Railways Bill

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Standing Committee A

Tuesday 14 December 2004

(Afternoon)

[Mr. David Amess in the Chair]

Railways Bill

Schedule 1

Transfer etc. of functions of the Strategic Rail Authority

Question proposed [this day], That this schedule be the First schedule to the Bill.

2.30 pm

Question again proposed.

Mr. Christopher Chope (Christchurch) (Con): Before we adjourned, the Minister told us that there would be quite a saving in staff numbers, and he kindly drew our attention to the briefing note on the Bill, which was made available earlier today. I have been looking in detail at page 12, which sets out the six units involved in DFT rail, although I do not know why it is not simply called Df rail. Unfortunately, it does not link them to schedule 1.

It would be extremely helpful if the Minister could set out in writing—I am not asking him to do this in a detailed oral response this afternoon—how the different paragraphs of schedule 1 will link in with the new structure, where the staff savings will arise and where staff will be redeployed. That would give us a much better feel for how the new structures will work.

The group structure proposed in annex A shows that the six directors, heads of procurement and so on will report directly to the director general rail, but it does not deal with the functions that will be transferred as a result of schedule 1 or with the savings that will be made when functions are removed altogether from the Department's ambit.

I hope that the Minister, in the spirit of good will, will be a little more forthcoming on the issue. One of the watchwords of Conservative Members is accountability, and we think that it is important for Ministers to be as open and accountable as possible with Committees that are scrutinising Bills such as this.

The Minister of State, Department for Transport (Mr. Tony McNulty): I am all for accountability and due scrutiny, and many of the hon. Gentleman's points are entirely fair and reasonable. They go to the heart of what I said earlier about the Bill unleashing our ability to carry out a process. Page 12 starts that process and is, in part, the mirror image of schedule 1.

If powers and functions are to be transferred, they must be transferred to something. That something is DFT rail, in the case of the Department. It is called DFT rail because the separate entity is the Department for Transport rail division, not the Department for
 
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rail. Having presented the Bill to the House, we set out at the earliest opportunity the high-level organisation of that unit within the Department.

As I said on Second Reading—and I am happy to say again—I will be more than happy to keep hon. Members informed if I have more to say about the DFT rail unit during this part of the parliamentary process or subsequently. However, at this stage, I cannot say what the end beast will look like, because we are in the early stages of abolishing the Strategic Rail Authority. That is a transitional process, and it will not simply happen at the flick of a switch. We are also dealing with more than 500 people—be they from DFT rail as it is now or the SRA—their individual circumstances and how they will fit or not fit into new positions within the new beast. As the hon. Gentleman will appreciate, that is a long, drawn-out process, but as and when I can do so, I will be more than happy to report back to the Committee and keep it informed of that and the other non-legislative elements that flow from what we seek to do through legislation. I hope that that is helpful.

Mr. Greg Knight (East Yorkshire) (Con): My hon. Friend the Member for Christchurch (Mr. Chope) referred to the statement that the Minister kindly made available to the Committee and that was placed on the Table this morning. Could the Minister tell us what is the status of that document? It almost appears to be a statement of policy. The preamble to the document refers to the fact that it is available to members of the Committee. If the document is a statement of policy in all but name, should it not be made available to the whole House, perhaps by the Minister issuing it as a written statement so that it is printed in Hansard?

Mr. McNulty: I take the point, but I do not think so—not least because, for want of a better phrase, it is a position statement that emanates from the original parliamentary statement made in July. We felt it important to let the House, as well as staff in the SRA and the DFT, know what is going on through some of the non-legislative transitional elements as well as through the Bill. We do not want people to run away with the notion that either nothing will happen in terms of implementing the White Paper until the Bill is secured, or a whole host of things are to happen of which they have no knowledge, regardless of the passage of the Bill through the House. We are trying to keep a balance between the two.

I said on Second Reading that I am more than happy to make this and subsequent update or position papers on the non-legislative side available to members of the Committee and to the House through the Library. I think that that is an entirely fair point.

John Thurso (Caithness, Sutherland and Easter Ross) (LD): May I ask the Minister for clarification regarding annex A? If he cannot answer now, he could give me an answer at a later stage. Among the directors of the various projects, who would have the primary responsibility for freight?
 
