Clause
33
Amending
existing access contracts: effects of contracts under section
32
Question
proposed, That the clause stand part of the
Bill.
Susan
Kramer (Richmond Park) (LD): I want to make some brief
remarks. To someone sitting outside this room, our previous discussion
would have sounded as though it was taking place at cross-purposes. My
interpretation of the language is rather closer to the
Ministers than that of the hon. Member for
Wimbledon, who sits on the Conservative Front Bench. However,
the issue that has not been raised and which is relevant to the clause
is the implications for freight and for freight rail access along
routes it currently uses after Crossrail has come into
play.
11
am
As I said
earlier, the implications for London are extremely serious. London has
no aggregate resources within its own boundaries and the only mechanism
for bringing aggregate into London is freight rail. Those pathways need
to be protected in some way. While there may be compensation for the
freight rail provider, there is no mechanism for dealing with the
problem that Londoners will face without the ability to bring in bulk
product for a variety of purposes. The Minister should address that
issue.
Mr.
Harris:
I understand and sympathise with the hon.
Ladys concerns about freight as affected by Crossrail. Clause
33 is relevant if a direction has been made requiring the grant of
access rights for Crossrail services outside the central London tunnel.
However, I hope she will be reassured that there might then be the need
for a further process of amendment of any other access rights that are
in conflict. Clearly conflicting rights are likely to have been picked
up and dealt with at earlier stages as a consequence of ORR oversight,
subject to its new duty, and reviews of contracts under clause 27, but
some could
remain.
Question
put and agreed
to.
Clause 33
ordered to stand part of the
Bill.
Clause
34
Effect
on franchise agreements of directions under section 28 or
33
Stephen
Hammond:
I beg to move amendment No. 18, in
clause 34, page 24, line 5, leave
out terminate the agreement and insert
instruct the Office of Rail Regulation to review the
agreement and to determine how to vary it in light of those
directions.
The
Chairman:
With this it will be convenient to
discuss amendment No. 19, in clause 34, page 24, line
9, leave out
Secretary of State has
terminated the franchise
agreement
and
insert
Office of Rail Regulation
has
acted.
Stephen
Hammond:
We move on to a clause that deals with the impact
of the Crossrail project on the existing railway franchise agreements.
The amendments are very much in line with one another as they deal with
exactly the same issue. The clause gives the Secretary of State the
power to terminate a franchise if the parties to the franchise cannot
agree on how it is to be modified to deal with the consequences of the
Crossrail project, and only in those circumstances.
I can
understand that some sort of external arbitration will be necessary if
such a situation arises. After all, none of us wants the construction
or operation of
Crossrail to be held up by a disagreement between
two sides to an existing franchise where that franchise agreement will
have an impact on Crossrail. However, giving the casting vote in such a
dispute to the Secretary of State is not necessarily the solution to
the problem. The power to mediate in such disputes should be given to
the ORR, which is transparently more of an independent and impartial
expert body than the Secretary of State and so perfectly suited to
carry out this
role.
Amendment
No. 19 would change the wording of subsection (3) so that instead of
terminating the franchise himself, the Secretary of State will instruct
the ORR to review the agreement and try to mediate to achieve an
equitable solution. It would therefore revise a subsequent subsection
to reflect the change made by amendment No. 18. I hope the Minister
will look favourably on the suggestion that the Secretary of State
should not mediate and that the ORR, as an impartial and expert body,
should take on that
role.
Mr.
Harris:
Clause 34 deals with the consequences for
franchises affected by the amendment of access rights held by the
franchisee in order to facilitate Crossrail services. That may arise
when, under clauses 28(2) or 33(2), the ORR directs amendments to
access rights. If those amendments affect the carrying out of a
franchise agreement, the parties to that agreement must use all
reasonable endeavours to vary its terms. If they fail to agree, the
Secretary of State can terminate the franchise agreement. The
ORR can direct that compensation as payable and determine the amount.
Amendment No. 18 and amendment No. 19, which would
apply to the consequential changes, would remove the Secretary of
States power to terminate the franchise agreements when
agreement could not be reached between the parties and instead allow
the ORR to vary the franchise agreement for the
parties.
While I
approve the spirit of the hon. Gentlemans amendment, it is
unsatisfactory for two reasons. First, it would place the ORR in a role
completely outside its normal regulatory function. It
does not regulate franchise agreements and has no experience in doing
so, or in setting or writing the minimum specification for them. The
hon. Gentleman suggested that it has expertise in that area. It does
not.
