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Clause 10: Franchising and financial assistance in relation to Wales
64. Clause 10(1) provides that the Secretary of State must consult the NAW before issuing an invitation to tender for or, where he does not invite tenders, enter into a franchise agreement under which the services to be provided are or include "Welsh services". "Welsh services" is defined in clause 56 and means railway passenger services which start in Wales, end in Wales or otherwise make at least one scheduled call in Wales. The franchise agreements in question would include, but would not be limited to, those which are the subject of clause 10(2).
65. Clause 10(2) provides for the Secretary of State and the NAW to be joint parties to a passenger rail franchise that provides services that are or include "Wales-only services". "Wales-only services" is defined in clause 56 and means services that both start and end in Wales and do not make any other scheduled calls outside Wales, and have not been excluded from the definition by an order made by the Secretary of State. In practice this means the current Wales and Borders franchise which is operated by Arriva Trains Wales, since this is the only franchise which at present provides or includes Wales-only services. The Secretary of State will not be able to enter into a franchise agreement that falls within the scope of this clause on his own with a franchisee; he may only do so if the NAW joins with him as a co-signatory to the agreement. In future the franchise agreements referred to in clause 10(2) could include a different franchise to the current Wales and Borders franchise, or more than one franchise, if they provided Wales-only services. As mentioned in the notes to clause 1, it is intended that the SRA interest in the franchise agreement with Arriva Trains Wales will be transferred to the Secretary of State and the NAW jointly.
66. Clause 10(3)-(12) provides a power for the NAW to provide financial assistance connected with Welsh services. This power is based on section 211 of the Transport Act 2000. Similar provisions apply to the Secretary of State under clause 6 and the Scottish Ministers under clause 8.
67. Clause 10(3) enables the NAW to provide financial assistance to any franchisee where the NAW is a party to the franchise agreement. The NAW can provide financial assistance to buy services from the franchisee which operate to, from or within Wales. It can also provide financial assistance to the franchisee for any other purpose in relation to such services. This might include the provision of new passenger facilities, such as a station or the re-opening of a disused line, or improvements to existing facilities. The NAW's power under this clause is not limited to franchises it is a party to for the purposes of clause 10(2). It will be possible for the Secretary of State to invite the NAW to be party to other franchise agreements that provide services that make scheduled calls in Wales. In addition, it will be possible for the Assembly to be a party to a franchise agreement with the Scottish Ministers if the Scottish Ministers and NAW agreed that the Assembly should provide financial assistance to secure a service between Wales and Scotland under a Scottish franchise.
68. Clause 10(4) enables the NAW to provide financial assistance otherwise than under a franchise agreement for "Welsh purposes". It will enable the NAW to provide funding, so as to develop the railway serving Wales, to a wide range of parties, such as Network Rail, freight operators and other third parties. In addition, subject to clause 10(10), it will enable NAW to provide financial assistance to franchisees where the NAW is not a party to the relevant franchise agreement.
69. Clause 10(5) defines the meaning of "Welsh purposes" for the purposes of clause 10(4).
70. Clause 10(6) enables the NAW to make payments to the Secretary of State or the Scottish Ministers in relation to their respective roles as "operator of last resort". This role arises under amended section 30 of the 1993 Act when a franchise that either of them has let ends and is not replaced with another franchise agreement. Where the NAW secured services as a party to the franchise agreement in question it will be able to provide the necessary financial assistance for those services to continue to be provided.
71. Clause 10(7) clarifies what may constitute the provision of financial assistance by the NAW for the purposes of clause 10.
72. Clause 10(8) gives the NAW the discretion to enter into agreements and other arrangements to provide financial assistance to any party under Clause (3) or (4) on whatever such terms and conditions it thinks appropriate.
73. Clause 10(9) relates to clause 7 (notification of assistance from the Secretary of State for freight services). It obliges the NAW to consider whether or not, in providing financial assistance in relation to freight services the effect is consistent with any scheme relating to the provision of grants for freight facilities that the Secretary of State has notified to it. The clause does not require the NAW to act in accordance with the Secretary of State's scheme.
