House of Lords - Explanatory Note
Transport Bill - continued          House of Lords

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Clauses 211: Directions to provide railway facilities

218. Clause 211 gives new powers to the Rail Regulator, on the application of the Authority (or other person with the consent of the Authority), to give a direction for the improvement of railway facilities (such as track or stations) or for the provision of new facilities. The clause provides that the person directed is to be the person who is an appropriate person to carry out the direction. The Regulator may only give a direction if he is satisfied that the person directed will be adequately rewarded for these improvements and facilities and the Regulator must consult the person, and others as he thinks fit, before giving the direction. The Regulator may grant an application to revoke or vary a direction, again subject to adequate reward, or compensation for abortive work. The person directed must do all that he reasonably can to comply with the direction made by the Regulator. The clause sets out the procedures which must be followed before a direction can be made. This new power of direction does not affect any existing obligations (e.g. licence conditions) or powers. The Secretary of State may, after consulting the Regulator, exempt specified railway services from the Regulator's direction making power.

Clause 212: Objectives of the Regulators and the Secretary of State

219. Clause 212 amends the 1993 Act so as to require the Regulator to facilitate furtherance of the strategies of the Authority, and to contribute to integrated transport and sustainable development. His duty to promote competition is redefined to be for the benefit of users of railway services. The clause also amends the duties of the Secretary of State to reflect the fact that he is no longer exercising privatisation functions under the 1993 Act. The Rail Regulator has a new duty to take account of general guidance from the Secretary of State about railway services or other matters relating to railways. This general guidance must be published.

Clauses 213 and 214: Enforcement Regime

220. Clause 213 and 214 modify the enforcement regime available under the 1993 Act.

221. Monetary penalties may be imposed by the Regulator or the Authority for contraventions of licence conditions, franchise requirements and the provisions of orders made to secure compliance with an operating licence or passenger service franchise. In contrast to the 1993 Act, these will cover past breaches as well as those which are continuing. There are limitation periods, after which past breaches of licences may not be penalised.

222. There is no specific limit on the penalty which may be imposed, but it must be of a reasonable amount. In calculating a penalty the appropriate authority (the Rail Regulator or the Authority) must take account of policies which it has published with regard to such penalties. Such policies may include policies of having regard to the need to secure compliance, the consequences of the breach and deterrence of other breaches. A rail operator may apply to pay in instalments.

223. There are requirements as to the procedure, including the giving of notices with prescribed information.

224. The operator may make an application to the court to question the validity of a penalty order on prescribed grounds. The requirement to pay a penalty is suspended until a case is determined. The court may cancel or reduce the penalty or extend the timescale to pay. It may also require interest to be paid on a reduced penalty.

225. The 1993 Act is amended to allow the appropriate authority, if it thinks fit, to refrain from taking action requiring compliance with a relevant licence condition or franchise requirement where an operator is taking appropriate steps to comply or where a breach would not adversely affect railway users or lead to an increase in public expenditure.

226. Clause 214 reduces the period for a rail operator to make representations or objections to enforcement action from not less than 28 to not less than 21 days; it reduces the period on modifications to a compliance order from not less than 28 days to not less than 7 days; and on revocation from not less than 28 days to not less than 21 days. But the Regulator or Authority can allow more time for representations to be made where that would be appropriate.

Clauses 215 to 217: Consultative Committees

227. Clause 215 renames the Central Rail Users' Consultative Committee as the Rail Passengers' Council and renames the Rail Users' Consultative Committees as the Rail Passengers' Committees. Schedule 22 makes consequential amendments to legislative references.

228. Clause 216 extends the functions of the renamed bodies. These will be extended to passenger services which are not provided under a franchise agreement. New duties include keeping under review matters affecting the interests of the public in relation to the passenger railway, making representations to an consulting such persons as they think appropriate and co-operating with other bodies representing public transport users. This might, for example, mean co-operating with a bus users' group. The Secretary of State may exempt certain services from their remit or modifies the ways in which the new provisions apply.

