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Clause 4

Power of Office of rail regulation to charge fees

Mr. Greg Knight: I beg to move amendment No. 9, page 2, line 8, leave out from ‘as’ to ‘in’ in line 9 and insert

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 2, page 2, line 25, at end insert

Mr. Knight: Given that my amendment has been signed not only by my hon. Friends the Members for Christchurch (Mr. Chope) and for Wimbledon (Stephen Hammond) but by the hon. Member for Leicester, South (Sir Peter Soulsby), to whom I am obliged, it would not be stretching the truth to say that it has the ring of an all-party amendment.

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Clause 4 gives the Office of Rail Regulation power to charge fees, stating that

My concern relates to subsection (2), which states

As I said in Committee, what worries me is that, in effect, the Office of Rail Regulation will be advocate, judge and jury in its own cause. It will surely never admit that the fee it wishes to charge is unreasonable. Therefore, there is no objective test of whether the fee imposed is reasonable to a third party.

Mr. Chope: Does my right hon. Friend know whether this form of words is unique to the ORR and the Bill, or is there the same form of words for all self-financing regulatory authorities?

Mr. Knight: I do not know the answer to that, but my concerns nevertheless remain. If this wording is used elsewhere, however, perhaps I should start a campaign to amend the wording in other statutes similarly. If we were to have a profligate or wasteful ORR, it could cover its high-spending ways by imposing fees that are higher than necessary but that it decrees reasonable.

Amendment No. 9 would change the wording so that the fee payable in any case would be such an amount as

In other words, it would introduce an objective test, so that in any disputed case that might come before the courts, they would be able to say whether that is a reasonable amount. That is how we should proceed, and the amendment’s wording is far better than the original wording in the Bill.

I began to make this point in Committee, and the Minister stopped me in my tracks. He said he had listened to my point, and that if I were to table an amendment on Report:

When we started on the process of considering the Bill and the Minister was facing questions, he rather dismissed my point, but when I returned to it in Committee proper it was clear that he had been reflecting on my remarks and he generously said that he would consider such a suggestion on Report. He has subsequently indicated to me that he is minded to accept this amendment.

I do not want to blight the Minister’s career, but may I say to him that he has behaved as a model Minister in this instance? He listened to the argument and felt that a fair point was being made from those on the Opposition Benches, and he has graciously conceded that the amendment should be made.

I therefore hope that no Member will disagree with amendment No. 9. I am always nervous when I see my hon. Friend the Member for Christchurch (Mr. Chope)
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in the Chamber, because I know how volatile he is, but I hope that I am taking him with me in my arguments.

Amendment No. 2 also relates to the power to charge fees under clause 4, but seeks to make a change by adding at the end of proposed new section 21A(6),

Proposed new section 21A(6) gives the ORR power to revise a fee notice that it has already issued by issuing a subsequent notice. My concern is that if there were an unreasonable person in the ORR they could issue a notice, and if it was not paid by the time stated in the notice they could issue a second notice increasing the fee—perhaps even adding interest on to it—and that subsequent notice would then supersede the original fee notice issued. That is not how the ORR should behave, but it could behave like that under the Bill as drafted. My amendment No. 2, which I am delighted my hon. Friend the Member for Christchurch has signed, would prevent that from happening. In other words, the ORR would not be able to issue a subsequent notice mentioning a higher fee solely because the original fee was not paid on time.

The Minister may be less convinced about amendment No. 2, but I ask him to reflect on the points I have made. Surely it is not proper for the ORR, or indeed for any body, to be able to revise a fee and thus impose a penalty on the person due to pay it merely on the grounds that they have been late in paying it. I hope that the Minister will give me a full house today by accepting that amendment too.

Stephen Hammond: I shall not detain the House long. I am delighted that amendment No. 9 has been selected. As my right hon. Friend has been saying, the question of fees charged by the ORR was raised during some lengthy deliberations in Committee. He has explained that the intention in Committee was to ensure that the fee was consistent with the fee levied on operators of other parts of the network and that it was based on the costs reasonably incurred, and not on anything else. He started suggesting some sensible changes in Committee and he has proposed them today, so I am pleased to have added my name to the amendment. As he said, under the amendment the ORR would no longer be assessing itself in terms of reasonable costs. Thus, the test of reasonableness would be made much more impartial, and therefore fair and credible. This excellent amendment improves the wording, and I hope that the Minister will support it.