74. Clause 10(10) clarifies the way in which the NAW may enter into agreements or other arrangements under Clause 10(4) to provide financial assistance in respect of franchised services. This clarification is needed because Clause 10(4) gives NAW a wide power, which enables it to provide assistance outside the terms of a franchise agreement. The clarification is that where the NAW enters into an agreement or arrangement with a franchisee, franchise operator, or employee, agent or independent contractor of the franchisee or franchise operator (a "relevant person") it may only do so under the terms of a franchise agreement. This is intended to ensure transparency in relation to franchise agreements, which are public documents, kept on the public register. Clause 10(10) ensures that NAW only enters into agreements with franchisees etc. which relate to franchised services where those agreements are entered into in accordance with the franchise agreement.
75. Clause 10(12) defines the meaning of "facilities" and "railway" for the purposes of clause 10. For the purposes of clause 10 the term "railway" is deemed to have its "wider meaning". This term is itself defined by section 81(2) of the 1993 Act and means a railway, tramway or transport system which uses another mode of guided transport but which is not a trolley vehicle system. The terms "guided transport", "railway", "tramway" and "trolley vehicle system" are defined by section 67(1) of the Transport and Works Act 1992.
Clause 12: Transfer schemes at end of franchising agreements
76. Clause 12 provides for the making of a Transfer Scheme when a franchise agreement terminates (for whatever reason) to transfer the relevant franchise assets (as defined in clause 12(8)). Under section 27 of the 1993 Act, the SRA has power to designate property, rights and liabilities as "franchise assets" under a franchise agreement. These "franchise assets" are important to the operation of the franchised services, and accordingly section 27 provides that franchise assets may not be disposed of by the franchise operator without the consent of the SRA. Schedule 1 of this Bill amends section 27 so that these functions will be exercised in future by the Scottish Ministers in relation to Scottish franchise agreements, and by the Secretary of State in relation to other franchise agreements.
77. Clause 12 is primarily intended for use where a franchise agreement is terminating, and a new franchisee is taking over from the existing franchisee. The Secretary of State or the Scottish Ministers, as appropriate, may make a Transfer Scheme for the transfer of the franchise assets from the old franchise company to the new franchise company. The old franchise company will be paid for the franchise assets in accordance with the terms of its franchise agreement.
78. However, there may be circumstances in which a franchise agreement terminates but is not replaced with a new franchisee. This may happen, for example, where the franchise agreement terminates and the services have to be provided under amended section 30 of the 1993 Act by the Secretary of State or the Scottish Ministers as "operator of last resort". In order to enable the Secretary of State or the Scottish Ministers (or a company owned by one or both of them) to discharge the duty to act as operator of last resort, it is necessary for the franchise assets to be transferred to them. Clause 12(2) makes provision for this.
79. Clause 57(3) and (4) explains the meaning of companies which are "wholly owned" and "jointly owned" for the purposes of this Bill. Clause 12(2) uses these terms.
Passenger Transport Executives
Clause 13: Railway functions of Passenger Transport Executives
80. Subsection (1) provides that the Secretary of State must consult a Passenger Transport Executive in England before issuing an invitation to tender for or, where he does not invite tenders, entering into a franchise agreement which includes services where that Passenger Transport Executive have an interest.
81. Subsection (2) defines the services in which a Passenger Transport Executive has an interest. These are railway passenger services within a PTE's area or railway passenger services to or from a PTE area.
82. Subsection (3) enables a Passenger Transport Executive in England to enter into arrangements with the Secretary of State whereby the PTE can make payments to the Secretary of State that relate to railway passenger services, station services or bus substitution services provided within the PTE's area and/or the Secretary of State can use his powers in relation to those services within the PTE's area in a particular way. This would for example enable the parties to agree for the Secretary of State to secure additional railway passenger services under the franchise agreement which the PTE would fund. "Bus substitution service" is defined in Schedule 11 Paragraph 11(b) of the Bill.
83. Subsection (4) enables Passenger Transport Executives in England to enter into agreements directly with Train Operating Companies who are rail franchisees and franchise operators in connection with railway passenger services and related station services within the PTE's area.
84. Subsection (5) specifies that Passenger Transport Executives in England need to obtain the approval of the Secretary of State before entering into agreements with franchisees or franchise operators (or anyone who proposes to be one). This requirement applies whether the PTE is relying on its powers under subsection (4) or any of its other powers (such as its general powers under section 10 of the Transport Act 1968 (c.73)).
