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Mr. Deputy Speaker: Order. The hon. Member seems to be making a Second Reading debate speech. There are specific Lords amendments before us and I have already given him some leeway. He should have dealt with these matters in the initial debate. He must now deal precisely with Lords amendments Nos. 1 to 9—and he must do so briefly.

7.15 pm

Mr. Tyrie: I shall end by making one more point, Mr. Deputy Speaker. I am sure that you will permit me that. In response to an intervention by the hon. Member for North-West Leicestershire (David Taylor) a few moments ago, the Minister made a number of assertions about the increased efficiency that will result from the Bill.

Peter Bottomley (Worthing, West) (Con): I take my hon. Friend's remarks seriously. The merged Departments have picked the name for their building as No. 1 Parliament street, but this House has had a No. 1 Parliament street address on the other side all the—

Mr. Deputy Speaker: Order. That intervention and any response to it would be quite out of order. I hope that the hon. Member will bring his remarks to a close.

Mr. Tyrie: I obey your ruling in every particular, Mr. Deputy Speaker. I end by referring to the intervention of the hon. Member for North-West Leicestershire, who spoke of the need to close the tax gap. The Economic Secretary responded, but the problem is that he adduced no evidence that there will be any reduction of that gap and provided no evidence whatever that savings might come from the merger. There may be costs, which is why the Conservatives have been so concerned to put down markers to register our concern about the Bill.

Question put and agreed to.

Lords amendments Nos. 2 to 9 agreed to.
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Railways Bill

Mr. Deputy Speaker (Sir Michael Lord): Under the Order of the House made earlier today, any message from the Lords in respect of any Bill may be considered forthwith, without Question put. I have received a message from the Lords. The Lords agree to the Railways Bill with amendments, to which they desire the agreement of the House.

Lords amendments accordingly considered.

Clause 13

Railway Functions of Passenger Transport Executives

Lords amendment: No. 1.

7.17 pm

The Minister of State, Department for Transport (Mr. Tony McNulty): I beg to move, That this House disagrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we may discuss Lords amendment No. 2 with Government motion to disagree, Lords amendment No. 3 with Government motion to disagree, Lords amendment No. 4 with Government motion to disagree, Lords amendment No. 5 with Government motion to disagree, Lords amendment No. 6 with Government motion to disagree and Lords amendment No. 7 with Government motion to disagree.

Mr. McNulty: I am sure that the House authorities are entirely in order in putting the provisions together in this way, but it makes it sound as if there was a good deal of disagreement with the other place. I want to put on record the fact that I commend the other place for the way in which it has scrutinised and ultimately dispatched the Bill—and with a good deal of agreement.

There is but one real issue on which we disagree in this set of amendments and it is about passenger transport executives and their ability to have co-signatory status. The existence of seven Lords amendments and seven disagreements with them does not mean that there was untold disruption or disagreement with our noble Friends in the other place.

I have said before and it has been explained clearly in the other place that the Government cannot accept these amendments. As the noble Lord Davies of Oldham said earlier today, they raise a matter of principle about which the Government are clear. There is a new role for the PTEs and it is required because the current system was built for a different time and does not fit in with the new framework set out in the White Paper.

Throughout our deliberations, all sides have made it clear that the context for the debate is the rail White Paper, not all of which has necessarily been picked up in the Bill. Central to the new structure set out in that document is the role of the Secretary of State in setting the strategic direction and the amount of national funding that will be invested in the railways. The system that the PTEs are seeking to retain is totally inconsistent with that principle and more reminiscent of another time.
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The Government have listened carefully to the concerns raised here and in another place about PTEs. As I have said, we have moved considerably from our original position. In the original citation in the rail White Paper concerning this aspect of PTE functions, we were minded to remove all their ability to have co-signatory status. We have moved away from that and the PTEs, with the agreement of the Secretary of State, can have a role to play.

We considered the proposal made in another place for a 60-day window for PTEs to delay before the signing of a franchise. We are unconvinced that that would deliver anything other than costly delay and an opportunity for PTEs to seek to reopen negotiations at the eleventh hour. Potentially, each month's delay in completing a franchising process could cost hundreds of thousands of pounds of taxpayers' money. Clearly, that would be inconsistent with our strategy to deliver efficiency and value for money in the rail industry.

I want to make it very clear, to this House and to the other place, that we feel that we cannot compromise on co-signing or co-specification. Basically, the amendment would allow PTEs to dictate to the Secretary of State—who is responsible for rail across the whole country—what services should be provided in their areas. The right to co-sign puts the PTEs on an equal legal footing with the Secretary of State, despite the fact that the Secretary of State provides the overwhelming majority of funding, with PTEs merely contributing at the margins. Such a system would not make sense: it would merely encourage confrontation and retain the adversarial approach that has been prevalent since co-signatory status was introduced in 1993.

I wish to reassure the House that the provisions are not about removing the important influence and input that PTEs have into the rail services in their areas. That is why the Bill, as introduced, means that the Secretary of State will be under a duty to consult with the PTEs before issuing an invitation to tender for any franchise that includes services to, from or within a PTE's area. This will be a full and detailed consultation, giving the PTEs a clear opportunity to set out the needs and ambitions of their areas.

Once the baseline specification for a franchise, including services in PTE areas, has been set, the PTEs will also have the right to amend the services in their areas—that is, buying additional services, or reducing services and retaining the savings. That will give them much greater flexibility to make choices about the balance of transport in their areas than currently prevails and allow them to make rational decisions based on financial accountability.

Equally, our proposals will not change the mechanism by which PTEs can secure certain rights, such as rights to information, or the right to insist on the train company's involvement in concessionary fares or integrated ticketing. Such rights and responsibilities will continue to be included in franchise agreements as long as the Government are confident that they are necessary and add value. That will remain the case whether or not PTEs are co-signatories.

Nor will the Government's approach reduce the PTEs' ability to maintain their constructive and beneficial relationships with the train operating
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companies. Centro, the West Midlands PTE, did not co-sign the Chiltern franchise, but it has managed to build an excellent, productive relationship with that TOC. The Government's approach does not attempt to limit local decision making as has been suggested but merely places that in its proper context.

Mr. William Cash (Stone) (Con): Does the Minister accept that the amendment's provisions in respect of bus substitution services also affect clause 29, which deals with station closures?

Mr. McNulty: I accept the inference that there is a relation between the two, but I struggle to see any connection with the Lords amendment or the Government's motion to disagree. However, I understand the hon. Gentleman's point, and suggest that he raise it again at another point in the debate.

The new arrangements for PTEs will create a more efficient, more accountable and less adversarial framework for delivering rail services in key metropolitan areas. I am by common consent a man of consensus who seeks compromise when it is available. To graft on to the post-Railways Bill rail industry a power that prevailed from 1993 only in the immediate wake of privatisation does not make sense and I need to say that as clearly as possible.

We are seeking modernisation of the relationship between the powers, local decision making and so on of PTEs and the train operating companies and others. That is not a denigration of local democracy in any way, shape or form. There is confusion about that. Hon. Members should be clear that we have sought compromise but there is no scope for it because the 1993 powers for co-signatory status simply do not fit in with the post-White Paper world.

This is a matter of principle, as my noble Friend Lord Davies explained clearly in the other place earlier today, on which the Government are unwilling and, indeed, unable to move. In that context, the House should be clear that to lose the Railways Bill because of this matter would be unfortunate, not least because of the level of consensus on the Bill in this and the other place.

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