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28 Feb 2006 : Column 25WH—continued

Industrial Relations

11 am

John McDonnell (Hayes and Harlington) (Lab): First, I declare my interest as chair of the National Union of Rail, Maritime and Transport Workers parliamentary group as set out in the Register of Members' Interests.

I am grateful to be able to raise the important issue of industrial relations within the railways industry. I am sure that the Under-Secretary of State for Transport, my hon. Friend the Member for Halton (Derek Twigg), will agree that the men and women who work on our railways perform a magnificent job in helping to keep Britain moving. It is a 24-hours-a-day, seven-days-a-week, 365-days-a-year task. Railway workers know better than anyone that for the railways to work effectively, there has to be co-operation from all involved: the cleaners, railway workshop grades, train maintenance staff, track workers, catering staff, signal technicians, office staff, call-centre operatives, station revenue protection staff, signal operators, guards and drivers. They all work together in all hours and, sometimes, appalling conditions, to ensure that our trains keep running. In fact, prior to privatisation, British Rail's work force were judged the most productive of any rail service in Europe. A recent Catalyst study confirmed the efficiency of the service and the contribution that the work force make to that.

Railway workers continue to do a brilliant job, despite having to pick up the pieces of the disastrous privatisation undertaken by the last Conservative Government. Privatisation not only crippled our railway system, but saw the privateers make huge redundancies and attack wages and conditions so that the income of the vast majority of railway workers even fell behind average earnings during the period of privatisation. Although our rail staff remain in the private sector, they are magnificent examples of public servants. They retain the ethos and commitment of the public service, and often have to work in severe conditions; for example, there has been a huge increase in staff assaults, and they now find themselves on the front line of a risk of terrorist attacks.

I know that my hon. Friend the Minister—indeed, all Members of the House—will agree that our rail staff should be treated fairly and with respect, and that they deserve a fair framework for industrial relations. I hope that he will reassure them today that the Government share those aspirations and are willing to act to achieve a fair framework for industrial relations in the modern railway industry.

I shall highlight three areas of concern: the role of the Association of Train Operating Companies in industrial relations; the role of the Government in industrial relations; and the industrial relations problem of the future of the railways pension scheme. The purpose of ATOC, as it is known in the industry, is a mystery to me and many of my colleagues. What is it? I checked its website, and it is not a statutory body but a voluntary organisation whose role is to serve as

The website goes on to say that the association

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That sounds exceptionally good.

Members of ATOC—the TOCs, or train operating companies—are paid handsomely for their work. Indeed, according to a recent study by Professor Jean Shaoul of the university of Manchester, the combined total income of TOCs rose by 26 per cent. from £4.8 billion in 1997 to £5.8 billion in 2003.

David Taylor (North-West Leicestershire) (Lab/Co-op): My hon. Friend describes an organisation, ATOC, that seems to have worthy aims. Will he tell the House how frequently ATOC has met the railway trade unions to discuss issues of common concern, such as those that he has mentioned: training, pensions, and staff assaults? Would not that be a worthwhile forum in which to resolve some of these problems?

John McDonnell : The answer is never. That is the principal point that I wish to make about the role of the association, because train operators have been subsidised with never less than £1 billion a year—indeed, in 2003–04 the amount reached £1.8 billion—all of which is funded by the taxpayer. They have made profits of £1 billion, yet without the subsidy, train operators as a whole would have made a loss every year. With such generous public support, therefore, the Government should be keen on train operators showing a bit of commitment to social partnership by at least meeting the unions.

Mr. George Galloway (Bethnal Green and Bow) (Respect): Will my hon. Friend confirm that the taxpayer is subsiding private train operators between two and three times as much as the taxpayer subsidised British Rail before privatisation?

John McDonnell : I welcome that intervention, and refer back to the Catalyst report, which demonstrated the driving down of public interest from the Government and the public support for British Rail. Even in those circumstances in which there was less public subsidy being provided, the Catalyst report, for which transport experts and economists were independently consulted, judged that British Rail was one of the most productive and efficient systems in Europe.

Since then, privatisation has resulted in more and more public subsidy being poured into the private sector, which has been creamed off in profits for over a decade. That is the point. With such generous public subsidies, one would expect, and the Government should expect, ATOC at least to show a bit of commitment to social partnership. ATOC regularly meets the Government and other stakeholders in the industry, but, as my hon. Friend the Member for North-West Leicestershire (David Taylor) said, it does not meet the representatives of staff—the rail unions. Indeed, it has refused to meet the unions to discuss anything, not only industrial relations.

We know—there has been evidence of this in previous debates—that there has been a continued rise in staff assaults on the railways. Many Members, particularly in London, have participated in the safer stations campaign and have called for improvements to protect passengers and staff, but that does not seem to matter to
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ATOC. It does not see any benefit in meeting the rail unions to discuss an industry-wide approach to this problem; it simply refuses to meet the unions to address this basic issue.

David Taylor : On a point that links to the core of the debate, does my hon. Friend hope that ATOC will resist the apparent suggestions for the hiving off of the British Tranport police, who tackle staff assaults and are tooled up to improve the record in that respect?

John McDonnell : I concur with my hon. Friend's sentiments; this is another issue on which one would expect ATOC to meet the rail unions to discuss and place on an agenda. If we are to discuss the safety and security of staff and passengers on the railway system, one would expect ATOC to come to the table with the unions, but it does not meet on anything. We all agree that there is a need to plan and develop industry-wide training and skills. Does ATOC discuss that with the unions? Forget it; ATOC was not interested when an approach was made by the unions. There is a growing crisis with railway pensions, which I shall discuss later. That is a key issue for all concerned—employers and employees—but ATOC would rather not talk to the unions about that either.

Members will find it astonishing that ATOC will not agree even to meet the unions to discuss what could literally be matters of life and death. After the appalling terrorist attacks on London, the Mayor, Ken Livingstone, rightly had discussions with the railway unions on future safety and security matters on London Underground. All sides thought that those talks were productive and helpful in developing our response to terrorist attack.

Those discussions throw into sharp relief the fact that there is no forum for similar discussions with the train operators. The unions have sought meetings with employers through ATOC to discuss improved transport security following the terrorist attacks, but ATOC, which receives billions in public subsidy from the Government, still refuses to meet the unions even to discuss that basic issue. That is unacceptable. I hope that my hon. Friend the Minister agrees that that cannot be allowed to continue. As he knows, we have already had a meeting on this issue. The rail unions and the TUC have also had meetings with the Government to try to sort out the matter. Can he assure me that the Government will now intervene and ensure that there will at least be a dialogue between the rail unions and ATOC? The unions stand ready and willing to attend a meeting with ATOC, wherever and whenever that can be arranged, to discuss these critical issues, and we are asking the Government to intervene if ATOC refuses. I hope that my hon. Friend will be able to give that assurance because we know that the Government take an active interest in railway industrial relations.

That takes me to my second point.