Franchise
oversight and construction lie with the Department for Transport, and
lay previously with the Strategic Rail Authority. The functions of
franchising and of overseeing access contracts are in practice well
connected, but they are separate functions undertaken by separate
bodies with separate
responsibilities.
More
importantly, the amendment would remove a necessary protection for the
holder of the franchise. Agreement might not have been reached because
the franchise holder considered that an amended franchise would not be
a viable business proposition for him, so he would wish it to be
terminated with compensation. In that case, it is far more satisfactory
for the Secretary of State, who holds a franchising function, to
terminate such an agreement with compensation and
then refranchise the service. Therefore, following that explanation, I
ask the hon. Gentleman to withdraw his
amendment.
Stephen
Hammond:
It may well be that the ORR does not have the
expertise, as the Minister described from first-hand knowledge, but in
its function as a
regulator it is an expert, independent and impartial observer. Many in
the industry might prefer that that body conducted the franchise
renegotiation process, rather than the Department for Transport, but
that is a discussion for another day and I am not tempted to open it
now.
I am interested
in the Ministers reference to an unintended consequence of my
amendment being that it might affect the business viability of a
franchise and, therefore, might undermine the ability of a franchise
holder to terminate if a franchise became unviable and the ability to
get compensation. That is certainly not a consequence that I had
anticipated.
The
spirit of the amendment is to look at a resolution where the access is
purely to do with Crossrail. I could not envisage circumstances under
which such a minor access arrangement would invalidate the whole
franchise, but I am prepared to accept the Ministers
explanation that in certain cases it might, and, therefore, that
protection should certainly be in place. Owing to that unintended
consequence, I beg to ask leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Clause
34 ordered to stand part of the Bill.
Clause
35
Award
of Crossrail franchises to public-sector
operators
Question
proposed, That the clause stand part of the
Bill.
Stephen
Hammond:
The explanatory notes for the clause state that
it disapplies the prohibition in section 25 of the 1993 Act on public
sector operators being a franchisee in respect of passenger rail
services. Section 25 of the 1993 Act effectively privatised British
Rail and introduced, or was the forerunner of, todays industry
structure and provides that certain public sector bodies cannot be
franchisees. Those bodies include Ministers of the Crown, local
authorities and passenger transport authorities. For better or for
worse, depending on how we look at it, it is a competitive system
whereby private sector companies bid for and operate rail franchises.
The question is, therefore, whether that system is
working.
If the
Department for Transport believes the system to be working elsewhere in
the country, why should Crossrail be different? We all know the answer
to that. The clause is so worded so that Transport for London can
operate Crossrail, post-construction. That raises the question whether
it is intended that the bidding process will see TfL as the sole
bidder.
We all
understand that that is what is intended by the Mayor, with his
megalomaniac tendencies, writing blank cheques from Londoners
bank accounts. Not necessarily every Londoner would agree with that
statement. Perhaps we will hear this from the Minister, but as we
understand it, the Mayor has just bankrolled the construction phase of
Crossrail. However, should that automatically give him the right to
operate it? After all, are we convinced that the Mayor is a good
operator and are we clear that that would be in the public interest?
Can we be sure that health and safety standards will be properly
met?
If one
examined the record of TfL in operating the underground, it would at
best be described as patchy. TfL management likes to
blame the infracos and everyone else, but the operating statistics of
the underground show that some 40 per cent. of the delays are due to
TfL and its inability to operate efficiently. Do we really want the
major national project of Crossrail to operate with 40 per cent.
inefficiencies? I am not sure that anybody wants that. Surely even the
Mayor, who at best is economical with the truth at times, does not want
that or wish to publicise it. [
Interruption.
] Hon.
Members should read the June edition of The Londoner
and they will see what I
mean.
Can we be sure
that it is in the public interest to have TfL as the constructor and
the operator? Where are the checks and balances? If TfL, which blames
anybody but itself for faults, has both roles, who will it blame? Would
it not be amusing to see the operation arm of TfL blaming the
construction arm? No, it would not, because the only people to suffer
would be those who travel on Crossrail. The public purse would also
suffer.
It looks as
though the clause has been written in so that TfL will have the right
to bid for this franchise. Is it to be an exclusive franchise? How long
will it run for? Who else may bid? The franchise system that the
Government have created allows for franchises of seven to 10 years. Is
it intended that the Crossrail operating franchise will be of the same
length? I suspect
not.
