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The regulator had no case for making such a suggestion. It was purely bandwagon-jumping in the aftermath of the horror of that crash. It was a populist move which demonstrated that the present regulator sees himself as some kind of new Labour people's champion, rather than a dispassionate regulator of the industry. He told me that he regards himself as the voice of the customer, rather than an interpreter of statute and an enforcer of conditions laid down in agreed rules.

Such politicised regulation should not exist, but the Bill provides precisely for it by restoring the authority of the Secretary of State to issue guidance to the regulator in perpetuity. That is why we have tabled an amendment. It is reasonable for the SRA to receive guidance from the Secretary of State. The amendments make it clear that the Secretary of State can issue guidance to the authority, but not to the regulator.

I shall speak briefly to amendment No. 416, which refers to clause 202 and the enforcement regime. It raises our third fundamental objection to this part of the Bill. The penalties that the regulator can apply are much wider than those in the Railways Act 1993. They can be imposed retrospectively, without limit. For example, the regulator is at present threatening Railtrack with a substantial fine--I do not remember the exact figure, but it is millions of pounds--in relation to a two-year period during which Railtrack has improved its performance by 9 per cent.

As a result of the Southall rail crash, the train operating company received a fine of less than £2 million, for an accident which resulted in people being killed. It seem extraordinary that although Railtrack improved its performance by 9 per cent., it will be fined many millions of pounds just because it has not reached the target set by the regulator.

Yes, I am sure that the regulator is within his powers, and yes, I am sure that that will raise a cheer from the populist press, but the regulator should ask himself whether such fines are in the interests of a better railway, or whether they are being imposed so that he can be the passengers' champion and play to the gallery.

We propose an amendment to clause 202, which extends the enforcement regime. Rather than leaving the scale of the penalty at

we suggest that the fine should be of such an amount as

The general duties in section 4 of the 1993 Act are to run a better railway.

Unless the fines are proportional and it can be demonstrated that they provide the incentive to make sure that the railway providers offer better trains, services and

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facilities for passengers, what is the purpose of the fines? I do not see why the Minister should not accept the amendment.

Finally, amendment No. 417 proposes that clause 208 should be omitted from the Bill. One of the most iniquitous things that a regulator can do is to move the goalposts during the period of an agreement. The clause effectively gives the regulator powers to amend access agreements, which are the agreements between the train operating companies and Railtrack, unilaterally. Unless the operators have the certainty of their franchise contracts and their access agreements, commercial confidence in the railway's finances will be undermined.

Will the Minister explain how it can be just to give the regulator such wide powers? I can see that it would be convenient and provide more flexibility for the regulator, and might also be convenient for the operators, but it seems extraordinary that the regulator should have powers to change the access agreements by his own diktat.

This is an important group of amendments, dealing with the powers of the regulator and the directions of the Strategic Rail Authority, which go to the heart of some of the problems in the Bill. I hope that even at this late stage, the Minister will take on board some of the points that I have made in the hope of improving the Bill.

With all the extra regulatory and commercial uncertainty created, the huge shopping list of investment projects needed for the railway--£52 billion is specified in the network management statement--as well as the queue of investment proposals from the train operating companies and the refranchising procedure, the danger is that unless we can provide confidence and certainty for investors and a stable regulatory regime, the money will not be forthcoming and the burden on the taxpayer will once again increase.

The only extra money that the Government are spending on transport is not the result of any increase in the Chancellor's largesse, or the result of all the extra taxes being paid by motorists. It is because of the falling subsidies on the railway that the Chancellor has allowed Ministers at the Department of the Environment, Transport and the Regions to keep a small amount of that money to spend on other transport projects, inadequate as it is. If we had not privatised the railway, the Secretary of State would not have even that money to spend.

If we do not want to start diverting resources in large measure back to the railways because legislation such as the Bill has choked off the supply of private investment, the Minister should listen to what the industry is saying, which is what I have expressed from the Opposition Dispatch Box this evening.

Mr. Hill: The hon. Member for North Essex (Mr. Jenkin) made a serious speech, to which I shall respond seriously and in detail. I hope that the House will forgive me if I speak at some length.

Amendments Nos. 412 and 414 to 417 would amend the powers and duties of the rail regulator. Amendment No. 412 would remove the regulator's power to give a direction to improve an existing facility or to provide a new one, provided that he is satisfied that there will be adequate reward. Amendments Nos. 414 and 415 would remove the Secretary of State's power to give general

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guidance to the regulator. Instead, the regulator would be required to have regard to the Secretary of State's general guidance to the Strategic Rail Authority. Amendment No. 416 seeks to put additional conditions on penalties imposed by the regulator and the SRA. Amendment No. 417 would remove the regulator's power to direct parties to amend an access agreement to permit more extensive use of facilities.

Before dealing with the amendments in detail, I shall dispose of the bottleneck argument that the hon. Member for North Essex presented. If I understand the hon. Gentleman correctly, he argues that a bottleneck in investment might develop. However, the Strategic Rail Authority's strategies will be published and its views will be well known to the industry. Fears of a bottleneck are therefore groundless; such a notion is far fetched. I hope that I shall be able to develop that point in more detail and allay the other anxieties that the hon. Gentleman articulated.

I shall deal with the amendments in turn and explain why they are not desirable. First, let us consider amendment No. 412. Clause 200 enables the Rail Regulator to give a direction to a person who is in a position to act to improve an existing facility or provide a new facility. That power can be exercised only through an application from the SRA or a third party, with the consent of the authority. As we said in Committee, that power will ensure that improvements can be made to the network when they are in the public interest.

Mr. Jenkin: Will the Minister give way?

Mr. Hill: If the hon. Gentleman will contain himself and allow me to develop the argument, I shall give way in due course.

There may well be circumstances in which the SRA considers that there is a strategic need for a new or improved facility, but where the person in control of the facility has a short-term view and does not wish to make the investment or has other priorities. In such cases, the clause will provide the balance between the interests of facility owners and the long-term strategic needs of the railway.

An improvement may be sought by a third party, who applies directly to the Rail Regulator, but he must have the consent of the SRA. That will ensure the existence of a genuine interest, which is wider than the commercial interest of one party, and accords with the wider aims of the authority.

I repeat that clause 200 is not designed to replace the normal commercial judgments and investments of facility owners such as Railtrack or English, Welsh and Scottish Railway. It does not preclude voluntary arrangements between a facility owner and someone who wishes to agree terms for an enhancement. The clause provides the element of compulsion necessary to ensure that an investment occurs. That power is to be used sparingly by the SRA as a last resort.

In most cases, we would expect funding bodies such as the SRA to come to voluntary contractual agreements for enhancements that are not commercial, and to make requests to the regulator only as a last resort.

Mr. Jenkin: Two phrases expose the flaw in the Minister's argument. He assumes that the industry will

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take a "short-term", myopic view, when all the evidence suggests that, under privatisation, the industry is taking a longer view than under nationalisation.

Secondly, the Minister claims that the power will be used "sparingly". However, its existence means that all railway operators will be looking over their shoulders and wondering whether every investment that they make is acceptable to the SRA. They have limited funds for investment. If they invest in the wrong facility, will they also be required to invest in a different facility? The increase in investment that the railway needs will be achieved only by setting the industry free from such restraint.

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