85. Subsection (6) enables the Secretary of State to give approval to agreements for the purposes of subsection (5) under either a general approval (approving a class of agreements such as agreements relating to a specified issue) or a specific approval (for a particular individual agreement). It also enables the Secretary of State to withdraw any approval which he may give in relation to an agreement at any stage up to the point that the agreement is entered into.
86. Subsection (7) confirms that the agreements that a Passenger Transport Executive in England may, with the approval of the Secretary of State, enter into include rail franchise agreements which comprise or which include services within their passenger transport area.
87. Subsection (8) specifies that the Secretary of State and a Passenger Transport Executive in England must provide information to each other which has been reasonably requested by the other for the purposes of undertaking their functions with respect to railways or railway services. Subsection 8(b) provides that this duty is limited to a duty to share information which the disclosing body may lawfully disclose (i.e., the information is not covered by a contractual or statutory prohibition on disclosure).
Clause 14: Repeals and savings relating to Passenger Transport Executives
88. Subsection (1) specifies the sections of the Transport Act 1968 and the 1993 Act that are to be repealed in relation to PTEs.
89. Subsection (2) provides that Passenger Transport Executives which are party to franchise agreements at the time when this clause is brought into force may continue to be a party to those franchise agreements.
90. Subsection (3) provides that subsection (2) and clauses 13(4) and 13(7) of this Bill must be disregarded if there are provisions within the relevant franchise agreement that enable any person to amend that agreement in such a way as to cause a Passenger Transport Executive to cease to be a party to that agreement. It also provides that a Passenger Transport Executive must comply with all directions that the Secretary of State gives to them pursuant to which they will cease to be a party to a franchise agreement.
91. Subsection (4) contains a transitional provision that notwithstanding the repeals in this Bill and the provisions of clause 14, section 34(17) of the 1993 Act (c.43) shall continue to have effect in relation to any franchise agreement to which a PTE is party before the commencement of this clause. In addition any other provision that affects the meaning of section 34(17) will continue in force for the purposes of this section. Section 34(17) is a dispute resolution provision for franchise agreements to which the SRA and PTEs are party, and provides that disputes may be referred by either body to the Secretary of State, who may give such directions to the SRA and the PTE with respect to the franchise agreement as he may think fit.
92. Subsection (5) provides that, if the provisions of subsection (4) are used, any references to the Strategic Rail Authority are to have effect as references to the Secretary of State where the interest in the franchise agreement has been transferred to the Secretary of State.
Clause 15: Duty of Secretary of State and Transport for London to co-operate
93. Clause 15 replaces various references in section 175 of the Greater London Authority Act 1999 (the GLA Act) to the SRA with references to the Secretary of State. The revised section 175 provides a duty on the Secretary of State and Transport for London (TfL) to co-operate. In addition it amends section 175 so that the Secretary of State must consult TfL before issuing an invitation to tender (or when entering a franchise agreement for which an ITT has not been issued) for railway passenger services to, from or within London. TfL and the Secretary of State also have a reciprocal duty to share with the other information relating to certain transport functions. Section 175 as amended also allows TfL to enter into arrangements with the Secretary of State in relation to railway services to, from or within London and for payments to be made by TfL to the Secretary of State in respect of them.
Clause 16: Relaxation of contractual restrictions on Transport for London
94. Clause 16 repeals section 201 of the GLA Act, which places restrictions on the type of agreements that TfL can enter into which involve the provision of railway services by licensed operators on the national network. This clause provides instead for a prohibition on TfL entering into agreements with rail franchisees without the consent of the Secretary of State. Certain agreements (those in respect of the grant of a use of a railway facility) are excluded from this prohibition.
Clause 17: Membership of Transport for London
95. Clause 17 amends the GLA Act to change the membership of the TfL board. It requires the Mayor to ensure that two of TfL's board members represent the interests of people living, working and studying in areas outside Greater London that are served by railway passenger services in respect of which TfL exercises functions, and to consult the relevant regional planning bodies before making relevant these board appointments.