I
ask all those questions because the shadow Secretary of State for
Transport, my hon. Friend the Member for Chipping Barnet
(Mrs. Villiers), has intimated that we favour some
reintegration of the network. TfL being the owner, if not the manager
of the network and the operating model, could fit into a model of
reintegration later on. However, it would not fit in with the
Governments current model of operation for the railways. I ask
the Minister, is that what is intended in the clause? Is he now saying
that he accepts that a degree of reintegration is viable, possible and
desirable? In terms of this contract, is the clause just a Trojan horse
for TfL? Is this an exclusive bidding procedure and for how long is the
franchise intended to
run?
Susan
Kramer:
I find that speech fairly fascinating because the
Conservative Front-Bench team are trying to have it both ways. They
want to talk in terms of much greater integration in the system and to
propose that there should be barriers to integration. I also say to the
hon. Member for Wimbledon that he should not be afraid. I honestly
believe that the hon. Member for Henley (Mr. Johnson) will
never be in a position to run this
system.
Stephen
Hammond:
For the sake of clarity for the hon. Lady, I did
not propose one thing or the other. I merely asked a number of
questions. She should not infer any position from those
questions.
11.15
am
Susan
Kramer:
I thank the hon. Gentleman for that clarification,
which I find extremely curious, but let us move on. One of the most
attractive features of Crossrail is its potential to integrate with
Londons overall public transport provision. TfL has many flaws,
but it has certainly delivered some significant
improvements, notably the new London overground
network.
Stephen
Hammond:
While the hon. Ladys constituents may
think that that has been of benefit, mine would not agree, because of
the Mayors failure to deliver the east London line to
Wimbledon.
Susan
Kramer:
I hope that the hon. Gentleman will get the
services that he seeks in the Wimbledon area in future. With the London
overground, there was a pattern whereby an extremely poor service
provided by Silverlink was taken back into TfL control for a
holding period while it was revamped, then
refranchised to a private sector operator. I see no reason why those
strategies cannot be responsibly used by TfL to provide Londoners with
the most appropriate and effective service. The hon. Gentleman will
know that the way in which TfLs services are provided are a
complete mixture; the buses, the docklands light railway, the
overground and the tube all have different kinds of
arrangements.
The
hon. Member for Wimbledons fascination with private operators
is somewhat questionable, given the hideous Metronet experience that we
all have been through. Private operators can play an important role,
provided that integration oversight and a general
pattern of regulation are in place. To suggest that it is inappropriate
to introduce a clause that allows such measures to proceed for
Crossrail strikes me as extraordinary. Londoners will be fascinated by
the implication that the new service should be exclusively in private
hands, and not part of the broader TfL family as an integrated rail
service in
London.
Stephen
Hammond:
The hon. Lady is being party political and seems
to have inferred all sorts of things from what I saidI wish
that I had been as clever as she suggests. I actually asked
whether the bidding process was going to be exclusive to TfL, and was
really asking nothing more than that.
Mr.
Field:
I shall make a brief contribution to probe the
Governments thinking. I am not a great defender of the Mayor,
but he has been vindicated in many ways by what has happened on the
underground. To a large extent he has been a passengerperhaps
it is the wrong time to say that. The public-private partnership
exercise for the London underground has unravelled, and I am afraid
that that is what the Mayor had in mind at the outset when he made his
complaints about the nature of the exercise. Obviously, we hope that he
is in the last 22 weeks of his mayoralty, but he has made the rather
important point that we should not view transport, policing or any
other area only through the prism of a particular Mayor. We have to
look at the powers that should be in place for London governance and at
the importance of ensuring that proper services are available for all
Londoners.
Mr.
Lee Scott (Ilford, North) (Con): Does my hon. Friend agree
that one of the most important things for the running of Crossrail,
whether by TfL or any other body, is that it should
not suffer from the same problems that affect London underground, where
passengers, including my constituentsI am sure yours as
wellhave to travel in conditions in which it would not be legal
to transport
animals?
Mr.