Tom Brake (Carshalton and Wallington) (LD): Before the hon. Gentleman moves on to his second point, will he clarify the extent to which he thinks
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dialogue should take place between ATOC and the rail unions? Does he believe it should include pay, pensions, which he mentioned, and terms and conditions?

John McDonnell : I think that there is an opportunity now to establish a framework in which all matters of common interest to employers and employees in the railway industry can be placed on the table. That should start with a discussion about conditions and the future of the industry. There is an opportunity to return to a co-operative relationship on wages negotiations to avoid the multiplicity of negotiations that take place at present. It will be for both sides to decide how they go forward.

The key issue is to get people around the table. If we can get employers and unions around the table to discuss some of the basic planning of the industry's future—for example, safety, security and response to terrorist attacks—that would engender the opportunity to lead on to other matters by mutual agreement. The issue is the principle of the employer talking to employees and union representatives about these critical matters.

The Government have a role to play. If we are to seek a partnership in this industry, as we seek it in every other industry, there is an onus on the Government to persuade ATOC to come to the table and not to have a stand-off or to be unco-operatively belligerent to basic discussions and dialogue with the industry.

There is also the role of the Government. The Government's role in industrial relations in the railway industry at present is unwise, and even worse than unwise. It is unnecessary and, to put it bluntly, can be seen as unfairly interventionist on the side of employers rather than the unions. It is not a balanced approach. Many in the industry and certainly many railway workers believe that the Government in key instances are letting them down.

The matter needs to be explained because most people find the Government's role unbelievable. I presume that the Government, following heavy lobbying from the private train operators and our mysterious friends in ATOC, have decided in their wisdom to retain powers used by the now defunct Strategic Rail Authority. Those powers allow the Secretary of State for Transport to intervene directly in industrial relations within the industry.

First, the Government can veto pay and conditions agreements between the rail unions and private train operating companies. Secondly, the Government can waive penalty payments incurred by private train operating companies involved in industrial disputes. Thirdly, the Government can provide compensation—this is staggering, and I do not know of any other example in any other industry, public or privatised—to private train operating companies that have lost revenue through involvement in industrial disputes. In other words, on top of the billions of pounds of subsidy and profit already paid to private train operators, it is now Government policy to bankroll private train operating companies in their disputes with the rail unions. That is subsidising a subsidy. It is subsidising industrial relations failure on behalf of employers.
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Mr. Galloway : I am grateful to my hon. Friend for allowing me to intervene again in his admirable speech. I congratulate him on obtaining this debate because it is timely and important.

The first time that I met the Secretary of State for Transport, 31 years ago, he was pressing Trotskyite tracts on bewildered railwaymen at Waverley station in Edinburgh. He metamorphosed, as have so many new Labour Ministers, into a man applying the lash to militant trade unionists, as he now sees them, in the railway industry. That was unbelievable enough, but my hon. Friend has just told the Chamber that despite taxpayers providing subsidies of between two and three times the amount of those previously provided to British Rail, the Association of Train Operating Companies has now resuscitated a power that would allow it to compensate maverick employers who will not meet their employees for the failure of their industrial relations strategy. Perhaps he will repeat what he said so that the Chamber can be sure of what he said. Can it really be true, even of this Government?

John McDonnell : There is a Trotskyist analysis of how we have arrived here, but we can talk about that later.

If the left was demanding a Labour Government to subsidise unions in disputes, my hon. Friend and I would describe it as a transitional demand. That is the ludicrousness of what is going on. If we told the Government that we expected them to subsidise unions and to pay them so that there is no loss to the work force when they go on strike, there would be uproar in the Daily Mail and The Sun would run pictures of my hon. Friend the Minister—

David Taylor : Rightly so.

John McDonnell : Rightly so for its readership. My hon. Friend would be called Red—

David Taylor : Red Twigg.

John McDonnell : When the issue is explained to people, they feel disbelief that a Labour Government should subsidise employers in dispute so that they lose nothing in that dispute. Many of us were shop stewards before coming to the House and it beggars belief that that is happening. In practical terms, the reality is that that provokes and prolongs disputes because there is no loss to the employer.

Tom Brake : The hon. Gentleman clearly objects to subsidies, but does he believe that there are cases—for example, 7/7, when I understand that train operating companies received a subsidy—when the use of Government money is appropriate?

John McDonnell : What I resent is not subsidies to the railway industry, but subsidies being creamed off into profit by the private sector. In addition, I resent subsidies being used in industrial disputes to strengthen the hand of employers to achieve their objectives in those disputes. If there is to be a level playing field, it should be level for industrial relations. Otherwise, industrial relations in the railway industry are soured rather than having a proper climate and framework.
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I shall give some examples. Richard Branson of Virgin Trains and Brian Souter of Stagecoach can expect payouts from a Labour Government whenever they take on a rail union. That is beyond belief. Not only is it obviously wrong, it is an unprecedented and dangerous departure from existing policy on private sector industrial relations. It could have widespread implications beyond the confines of the railway industry. Where will the Government next intervene to prop up multi-million-pound private companies in their battles against the unions?

What about the cost of that ill-conceived policy? In answer to a parliamentary question on 14 March 2005, I was told that the Strategic Rail Authority has paid a staggering £23 million to compensate private operating companies for revenue losses during strike action between March 2003 and November 2004. That £23 million could have provided investment in the rail service.

David Taylor : Can my hon. Friend give any examples of how using taxpayers' money in this way has prevented emerging disputes or has improved industrial relations in the transport sector?

John McDonnell : I would welcome the Minister giving an example, if he can find one, of where else this policy operates in government or elsewhere. I know of no other example.

The sum of £23 million may not sound a great deal, but it could be used, for example, to build a new secondary school or refurbish a primary school, or it could be used to invest in a medical centre, but it goes straight into the profits of private operating companies to enable them to defeat a union that possibly has a legitimate case for industrial action—one would have to judge each case individually—that, in normal circumstances, would have been resolved through negotiation but is prolonged as a result of Government intervention.

David Taylor : It would pay for a thousand graduate teachers.

John McDonnell : My hon. Friend says from a sedentary position that the money would pay for a thousand graduate teachers. Instead, it is pocketed by Branson, Souter and others in ATOC.

During the same period, according to a study by Professor Shaoul of the university of Manchester, private train operators received more than £1.5 billion in public subsidy and made profits of £200 million. That is incredible, and it is important that we get it on the record, as the average person in the street would not believe what the Government do to prop up the industry and employers who want to provoke industrial relations disputes. This is an astonishing abuse of public funds, and there must be further proper scrutiny of the policy.

Mr. Ian Davidson (Glasgow, South-West) (Lab/Co-op): In the interest of putting things on the record, does my hon. Friend have any additional information about how the £23 million was distributed among the companies that received it?

John McDonnell : That is one of the questions that I would like to ask the Minister. The answer should be
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placed on the record, as it is important that when the travelling public step on their train they know how much the train operating company receives from the Government to prop up any industrial action that it may wish to provoke.

