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Jeremy Corbyn (Islington, North) (Lab): What is the boundary for rail infrastructure in Wales, because the link lines between north and south Wales partly run through England? In the hon. Gentleman's view, should those lines be included in the Wales franchise?

Mr. Llwyd: The Welsh Assembly should be properly consulted with regard to the important rail service from Swansea to Paddington. I am not saying that it should control lines outside the Welsh border, but it should be consulted properly and its views should be taken into account, which is not the current situation with regard to the cross-party committee. I hope that I have made the point, and I ask the Minister to respond in as much detail as possible.

John Thurso: Before I address the new clause and amendments introduced by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), I shall refer to the amendments tabled by the hon. Member for Ceredigion (Mr. Thomas) in Committee. I am sure that there was a good reason why the hon. Member for Ceredigion was not in Committee when we reached those amendments. I am sorry that they were not moved, because I sympathise with them.

Mr. Llwyd: My hon. Friend the Member for Ceredigion (Mr. Thomas) experienced a flooding incident in his flat.

Mr. McNulty: For seven sittings?

Mr. Llwyd: For some unearthly reason, the message did not get through to the Clerk or the Chair, and I apologise for that on his behalf.

John Thurso: I am grateful to the hon. Gentleman for that explanation. If one's flat is flooded, it is a serious occurrence, which explains why the hon. Member for Ceredigion was not present on that morning. I sympathise with the amendments, and if I had known about the situation, I might have put my name to them.

New clause 9 and the amendments relate to the asymmetry of the devolution settlement in this country. In Scotland, we enjoy a Parliament with full powers, whereas the Welsh Assembly has powers over secondary
 
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legislation only. It is fairly well known that my party would like Wales to be blessed with a Parliament as opposed to an Assembly.

In broad terms, I can see no reason why Wales should not be permitted the same devolutionary responsibilities as Scotland. Some difficulties exist, and the hon. Member for Islington, North (Jeremy Corbyn) has made the point that whereas the Scottish railway system is almost wholly in Scotland and has two well-defined routes in the west and the east, the situation is more complex in Wales, because the railways dip in and out of England. That difficulty in formulating strategy is not apparent in Scotland.

On the principle of the matter, the Welsh Assembly should be permitted as much say in the railways as possible. I have said this before, and I am sure that I will say it again: the correct principle for devolution is that what can be devolved should be devolved. Assembly Members—in particular, Jenny Randerson, who speaks for the Liberal Democrats on such matters—have contacted me to make the point that all parties would like to see a greater role for the Welsh Assembly. I hope that the Government will listen with some sympathy to the points that have been made and consider—if not today, in another place—how they might fulfil the legitimate aspirations for devolution expressed by the hon. Member for Meirionnydd Nant Conwy.

4 pm

Mr. McNulty: I do not doubt that these are serious matters. Nor do I doubt that the hon. Member for Ceredigion (Mr. Thomas), who sat—or rather, did not sit—for Plaid Cymru on the Committee, had difficulties on the day that the amendments should have been debated. These amendments should therefore be treated with all due consideration and regard, and in detail, and I shall try to respond to them in that context. However, the record should show that the inundation took place on only one sitting day. The hon. Member for Ceredigion popped along to see us for about half an hour on the first day that we sat and was not there for the remaining seven sittings. That is a matter of regret, not least for the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), who, as he said, would have wanted to discuss the amendments had that been possible. I understand about the flood, but to turn up for only one sitting, albeit with an excuse for one of the others, is not a terribly good batting average for any member of any Committee.

New clause 9 seeks a power for the National Assembly for Wales to prepare and publish railway strategies for Wales that is equivalent to Scottish Ministers' powers in relation to Scottish railway strategies in clause 5. I contend that that is unnecessary. The Secretary of State has overall policy responsibility for the strategic direction of the railway in England and Wales. Scottish Ministers have the power to prepare a railway strategy because they have equivalent franchising and network functions in Scotland to those of the Secretary of State in England and Wales. I understand that the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) addresses those points in later amendments, which I shall deal with in due course.

