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Mr. Prescott: That is indeed a serious point and I am well aware of it. In this matter, although passenger transport authorities in Scotland and in England have some concerns, we shall be giving the grants to the Strategic Rail Authority and it will negotiate with the PTAs about the provision of services. I can assure my hon. Friend that we shall be giving the matter proper attention in Committee. We are well aware of the problem and members of the Committee will have a chance to examine that complaint.

The Bill establishes the Strategic Rail Authority and sets out its powers to improve services for rail users. The Conservative party planned for a static railway; its solution was to price passengers off the system, rather than invest for growth. Privatisation fragmented the industry into many pieces--[Interruption.] It is not in doubt that the railway system was fragmented into many pieces by privatisation, which created millionaires and millions of dissatisfied passengers as well a decline in performance and investment. The industry was subject to constraint by the limited franchises that the Conservative party imposed on it. Labour's priorities are exactly the opposite.

Joan Ruddock (Lewisham, Deptford) rose--

Mr. Prescott: We will promote and develop a growing, safer, better invested railway that is committed to delivering improved performance, quality and capacity.

Mr. Jenkin: Behind you.

Mr. Prescott: I am grateful to the hon. Gentleman and give way to my hon. Friend the Member for Lewisham, Deptford (Joan Ruddock).

Joan Ruddock: Will my right hon. Friend comment on the railway company Connex, which has today threatened that there will be no new year services for passengers in my constituency and elsewhere? Does he understand the fury of my constituents? That threat comes on the backof the company's practice of shutting out disabled

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passengers earlier this year, and running trains with so few carriages that there has been massive overcrowding. Three weeks ago, in an apparent attempt at virtual punctuality, it removed all the clocks at Lewisham station.

Mr. Prescott: That is a proper answer to those who make claims about the joys and successes of the privatised railway industry. The Strategic Rail Authority will be able to deal with such matters and with the renegotiation of franchises, which will improve services. It will have powers to enforce the franchisees to deliver what they have promised. As I understand it, that railway company suffered a fine of £1.4 million. Under the Bill, that money will not go to the Treasury: such fines will be reinvested in the railways. That is an obvious improvement.

The Strategic Rail Authority will put railways at the centre of an integrated transport system, with proper public accountability and investment, putting the passenger's interest at the top of the agenda in a long-term strategic framework with the focus on a plan for growth.

Mr. Jeremy Corbyn (Islington, North): The Secretary of State rightly proposes a large investment in the railway infrastructure. What plans does he have for any stake to be taken in Railtrack by the public sector, so that we can guarantee that the money invested by the public does not end up in the pockets of the shareholders of Railtrack or train operating companies?

Mr. Prescott: I understand my hon. Friend's point, but the money that was given by the previous Administration under the negotiations for the franchises was a form of revenue support for the companies to maintain the price structure forced on them by the Railtrack agreement. That is a matter of some concern. I have instructed the Strategic Rail Authority and the regulator to consider this matter in the further agreements with Railtrack and the rolling stock companies. We do not envisage taking any share in Railtrack. I am not sure that many people would want to do that at the moment, and I am not convinced that there is a case for the Government to do so.

I am glad that the shadow Strategic Rail Authority has already set to work on strategic planning with such good effect. In his articles, the right hon. Member for Wokingham complained about the rail franchises. It was the Conservative Government who negotiated rail franchises that were limited to seven years and which, according to the companies, stunted investment. That is their complaint and why they agreed to renegotiate the franchises.

Mr. Redwood: They should get on with it.

Mr. Prescott: They are getting on with it, although the right hon. Gentleman does not seem to be aware of that. They have seven-year contracts, and I agreed that we should start early negotiations. The Strategic Rail Authority is doing that, but the right hon. Gentleman will apparently vote against that body.

Renegotiating the franchises will create greater commitment to quality and investment over a longer period. The Strategic Rail Authority will take over consumer protection functions from the rail regulator.

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The Strategic Rail Authority and rail regulator will have enhanced powers to deal with poor performing companies.

The rail regulator, confirming his role as an economic regulator, will have a new power to require facility owners, such as Railtrack, to enhance facilities or to provide new facilities. The rail regulator will work to facilitate the SRA's strategic approach, balanced against his other duties.

As I said, the SRA will retain the penalty income from enforcement action, including enforcement by the rail regulator. Penalties will be kept for investment in the railway, and not returned to the Treasury.

We have also responded to the Select Committee's other concerns. We have given the SRA wider powersto encourage rail freight, we have ensured greater transparency and accountability and we were happy to include in the Bill the other recommendations made by the Transport Sub-Committee chaired by my hon. Friend the Member for Crewe and Nantwich.

During the Second Reading of last Session's Railways Bill, I undertook to return to the issue of the borrowing powers available to the SRA--I think the matter was raised by the right hon. Member for Wokingham. The SRA's borrowing limit is that of the British Railways Board which it replaces and is to be set at £3 billion, part of which will be swallowed up by the board's existing debt of half a billion pounds.

We are now providing the necessary flexibility for the SRA to accommodate the outcome of the current negotiations on franchise replacement. The existence of a £3 billion borrowing limit does not mean that the SRA will need to borrow £3 billion or any other amount. We should not anticipate the results of the negotiations.

The measures in the Bill bring public accountability back to the railway industry. It will allow the SRA to plan for an expanding network. It will require those who own the network to meet their obligations and fulfil their promises, and it will require train operators to fulfil their franchise agreements. It will return the concept of "public" to the concept of a public rail service.

The railway industry has been subject to plenty of criticism, much of it deserved, but there are now positive signs of a revival of Britain's railways. Figures for performance and for signals passed at danger are encouraging, although we still have a long way to go. The Strategic Rail Authority will be the new guardian of the public interest: it will plug the loopholes in the last Government's rail legislation, and will provide tougher enforcement to protect the passenger.

Mr. Cynog Dafis (Ceredigion): Should not the authority be obliged to listen carefully to what is said by the Welsh Assembly about the needs and priorities of services in Wales? What mechanisms will the Secretary of State introduce to ensure that it does so?

Mr. Prescott: I believe strongly in consultation between the Welsh Assembly and the SRA. Indeed, I am currently considering a proposal that the authority should include a member representing the Welsh interest.

We have further enhanced the powers of the passengers' representatives, now renamed rail passengers' committees, by providing a statutory basis for their work

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on bus-rail links, interchanges and new integration. Given those new powers, it is no wonder that the rail passenger watchdog has described the Bill and the SRA as

    "the best Christmas present passengers could have".

The Bill will help to provide a quality integrated transport system for the 21st century. It gives us the means to rebuild our transport industries, to reduce congestion, to improve the environment and to provide a transport system that is good for people, whether they are motorists, bus or rail passengers or, indeed, pedestrians. Despite the transport mess and the decline in quality over the 18 years that we inherited we have, in just two and a half years, begun to turn the corner. There are more passengers on trains; more goods are carried on the railways; there are more bus passengers, reversing the decline; there is cleaner air in our cities; and there are record levels of investment. All that is within a longer-term framework. The Bill takes a further step towards the establishment of a modern, integrated, properly financed and properly regulated transport system to rival the best in Europe.

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