Mr. Galloway : I do not know when such payments began—I missed that part of my hon. Friend's comments—but I wonder whether they helped subsidise Brian Souter's vicious, fascistic, anti-Government campaign on clause 28, which may have had a different number in Scotland. Using money from his business, this Brian Souter launched a blistering, homophobic, bigoted and prejudiced campaign against the Government who gave him millions of pounds.

John McDonnell : Strange bedfellows on the overnight sleeper to Scotland—that is all that I can say.

On the point raised by my hon. Friend the Member for Glasgow, South-West (Mr. Davidson), I have some information in respect of Scotland. A written reply to a parliamentary question from my hon. Friend the Member for Islington, North (Jeremy Corbyn) in May 2003—that was during the period of the Strategic Rail Authority—states that

That is a matter for the Scottish Executive, of course, but that is how much was paid out to one company under the SRA.

What bewildered Members of this House is that, on the demise of the SRA, the Government took those powers to themselves, when they could so easily have stepped back at that stage, and declined to receive such powers or to engage in the continued subsidy of industrial relations provocations by employers.

I wish to ask my hon. Friend the Minister some questions so that we can put the matter on the record. I hope that today's debate will prompt further public and parliamentary scrutiny of the whole process. First, how long have the Government—and, before them, the SRA—pursued this policy? That is the point that my hon. Friend the Member for Bethnal Green and Bow (Mr. Galloway) made. How long has this been going on? I ask the question because some confusion has been created by some of the responses to the Transport Committee. The issue was briefly raised in that Committee on 26 November 2002 as part of its inquiry into the SRA. In an exchange at that meeting, the Chairman asked Richard Bowker of the SRA:

Mr. Bowker replied:

Yet we know from subsequent parliamentary questions that four months after that Select Committee hearing, the Government, through the SRA, were already paying National Express compensation to the tune of millions of pounds for revenue lost in a dispute
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involving ScotRail. Was the Select Committee misled? Did Mr. Bowker not know that that was the intention? We need clarification on that.

Will my hon. Friend also clarify when the Government and the SRA started the policy? Precisely when did it start, and who took the decision? Do the Government use taxpayers' money to provide direct or indirect financial support to private companies during industrial disputes, or to veto private sector pay-and-condition agreements, in any industry other than the rail industry? Is this industry unique, or are hidden subsidies provided to other employers by the Government?

Under what statutory arrangements do the Government believe that they can use such powers? It would be useful to clarify exactly the statutory arrangements, as several hon. Members would seek to amend the legislation. Did the Government or the SRA take legal advice on the issue? What legal advice was provided, by whom, and can it be made publicly available? Hon. Members would, at the least, want to clarify whether this is a legitimate role for the Government and whether legally the Secretary of State has such powers.

Mr. David Drew (Stroud) (Lab/Co-op): Will my hon. Friend ask an additional question? He will know that new franchises are about to come into operation. I have been told by union activists that the companies that are taking on those franchises may use the opportunity further to reduce trade union rights and activities. Should not the Government insist that the franchises include right and proper processes for trade union officials and members to engage in industrial relations? It would be an absolute disgrace if such activities were to be reduced.

John McDonnell : It would be useful if this debate were to send a message to companies that seek to provoke industrial relations breakdowns, or to reform, change or cut pay and conditions, and are willing to take on the unions on the basis that their activities will be subsidised by the Government. We must send out the message that Members of this House will examine and scrutinise every penny of taxpayers' money that is used to subsidise industrial relations provocations. At this key stage of the tenders being transferred, we run into danger by feather-bedding employers and train operating companies that are willing to risk industrial relations in the industry to enhance their profits.

David Taylor : Is there not a myth about industrial relations in the rail industry? Even in the peak years—if we can call them that—of Thatcherism between 1979 and 1996, there were just a handful of industrial disputes. They were regrettable, but there were just a handful. The number quintupled between 1997 and 2004, not least because the negotiations involve 73 different bodies, including 25 train operating companies, 10 infrastructure companies and so on.

John McDonnell : That leads back to the original point, which is that there should be some discussions between the Association of Train Operating Companies and the unions. That might enhance the industrial relations climate by overcoming the dog's breakfast of negotiating structures that exist.
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I shall finish off with a couple of questions to the Minister. Will he tell me when the powers were taken and when the decision was made to provide the SRA and the Government with those powers? At what level of Government was that decision made? It smacks of a decision centred on No. 10. It astounds me that No. 11 and the Treasury would agree to such a scale of subsidy to the private sector being made in such an unaccountable way.

This leads me to my final question on the matter. Will the Minister explain the formula or the criteria used to determine whether a private train operating company can receive support in this way? Is there a checklist of actions that the company has to have undertaken? Is an assessment undertaken by the Secretary of State of whether the company has acted reasonably in seeking to settle the dispute?

I have another example of where the Government intervene in industrial relations; it is happening at the moment in the Prison Service. The Home Secretary has the opportunity in law to intervene to prevent industrial action in the Prison Service. However, he has that power only on the basis of making an assessment of whether it is reasonable to do so, and he assesses the behaviour and the activities of the partners within that industrial relations framework. Do similar procedures exist in the decision-making process through which the Secretary of State for Transport awards significant sums of money to the companies? Does the Secretary of State consider the behaviour of and actions taken by employers in seeking to resolve the dispute, or in seeking to prolong or provoke it?

Will the Minister tell me which companies have received such financial support, and how much support have they received? It would be very useful to get on the record, down to the last penny, how much Branson and others have been trousering from Government on the basis of disputes that they have provoked.

Ms Katy Clark (North Ayrshire and Arran) (Lab): My hon. Friend has already mentioned that substantial subsidy has been given to First ScotRail in respect of an industrial dispute in Scotland. Recently, powers relating to railways have been transferred to the Scottish Executive. It would be helpful if the Minister told us what discussions had taken place with the Scottish Executive on the issue, and if he confirmed that it was within the Scottish Executive's powers to decide not to continue with the policy and not to provide subsidy to private companies in this way.

John McDonnell : That is an important question. My understanding is that the Scottish Executive have a role in the matter, but we need clarity on that. Are the Scottish Executive being hamstrung and controlled by the Secretary of State for Transport in their operations to facilitate improvement of the industrial relations climate? It would be useful to get on the record the specific roles that each of the partners within Government play.

In the current dispute between the National Union of Rail, Maritime and Transport Workers and Virgin Trains, more than 300 guards have been striking on Sundays since 1 January, after the Virgin board vetoed a settlement of the dispute over the erosion of Sunday pay
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rates. In that dispute, we have the barmy situation of Virgin bosses blocking a settlement that would have cost them no more than £6 per guard per Sunday to settle. In an answer to a written parliamentary question, my hon. Friend the Minister confirmed that Virgin Trains was in discussion with its franchise manager—the Government—on the current dispute. With regard to this dispute, will he assure me that the Government are not providing the train company of our multi-billionaire friend Richard Branson with any financial support? I hope that the Minister can provide answers to these questions, and I hope that he will also reassure us on the threat to railway pensions.