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Mr. McNulty: Again, that is a good question, and one that we are considering in some detail. Page 15 of the briefing note states:

''The Department is working with the industry and ORR to agree a basis for long-term access contracts on the network and to identify key freight routes.''

In the context of what is be transferred or otherwise from the SRA, much of the freight element of its work will come to the DFT rail unit for strategic reasons, and some will go to Network Rail for the operational set-up.

As and when we firm up the proposals, I shall inform the Committee how we intend filling the little boxes in annex A, who will take what responsibilities, and who will fill the subsequent boxes beneath them. The weekend after the publication of the Bill and subsequent papers, we advertised for the director general of the entire unit. Beyond that, the hon. Gentleman and others will appreciate that we are still talking about what exactly is needed.

The transfer of functions will affect the DFT in large measure and the Office of Rail Regulation and Network Rail to a lesser extent, and we have to decide what will be the best fit of existing staff and the positions represented by those little boxes. That will rightly be a fairly lengthy process. We are talking about people's livelihoods and jobs, and the process is better done with less haste and more concentration. The apportioning of freight in the high-level organogram in annex A is a good point. I shall get back to the hon. Gentleman and the Committee when we start filling in the boxes more generally than is apparent from the initial titles.

The Committee has raised fair and reasonable points, but I am now ready to commend schedule 1 to the Committee.

Question put and agreed to.

Schedule 1 agreed to.

Schedule 2

Transfer schemes

Question proposed, That this schedule be the second schedule to the Bill.

Mr. Knight: I rise to ask the Minister a question. Schedule 2, as I am sure all members of the Committee will know, sets out the parameters that will apply to the transfer schemes. Why does the Minister deem paragraph 2 to be necessary?

Mr. McNulty: Unless guided by some extra-temporal force that says otherwise, I shall point out that some elements of the SRA's assets, liabilities and contracts are specific to the relationship between the SRA and the Department for Transport, and include no third party. Clearly if the whole thrust of the schedule is about how the transfer scheme or schemes will relate to third-party arrangements with franchisees, contractors and everything else, it is important to get all that down in detail. There will, however, be residual elements that remain entirely a matter for the DFT and the SRA. We do not, in effect,
 
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have to instil a transfer scheme to transfer back to ourselves what we transferred to the SRA and that was ours, because that dual relationship becomes a single relationship. It is important to write that into the Bill, because otherwise it might float around in the ether and be subject to some sort of legal action. For completeness, those elements in which no other party is involved and that were part of the DFT-SRA relationship but are now just a DFT matter also need to be swept up.

So I believe that paragraph 2 is included for completeness, but I am open to guidance and tutorage.

Mr. Chope: May I take the opportunity to ask the Minister about paragraph (10), which talks about compensation for third parties? Does he have in mind a rough estimate of the extent of a possible contingent liability as a result of third-party rights arising from the changes set out in the Bill? Obviously the compensation payments will be paid out of national taxes by the citizens of this country, and it would be interesting to know what levels of compensation the Government envisage are likely to have to be paid.

Mr. McNulty: The very short answer is that it depends, in part, on any remaining potential liability, against which there should be no contingency, once the entire transition has been effected. The hon. Gentleman will know, because it arose on Second Reading, that we are not about to flick a switch and stop any number of the active and operative contracts and franchises in which the SRA is involved, as and when we finally close it down. A transitional period is clearly involved. There may well be some residual contingent liability, but we really need to wait and see, as we saw with the previous schedule, how many people we are talking about transferring into the new unit and what residual elements—not of the DFT-SRA relationships but of the relationship between the DFT, the SRA and the third parties—are left.

Clearly a huge body of work needs to be worked through. I do not apologise for not having all the answers at my fingertips now, given that that work, much of which is non-legislative, must be done. It will, as the hon. Gentleman suggests, need to be understood that there may be a contingent liability at the end, but given that most, if not all, the SRA's operative and franchise contracts will remain extant and run their course, we will have a far clearer picture once we start to unpick all the other assets and liabilities involved in the SRA. I am more than happy, as I said, to keep the Committee fully apprised of how things unfold.

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Prepared 14 December 2004