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Delegated Legislation Committee Debates

Draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers Etc.) Order 2001

Third Standing Committee on

Delegated Legislation

Wednesday 14 February 2001

[Mr. Jonathan Sayeed in the Chair]

Draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2001

4.30 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): I beg to move,

    That the Committee has considered the draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 2001.

It is a delight to serve under your wise and efficient chairmanship, Mr. Sayeed, and to appear before such a distinguished audience, elements of which have been liberated from various stages of incarceration.

The Committee meets under the affirmative resolution procedure. The purpose of the order is to give the Scottish Executive the power to provide grants to the Strategic Rail Authority for passenger rail services provided under Scottish franchises. Under the devolution arrangements, railways are a reserved matter for the Westminster Parliament. However, the Government made commitments during the passage of the Scotland Bill to ensure that Scottish Ministers would have an appropriate level of control over Scottish passenger rail services within the overall Great Britain framework—a set of commitments collectively known as the McLeish settlement, proposed in the House by my hon. Friend the Member for Cunninghame, South (Mr. Donohoe).

We have been working progressively towards implementing appropriate measures to meet those commitments and the order represents the virtual completion of that process. There is one further commitment to meet—the transfer of legislative competence for powers over the promotion and construction of new railways in Scotland to the Scottish Parliament. We are awaiting further information from the Scottish Executive before it can go ahead. The other commitments have been met by the inclusion of certain powers for Scottish Ministers in the Transport Act 2000 and by orders made under the Scotland Act 1998.

The order will meet our commitment to transfer to Scottish Ministers financial responsibility for the Scottish passenger rail franchise. The order is made under section 63 of the 1998 Act, which provides that an Order in Council may be made, among other things, for any function of a United Kingdom Minister of the Crown so far as it is exercisable in or as regards Scotland, to be exercisable by the Scottish Ministers instead of, or concurrently with, the United Kingdom Minister. The order therefore provides for Scottish Ministers to exercise the powers given to the Secretary of State for the Environment, Transport and the Regions under paragraph 7 of schedule 14 of the 2000 Act. That paragraph provides that the Secretary of State

    ``may make to the Authority''—

the Strategic Rail Authority—

    ``grants of such amounts, on such terms, as he may determine''.

The order transfers that function of the Secretary of State to Scottish Ministers insofar as the function relates to the making of grants for funding passenger rail services that start and end in Scotland and are provided under a franchise agreement, by a person who also provides services under a franchise agreement that starts and ends in Scotland. That means the services provided under the ScotRail franchise, including the Scottish sleeper services and ScotRail's cross-border services.

The Scottish Executive fund the Strathclyde Passenger Transport Authority elements of the ScotRail franchise and will now become responsible for providing the SRA with any grants necessary to fund the entire franchise. The Executive will also become responsible for funding services under that franchise should it ever become necessary for the SRA to provide, or secure, the services in fulfilment of its duty under section 30 of the Railways Act 1993 as the operator of last resort.

Sir Robert Smith (West Aberdeenshire and Kincardine): Will the financial responsibilities being transferred need finances to be transferred to meet that responsibility?

Mr. Hill: They certainly will and I shall expand on the subject later.

The SRA will have a duty under section 30 to provide or secure services in the event that the franchise was terminated prematurely, or if it came to an end and no further franchise agreement had been made. In that case, the authority would either act as operator of last resort or secure the provision of services until a new franchise agreement was made.

Scottish Ministers' powers under the order will be exercisable concurrently with those of the Secretary of State. We will therefore retain the power to make payments in respect of the Scottish franchise. The Secretary of State's retention of that power will not affect the Scottish Ministers' independent exercising of power, nor will it affect their important role in issuing directions and guidance to the SRA on the Scottish franchise and advising other operators whose services serve Scotland. Scottish Ministers' powers under the order will enable them to make grants of such amounts and on such terms as they may determine.

Under the Transport Act, the SRA, in exercising or declining to exercise its functions, is required to comply with directions and guidance given by the Secretary of State under the financial framework that he has set for the authority. The overall Great Britain framework will thus be preserved. The powers of Scottish Ministers to give directions and guidance remain those given under the Act.