Tom Brake : I want to put a hypothetical situation to the hon. Gentleman. It is possible that one of the train   operating companies—probably not Richard Branson's—will risk bankruptcy as a result of an industrial action. What does he think the appropriate Government response should be in such circumstances?

John McDonnell : To bring it back into public ownership. It is as simple as that. That would solve the problem overnight and be a shining example of the Government's actions for the future.

Mr. Davidson : My hon. Friend has asked a large number of very detailed questions of the Minister, who is a fine man and will want to be as helpful as he possibly can. Does my hon. Friend agree that if the Minister is unable to answer all the questions in detail today—I see that he is here unprotected by a Parliamentary Private Secretary—it would be reasonable for him to give a clear undertaking to provide in writing an answer to any questions that he is unable to answer?

John McDonnell : I do not say this as a quotation from Shakespeare's "Julius Caesar", but the Minister is an honest man. Therefore, I am sure that he will provide us with all the detailed responses that we have asked for. I do not expect him to do that in sufficient detail today, but I would welcome it in writing. We would then have the opportunity to place that matter on the record in a further debate. The debate does not end here: the issue will come back time and time again, every time there is a dispute in the railway industry and every time we identify a single penny going from the taxpayer to the employer to subsidise disputes. This is the first part of the campaign to get some sort of fair and just industrial relations framework in the railways industry.

Mr. Davidson : And the answers will come up at his trial.

John McDonnell : From a sedentary position, there was a reference to trials. We no longer shoot people in our movement for betrayals. [Laughter.] Some regret that.

I move on to address the issue that is souring the industrial relations climate at the moment, which is that of the railway pension scheme. As the Minister will be aware, the scheme is under threat due to significant deficits in a number of different sections of the scheme. A number of sections are okay and can manage the deficits, but a number are not. The deficits have been caused by factors similar to those facing other industry
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pension schemes, including poor financial returns—I accept that—but also irresponsible employers exploiting pension holidays during the early years and the actuary's change to mortality assumptions on the basis that pensioners are living longer.

However, the threat to the railway pension scheme has been significantly compounded by the fragmentation and privatisation of the railways, specifically by railway employers enjoying surpluses built up during the latter years of British Rail when thousands of railway staff left the industry in preparation for privatisation. The rail employers have not been prepared to use those surpluses or the billions of pounds profit made from privatisation to fund the schemes adequately.

The structure of the railways means that train operating and infrastructure companies' contracts cover only a number of years before they are re-tendered, which introduces instability into the system. The Minister will be aware that that has acted as a disincentive for train operating companies and other rail contractors to take on the liability of additional contributions now, or to recoup any overpayments from surpluses in the future. It is a structural problem in the industry.

The problem has been compounded by the fact that, following privatisation, the unified railway pension scheme was fragmented into more than 100 different sections, which has meant the loss of the economies of scale and financial stability provided by the unified scheme. As a whole, the private train operating companies, Network Rail and its contractors are entirely dependent on public subsidy for their continued survival. Does the Minister agree that the Government have a clear responsibility to assist in resolving this problem?

There is plenty of scope for the Government to act. In the immediate term, they could use their position as the primary funder of the railway industry to provide comfort letters to the actuary to allow for deficits to be repaid over a longer period than the five years currently proposed. That would add some security to the system, which is increasingly in disarray. I understand that there may be plans to provide such comfort letters to cover the train operating companies, and if that is the case, it is most welcome. I hope that it will apply to all railway companies whose pension schemes are suffering from severe deficits. Even if comfort letters are provided, they will not address the fundamental problem of the fragmentation of the railway pension scheme, nor the tendency of various railway operators and employers to act in their own short-term interests.

Does my hon. Friend the Minister agree that the pension system could be made more efficient and secure if the railway pension scheme reverted to a unified fund, rather than the array of individual sections? Does he agree also that it would introduce immediate economies of scale and facilitate stability, long-term planning and more prudent management—essential prerequisites of a healthy pension scheme? There could be strong financial incentives for the Government to move towards a unified pension scheme.
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The Minister knows that every time a train operating franchise changes hands or splits, the pension scheme is restructured to take account of the change of franchise, with pensioners, deferred pensioners and contributing members allocated or re-allocated to various sections of the railway pension or to new sections that are being set up. Pensions are complicated enough, and that adds only complication upon complication. Furthermore, all those changes require the input of actuaries, lawyers and other professionals, and there must be an enormous administrative burden.

The costs associated with the changes to pensions are borne not by the private companies but by the Department for Transport. Will the Minister tell us how much money the Government have spent in that way since the railways were privatised? Do the Government believe that it represents value for money? Does he agree that it would be far better value for the Government and a better deal for railway workers if there were a unified pension scheme again?

I thank my hon. Friend the Minister for taking the time to listen to my concerns, and I hope that he will be able to answer my questions, if not today then in writing to us, so that we can read those responses into the record.

Our railway workers need their concerns raised in this place. When the Government were elected, they went out of their way to impress upon the media and all who would listen to them that their relationship with the trade unions would mean fairness not favours. When it comes to industrial relations in the railway industry, the sense is that the whole process has been reversed. The privatised companies are getting the favours, and the rail staff are not getting any fairness. I hope that the Minister will tell us today how he intends to change that, and I hope that he will at least provide us with a commitment that the Government will consider the matter again.

As I said earlier, this is the start of a campaign that will not go away. This is the first debate in a long campaign that we hope will not only secure a fair industrial relations framework for the railway industry but create an effective climate for railway workers, passengers, the Government and taxpayers.

11.43 am

Tom Brake (Carshalton and Wallington) (LD): I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on securing a rare debate on the subject of industrial relations in the railways. He said that he will seek to pursue the matter further and to secure a further debate, and I would welcome that. I commend him for following the matter attentively. The trail of parliamentary questions included in our pack demonstrate how assiduous he is in following the issues, whether they are industrial relations, pensions or the relationship between the Association of Train Operating Companies and the unions.

On that point, I am as surprised as the hon. Gentleman is about the unwillingness of ATOC to enter into discussions. We might have a difference of opinion about the areas it should be willing to discuss, but I support the general principle that it should be willing to enter into discussions. I agree with his comments about the role that the workers in the rail industry have to play
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in keeping the country moving, and about the very important role that they played in keeping us on the move during the recent terrorist incident.

Prior to the debate, I sought feedback from several sources, including the unions, individual staff and the industry on the state of industrial relations in the railway industry. I was not overwhelmed by representations from those different sources. Perhaps the unions direct their attentions to the hon. Gentleman. I hope that that is not the case, and I encourage them to share their concerns more widely than appears to have been the case in this instance. It confirms the anecdotal evidence of my recent travel experiences, which is that, generally, industrial relations on the railways are good.

I received some information from Network Rail about the level of industrial action within its organisation. According to the company, there has been only one incident of industrial action since it took control in October 2002. It has been a period of relative calm. That is in contrast with past years. I have been commuting in and around London on the trains for the past 23 years, and during that time, there have been some very bad periods when many travellers have had to seek other ways of getting to and from work, whether walking, cycling, using the tube instead of the train or vice versa.

