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Lord Bruce of Donington: My Lords, can the noble and learned Lord tell the House whether Her Majesty's Government are in possession of any prima facie evidence indicating the identity of those responsible?

Lord Hardie: My Lords, as the noble Lord may be aware, there are petition warrants which name two

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people. Those warrants were issued on the basis of information available linking them with the disaster which occurred.

Railtrack: Profits

3.15 p.m.

Lord Peyton of Yeovil asked Her Majesty's Government:

    What the Deputy Prime Minister meant when he described Railtrack's profits as "basically taxpayers' money".

Baroness Hayman: My Lords, my right honourable friend the Deputy Prime Minister was expressing himself with his customary robust lucidity. Last year Railtrack received £2.1 billion--about 85 per cent. of its total income--from access charges from passenger train operators. Those operators are receiving about £1.8 billion this year in subsidy. Railtrack's profitability is clearly dependent on taxpayers' money.

Lord Peyton of Yeovil: My Lords, I am grateful to the noble Baroness for that response. It seems that the right honourable gentleman's customary robust lucidity rather ran away with him on this occasion. There seem to me to be two possible explanations. I wonder whether the noble Baroness will select the right one. Either the right honourable gentleman was trying to comfort some of his more behind-the-times colleagues, or alternatively it was old Labour peeping through the curtains manifesting its old dislike of profits and its hostility to success.

Baroness Hayman: My Lords, I believe the issue is not one of hostility to profits; it is one of concern about investment. That concern about investment has been stated clearly by the rail regulator and it is often stated within your Lordships' House by Members who are concerned about the level of investment. We are concerned that profits in the private sector, against which we have no bias whatever, should not be achieved at the expense of proper investment in the infrastructure of the railways.

Lord Berkeley: My Lords, does the Minister agree that Railtrack's profit of £346 million last year on a non-guaranteed-by-the-Government element of not much more than £500 million is fairly excessive? Does she agree that possibly stronger regulation to ensure that Railtrack's investment is wisely planned and wisely carried out in the national interest would be highly desirable?

Baroness Hayman: My Lords, we are certainly concerned about the regulatory framework within which the rail industry operates. A review of that framework is part of our commitment to establish a new rail authority to provide a clear strategic programme for the

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development of railways and to strengthen regulation in the interests both of investment and ultimately of passengers and freight.

Baroness Oppenheim-Barnes: My Lords, does the Minister acknowledge that whereas the party opposite's new respect for investment is welcome, a windfall is a jolly sight better than a shortfall, which is what happened in all the utilities which were privatised against the will of the party opposite and which were costing the taxpayer and consumers a great deal more?

Baroness Hayman: My Lords, it is important to keep this in perspective. The profits have increased 25 per cent. on the past financial year. It is important that under the regulatory framework--this is not a new conversion for this side of the House--those profits are poured into the investment that is so necessary within the rail infrastructure.

Lord Ezra: My Lords, in view of the fact that everyone is agreed that there ought to be considerably more investment in the rail infrastructure, particularly in the light of the Prime Minister's remarks in New York recently, instead of general directions to Railtrack to invest more, could there not be agreement on a specific plan over the next five years so that we all know exactly where we stand?

Baroness Hayman: My Lords, Railtrack's network licence requires the company to produce an annual statement of forecast network capacity needs and its proposals for investing in the network. The regulator recently issued a statement suggesting improvements to be made in next year's network management plan and announced that he proposed to discuss with Railtrack a revision to the existing network licence which would give the regulator more power to ensure that Railtrack delivers on its plans. We were disappointed that Railtrack issued a statement on Monday, 16th June, rejecting the regulator's proposal for an agreed licence modification. Railtrack appears to be willing to risk the regulator referring the matter to the MMC for decision. However, I understand that these issues will be discussed at a meeting with the regulator tomorrow.

Earl Attlee: My Lords, does the Minister agree that those unfortunate comments from her right honourable friend will make London Underground appear less attractive for private investment or full privatisation?

Baroness Hayman: My Lords, I am not concerned about London Underground looking less attractive for full privatisation because we are determined that that is not the course that we should take. I am concerned that the message that my right honourable friend has put clearly on many occasions regarding transport--that there is great opportunity for public/private partnership for investment--should be reiterated.

Lord Peyton of Yeovil: My Lords, is the Minister aware that what she said about the need for partnership is very acceptable? However, I hope that the noble

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Baroness will also agree with me that investment by Railtrack this year has shown a considerable increase. Will she please suggest to the regulator that he takes due note of that rather than conducting a rather shallow public relations exercise?

Baroness Hayman: My Lords, it is not for me to answer for the conduct of the regulator. However, I believe that there is considerable dispute about the profile of the investment--the noble Lord is correct that it has increased this year--between major projects and the commitment to ongoing investment in the current infrastructure. I am sure that the rail regulator is taking both those considerations into account in his discussions with Railtrack.

Lord Skelmersdale: My Lords, in a Written Answer to me the Minister said that the Government are reviewing the role of the rail regulator. Can the noble Baroness tell the House something about that review?

Baroness Hayman: My Lords, as I said in reply to an earlier question, we are committed under our manifesto to undertake a thorough review of the whole regulatory process. That is seen as part of our commitment towards establishing a new rail authority to provide a strategic programme for the development of the railways.

Habitual Residence Test

3.22 p.m.

Earl Russell asked Her Majesty's Government:

    Whether they have any plans to review the habitual residence test.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, we are committed to a wide-ranging review of social security. The habitual residence test will form a part of that work.

Earl Russell: My Lords, I thank the Minister for that welcome crumb. Will the noble Baroness accept two propositions? First, it is unjust and unfair that British subjects who have been away from this country for a long time--married, caring for a sick relative, or engaged in public service--should be destitute when they return. Secondly, under Articles 6 and 7 of the Treaty of Rome we cannot discriminate between the nationals of different EU countries. If the noble Baroness accepts both those propositions, can she see any reason why the test should continue?

Baroness Hollis of Heigham: My Lords, we are well aware of the concerns that the noble Earl expressed about the habitual residence test. However, before we determine what we should do we need to understand the effects of the habitual residence test.

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On examining the issue, I was surprised how little we know. In two thirds of the cases, the impact of a test that was announced at the Conservative Party conference to stop foreign tourists having benefit holidays has been on British citizens. Half of those who failed the test have been British citizens. We do not know why people failed the habitual residence test. We do not know what happened to them. We do not know whether applicants appealed, and whether their appeals were successful. We do not know whether they reapplied, and whether that was successful. We do not know whether they stayed or went. We do not know whether applicants were subsequently eligible for benefits. Perhaps the House will appreciate exactly why we need the review that we are determined to have.

Lord Rotherwick: My Lords, is the Minister able to tell us how long the review will take bearing in mind that there are legitimate claimants? The longer the review continues the more uncertainty there will be in their minds. Can the noble Baroness tell us how long she thinks the review will continue?

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