Provision of service by provider of last resort
Clause 18: Qualification of duty in respect of services funded by others
96. Clause 18 limits the circumstances in which, if a franchise ends and is not replaced with another franchise, the relevant franchising authority is required to continue to provide the services as the "operator of last resort". The "operator of last resort" function is in section 30 of the 1993 Act (which is to be amended by this Bill). The limitation is that the operator of last resort need not provide services that were funded under the franchise agreement in question by the NAW, a PTE or TfL if it believes that that party will not supply it with the necessary funds. The clause gives the operator of last resort the discretion to decide not to provide the services if he believes the funding will not be forthcoming - i.e. before he falls short of the necessary funding. The relevant franchising authority, and therefore operator of last resort, for the purposes of this clause is the Secretary of State for franchises in England and Wales, or the Scottish Ministers for Scottish franchises.
Part 3: Rail Passengers' Council and Rail Passengers' Committees
Clause 19: The Rail Passengers' Council
97. Clause 19 provides for the existing Rail Passengers' Council (RPC) to be replaced by a new, recast body of the same name. The existing RPC, which exists by virtue of section 3 of the 1993 Act, is abolished by subsection (6). As with the existing RPC the new body will be an executive Non-Departmental Public Body (NDPB). But it will take on the additional responsibilities and requirements of a body corporate (see Schedule 5). The current RPC is sponsored by the Strategic Rail Authority.
98. Clause 19(2) sets out the make-up of the new Council. The Scottish Ministers, the NAW and the London Assembly are each to appoint a member of the Council. The Council Chairman and not more than 12 other members are to be appointed by the Secretary of State.
99. Clause 19(4) - The RPC will continue as a national GB-wide body sponsored by the Secretary of State. Payment of all Council members other than the LTUC member will come from the central RPC budget. Section 19(4) ensures that the Secretary of State is content with the terms and conditions of those Council members appointed by the Scottish Ministers and the NAW. The London Assembly will be responsible for the terms, conditions and remuneration of their Council appointee (section 19(5)) but must consult the Secretary of State.
100. Clause 19(7) - The new Council created by subsection (1) is legally a different body to the current Council created under section 3 of the 1993 Act, even though the name of the two bodies is the same. To assist with the smooth transition to the new body, subsection (7) provides that any reference to the current body in enactments, instruments and other documents will continue to have effect but will apply to the new body. This would cover, for example, the reference to the Council in Schedule 1 of the Public Records Act 1958, and the references to the Council and its functions in section 76 of the 1993 Act.
Clause 20: Delegation of functions by Council
101. This clause inserts a new section 76A into the 1993 Act which enables the RPC to delegate certain of its duties to other public bodies which may agree to discharge those duties. It is anticipated that a regional transport users body may be a suitable body to enter into such an agreement with the RPC. New section 76A(4) provides that the agreement of the Secretary of State is required before any such agreement can be entered into.
102. The duties which can be delegated by an agreement under subsection (1) are those set out in section 76(7A) of the 1993 Act. These are the duties of the RPC, so far as it appears expedient from time to time to do so, (a) to keep under review matters affecting the interests of the public in relation to railway passenger services and station services; (b) to make representations to, and consult, such persons as they think appropriate about those matters; and (c) to co-operate with other bodies representing the interests of users of public passenger transport services.
103. The new RPC will operate as a national body without the existing structure of regional committees. Alternative management approaches are being developed which will enable the RPC to build and maintain contacts with the wide variety of rail interests and passenger representative bodies that already exist or will be developed across the country. This is expected to occur largely through informal co-operation. This power to delegate provides the RPC with the flexibility to formalise such working relationships for specific matters should it agree to do so with the relevant public body (and with the consent of the Secretary of State). For example a local public transport group may be better placed to pursue a rail issue of particular local concern.
104. In delegating any such duties the RPC would not be prevented from working alongside the delegatee. Section 76A(2)(b) of the 1993 Act, as inserted by clause 20, expressly provides that the RPC will retain powers to do all of those things which it would have been able to do by virtue of section 76(7A) had it not delegated any of its duties under this provision.