That is not to say that there are no areas of dispute or disagreement, as the hon. Gentleman highlighted. Sometimes, they are resolved quickly, and I am sure that he welcomes the swift action that Metronet Rail took in relation to Blue Diamond. The cleaning contract was quickly terminated after it was revealed that the cleaning contractor was not paying workers the agreed rate. It had its contract withdrawn—a substantial contract that was worth £20 million over three years.

I hazard to say that there are some examples of quite good relations between some of the main players and the unions. However, the hon. Gentleman, through his series of parliamentary questions, has rightly drawn attention to the dispute between the National Union of Rail, Maritime and Transport Workers and Virgin. He referred to the essence of the dispute—an issue about Sunday pay rates, involving 300 guards—and revealed that one of the more surprising aspects of the dispute was the role that the Government have played in providing subsidies to train operating companies involved in disputes. As he stated, and parliamentary answers reveal, Virgin is in discussion with the franchise manager—the Government—about that issue.

I do not think that the hon. Gentleman answered my question in an intervention about whether it is appropriate to pay subsidies to compensate the train operating companies in relation, for instance, to a terrorist incident. There are perhaps circumstances in which it is perfectly legitimate for those companies to receive support. However, in relation to industrial disputes, we need much reassurance from the Government that such support does not feed the dispute, rather than seek to resolve it. At £23 million, the sums of money involved are not insubstantial, and I hope that the Minister will be able to provide more detail about which train operating companies have received that subsidy, so that we can consider whether some of the smaller companies would have gone out of business if they had not received it. The hon. Member for Hayes and Harlington said that there is a clear way
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forward: the Government should take control and bring the companies back into the public sector. However, it would be useful for Members to know whether some companies might have gone out of business without some of the subsidies.

Mr. Davidson : Having listened with some interest to the hon. Gentleman, I am not clear whether he supports the Government being able to indemnify companies for their losses. Can we have a clear statement of the Liberal position on that matter?

Tom Brake : I thank the hon. Gentleman for his intervention and I hope to be able to give him a clearer picture in the next few minutes. I believe that there may well be circumstances in which what has been described is appropriate but, as the hon. Member for Hayes and Harlington said, we need to hear from the Minister what criteria the train operating companies have to satisfy to qualify for the subsidies. We also need to hear whether there is anything on the other side of the argument. In other words, are the Government actively providing incentives to ensure that industrial disputes are resolved amicably? Is everything on one side of the argument? I hope that the Minister will respond to that point.

Mr. Davidson : Do I take it that the answer about the Liberal policy is, "Don't know"? I ask the question because the issue is not solely of academic interest, as the Liberals are in a coalition in Scotland and there is a potential impact on the position of ScotRail. It would be helpful to me as a Scottish Member to know unequivocally whether the Liberals are in favour of the procedure. If the hon. Gentleman cannot tell me today, perhaps he could write to me, as the Minister does, after the debate in order to make me aware of the position.

Tom Brake : It is a departure to request that Opposition Members write to Government Members to explain their position, but the intervention from the hon. Gentleman was legitimate, his point was valid, and I will pursue it and give him a detailed response. The Minister for Transport and Telecommunications in Scotland is a Liberal Democrat Member of the Scottish Parliament, so clearly the hon. Gentleman is entitled to a response, which he will receive soon, I hope.

John McDonnell : The hon. Gentleman is right. If there is to be subsidy in an industrial relations dispute, what criteria do the Government use? At the moment, if there are criteria, they are used to judge whether the money goes to the employer. If there is to be that Government intervention, we might as well have criteria whereby the Government decide who they will back. They might well be sending a cheque to Bob Crow and saying, "You've got it right this time, Bob; we'll give you the dosh." That is the ludicrous situation that we are getting into if the Government are going to intervene in industrial relations.

Tom Brake : I am happy to let the Minister respond to that point and say whether he will seek to make a financial contribution to Bob Crow's funds—I am sure that he will have clear views on that.
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The hon. Member for Hayes and Harlington rightly highlighted the concerns of the unions.

Stephen Hammond (Wimbledon) (Con): On the point about funds to Bob Crow, let us consider what Nick Wright, head of communications for ASLEF, has said, which is that it is easier to negotiate with the TOCs and the franchise operators in the run-up to the renewal of the franchise. So in fact the Government are giving money to Bob Crow and his friends, because they have the power in the balance of negotiations at that time. That is the countervailing argument to the one advanced by the hon. Member for Hayes and Harlington (John McDonnell) earlier.

John McDonnell rose—

Tom Brake : I give way again.

John McDonnell : We can overcome that by ending the franchise process altogether and bringing rail back into public ownership.

Tom Brake : Clearly, we need a further debate on this subject because we could pursue it for a number of hours hence, but to return to what I was saying, the hon. Member for Hayes and Harlington rightly highlighted the concern of the unions that the subsidy process is feeding disputes. I hope that, as he said, the Minister will put clearly on record the criteria that have to be met for the subsidy to be provided and what the counterbalance is in terms of the encouragement that the Government give to ensure that disputes are settled amicably without the need for an industrial dispute.

Has the Minister considered whether there are circumstances in which compulsory arbitration might be needed to resolve such an issue? I am referring to binding arbitration whereby the cases of both parties would be assessed independently and they would agree to sign up to the outcome of such a process. Alternatively, has the Minister considered the idea proposed by the transport committee of the London assembly, which is voluntary no-strike agreements in advance of key dates in the calendar when disputes traditionally come to a head, such as Christmas and new year? I am also thinking of the period in advance of the Olympics in 2012. I hope that the Minister will comment on that point. He may also want to provide clarity on what reasonable steps the franchise operators have to take to prevent industrial action. I understand that the Government require operators to do that before any subsidy can be made available.

I have not dwelt on pensions, to which the hon. Member for Hayes and Harlington rightly referred. The Government are in a bit of a mess in that area. Certainly there is not much clarity or consistency from the Government on public sector pensions. The issue of pensions will increasingly grab the headlines, whether in the public sector or in the rail industry, as the hon. Gentleman outlined. I hope that the Minister will be more convincing on that issue in relation to the railways industry than the Government have been in respect of other sectors.
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I hope that hon. Members agree that, so far, this has been an informative debate, attempting to clarify Government policy. That is what the hon. Member for Hayes and Harlington is seeking to do, and I thank his office for clarifying for me before the debate the areas on which he was to focus. The debate has not been about scoring political points, so I hope that the Minister will respond in a similar vein.

11.57 am

Stephen Hammond (Wimbledon) (Con): I congratulate the hon. Member for Hayes and Harlington (John McDonnell) on securing the debate and on putting his case so clearly, eloquently and forcefully. I support him in praising the staff of the railways for the job that they do. I represent a London constituency that benefits from both surface and underground rail, and the staff work very hard. Unfortunately, all too often in the eyes of the travelling public and perhaps in the eyes of some of the workers, they are represented by union leaders to whom the old adage of the first world war might apply.