Although the Bill does not place a statutory duty on the Secretary of State to publish railway strategies in the same way that section 206 of the Transport Act
 
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2000 makes it a duty of the Strategic Rail Authority to publish such strategies, he will have an overall strategy for the railway. From time to time, the Department for Transport will undoubtedly publish documents that set out his objectives in this regard. The Department will certainly consult the National Assembly for Wales as a matter of course when preparing any strategies that affect Wales.

The Bill already requires the Secretary of State to consult the Assembly before exercising certain key functions: for example, before he gives general guidance to the Office of Rail Regulation as to that body's exercise of its functions, which is in clause 3; before he publishes a statement of policy on franchising, which is in schedule 1; and before issuing invitations to tender for franchises that provide or include Welsh services or entering into such a franchise without a tendering process, which is in clause 10. The Bill already has elements that take full account of the need to consult the Assembly.

Moreover, there is nothing in the Bill to prevent the Assembly from preparing and publishing its own strategy for the Welsh railway. As the hon. Member for Meirionnydd Nant Conwy will know, it already funds a significant programme of rail investment as part of its policy of developing an integrated transport system, which is set out in its document, "The Transport Framework for Wales". Clause 3 anticipates the Assembly's strategies. It provides that the Office of Rail Regulation must have regard to any Assembly's railway policies or strategies notified to it when exercising its functions under part 1 of the Railways Act 1993 and the Bill. Subsection (8) says that the ORR must

"have regard to any notified strategies and policies of the National Assembly for Wales, so far as they relate to Welsh services or to any other matter in or as regards Wales that concerns railways or railway services".

The provision therefore already exists. There is a logic and integrity to the Bill's provisions for Wales and the National Assembly. I know that the hon. Gentleman wants to go much further and I shall deal with the amendments that try to achieve that shortly. However, the measure's logic reflects the asymmetrical democracy that exists through devolution in this country. As the hon. Member for Caithness, Sutherland and Easter Ross said, it reflects the relative weight, power and functions of the respective institutions.

Mr. Llwyd: I am genuinely grateful for the detail that the Minister is providing in his response. However, the debate echoes what was said when the Strategic Rail Authority was set up. People in Wales felt that there should have been either a separate Welsh branch of the SRA or a strong Welsh representation. However, I repeat that I am grateful to the Minister for going into such detail.

Mr. McNulty: I do not doubt that the hon. Gentleman is right. He will understand that I did not follow the debate on establishing the SRA with the same attention to detail and interest with which I am following the current debate, for obvious reasons. However, in the past year or two, the SRA has moved more readily towards a regional focus and taken account of the regional sensitivities that exist throughout the United Kingdom. We do not want to
 
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lose that in replicating the SRA functions that the Department for Transport rail unit, rather than the SRA, will cover.

Amendment No. 33 would give the Assembly a great deal more power—more power than Scottish Ministers would enjoy. It would make the National Assembly and the Secretary of State joint signatories to all the English franchises that cross the border into Wales. The Scottish Ministers will not have that power for the east and west coast franchises—the rough parallel that one could draw.

The core of the Bill as it relates to Wales is the Assembly's role in the Arriva Trains Wales franchise. That is the only franchise that currently provides what the Bill defines as "Wales-only services". As drafted, the Bill gives the Assembly the right to be a joint signatory with the Secretary of State to the Arriva Trains Wales franchise, thus recognising the importance of that franchise to Wales.

Clause 10(1) deals with the other important relationship between the Secretary of State and the National Assembly: on consultation about all franchises that serve Wales. My hon. Friend the Member for Islington, North (Jeremy Corbyn) made that point earlier. The Assembly will have the clear right to be consulted about franchises that provide Welsh services. That will give the Assembly the opportunity to say what it would like to achieve for Wales from them. It will also be able to use the broad powers in clause 10 to provide financial assistance to secure additional services from the relevant franchisee.

If he considered it appropriate, the Secretary of State could invite the National Assembly to be a joint signatory to a franchise that provided Welsh services—for example, if the Assembly wished to secure significant services via the franchise. Clause 10(3) enables him to do that. However, it is right that that remains a flexible option. I do not therefore believe that amendment No. 33 is necessary.