229. Schedule 23 makes new financial and procedural provisions for the bodies. This includes their financial relationship with the Authority.

Clauses 218 to 221: Access agreements

230. Clause 218 enables the Rail Regulator to give general approvals for access agreements of a specified class or description and makes provision for their publication and revocation.

231. Clause 219 and Schedule 24 set out procedures relating to the review by the Rail Regulator of the terms of an access agreement or a linked licence as to the amounts payable under the access agreement by one of the parties to the other (an "access charges review") for the use of a railway facility. Under paragraph 8 of Schedule 28 these procedures will apply to review of access charges currently being undertaken by the Rail Regulator, in the event that it has not been concluded when the new procedures comes into force on Royal Assent.

232. Where the Rail Regulator wishes to initiate an access charges review he must serve a notice on the parties to an access agreements and other persons with an interest in the facility setting out, among other things, his conclusions on the access charges review and the changes to the access agreement or linked licence which are necessary to bring these conclusions into force.

233. If the facility owner or the other person with an interest in the facility who is served with the review notice object to a review notice, the Rail Regulator must either serve a revised review notice or refer the questions raised in the access charges review to the Competition Commission, who must investigate and report on whether they operate or may be expected to operate against the public interest and whether any effects adverse to the public interests should be remedied or prevented. If the Competition Commission concludes that the matters so referred do operate against the public interest and that the adverse effects should be remedied or prevented there are procedures under which the Rail Regulator or the Competition Commission may effect the necessary changes to the relevant access agreement or linked licence.

234. If the access beneficiary - the person who uses the facility in question - objects to an access charges review or to any changes required by the Rail Regulator, or the Competition Commission in accordance with the provisions in Schedule 24, he may terminate the access agreement.

235. Clause 220 enables the Regulator to direct that an access agreement or network installation contract be amended to permit more extensive use of the railway facility or network installation in question. The clause also applies procedures in Schedule 4 of the 1993 Act to these new direction powers. The clause makes it clear that the Regulator may give directions requiring the parties to an access agreement which are necessary in his opinion to give effect to the conditions of a licence.

236. Clause 221 enables the Regulator to act in relation to contracts for the use of railway facilities or network installations which are proposed to be constructed or in the course of construction.

Clauses 222 to 226: Closures

237. Clauses 222 to 226 simplify the provisions in the 1993 Act relating to the closure of railway services, network, stations etc. In particular, the Rail Regulator's functions in respect of major closures are transferred to the Secretary of State, so that when major closures are proposed these will be determined by the Secretary of State.

238. Clause 223 gives a new power for conditions to be imposed on a minor closure. Clause 224 widens the definition of minor closures (where less stringent procedures are required to be followed), so that it can include the track within stations and depots. Clause 225 allows the Authority to make a general determination of a class or description that shall be considered minor closures, rather than having to determine each case separately. Where such a general determination is revoked this does not affect the validity of the status of a minor closure already determined by the general determination. The Authority is required to inform the Rail Regulator of a decision to allow a minor closure.

239. Clause 226 makes it clear that where a non-franchised passenger service is to be closed, the operator must continue the service until closure. This will ensure that the burden of maintaining the service does not fall on the Authority.

Clauses 227 and 229: The British Railways Board

240. Clause 227 and Schedule 25 allow the transfer to the Secretary of State of any property, rights or liabilities of the BRB. This is in addition to the power to transfer to the Authority - where it is intended that most rights and liabilities will be transferred.

241. Clause 228 provides for the winding down and the abolition of the BRB. Abolition will be effected when all residual liabilities, properties and rights have been transferred to the Authority or the Secretary of State.