I was interested in the hon. Gentleman's history lesson. We have heard from several Government Members, both Front and Back Benchers, the history lesson of the railways, which always seems to start around 1988, when British Rail started to be a productive and efficient body, and which ignores conveniently the history of the 70 years before that, when Governments of both hues failed to invest. I guide anyone who wants to read a succinct history of the railways to the two articles by Professor Huxley in The Railway Magazine last year, which give a rather more clear, fair and balanced view of railway history.

There has been quite a lot of talk today about the improvement in industrial relations on the railways and, indeed, throughout the country generally. It is true that industrial relations have improved such that, in 2003, we recorded the lowest number of labour disputes for 25 years, but it is true also that one third of those were recorded on our transport system in some way, shape or form, and that transport still accounted for 25 per cent. of the almost 500,000 days lost. The debate is therefore important in allowing us to consider why some of these disputes still arise. I shall refer to some of the issues raised by the hon. Member for Hayes and Harlington.

Tom Brake : I understand that today is a big day for the Conservatives—they have published a new glossy brochure. Will the hon. Gentleman set out what it contains about railways policy?

Stephen Hammond : I shall leave that for the hon. Gentleman to read later in the day; the brochure does not set out any policy in detail. Of course, later this week the Liberal Democrats have a bigger day, and we shall see whether it presages any change.

I confirm for the hon. Gentleman that by the summer recess there will be detailed Conservative policies on a number of issues, such as transport policy—particularly rail policy. I shall be delighted to debate them with him then.

The hon. Member for Hayes and Harlington referred to a number of the written parliamentary questions that he has tabled about subsidies to the railways. In my
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earlier intervention on the hon. Member for Carshalton and Wallington (Tom Brake) I said that the argument could be made either way.

There has been much righteous indignation about legitimate cases for industrial action being overcome by an astonishing abuse—I think those were the words of the hon. Member for Hayes and Harlington—of public funds. He asked a number of detailed questions of the Minister. Surely the nub of the issue is that the franchise agreements, entered into by both this Government and their Conservative predecessor, have enshrined the ability to reimburse the franchise operators for net losses due to industrial action. That is within the franchise arrangements and, presumably, subject to normal franchise arrangements and normal contract law: if one side breaches those franchise arrangements, the other can seek redress. I am sure that the Minister will confirm that that is the case. If it is not, I shall be interested to hear his argument as to why.

The argument to put to the hon. Member for Hayes and Harlington is that the franchise arrangements have sought to put such things in place so that we can improve services to passengers and investment in the railways, which has been lacking since 1918.

John McDonnell : The question for the hon. Gentleman is whether those things should be within the franchise agreements themselves. What is his party's position on that?

Stephen Hammond : I am happy to confirm that my party believes that the current franchise arrangements are suitable and appropriate.

I look forward to the Minister giving a number of answers—either in the Chamber this morning or in writing later. If he cannot answer the rather large number of huge, detailed questions, perhaps he will do us the courtesy of making any written response available to everybody by placing it in the Library. That would be helpful.

I picked up on the remark made by the hon. Member for Hayes and Harlington about the Association of Train Operating Companies refusing to meet about anything. I accept that that may be right; I simply do not know. However, the quote that I gave from the head of communications at ASLEF clearly indicates that across the industry there is dialogue with the train operating companies in certain cases.

Under the franchise arrangements, the train operating companies have an obligation to speak to franchise operators about industrial relations, safety and security. The hon. Gentleman tried, I think, to present a picture in which no conversation at all was taking place between the unions and the franchise operators. That is somewhat misleading.

John McDonnell : I find the word "misleading" inappropriate. I made it clear that there is no dialogue between ATOC and the unions. ATOC has refused all meetings about the strategic issues facing the railway industry, including issues of safety and so on. I did not seek to mislead the House in any way.

Stephen Hammond : I am happy to withdraw my remark. I merely point out that a huge amount of
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dialogue is going on between unions and franchise operators and between unions and the train operating companies, as was shown by my quote from the head of communications at ASLEF.

We have talked a little about the principle of an employer and employee talking together, and I suspect that there is agreement on that across the House. Equally, there must be some agreement across the House that when an agreed negotiation and consultation process is in place, it should be maintained through all the stages of negotiation.

The hon. Member for Carshalton and Wallington has already referred to the Greater London authority transport committee report, which came out this week. It refers exactly to this issue. It says that if the process could be cemented voluntarily, that could revive a great deal of trust in industrial relations in the underground. I accept that the underground is not the same as surface rail, but the point being made was that all too often in London underground negotiations, the unions break an agreed code and threaten industrial action at an early stage. We then see a breakdown into industrial action at a time that causes the height of discomfort to the travelling public.

The GLA committee made and illustrated the point that that was a continual tactic. It seems sensible that the committee should have recommended that when an agreed negotiation and consultation procedure is in place, the whole of it should be followed through prior to any escalation of action. I hope that that could be agreed across the House, and would welcome the Minister's support for that recommendation.

The hon. Member for Hayes and Harlington did not talk about a number of other industrial relations issues. I should like to mention one thing that the public find extremely difficult to understand. The discomfort of the travelling public is clearly the leverage of the unions in industrial relations. Andy Reed, another national organiser for ASLEF, said that industrial relations at the London underground varied "from hostility to anarchy".

That is exactly what the travelling public see—the hostility of the unions towards them and the anarchy of the service provided to them. The travelling public have problems understanding that quite often the majority of such actions—or at least a number of them, particularly recent ones on the underground—have not been supported by a majority of the union members.

For instance, various reports have stated that in the past four years, I think, the RMT has called 23 ballots in respect of the underground system. Turnout has been 48 per cent. on average, but below 40 per cent. in a number of the ballots. Those ballots have resulted in 10 strikes. Much talk this morning has been about unscrupulous employers trousering money, but there are also unscrupulous union leaders who call strikes on minority turnouts and minority support.

Mr. Drew : I should declare my links with the RMT, which are recorded in the Register of Members' Interests. Does the hon. Gentleman accept that I have seen members of the general public hurling abuse at staff members, when, because of the total inadequacy of our network and through no fault of those staff members, connecting trains have gone? I have seen how those staff
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members, some of whom I am sure are union activists—I know some activists well—deal with that situation. It is a gross abuse to point the finger at the start at union activists, as the hon. Gentleman has done.

Stephen Hammond : In this case, this hon. Gentleman is genuinely being misleading. I opened my remarks by specifically praising the staff, and I would utterly condemn anyone who made such remarks to railway workers. My remarks about the unscrupulous nature of union leaders referred not to the workers, but to the tactic of calling action on a minority turnout.

John McDonnell : That was raised in the GLA transport committee debate. The Conservative members argued that industrial action should be called only if a majority of all staff—not a majority of the turnout—voted for it. However, on that basis, the GLA member, Roger Evans, for whom only 13 per cent. of the electorate voted, would never have been elected in the first place.