My right hon. Friend also discussed amendment No. 2, which I also support. It would ensure that the fees could not be raised by the ORR upon a revision of a notice notifying a fee—he has just elucidated that important principle—and it represents an improvement to the clause. The amendment is sensible and rational, and it needs to be taken with amendment No. 9. Those amendments, taken together, improve the clause as drafted.

Sir Peter Soulsby: As the right hon. Member for East Yorkshire (Mr. Knight) said, I have added my name to amendment No. 9. I did so because, as he suggested in Committee, it makes good sense to clarify the clause’s intention. It may seem a small point, but it is an important one, because, as he said, the clause as originally drafted would have left the ORR as judge
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and jury about what was reasonable in its own case. The amendment suggests a sensible alternative—the test of reasonableness should be objective rather than internal to that organisation—so I am pleased to support it. I share his hope that the Minister will accept it. I am sure that he will because—I say this as we are using the word—he is a very reasonable man.

I understand the point that the hon. Member for Wimbledon (Stephen Hammond) and the right hon. Member for East Yorkshire make about amendment No. 2. However, as the right hon. Gentleman said, such provision would be necessary only were we to envisage a situation where the ORR was acting in a grossly unreasonable way. I suggest that it is not necessary to write that into the Bill. There are other ways to ensure that persons acting in that capacity behave reasonably without setting specific provisions. I support amendment No. 9, but not amendment No. 2.

4.30 pm

Mr. Chope: I, too, support amendment No. 9. I was a little disappointed that my right hon. Friend the Member for East Yorkshire (Mr. Knight) was unable to answer my intervention, because he normally brings such intellectual rigour to our debates. He has normally done his homework and research, but it appears that he has not found out the answer to the question. I do not think that it is purely speculative. Paragraph 15 of the explanatory notes that have been kindly supplied by the Government states, on the subject of the charging regime:

and so on. The paragraph continues:

It thereby suggests that the wording that my right hon. Friend wants to amend is already extant in other legislation. My concern is that we should have some consistency.

Mr. Greg Knight: If my hon. Friend rereads the explanatory notes, he will see that they use the word “similar” rather than “the same”.

Mr. Chope: I do not need to reread them to know that the words “the same” are not used. However, the words

infer that someone should be put on notice that the same wording may be used in other legislation to create a similar situation. The situation will merely be similar, but the wording might be the same.

Mr. Tom Harris: In an attempt to satisfy the hon. Gentleman’s curiosity, I understand that such a form of words—or a similar form—is not uncommon in other legislation. I hope that he will not press me on which pieces of legislation, because I do not have that information to hand. If his case is that the wording is inappropriate in the Bill and is therefore inappropriate in other legislation, he should be careful that he does not countermand his argument. It is clear that the ORR, in following its general practice when charging fees across the rest of the rail network, has not charged unreasonable amounts.

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Mr. Chope: I am not just concerned about the ORR, but I am grateful for the Minister’s assurance.

If the Minister’s information is that wording similar to the unamended wording in the Bill is extant in other legislation, I hope that, as a result of the debate, the Government will amend it. That can be done without the need for a long-winded piece of full legislation under the deregulatory regime introduced by the Government in the Legislative and Regulatory Reform Act 2006. Since that Act was passed, I have noticed a great paucity of measures brought forward under it. At the end of the debate, the Minister might seek to break the mould and suggest that that the modest deregulatory measure that we have suggested should be applied to all other legislation that is so worded. I hope that that is useful.

On amendment No. 2, my right hon. Friend the Member for East Yorkshire is on to a good point. I should much prefer it if people who paid the fee on time or earlier got a discount. That would be better than penalising late payment in the way envisaged in the Bill.

Unamended, the Bill puts the ORR in a position that is different from the one occupied by everyone else in the country. If I provide a service for which the bill is not paid on time, I cannot arbitrarily increase the size of that bill to reflect its late payment. I can issue a writ or summons to recover the money, and I might be able to charge a modest rate of interest and claim any associated costs, but the Bill goes rather further. That is why I believe that my right hon. Friend for East Yorkshire is on to a good thing with amendment No. 2.

