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

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Mr. Grieve: I should like the Minister to consider the possibility that, under the order, grant funding of a rail service that runs mainly within England could be dealt with by Scottish Ministers because the same operator ran services exclusively within Scotland. I would be grateful for enlightenment, because I am sure that he would agree that that would not necessarily be satisfactory.

4.58 pm

Sir Robert Smith (West Aberdeenshire and Kincardine): The hon. Member for Beaconsfield (Mr. Grieve) highlights the need to clarify the financial transfers to the Scottish Executive. Unless we are misreading the order, there is a danger that someone who holds the franchise for the Scottish rail service and wins the franchise for the east and/or west coast main line would therefore be required to be funded by the Scottish Executive. Would more money transfer in such circumstances? What is the long-term plan for sourcing of grant? Would grant be incorporated into the block grant and adjusted by the Barnett formula for Scotland every time that there is an adjustment to spending on rail transport in England?

We are worried that that may not provide the integrated transport planning that we need if we are to encourage more people to use the railways. We would like reassurance from the Minister that the hon. Member for Beaconsfield is reading the order incorrectly. If he is correct, what is the plan for the long run, when there may be—as some of us want—a much more coherent system with fewer franchisees, when there would be every chance that the franchises were held by the same company?

4.59 pm

Mr. Hill: Let me deal with the question of information raised first by the hon. Member for Beaconsfield. Those hon. Members who have previously served on Committees that consider this type of order will recall discussions about the amount of information made available to them when considering delegated legislation compared with the information that is available to Members of the Scottish Parliament. In the interests of informed debate and following previous practice, the executive notes prepared by the Scottish Executive for the assistance of MSPs have been circulated to you, Mr. Sayeed, and to members of the Committee.

I understand that we owe that facility to my hon. Friend the Member for Cunninghame, North (Mr. Wilson), now the Minister of State, Foreign and Commonwealth Office who, when he was at the Scottish Office, brought the matter to the attention of my right hon. Friend the Leader of the House last November in connection with the report by the Procedure Committee on delegated legislation.

Finance and the future shape of grants was mentioned by the hon. Member for Beaconsfield and by the hon. Member for West Aberdeenshire and Kincardine, whom we are delighted to have join us—he has made an incisive contribution to our debate. I was asked about the replacement of the ScotRail franchise. The franchise replacement process will need to be managed to achieve best value for money within the available funding.

Spending review 2000 sets the Government's spending plans for the three years to 31 March 2004. Any new commitments made before that date would have to be funded by provisions transferred from the Department for the Environment, Transport and the Regions. Such a transfer would be made only for projects that met overall value-for-money tests. It would be for Scottish Ministers to fund any new commitments that did not meet those tests or that were made after 31 March 2004. I hope that that explanation was helpful.

The hon. Member for Beaconsfield was referring to grants for services that cross the border when we had to suspend for the Division. I am pleased to say that, during that brief respite, inspiration winged its way to me. I am now able to provide what I hope will be a full and satisfactory explanation.

The order allows Scottish Ministers to fund services that cross the border that are funded by a Scottish franchisee, which is currently ScotRail. That would presently cover ScotRail services to Carlisle and sleeper services to London. It does not cover the cross-border services provided by Virgin or GNER. That fulfils the McLeish settlement. The funding powers are concurrent with those of the Secretary of State.

We cannot speculate about the future pattern of the franchise map. However, the order would permit Scottish Ministers to fund cross-border franchise services provided by a company that also had a franchise for services wholly within Scotland. If a service provider that was already operating services to Scotland from England acquired the Scottish franchise, it would be possible—but not necessary—for the Scottish Executive to fund the cross-border services, but not the English-only services. I hope that that explanation is satisfactory.

Mr. Grieve: Will the Minister give way?

Mr. Hill: With trepidation.

Mr. Grieve: I understand that it will not be possible to fund the English-only services but if, for instance, a Scottish franchisee were operating the line from Edinburgh to London, about 70 per cent. of the service would be entirely in England. I am sure that the intention behind the order in those circumstances is not that the Scottish Executive should decide what grants should be made for that service.

Mr. Hill: In the immortal words of our late lamented leader, Harold Wilson, the former Prime Minister, I never answer hypothetical questions. However, the hon. Gentleman tempts me slightly. The order would permit such a provision but, frankly, that is a matter for Scottish Ministers and the Scottish Executive. That is the purpose of the order.

Mr. James Wray (Glasgow, Baillieston): May I ask a couple of questions? Was the order granted because of a request from the Scottish Executive that the matter should be devolved to Scotland? Was a calculation made at the time of the distribution of the Barnett formula, and if the order is made, will extra funding be added to that?

Mr. Hill: The Scottish Executive have not requested any such provision. As my hon. Friend the Member for Cunninghame, South knows only too well, the order fulfils a commitment made during the passage of the Scotland Bill, which is known as the McLeish settlement.

I reiterate that the arrangement is not part of the Barnett formula because, as my hon. Friend the Member for Glasgow, Baillieston (Mr. Wray) is aware, the railway is generally a reserved power to the GB authority. We are providing the power to fulfil a commitment to the Scottish Executive to enable them to franchise rail services predominantly within Scotland. It will therefore apply to ScotRail, but it could apply to cross-border services. That seems consistent with the general pattern of franchising in the United Kingdom. If my hon. Friend reflects on the matter, many franchises are effectively regional. I am aware, of course, that Scotland is a nation and I am sure that my Scottish colleagues will forgive me for making that analogy.

The powers that the order will give to the Scottish Executive are wholly consistent with the pattern of franchising and it is right and appropriate that the Executive should have those powers for rail passenger services operating wholly or predominantly within Scotland.

Mr. Grieve: I am not trying to make the Minister's life difficult; I may have failed to note a simple answer. My real concern is whether the transfer of powers precludes the Westminster Government granting funds. Or, does the order give the Scottish Executive a veto on granting funding to a line that runs substantially within England—perhaps it runs from London to Berwick-upon-Tweed, but happens also to go on to Edinburgh—just because the franchisee happens also to have a line that starts and finishes wholly within Scotland? That is the nub of the matter. If that is not the case, I for one will sleep happily at night. If it is, the order is missing something.

Mr. Hill: The short answer is no. The long answer is that there is no Scottish funding veto.

Sir Robert Smith: The Minister said that it would be possible for the Scottish Executive to act if , for example, ScotRail got the GNER service. Would it still be possible for a UK Transport Minister to fund the GNER service even if it were owned by ScotRail? My worry is that Scotland might suddenly have to fund half the services in England.

Mr. Hill: I am delighted to say that I have anticipated my officials—I realise, of course, that they do not exist in Committee Rooms. The answer is yes.

Question put and agreed to.


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

        Committee rose at nine minutes past Five o'clock.

The following Members attended the Committee:
Sayeed, Mr. Jonathan (Chairman)
Atkinson, Mr. Peter
Clarke, Mr. Tom
Donohoe, Mr.
Fallon, Mr.
Galloway, Mr.
Grieve, Mr.
Hill, Mr.
Hughes, Mr. Kevin
Macdonald, Mr.
Moore, Mr.
Robertson, John
Ross, Mr. Ernie
Woolas, Mr.
Wray, Mr.
The following Member also attended, pursuant to Standing Order No. 118(2):

Smith, Sir Robert (West Aberdeenshire and Kincardine)

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