Clauses 229 and 230: Competition

242. Clause 229 provides a power for the Competition Commission to veto amendments to licences proposed to be made by the Regulator following a reference to the Competition Commission. The conclusion of a reference to the Competition Commission in respect of modifications to the terms of a licence is effected, under the 1993 Act, by licence modifications directed by the Rail Regulator. Clause 229 provides that the Competition Commission shall have four weeks following the Rail Regulator's announcement of his intended licence amendments to veto those amendments, and instead substitute its own.

243. Clause 230 makes it clear that the Rail Regulator may exercise functions under the Competition Act 1998 concurrently with the DGFT in relation to agreements etc for the supply of rolling stock and certain other railway related contracts and arrangements.

Clauses 231 and 232: Pensions

244. The BRB has for many years past had a practice of making provision for indexation of certain pensions arising under very old pension schemes (largely schemes of the old pre-BRB railway companies), where the schemes themselves did not make adequate provision for such indexation. Clause 231 converts the BRB's customary practice of providing indexation for cost of living increases, into a binding obligation of the Authority.

245. Clause 232 makes a number of changes to the pension protection provisions contained in the Railways Act 1993 and the Railway Pensions (Protection and Designation of Schemes) Order 1994 in order to ensure that pension protection continues after creation of the Authority and the dissolution of the British Railways Board. The clause also addresses a problem that has been identified in relation to the existing arrangements under the 1993 Act. Schedule 11 to the 1993 Act and the Protection Order made under that Act are amended to provide certainty in relation to the protection of staff pensions in certain cases when there is a change of employer. Subsections (1) and (3) to (5) of this clause (and subsections (2) and (8) in so far as they relate to those subsections) are given effect from the date of the Report Stage of the Bill in the House of Commons (10th May 2000) (clause 247(5)). This is done in order to ensure that no one can seek to exploit any ambiguity in the 1993 Act arrangements between the date on which the clarificatory amendments contained in those subsections became public knowledge and the date on which any Act resulting from the Bill comes into force. Subsection (7) removes the requirement for certain disputes relating to railways pensions to be referred to arbitration. The effect will be that disputes may be referred to the Pensions Ombudsman, or (where appropriate) the Court, in accordance with newer procedures.

Clause 233 to 237: Miscellaneous

246. Passenger Transport Executives (PTEs) may make statements to the Authority under section 34(5) of the 1993 Act specifying their passenger service requirements in their area.

247. Clause 233 provides that the Authority must not, without a direction from the Secretary of State under section 34(18) of the 1993 Act, carry out the requirements in the statement if it would prevent or seriously hinder the Authority from complying with directions and guidance given by the Secretary of State or Scottish Ministers or from complying with their financial framework. The Authority need not comply with the statement if it would have an adverse effect on the provision of railway passenger or goods services or, unless there are special reasons for doing so, increase the amounts which the Authority must pay to franchise operators. Should there be a dispute between the PTE and the Authority on the statement, the Secretary of State has the power to resolve the dispute.

248. Clause 234 will allow for the transposition of the European Union Directive on the interoperability of the trans-European high-speed rail network. The Directive came into force in 1996. The clause will also allow for the transposition of a similar Directive relating to the conventional rail network which is currently under discussion. The power is given to the Secretary of State to make regulations to cover the technical specifications which will be issued under the Directive.

249. Clause 235 gives powers to the Scottish Ministers and the NAW to provide financial assistance for freight in Scotland and Wales. These powers must be exercised in accordance with schemes which have been notified to them by the Authority.

250. Clause 236 and Schedule 26 make provision for the consequences for taxation of the various transfers and transfer schemes for which the Bill provisions.

251. Clause 237 abolishes the requirements for certain Treasury approvals for the remuneration of the Rail Regulator's officials and chairman and members of the rail users' consultative bodies.

Clauses 238 to 240: Supplementary

252. Chapter III and Schedules 27 and 28 make minor and consequential amendments to other enactments, provide for transitional provisions and interpretation.