Stephen Hammond : I think that that is also wrong. The recommendation is that there should be a 50 per cent. turnout of the membership in the ballot; that would be the relevant majority. All too often, action has been called on a turnout of well below 50 per cent. That is the difference.

John McDonnell : Roger Evans, the GLA Tory member, had been arguing that the tube unions should be allowed to take strike action only if a majority of those entitled to vote voted for the action.

Stephen Hammond : That is not the recommendation of the GLA transport committee, which is rather different. It is that there be at least a 50 per cent. turnout in the ballot.

John McDonnell : So the hon. Gentleman is condemning Roger Evans.

Stephen Hammond : No, I am not condemning him, because he is entitled to that view and I might support it. I was merely pointing out what the actual recommendation is. The tendency of union officials to act in their short-term interests all too often hampers industrial relations in the rail industry.

We could have a debate lasting an hour and a half on the railway pension scheme.

John McDonnell : We will.

Stephen Hammond : I am glad that we will, because it will be an interesting debate. It will be extremely interesting to hear the Minister's response about previous pension fund holidays, how they will work, and how they have worked and acted against pensioners.

The Minister might not wish to comment on the fact that across the public sector there is currently an unfunded liability in pensions, which the Government admit to be £460 billion. If they were to be honest and give their unfunded liability in the same way as
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companies must, following the obligations of financial reporting standard 17 or—perhaps to be more generous to the Government—following a discount rate more closely linked to index-linked skills, the unfunded liability of the Government pension scheme would be between £670 billion and £850 billion. I believe that the Chief Secretary has confirmed that in written responses.

The rail industry scheme's problem pales into insignificance when we consider the matter across the whole public sector.

The Parliamentary Under-Secretary of State for Transport (Derek Twigg) : Will the hon. Gentleman enlighten us on current Conservative party policy in this area?

Stephen Hammond : I am merely pointing out the Government's own error. If, in the same way as they force corporate pension funds—[Interruption.]

Mr. Jimmy Hood (in the Chair): Order. I ask hon. Members to stop having conversations across the Chamber.

Stephen Hammond : I was merely pointing out that if the Government operated on the same basis as that which they force on companies, the unfunded liability of the public sector pension fund would be between £670 billion and £850 billion. The Conservative party is considering whether or not we should fund it. It would be honest to say that this Government's liabilities are 125 per cent. of gross domestic product, not the 60 per cent. that they claim in terms of debt.

The issue of the pension fund will cause considerable problems both for the trustees and for the Government for some time to come.

12.13 pm

The Parliamentary Under-Secretary of State for Transport (Derek Twigg) : I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing this debate and providing an opportunity to discuss the important issue of industrial relations in the rail industry.

I use the railways every week, both local and national lines, and I have never driven down to London by car. It is a pleasure to use them. I am grateful to the people who work on them to ensure that a good service is provided.

I want briefly to outline the situation in the railway industry, because to do so gives a context to the industrial relations issues. In debates such as this we might feel that a major problem is occurring and that the situation is not quite as good as it seems.

Tom Brake : Will the Minister give way?

Derek Twigg : I have only just started, so I am sure that the hon. Gentleman will let me continue a little before I allow him to intervene.

Some good things are happening and I want to relate them to the Chamber in order to set the scene. The railways continue to be a success. The Government are spending £87 million each week on them and there have
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been record levels of investment in rolling stock. On average, over the past 12 months, more than 85 per cent. of trains have run on time as measured by the industry-standard public performance measure. Furthermore, there have been record levels of train patronage; more than 1 billion passengers used the railways in 2005, which is the highest number since the 1960s and makes our railways the fastest growing in Europe. Since 1996–97, rail passenger kilometres have grown by 32 per cent., so people are now travelling further by rail than ever.

Tom Brake : I thank the Minister for giving way. I was going to say that, having sat in a large number of these debates during the past nine years, I am aware that the introductory remarks about the industry generally tend to squeeze out the time for answering the serious points made by hon. Members.

Derek Twigg : The hon. Gentleman will just have to listen to what I have to say, and I think he will find that that is not the case.

It is important to underline the current success of the railway industry. It has much to do with its staff, who are a vital part of the success. Whatever their particular role, their actions contribute to the increased usage of the railway and the general improvement that has taken place. On 7 July we saw the commitment and performance of railway staff during difficult and trying circumstances. I know that an issue has been made about security on the railways and the role of staff.

It is also important to talk about the future, because the industry is now a vibrant one and more people want to work in it. Recently, I visited HMS Sultan, near Gosport, to see the new Network Rail apprenticeship scheme in action. It employs 200 engineering apprentices. They are the future of our railway industry. How often have we been crying out for investment in apprenticeships and in the railways? The scheme is another example of the good things that are happening. I am delighted about the growing interest in the railways and the increasing number of people using them.

My hon. Friend the Member for Hayes and Harlington raised the point about the Association of Train Operating Companies and meetings with the unions. He will know, as do the unions that I have met, that we have raised issues with ATOC. The specific one, about which there has recently been a further discussion and which my right hon. Friend the Secretary of State said he would raise, was about getting together to discuss security. I can tell my hon. Friend the Member for Hayes and Harlington, and other hon. Members, that we are in the process of dealing with that. We will host the meeting between ATOC and the trade unions to discuss security issues. The meeting will be about security and not about other issues.

I will now address the specific issues that have been raised in this debate. The Government believe that industrial relations are a matter for the industry and that issues are best and most effectively dealt with between the relevant industry parties. Before the Railways Act 2005, the Strategic Rail Authority had responsibility for industrial relations. When its responsibilities transferred to the Department for Transport last year, my predecessor, my hon. Friend the Member for Harrow,
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East (Mr. McNulty), stated that the Government intended to continue the SRA policy in this area. My hon. Friend the Member for Hayes and Harlington raised the matter in his speech and I will go into further detail as I continue mine.

The Government have three main roles in industrial relations in the rail industry. They must approve any pay settlement agreed during the last twelve months of a franchise; they can agree to waive poor performance penalties, if that poor performance is as a result of industrial action; and they can agree to provide compensation of net losses to train operating companies for industrial action.

Although the Department will not get involved in the details of pay awards and negotiations, the Government should keep an overview of what is happening in the industry, pay rates and anything unusual that is happening in terms of pay awards. A pay award in one TOC will have potential implications for all TOCs. My officials meet the industry regularly in order to provide me with such an overview. In addition, as hon. Members would expect, franchise management teams are kept regularly up to date with the current position of their TOCs in these matters.

A specific point was made about Virgin Cross Country. It has regularly met its franchise management team. The meetings have included updates to the Department on the current dispute with the RMT train managers about differential pay on Sundays, which has been ongoing since 1 January 2006. That does not mean that the Government are making, or are planning, any intervention in this or any other dispute. As I have explained, industrial relations issues are for the individual company and the union to resolve. However, we would be failing in our duty if we did not seek to keep up to date on issues that might affect the satisfaction of passengers or the smooth running of the railway, or that might have a significant effect on the public purse.