Amendment No. 36 would enable the Assembly to be the recipient of franchise assets at the end of a franchise agreement. At the end of the term of a franchise in England and Wales, it will be the Secretary of State's responsibility to make a transfer scheme in relation to the franchise assets. In Scotland, that role will be performed by Scottish Ministers.

Clause 12 sets out the parties to whom the franchise assets may transfer. They include the Secretary of State, the Scottish Ministers or a company that is either wholly or jointly owned by the Secretary of State and the Scottish Ministers, and a franchise company. The Secretary of State must consult every party to which he proposes to transfer assets before making the transfer scheme.

The primary intention of the clause is to transfer designated franchise assets at the end of the franchise to the new operator of train services. In the vast majority of cases, the new operator will be the new private sector franchisee. A transfer scheme will be made to transfer the franchise assets from the old franchise company to the new one. The out-going company will be paid by the in-coming train operator for the franchise assets in accordance with the terms of the franchise agreement.
 
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In a small number of cases, the Secretary of State, Scottish Ministers or companies owned by them will operate a train service as the operator of last resort on a temporary basis. Assets such as ticket machines and office equipment will therefore have to be transferred to those bodies to allow them to provide the service. There is no provision in the Bill for the National Assembly for Wales to operate services as the operator of last resort. The Assembly is therefore not included in the list of bodies that can receive a transfer of franchise assets.

That does not prevent the Assembly from owning certain assets in relation to a franchise. For example, if the Assembly were to invest in the Arriva Trains Wales franchise and there were certain assets that it considered should remain the responsibility of the Assembly, those assets need not be designated as franchise assets. The franchise agreement could clearly state that those assets were not among the franchise assets and were to be returned to the Assembly, which would then decide how they were to be used. On replacing the Arriva Trains Wales franchise in future, it would be for the Assembly to decide how it wished such assets to be used by the new franchise operator. The Assembly will of course be involved in the re-letting process, and will be consulted by the Secretary of State about that franchise and all franchises that serve Wales. However the ultimate statutory responsibility rests with the Secretary of State. I am therefore convinced that amendment No. 36 is unnecessary.

I understand the import of amendments Nos. 38, 39, 41 and 48 to 51, which all seek to make the National Assembly for Wales the national authority in Wales for the purposes of clauses that deal with network modifications. At present, the Secretary of State has that role. The amendments, if accepted, would give the Assembly the same status in Wales as Scottish Ministers have in Scotland in this regard. Throughout clauses 22 to 31, the only national authorities are the Secretary of State and Scottish Ministers. Scottish Ministers have this duty for all services, stations and networks wholly within Scotland and for some cross-border services; it rests with the Secretary of State in all other circumstances. This reflects and is part of the much wider devolution of responsibility for railway policy and funding to Scottish Ministers. Apart from in a few important areas such as safety, Scottish Ministers now have policy responsibility for all aspects of Scotland's railway. That makes it appropriate for them to be the national authority in the circumstances that I have just described.

As hon. Members have pointed out, that devolution settlement has not been extended to Wales. Under the Bill, devolution of railway policy and funding to the Assembly is much less extensive than to Scottish Ministers, and I fully accept that that is the cause of the complaint by the hon. Member for Meirionnydd Nant Conwy. The Assembly is taking on responsibility for franchising services in Wales, and those starting and finishing in Wales, through the Arriva Trains Wales franchise. However, the Secretary of State continues to have a major role relating to the railway in Wales—in specifying high-level outputs for the railway under schedule 4 to the Bill and funding the network, for example. Part of the reason for this is that the network in Wales is much less discrete an entity than the network in Scotland, which makes fuller devolution difficult at present.
 
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That being the case, it would be inappropriate for the Assembly to be the national authority for the purposes of this clause. Retaining this role for the Secretary of State fits better with the more general approach to devolving railway responsibilities to the Assembly, and is also simpler and more straightforward. Of course, in acting as the national authority for the purposes of the clause, the Secretary of State will need to consult and work closely with the National Assembly. There is already a requirement in schedule 7 for the Assembly to be a statutory consultee in relation to all closure proposals affecting Wales. Backing this up will be the extensive formal and informal discussions envisaged in the memorandum of understanding between the Secretary of State and the National Assembly.

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