Clause 21: Rail Passengers' Committee
105. This clause abolishes regional Rail Passengers' Committees. There is currently a federal relationship between the Council and the Committees, under which every chairman of a regional Committee is automatically a member of the Council. The RPC will continue to operate as a national body, but there will no longer be a federation of statutory regional committees (although it will be possible for the Secretary of State to direct that the Council should establish committees in relation to particular localities under Schedule 5 Paragraph 18, and the Council will be able to delegate certain of its functions under clause 20). Clause 21(3) introduces Schedule 6, which provides that the London Transport Users' Committee (which was treated as the Rail Passengers' Committee for the Greater London area by virtue of section 2 of the 1993 Act) will continue to have the functions that it has had as a Rail Passengers' Committee. The LTUC is established under section 247 of the Greater London Authority Act 1999. Responsibility for this body lies with the London Assembly.
Part 4: Network Modifications etc.
106. The main content of this Part sets out the procedures which must be followed for proposals to close certain railway services, networks or stations of specified descriptions. Generally such proposals require a public consultation and an assessment by the person carrying out the consultation whether the proposal meets criteria set out in government guidance. Such a proposal must be referred to the ORR who must issue a notice, a "closure ratification notice" before the closure is allowed to proceed. If certain conditions are not met the ORR must issue a "closure non- ratification notice" and the closure will not be allowed to proceed. The Secretary of State or Scottish Ministers are generally under duties to ensure the continued operation of services, networks or stations if the operator ceases provision before the ORR has issued a notice or if the ORR issues a notice that does not allow a closure to proceed.
107. Proposals to which the consultation procedures do not apply include minor closures of specified descriptions, closures relating to experimental passenger services and services through the Channel Tunnel. Closure procedures for Light Maintenance Depots (LMDs) that were subject to the closure procedures under the equivalent clauses of the 1993 Act are no longer subject to the statutory closure procedures.
Discontinuance of railway passenger services
Clause 22: Proposal by operator to discontinue non-franchised services
108. Subject to specified exceptions, this clause sets out the circumstances and procedures that apply when a service operator proposes to close all non-franchised services on a line or from a station.
109. It sets out the information an operator proposing a closure must provide to the appropriate National Authority (NA - the Secretary of State or the Scottish Ministers). This must include a summary of the assessment of the proposal carried out by the operator, following guidance provided by the Secretary of State or the Scottish Ministers or joint guidance provided by a combination of the Secretary of State, Scottish Ministers or National Assembly of Wales depending on the circumstances of the closure as set out in clause 42. The content of the guidance is not on the face of the Bill, but is likely to include criteria that cover economic, financial, environmental and social factors based on those used by the Department for Transport for appraisals in other transport modes.
110. The NA must carry out a public consultation on any proposal that it thinks should proceed, following the approach set out in Schedule 7 to the Bill. This includes a number of statutory consultees, with a minimum 12 week consultation period.
111. Following the consultation, the NA must then decide whether to refer the proposal to the ORR, the outcome of which will determine if the closure may proceed or not.
Clause 23: Proposals by funding authority to discontinue non-franchised services
112. Subject to specified exceptions, this clause sets out the circumstances and procedures that apply when a railway funding authority (RFA) proposes to close all non-franchised services on a line or from a station.
113. It sets out the steps a railway funding authority (RFA) making a proposal needs to take. RFAs include the Secretary of State, the Scottish Ministers, the NAW, Passenger Transport Executives and Transport for London and the Mayor. Generally, RFAs can only initiate proposals for closures if they are parties to an agreement that provides financial assistance in support of the rail service (or network or facility) in question. The exceptions are PTEs, the Mayor and Transport for London who can initiate proposals for closures for services, networks or stations wholly within their areas, or for other services, networks or stations for which they are the only public funding body.
114. The RFA must carry out an assessment of the proposal in accordance with the guidance provided by the Secretary of State or the Scottish Ministers or joint guidance produced by a combination of the Secretary of State, Scottish Ministers or National Assembly of Wales depending on the circumstances of the closure as set out in clause 42.The RFA must also consult on the proposal, again as described in the Explanatory Note for clause 22.
115. Following the consultation, the RFA must then decide whether to refer the proposal to the ORR, the outcome of which will determine if the closure may proceed or not.
|© Parliamentary copyright 2004||Prepared: 25 November 2004|