On the contractual position issue generally—

John McDonnell : Before the Minister discusses that, will he clarify the criteria that enable the Secretary of State to judge the intervention or the level of subsidy if there is a dispute? I am anxious to get as much on to the record as possible.

Derek Twigg : I thank my hon. Friend for that intervention, and I will address that point during my speech. I am sure that he will not be surprised to hear that we anticipated some of his questions. I will get back to hon. Members about the ones that I am unable to deal with today after the debate.

The Department's position on industrial relations within the rail industry is defined in the franchise agreements. Everything that the Department does, it does because it has to contractually. There is little that it must do that is discretionary.

Under the franchise agreement, the Department may at its sole discretion, agree to provide compensation to TOCs for their net losses suffered as a result of industrial action. That clause was added to the franchise agreement in 2003. The mechanism to pay compensation exists because of the relatively short-term nature of the franchises. Because of that, there were worries that TOCs might react in a way that would be to the detriment of future franchises rather
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than consider the causes of industrial action on their merits. Such awards might represent poor value for money for the industry as a whole and ultimately for the taxpayer when, in due course, we came to re-franchise the business. However, I emphasise that the compensation is not automatic and is paid only after consideration of all the contributing factors.

For an operator to be able to receive such support, it needs to be able to demonstrate that it has taken all reasonable steps to avoid industrial action. It also needs to show that it has done all that it can to prevent any action from having a negative effect on its business. Any support covers only net losses, and that captures the savings that operators may make from the industrial action. That remains the Government's position, but no such payments have been made since the Department took over direct responsibility for franchise agreements from the SRA last year.

John McDonnell : Is the judgment on reasonable steps undertaken independently?

Derek Twigg : It is taken by the Department, but the franchise managers work with the individual TOCs to that end. I stress that, since we took over the responsibility for franchising, we have not done anything in that respect. As my hon. Friend said, payments have been made under the clause. In the financial year 2003–04, the SRA made payments of £22.4 million in compensation to TOCs. In 2004–05, that figure was £1.4 million. My hon. Friend has asked for more detail on the breakdown of payments. I shall endeavour to write to him about it in due course.

Tom Brake : Is "reasonable steps" a legal definition or is there, as the hon. Member for Hayes and Harlington suggested, a checklist behind the phrase?

Derek Twigg : There is a relationship between a franchise manager and a TOC. "Reasonable" is something that we have to discuss and negotiate with the TOCs, but I shall be happy to give the hon. Gentleman further details after the debate.

I must clarify the position of the Department during the last 12 months of a franchise. When a franchise is at that stage, the position is slightly different. While the franchising concept was being developed in the mid-1990s, it was recognised that there was a need to prevent train operating companies from agreeing above-inflation pay increases, knowing that most of the cost would fall on their successors. To prevent that from happening, a clause was added to the franchise agreements to force the TOC to agree any proposed pay increases that would be above the average earnings index with the Department.

If the Department were to withhold its consent to such a pay award and that resulted in industrial action, it would be bound contractually to compensate the TOC for its net losses. That has never happened. To reiterate, the clause applies only if a franchise is in the last 12 months of operation. There are several other actions that cannot be taken by the operator in the last 12 months of a franchise without the Department's
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permission, which include the increase or decrease of staff numbers or total staff costs of more than 5 per cent. The Department monitors such issues carefully as part of its responsibility for managing the franchise.

Reference has been made to renationalisation. I shall not go into detail, but we have set up a new structure within the rail industry. The Department has set up a rail review, with Network Rail taking responsibility for performance. The train operating companies are working with them and also on improving customer service. Working with the private sector is important to bring more investment into the rail network and bring about the improvements that I have mentioned. We are spending £87 million a week. Post-privatisation, there were many complex problems in the industry. We have now set out a much clearer way forward and a structure whereby people understand what is happening. That will bring about further improvements in the rail industry in the coming years.

Reference has been made to agreements in respect of London Underground. Its operation, including industrial relations, is a matter for the Mayor, not central Government. It is for London Underground as the employer to lead in industrial relations and resolve any dispute with the trade unions. Any industrial action on the underground causes unnecessary inconvenience and disruption to the travelling public. We strongly urge all sides to continue negotiations so that the current dispute can be resolved peacefully. The strike arranged for 21 February was cancelled due to both sides engaging in constructive talks. I understand that the proposed strike on 2 March will also not go ahead.

As for strikes and agreements, and certain times when strikes should not take place, there are no proposals for the Government to ban strikes on London Underground. A local agreement between the employer and the trades union could be undertaken if both sides were agreeable. However, even that could not guarantee that no further action would take place. New York has such a no-strike agreement in place, but that did not prevent strikes from taking place last autumn. It also cannot prevent unofficial action. It is far better that industrial relations are undertaken in a constructive and positive manner from the outset so that strikes or threats of industrial action are not necessary.

I am sure that hon. Members will agree that now is not the time to go into the wider issues of railways pensions and the existing challenges.

Mr. Davidson : Before the Minister goes into pension details, did he accept our argument when we asked him for a full and helpful response to our detailed questions? He said that he would respond. Will his responses be helpful and constructive, and clarify matters, or will they be obscuration letters that sometimes come from Ministers?

Derek Twigg : Unless my hon. Friend has noticed something that I have not noticed in my seven months in the job, that is not generally my style. I give a commitment that I shall place the information that has been requested about issues that I have not dealt with today in the Library and I will make sure that all hon. Members are kept informed of what is happening. I shall make matters as clear as possible. I give my hon. Friend that undertaking.
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I understand the worries that are felt about railway pensions. It is accepted generally by all parties, including the trustees, that the operation of the railway pension scheme—the RPS—needs to be fundamentally assessed to ensure its continued good operation in the future and that members continue to receive their expected benefits, but the costs need to be contained at an acceptable level. I am aware of the potential for difficulty caused by the announcement of large deficits within sections of the RPS, but I am hopeful that a way forward will be found. Obviously, people are working together to find that way forward.

The rail industry has undergone extraordinary changes in the past 10 to 15 years, beginning with privatisation and ending with the recent Railways Act 2005. I stress that the commitment and contribution of trade union members and staff who work in the rail industry has obviously been fundamental in getting over the difficulties that the industry faced post-privatisation, Railtrack and so on, and in taking forward what is now a much more successful railway, which is improving. I cannot underestimate the contribution that the staff have made to that, as have the train operating companies and Network Rail as well as the Government in the way in which we have set in place the strategy for the railway. By working together, we can further improve the railway and take it from strength to strength.

As for the £87 million, it is crucial that our investment continues. Reliability has been a major factor in improving the railways. More than 85 per cent. of trains are running on time. People are voting with their feet and using the railways in greater numbers. As I said, more than 1 billion passengers used the railway last year. As any successful organisation knows, staff are its biggest asset—

Mr. Jimmy Hood (in the Chair): Order. We must now move on to the next debate.

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