Clause 241 to 243: Licensing of operators of goods vehicles

253. Clauses 241, 242, 243 and Schedule 29 relate to the Goods Vehicle (Licensing of Operators) Act 1995 which provides for a system of operator licensing for users of commercial goods vehicles that weigh over 3.5 tonnes. This Act is intended to ensure the safe and proper use of goods vehicles and the protection of the environment around operating centres (the place where an operator normally keeps the vehicles). Licences are granted and, where appropriate, disciplinary action taken against licence holders by traffic commissioners, who are individuals appointed by the Secretary of State. The Vehicle Inspectorate, an Executive Agency of the Department of the Environment, Transport and the Regions, has responsibility for ensuring compliance with the laws on operator licensing.

254. Clause 241 amends section 2 of the Goods Vehicles (Licensing of Operators) Act 1995 to increase the maximum fine for operating without a licence from level 4 on the standard scale (currently £2,500) to level 5 on the scale (currently £5,000).

255. Clause 242 and Schedule 29 give the Vehicle Inspectorate powers to detain, remove and dispose of illegally operated heavy goods vehicles ("HGVs") at roadside checks. Schedule 29 sets out a new Schedule 1A to be inserted in the Goods Vehicles (Licensing of Operators) Act 1995. The new Schedule enables the Secretary of State to make regulations providing for the detention of goods vehicles used without an operator's licence.

256. Clause 243 substitutes a new section 5(6) of the Goods Vehicles (Licensing of Operators) Act 1995 to abolish the "margin concession". The current provision enables newly acquired vehicles within the maximum number authorised under an operator's licence to be used for up to a month without notification to a traffic commissioner and without a disc being displayed. This means that a vehicle may be operating legally even though an operator's licence disc is not displayed on the windscreen. The detention scheme will only be workable if it is clear to Vehicle Inspectorate examiners at the roadside that a vehicle is being operated without a valid operator's licence.

Clause 244: Vehicles subject to regulation as private hire vehicles

257. Clause 244 amends the Public Passenger Vehicles Act 1981 ("the 1981 Act") and the Criminal Justice and Public Order Act 1994 ("the 1994 Act") in relation to vehicles which may be used as public service vehicles or private hire vehicles.

258. The effect of the amendment to the 1981 Act is that (subject to the limited exception mentioned below) a small public service vehicle ("PSV") called a "small bus" in the clause, can no longer be used for private hire work by virtue of its operator being licensed under the PSV operator licensing system. Instead, to undertake private hire work, the vehicles and their operators will need to be licensed under the Private Hire Vehicle ("PHV") licensing system.

259. By virtue of Part II of the Local Government (Miscellaneous Provisions) Act 1976, the Private Hire Vehicles (London) Act 1998 and certain local legislation PSVs in general are exempt from the licensing requirements of those enactments which are otherwise applicable to PHVs. PHVs are vehicles adapted to carry no more than 8 passengers which are provided for hire with the services of a driver for the purposes of carrying passengers otherwise than at separate fares (i.e. the vehicles are hired as a whole). PSVs are divided by section 1(1) of the 1981 Act into two categories, small PSVs being vehicles of the same size as PHVs used in the course of a business to carry passengers for hire or reward at separate fares (i.e. passengers pay individually as on a bus). Operators of small PSVs are required to be licensed by the traffic commissioners under the 1981 Act but PHVs and their operators are required to be licensed by local authorities.

260. Subsection (2) adds a new section 79A to the 1981 Act which provides that, save in one case, a small PSV vehicle which is being used to carry passengers otherwise than at separate fares is not to be treated as a PSV for the purposes of gaining exemption from the PHV licensing requirements. The exception applies where the vehicle is provided in the course of a passenger-carrying business all but a small part of which involves the operation of large PSVs (which are vehicles having more than 8 passenger seats and are described as "large buses"). Subsection (1) makes a consequential amendment in section 79 of that Act.

