers carried on the railway. Since privatisation, there has been an explosion of marketing, innovation and investment and a huge increase in the number of passengers, which we are the first to accept creates its own problems. This Government are the first to celebrate the 1,000 extra daily services on the railway since they came to power, yet those extra services are as a result of releasing the railway from precisely such restriction and interference. The Government are in danger of again placing the railway under such constraints, which will finish up starving it of investment by driving away investors who do not have the patience or confidence to wait for the bureaucrats to make up their minds.
Let me hasten to add that I am not making any personal criticism of the chairman of the Strategic Rail Authority. However, his role should be much more that of a facilitator and a catalyst. There is a place for such a role in the industry if the Secretary of State and Ministers cannot themselves fulfil it, but to hand over such broad powers is a mistake and one reason why we fundamentally oppose the Bill's railway provisions.
I shall briefly refer also to amendments Nos. 414 to 417. Amendments Nos. 414 and 415 amend provisions in clause 201 on the objectives of the regulator and the Secretary of State. I am looking for amendment No. 417, and I cannot find it, but if I am not mistaken it deletes subsection(2)(b)--[Interruption.] I beg your pardon, Mr. Deputy Speaker, I am on the wrong track. We could well have desired to delete that part of the clause, but I will not go into further detail because I would not be in order. I shall turn to amendment No. 417 in a minute.
Amendments Nos. 414 and 415 relate to the guidance that the Secretary of State gives to the rail regulator. Section 4(5) of the Railways Act 1993, which set up the office of the rail regulator, states:
- The Regulator shall also be under a duty in exercising the functions assigned or transferred to him under this Part--
(a) until 31st December 1996, to take into account any guidance given to him from time to time by the Secretary of State.
The Government have made a conscious and political decision to turn the regulator from someone dispassionate and relatively uninvolved in the politics of the industry into an active player in such politics. To give an example of such a change, it was not right for the rail regulator to issue a press release following the Paddington crash suggesting that he might remove Railtrack's licence if it did not prove to be a safe operator.
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