Field:
I am sure that there are plenty of people from
Congleton who use the underground. My hon. Friends point was
well made. My fears in relation to Crossrail are twofold. First, I fear
that there will be a repeat of the fares fair problem
that plagued us in the early 1980s, and many of our London
constituents, if not necessarily businesses, would not regard
themselves as benefiting directly from the Crossrail project. Secondly,
if Crossrail is to work, and become a great success, it must have spurs
well outside greater London. That is something else about which there
is increasing concern. It is at the heart of the matters raised by my
hon. Friend the Member for Wimbledon, and I hope the Minister can
respond to those concerns. The biggest fear of many
residents of Kent, Essex, Berkshire, Surrey and beyond is of the Mayor
taking control of their railway services because he is unaccountable
through any electoral process to people who live outside greater
London. The focus is on the present incumbent of the mayoralty, but
this is a sensible probing amendment and it will be interesting to
discover where the Minister is coming from.
I disagreed with much of what
the hon. Member for Richmond Park had to say, but in Mayor
Livingstones defence, I think that his transport policy
includes some sensible integration measures. My
biggest worry, especially in relation to buses, is that it is the
economics of the madhouse. We are losing hundreds of millions of pounds
a year on that budget, ditto for congestion charging. I accept that
Livingstone had the courage to go ahead with the congestion charge, but
I suspect that whether or not he is re-elected it will be difficult to
row back on what has been done. We have to accept the reality of the
situation.
My biggest
concern is about the sheer cost of the operation but, as the hon. Lady
rightly pointed out, to integrate the overground elements with the
system in east London in Hoxton and Haggerston is a positive step
forwards. I suspect that she views the Silverlink line with rose-tinted
glasses, given that she represents Richmond in west London where the
service operates rather better than it does out in the east. I have
been down to Silvertown and to North Woolwich, where the
service is ramshackle and requires enormous
investment to make it worthwhile. The population in that part of London
is relatively small, although City airport could allow North Woolwich
station to become a hub and, as we discussed in relation to Crossrail,
a further station on the other side of the river in Woolwich itself
would integrate the entire process. That is a sensible way forward but
it would impose a great cost on London council tax payers now and, I
fear, in many decades to come. I hope that the Minister will give
serious thought to what we have said. As part and parcel of integration
we need not just one template but the potential for openness to a broad
range of different
operators.
Mr.
Harris:
I wondered how long it would take for party
politics to raise its head in this long-running debate on Crossrail and
I am disappointed that it has done so in the form of an ungracious
attack on the London Mayor by the hon. Gentleman. I will not ask for
your indulgence, Lady Winterton, as you would probably rule me out of
order if I were to suggest that the hon. Member for Henley is far too
busy to spend his time on a Public Bill Committee dealing with the
largest infrastructure project that London has ever
seen.
The
Chairman:
Order. I suggest that the Minister does not go
down that
track.
Mr.
Harris:
That is a very wise ruling, Lady Winterton. I do
not intend to do
so.
The hon. Member
for Wimbledon referred to the franchise system created by the
Government. I was not a Member of the 1992 to 1997 Parliament, but from
my recollection a Conservative Secretary of State invented the
franchise system for the purposes of running down the rail system
which, however, has been rescued, modified and made fit for purpose by
this Government. It is simply not the case that we invented that
system. Clause 35 disapplies the prohibition in the 1993 Act on a
public sector operator acting as a franchisee, which
helps to provide the necessary flexibility to
accommodate a public sector operator of Crossrail passenger services. I
do not want to give my hon. Friends any undue hope that the Government
have any plans to renationalise the rail industry by the back
door, as this is a purely practical measure.
It may be useful to use public
sector franchisees during the phasing-in and stabilisation period.
During the stabilisation period, service levels and performance will be
fully tested and optimised. Until that has been done and, for example,
the required performance level is set, it would be difficult to hold a
conventional franchise competition. All franchises that are put out for
competition operate on the basis that the network and services are
already in place. We know passenger numbers and the pathways that are
available, but that will not be the case at the outset of the provision
of Crossrail services. Such a competition could result in franchise
bids factoring in at least some element of project risk, and that may
be better managed as part of the project
delivery.
Several
options are open at the moment, and one was mentioned in glowing terms
by the hon. Member for Wimbledon. A decision has not been taken, as a
significant amount of detail will need to be worked through in the
coming years between the Mayor of London, the Department for Transport
and train operators as to how exactly Crossrail will be integrated with
national rail services, and will interact with London Underground. As I
have said before, Crossrail is a unique railway in the UK, and it is
essential to retain the flexibility to deliver every possible option if
we are to operate services efficiently and
effectively.
Question
put and agreed
to.
Clause
35
ordered to stand part of the
Bill.
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