261. Subsection (4) amends the prohibition on touting for the hire of taxis and PHVs in section 167 of the 1994 Act. That section currently provides a defence to someone accused of touting if the vehicle is a PSV, however it is to be used at the relevant time. This subsection limits the defence so that it only applies if the vehicle in question is to be used to carry passengers at separate fares.

Clause 245: School crossing patrols

262. Clause 245 amends the Road Traffic Regulation Act 1984 ("the 1984 Act"). The purpose is to provide clear powers for school crossing patrols to assist children of any age to cross the road, and not just school aged children, and to extend the 1984 Act powers so that patrols are legally able to assist other persons, whatever their age, in crossing the road.

Clauses 246 to 253: Supplementary

263. Clause 246 provides that where an offence is committed by a company with the consent or connivance of, or due to the negligence of, a director or manager or officer, that person as well as the company commits an offence.

264. Clauses 247 to 249 provide for repeals, commencement (by commencement order) and transitional provisions.

265. Clause 250 permits the making of further consequential amendments by order.

266. Clause 251 summarises the financial provisions for the Bill.

267. Clause 252 deals with the territorial extent of the Bill. Part I extends to the whole of the United Kingdom. Parts II and III and clauses 244 and 255 extend only to England and Wales. Part IV extends to England, Wales and Scotland, and to Northern Ireland where amendments and repeals under this Bill relate to legislation with Northern Irish extent. Clauses 241 to 243 extend to England, Wales and Scotland.


268. NATS current debt to the National Loans Fund ("NLF") of around £300 million will need to be extinguished as part of the PPP transaction. This is because private sector bodies cannot borrow from the NLF. One way to extinguish this debt would be for the strategic partner to refinance it as part of the PPP package. Alternatively the NLF could write off the debt. If the debt is refinanced by the strategic partner a conservative estimate of the income raised from the partial sale of NATS to that strategic partner is £350 million. If the debt were written off then using the same assumptions the income from the partial sale of equity in a NATS unencumbered by debt to the strategic partner would be in the order of £650 million.

269. The consultancy and restructuring costs associated with establishing the PPP are expected to be in the region of £35 million.

270. Part I of the Bill makes provision for a special administration regime should it prove necessary for the Government to step in to maintain air traffic services (e.g., in the case of insolvency or a serious breach of licence). In these circumstances the Bill provides for the possibility of Government grants, loans or guarantees in order to secure uninterrupted provision of the services.

271. The local transport provisions are mostly enabling powers for local authorities, and will therefore depend on the timing and extent of their use by local authorities. They are not likely to have significant financial or manpower implications. Increased spend by local authorities on bus priority measures was anticipated by the increase in local authority transport funding in the Comprehensive Spending Review. Improved quality of bus services, passenger information etc could be expected to have some impact on bus operators but should in turn generate increased patronage over time.

272. The local authority road charging and parking levy schemes might generate up to £1 billion net annually by 2005, although this will depend on the extent to which local authorities choose to take up these powers. When published, individual local authority schemes will include estimates of the likely revenue and of the costs of introducing and running them, which will be funded from the revenue raised. Trunk road charging will be limited in scope and is unlikely to have significant financial or manpower implications. It is not possible to forecast the likely revenues as these will in most cases be dependent on local authority schemes. The Government has no plans to charge on trunk road bridges and tunnels which are not currently tolled. The powers to charge on new trunk road tunnels or bridges should make these expensive infrastructure items more affordable. Consideration will be given, on a case by case basis, as to whether or not to charge on new roads, tunnels or bridges.

273. The creation of the Strategic Rail Authority (SRA) is not expected to create any significant requirement for additional public expenditure. It will combine the current posts in the Office of the Director of Passenger Rail Franchising, the British Railways Board and some posts from the Office of the Rail Regulator and Department of the Environment, Transport and the Regions. There may be some additional staff costs involved with setting up the SRA supporting its strategic role. This is expected to be around £5 million a year for each of the three years 1999-2000 to 2001-2002.

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Prepared: 15 May 2000