Crossrail Bill

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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 Minister’s 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.
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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. Lady’s 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.
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 State’s 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. Gentleman’s 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.
I am interested in the Minister’s 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 Minister’s 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, today’s 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 Government’s 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.
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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 London’s 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. Lady’s constituents may think that that has been of benefit, mine would not agree, because of the Mayor’s 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 TfL’s 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 Wimbledon’s 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 said—I 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 Government’s 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 passenger—perhaps 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 constituents—I am sure yours as well—have to travel in conditions in which it would not be legal to transport animals?
The Chairman: Not mine!
Mr. Field: I am sure that there are plenty of people from Congleton who use the underground. My hon. Friend’s 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 Livingstone’s 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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