Mr. Tom Harris: The right hon. Member for East Yorkshire (Mr. Knight) is right to say that there has been some debate already in Committee and in the House about whether clause 4 gives the ORR the right to decide, without restriction, what fees are appropriate for exercising its relevant functions. The current wording of the Bill says that the fee could be

I assure the House that it is not the Government’s understanding or intention that the Bill should allow the ORR to charge unreasonable fees, nor that the ORR would consider itself able to do so. The Government expect that any fee the ORR might charge under clause 4 would be reasonable, on an objective basis.

The recollection of the right hon. Member for East Yorkshire about our earlier discussions is correct. I was grateful to him for raising the matter then, but I believe that my objection to his proposal, which I rejected, was both genuine and robust. He raised the matter again in the full Public Bill Committee debate, and he is right to say that I subsequently undertook to consider in a positive light any amendment that he might decide to table.

I did that, and I even thought about the matter over the Christmas recess—after all, what else would one do at such a time but consider amendments to the Channel Tunnel Rail Link (Supplementary Provisions) Bill? I have concluded that the right hon. Member for East Yorkshire has made a valid point and, although I do not believe that the Bill as written would create the
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problems that he has predicted, I am persuaded that it would be improved by amendment No. 9. I can therefore tell the House that the Government are willing to accept that amendment.

I congratulate the right hon. Member for East Yorkshire on drumming up so much support on both sides of the House for that amendment. [ Interruption. ] These are the jokes, folks. However, I must make two qualifications—that he should not get used to me being so accommodating, and that I am not inclined to be so generous in respect of amendment No. 2 .

Clause 4, as amended, allows the ORR to charge a reasonable fee and then to arrange for that fee to be paid. The ORR has to issue a notice informing the rail link undertaker that will be the new owner of HS1 of the amount of the fee and the date by which it must be paid. Unpaid fees will be pursued through the ordinary process of civil debt recovery.

However, subsections (6) and (7 ) of clause 4 allow the ORR to revise the notices that it issues. These two provisions have been included in the interests of being fair and reasonable. For example, if the ORR finds that it has charged HS1 too much, it can correct the original notice. That would prevent the ORR having to secure payment of the original amount and then arrange a refund later.

Amendment No. 2 is aimed at a slightly different scenario. In effect, it would prevent the ORR from charging interest in the event of non-payment of a notice. That is standard commercial practice and, as I said in Committee, we are all used to having to pay extra for bills that are paid late. The wording of the clause as it stands simply allows the ORR the same rights as any other organisation when dealing with a debtor.

The Opposition are understandably proud of their links with small businesses. They know that the late payment of bills is a major and serious problem for many small and medium-sized enterprises. Without that right to charge extra on unpaid bills, many small businesses would be left in some difficulty. I hope that Opposition Members will extend the same rights to the ORR, because the same principle applies.

Amendment No. 9 would also mean that any costs, including interest, that the ORR charges HS1 would have to be reasonably incurred—whether something is reasonable being the objective test that the right hon. Gentleman requires. That provides sufficient protection for the HS1 infrastructure from unfair fees, so amendment No. 2 is neither necessary nor appropriate, and I hope that he will not press it.

Mr. Greg Knight: I am delighted by the Minister’s response to my arguments in favour of amendment No. 9. It is pleasing to see that the generosity that he exhibited in Committee was not an aberration. I am also pleased to hear that I was in his thoughts at Christmas. I have to admit that he was not in mine.

I am grateful to the Minister for the fair way in which he has dealt with this matter. I never argued that the clause as drafted was without restriction. My objection was the test was such that the organisation imposing the fee had the right to be judge and jury in its own cause. I am pleased that he has taken the point and that we now have—or will have in a moment—an objective test in clause 4.

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Clause 4 as amended by amendment No. 9 means that amendment No. 2 is less essential, as the Minister pointed out. The test overall, being an objective one now, is whether the fee, even if it includes interest, is reasonably incurred. Because of that, and because the Minister has dealt with amendment No. 9 in a fair and reasonable way and invited Government Members to support it, it would be ungracious and unreasonable of me to divide the House on amendment No. 2.

Amendment agreed to.

Order for T hird Reading read.

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