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Jeremy Corbyn: Is my hon. Friend aware that the company Tube Lines, which is owned by Jarvis, has got into enormous financial difficulty and, indeed, has sold its contracts with the public sector to refurbish parts of the London Underground? There is now trading in public contracts, but priority should be given to finishing those contracts for the public interest and the public good, rather than advancing share prices in the City.

John McDonnell: Companies trading in profits is understandable when one looks at examples such as National Express, which expects a 70 per cent. increase on last year's profits. How can that provide value for money for the public sector and for the travelling public?

When the public sector demonstrates that it can run a service effectively and efficiently and give good value, as when Connex South Eastern went bust and South Eastern Trains took over the franchise, what happens? The Government force the operation back into the private sector. The private sector argues that its involvement enables transfer of risk, but we know that when that risk becomes too great, the public sector has to take it over again. That is what happened with the channel tunnel, Connex South Eastern and the maintenance contracts across the whole industry. Transfer of risk was a myth; it has been clearly demonstrated that it never worked from the start.

I am unable to comprehend why the Government cannot now allow some form of public sector operational involvement in the railways industry. The general public are convinced: poll after poll shows that the public want the railways to be brought back into the public sector. As for the Labour party, I remind comrades and colleagues that at its last conference the party voted overwhelmingly for a policy to bring rail back into public ownership. When South Eastern Trains was discussed at the London Labour party conference, which took place only weeks ago, it was agreed unanimously that South Eastern Trains should remain in the public sector. It is absolutely bizarre that the Government will not even allow the public sector a level playing field with the private sector. That is what amendment No. 17 would achieve.
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Amendment No. 18 is straightforward: it invites the Secretary of State to bring the railway industry back into public ownership as franchises run out. Amendment No. 17 simply proposes that when a franchise comes up for renewal, there should be a public sector comparator to enable an independent assessment of whether the public or the private sector can run it best; then, the contract should be awarded according to the results of that assessment.

Amendment No. 4 states simply, "If it ain't broke, don't fix it." If South Eastern Trains is running operations effectively in the public sector, why not leave it there? Ironically, it may well remain in the public sector—the Norwegian public sector, unfortunately, since Norway's state railway is bidding for the operation. The Government have a bizarre ideological commitment—a dogmatic commitment—to the private sector. It reminds us of the Victorian commitment to the hidden hand of the market, or, perhaps more appropriately, the American neo-conservatives' mantra for every occasion: "Private sector good, public sector bad." It appears that the only role that the Government envisage for the public sector is that of clearing up the mess made time and again by the private sector.

On Second Reading and elsewhere, the Secretary of State argued that the railways cannot be brought back into the public sector because it would be too expensive. We were told at one point that it would cost £3 billion, yet within six months we were told that the cost would be £22 billion. My amendments would enable the railway industry to be brought back within the public sector without cost, as franchises run out. It is argued that amendment No. 18 inserts a public sector preference, but amendment No. 17 answers that by invoking an independent and objective assessment process. In fact, it is almost a modernising amendment—practically third way-ish.

Amendment No. 4 is also straightforward. All the statistics for every quarter of last year show that South Eastern Trains in the public sector has outperformed all the private sector elements of the industry. They demonstrate how much more efficiently and effectively the operation has been run since it was taken over from Connex.

Mr. Robin Cook (Livingston) (Lab): I do not want my hon. Friend to understate his case. I am sure that he wants attention to be drawn to the fact that South Eastern Trains has not only improved the service to the public, but cut the subsidy needed by £1 million a month. The Government are therefore gaining every bit as much as the travelling public; surely they have an interest in ensuring that that continues.

John McDonnell: My right hon. Friend makes a valid point about benefits for the Government, but there are also benefits for South Eastern Trains from bringing maintenance contracts in-house. All that we are asking for is a rational process of decision making. We do not come with any ideological baggage from the past about the danger of relying on the hidden hand of the market or about the perfection of the public sector. We want a rational process of assessment.
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Time is short, so I shall conclude with an extract from a moving speech that was made at the Labour party conference. It is about Africa and the Government's role in the world, and the example that the Government can set, not just in Europe but globally:

I agree with that emotional and powerful speech by the Chancellor of the Exchequer. It sums up the arguments of the amendments precisely and succinctly. All we want is a fair approach based on what works, what is in the best interests of our overall community, and what delivers services to passengers without exploiting the state for the profiteers in the private sector, as happens at present. On that basis, I should like to press the amendment to a vote.

Mr. McNulty: Amendment no. 35, which was moved by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), aims to provide a discretionary power to transfer designated assets from a franchisee if that is warranted on passenger safety grounds. It would not achieve that as worded, and it is also unnecessary. I accept, however, the hon. Gentleman's point about the paramountcy of safety on the railways, which was a feature of the various contributions from colleagues.

If a franchise operator operates in an unsafe manner, there are various means by which it can be held to account, including the terms of the franchise agreement, the terms of its operating licence and the enforcement of the Railways (Safety Case) Regulations 2000. The hon. Gentleman will know that those regulations require all railway operators to have a comprehensive safety case approved by the Health and Safety Executive before starting operations. A railway safety case ensures that a railway operation has effective arrangements in place to ensure the safety of workers, the travelling public and others who may be affected by the operation. If the operator acts in breach of its safety case, it may be prosecuted by the HSE.

The Office of Rail Regulation will only grant a licence to operate if the train operator holds a valid safety case, unless the HSE has granted a safety case exemption for any reason. The regulator may revoke a licence if the licence holder commits a serious breach of the Railways (Safety Case) Regulations. Unless exempt, it is unlawful for an operator to operate railway assets without a licence. It is an event of default under the franchise agreement if the operator's safety case is withdrawn or terminated, or if the operator is in material non-compliance with an HSE prohibition or enforcement order. All those powers are entirely adequate to protect passenger safety.

It is hard to imagine a circumstance in which passenger safety might require the ownership of designated assets such as ticket barriers, information systems or contracts to be transferred to another body. If the assets themselves are a danger to the public, it will not remedy the situation to transfer the ownership of those assets to another person. For all those reasons, amendment No. 35 is not necessary.
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Amendments Nos. 4, 17 and 18, as my hon. Friend said, are intended to prevent private sector train companies operating franchises, but they would not work, nor would they outlaw franchises or transfer between operators. Taking back into the public sector each franchise as it ends costs nothing, for reasons that I shall amplify another time. It is also not the case, as my right hon. Friend the Member for Livingston (Mr. Cook) suggested, that the operating subsidy is far less—

It being Five o'clock, Mr. Deputy Speaker put the Question already proposed from the Chair, pursuant to Order [6 December 2004].

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