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Standing Committee Debates
Railways and Transport Safety Bill

Railways and Transport Safety Bill

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Standing Committee D

Tuesday 11 February 2003


[Mr. Alan Hurst in the Chair]

Railways and Transport Safety Bill

Schedule 1

Office of Rail Regulation

8.55 am

The Minister for Transport (Mr. John Spellar): I beg to move amendment No. 43, in

    schedule 1, page 49, line 21, at end insert—

    ''(cc) has had his estate sequestrated in Scotland or, under Scots law, has made a composition or arrangement with, or granted a trust deed for, his creditors,''.

The Chairman: With this it will be convenient to discuss the following:

Government amendments Nos. 44, 41 and 42.

Government new clause 3—Schedules 1 and 4: sequestration, &c. in Scotland. Mr. Spellar: The amendments reflect the different law on bankruptcy in Scotland as it relates, first, to the Secretary of State's power to dismiss a member of the Office of Rail Regulation and, secondly, to eligibility for appointment to the British Transport Police Authority.

The Enterprise Act 2002 includes new provisions on bankruptcy for England and Wales and introduces bankruptcy restrictions orders. The Bill provides that someone who is subject to a bankruptcy restrictions order may be dismissed from the Office of Rail Regulation. It also provides that someone who is subject to such an order is ineligible for appointment to the British Transport Police Authority. The relevant provisions of the 2002 Act have yet to be commenced, and clauses 70(3)(l) and 108(3)(a) allow transitional provisions on bankruptcy to be made by order, should the provisions relating to the BTPA and the ORR come into force first.

The provisions on bankruptcy restrictions orders in the 2002 Act do not apply to Scotland, and it is for the Scottish Parliament to decide whether to legislate for equivalent provision. For the present, however, the Bill must reflect existing bankruptcy arrangements in Scotland, and it is better to do that in the Bill than through secondary legislation, as currently provided for by clauses 70(2)(m) and 108(3)(b).

Amendment No. 43 sets out the bankruptcy grounds in Scotland on which the Secretary of State may dismiss a member of the Office of Rail Regulation. Amendment No. 44 sets out the bankruptcy grounds in Scotland on which a person would be ineligible for appointment to the British Transport Police Authority. Amendment No. 41 deletes the order-making power to make transitional arrangements on bankruptcy in Scotland in connection with the British Transport Police Authority. In the light of amendment No. 44, that power will no longer be needed. Amendment No. 42

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deletes the order-making power to make transitional arrangements on bankruptcy in Scotland in connection with the Office of Rail Regulation. In the light of amendment No. 43, that power will also no longer be needed. New clause 3 sets out how and when ineligibility or liability to removal on the grounds of bankruptcy in Scotland shall cease.

Miss Anne McIntosh (Vale of York): I thank the Minister for his comments and particularly for saying that it would be up to the Scottish Executive to decide whether the provisions of the Enterprise Act 2002 should enter Scottish law. What discussions has his Department had with the responsible body in the Scottish Executive about the prospective timetable? Is it satisfactory to have two different sets of provisions? If the amendments are made, what will be the state of the arrangements in Scotland until the Executive implements the Act?

Mr. Spellar: I hoped that it was clear from my initial statement that the new bankruptcy provisions do not apply to Scotland. When the Scottish Parliament legislates, we will obviously need to take account of that. At present, however, the Bill must reflect existing provisions on bankruptcy in Scotland. The mechanism by which bankruptcy is enforced does not particularly matter for the purposes of the Bill. What matters is that a bankruptcy decision made under those mechanisms—whatever they are—deals with an individual's qualification to be a member of the Office of Rail Regulation or the British Transport Police Authority. The amendments would take account not just of the difference between Scotland and England, but the potential variation in Scotland, to get to the core of the issue, which is that those who have been adjudged bankrupt should not be allowed to serve on the various boards.

Amendment agreed to.

Question proposed, That this schedule, as amended, be the First schedule to the Bill.

Miss McIntosh: Schedule 1 is extremely important, and I want to refer first to the remarks of my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) on First Reading.

The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): Second Reading.

Miss McIntosh: I thank the Under-Secretary of State for that.

The issue is the replacement of the present rail regulator with the Office of Rail Regulation. My hon. Friend the Member for Westmorland and Lonsdale cited, on Second Reading, the report of the Better Regulation Task Force, and asked:

    ''Is it the case, as some people suspect, that the Government were not exactly reluctant to implement that recommendation of their taskforce, given that the current rail regulator, Mr. Tom Winsor, has demonstrated that he is capable of being independent not only of individual concerns within the rail industry but also of Her Majesty's Government? Some Members will recall the occasion when the regulator gave evidence to the Select Committee on Transport about a difference of opinion, or of recollection, between him and a former Secretary of State. It would be a matter of great regret and some seriousness if the Government's decision to change the whole nature of the operation of the Office of the Rail Regulator were to stem from their frustration at the regulator's actions on that occasion. We

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    hope to be able to establish clearly that getting their own back played no part in the Government's motivation.''—[Official Report, 28 January 2003; Vol. 398, c. 781.]