The order is not concerned with details of the level of funding that will be provided, which will be determined separately. My Department will transfer funds to the Executive to enable them to provide grants to the SRA to meet the funding commitments under the Scottish rail franchise in the financial year 2001-02 and the ensuing two years. It is estimated that contractual franchise payments for 2001-02 will amount to £111 million. That sum is included in the Budget (Scotland) Bill 2001-02, which was recently debated by the Scottish Parliament. Funding for the Scottish Executive will be adjusted if necessary to reflect performance payments or receipts and the Rail Regulator's periodic review of Railtrack's access charges. I hope that my explanation meets the concerns expressed by the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith).

Until the end of the present Scottish franchise, there will be a similar transfer to the Scottish Executive from my Department's spending review 2000 provision, together with fixed franchise payments. From 2004-05 onwards, however, it will be for the Scottish Executive to include provision for the Scottish rail franchise in their spending plans.

The order marks an important milestone by providing the Scottish Executive with funding powers over the services provided under the Scottish passenger rail franchise within the overall GB framework. The power to make direct grants to the SRA in respect of that franchise will enable the Executive to target funds effectively and will give the Executive a financial lever over the strategic development of rail services in Scotland. It underpins their role in determining the future of passenger services in Scotland. It demonstrates the Government's commitment to delivering appropriate oversight of Scottish passenger services to the Scottish Executive within the overall Great Britain policy framework for railways. I ask the Committee to approve it.

Mr. George Galloway (Glasgow, Kelvin): On a point of order, Mr. Sayeed. The ancient practice of spying strangers may have fallen into disuse—it may even have been abolished—but scanning the Committee membership list I did not see the name of the hon. Member for West Aberdeenshire and Kincardine. Although it is always a pleasure to see him, he detained the Committee with his words of wisdom. I seek your guidance on whether he should have done so.

The Chairman: I am happy to offer the hon. Gentleman some guidance. The fact is that any hon. Member can attend a Committee such as this, address it and put points of order. However, such Members are not entitled to vote.

4.38 pm

Mr. Dominic Grieve (Beaconsfield): I welcome you, Mr. Sayeed, to the Chair. I also welcome the Minister, who now concerns himself with Caledonian affairs. What he said was interesting. As usual, the order was best explained by the explanatory notes, which were produced by the Scottish Executive, which reinforces the argument about the lack of proper explanatory notes on orders that emanate from the Government in Whitehall. I hope that the Minister will point out the contents of the notes to his civil servants. It would be extremely helpful if we had a similar document to assist us when debating all such orders, whether they be English, Welsh, Scottish or otherwise.

I wish for clarification on one matter. I appreciate and accept what the order is intended to do. Insofar as it concerns the rail network in Scotland, it makes eminently good sense. However, according to the note, it appears that it could transfer powers to Scottish Ministers to make grants for services that

    ``start or end in Scotland and are provided under a franchise agreement by a person who also provides services, under a franchise agreement, which start and end in Scotland.''

If I understand that correctly, that would mean that an operator of rail services who operated services within Scotland—with a start and end in Scotland—who also happened to operate a trans-border service running from Scotland to England could have funding determined by Scottish Ministers for that cross-border service. As the Minister will appreciate, many services start in England and end in Scotland that, by virtue of the geography of these islands, run for the most part in England. A train running from London to Edinburgh, for instance, will spend most of its time south of the border, even if the section north of the border is of great importance.

The way in which the franchises have been allocated may well mean that that issue is academic, but I can foresee under franchising that a Scottish rail operator with a major rail network inside Scotland could also provide a service all the way down to London. As I understand the rules under the order, we would then have the odd situation in which the funding of that service would fall to Scottish Ministers—or at least Scottish Ministers would have some veto or necessary concurrence with United Kingdom Ministers. Will the Minister clarify how that system will operate in practice? I am sure that he will agree that, just as it is extremely sensible to ensure that funding of rail services in Scotland—

4.42 pm

Sitting suspended for a Division in the House.

4.57 pm

On resuming—


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