The Better Regulation Task Force, which is an independent advisory group, was set up in 1997, and its terms of reference are to advise the Government on action that improves the effectiveness and credibility of Government regulation. That is done by ensuring that regulation is necessary, fair, affordable and simple to understand, taking particular account of the needs of small businesses and ordinary people. Its members are unpaid and come from a variety of backgrounds, but all have experience of regulatory issues. They are drawn from large and small businesses, citizens and consumer groups, unions, the voluntary sector and those responsible for enforcing regulations.

The taskforce reviews particular regulatory issues and has set five principles for good regulation—transparency, accountability, proportionality, consistency and targeting. In July 2001, it published a report on economic regulators, which considered the form of organisational structure best suited to effective economic regulation. There is widespread agreement, we are told, that regulators should be run by properly appointed boards rather than individual regulators.

It would be most helpful if the Minister for Transport would tell the Committee what other sectors are currently being reviewed in a similar way.

Mr. Don Foster (Bath): I am listening to the hon. Lady with great interest, but I confess that I have not the foggiest notion where she is going. Will she confirm that the very report to which she has referred—the economic regulators report of July 2001—specifically stated that the advantage of a broad structure for the operation in question was that it would ensure a wider range of expertise in the decision-making process, would increase continuity in decision making and provide greater transparency and accountability. Does the hon. Lady agree with that, and if she does, would it not be sensible to go ahead with the Government's proposals?

Miss McIntosh: If the hon. Gentleman will bear with me, I shall be brief. Like a train, I will get there, perhaps not on time, and certainly not to his timetable, but in my own time.

A serious charge has been made by my hon. Friend the Member for Westmorland and Lonsdale, which I lay at the Government's door.

Mr. Spellar: Perhaps the hon. Lady could help the hon. Member for Bath (Mr. Foster) by saying whether the Front-Bench spokesman on Trade and Industry or any other Conservative Front-Bench spokesman has opposed the report of the Better Regulation Task Force in that regard?

Miss McIntosh: I know that the Government do not like answering questions, but the Minister confirms that they wriggle out of doing so by asking different ones. I shall keep to the point and in order and ask the Minister, very slowly, one more time, whether he will set out, for the benefit of the Committee and the House, for me and for our colleagues at the

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Department of Trade and Industry, the Government's programme for dismantling the various offices of independent regulators and replacing them with a regulatory board. That is my first question.

Mr. Foster: Will the hon. Lady give way?

Miss McIntosh: No. If the hon. Gentleman's interventions were helpful, I would have no hesitation in giving way, but I want to make progress.

I want to help the Government to show that they are not being vindictive and do not have a vendetta against a gentleman whose integrity, independence and role as an independent economic regulator is not in doubt. That was reflected in the modest minority report of the Select Committee, but it was also recorded in the main report. I have no problem with the five principles, but I want to ask the Minister why this particular rail regulator, who has done a good job and who has been a beacon of independence—if he were a school, he would have been given a beacon for being a good school—is being removed from office. I also want to know how the Government plan to apply the five principles and, to repeat the question that I asked on Second Reading, to ask what role the Minister envisages the present rail regulator fulfilling.

Paragraph 1(1) of the schedule sets out the constitution. It says,

    ''The Office of Rail Regulation shall consist of a chairman and at least four other members appointed by the Secretary of State.''

Given that the Minister said in moving his amendments, which we did not oppose, that the amendments will not apply in Scotland, it will be interesting to know whether the Government intend to appoint someone who has a Scottish background, perhaps in Scottish law or business.

Paragraph 1(2) states

    ''The chairman or another member''—


I shall speak more slowly and a little louder, Mr. Hurst, as there seem to be some noises off this morning, which are most distracting.

Paragraph 1(2) states

    ''The chairman or another member—

    (a) may not be appointed for a term of more than five years (but may be reappointed)''.

Does that mean that they can be reappointed just for a further five years, or for another five years after that? Will there a limit or a maximum appointment? I am sure that the Minister will find some assistance in his briefing notes.

The chairman or another member

    ''may resign by notice in writing to the Secretary of State''.

I pause slightly to put a question regarding evidence from the present rail regulator that a former Secretary of State sought to bring an injunction preventing the regulator from granting an interim review of Railtrack when more money was requested. The Government, in their worst judgment, choose to put Railtrack into administration. I asked Tom Winsor whether he had considered resigning because his independence had

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been removed because he wanted to grant an interim review allowing Railtrack the further money that it felt it needed. That happened against the background of Renewco and all the efforts put into that new financial vehicle, which, we were told, would be the future life-blood of Railtrack. Renewco never came into being, and we shall not go down that track, because I get vexed about it. I remind hon. Members that I still own half my Railtrack shares, so I have a personal interest.


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Prepared 11 February 2003