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Baroness Thomas of Walliswood: My Lords, I thank the Minister for that Answer. However, the noble Lord will be aware that railway penalty fares schemes arouse some anger among passengers who think they are unfair. One reason why they believe them to be unfair is that it is so often quite difficult to buy a ticket in the first place. Can the noble Lord tell us whether the Government feel that they can use the franchising arrangements to ensure that the levying of penalty fares will only be allowed for train companies that provide adequate and convenient ticket purchasing facilities?

Lord Macdonald of Tradeston: My Lords, I know from the reaction in the House today that many noble Lords share the sentiments that lie behind the Question of the noble Baroness, Lady Thomas of Walliswood. However, under the Transport Bill, which is presently going through its Committee stage in another place, responsibility for penalty fares schemes will be transferred from the Office of the Rail Regulator to the strategic rail authority. We feel that the interests of consumers are better placed there. But

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that is not in any way to undermine the splendid efforts that the Office of the Rail Regulator has made to ensure that there is a high degree of assurance in the present schemes and that inspectors exercise their discretion properly. We would also ask, quite reasonably, that passengers allow sufficient time for purchase of their tickets. Let us be clear: if there are no facilities available for the purchase of a ticket, there is no liability.

Baroness Gardner of Parkes: My Lords, I introduced a private Bill on this subject some years ago and therefore I have a particular interest in it. Is the Minister aware that at that time there was much discussion as regards the necessity of providing machines which issue permits to travel? When these machines are available they work well. The machines are meant to record the station of embarkation and the date and time of embarkation. Will the regulator insist, or can it be provided for in the Bill at present before Parliament or in regulations, that every station has such a machine? Such a system would certainly distinguish between those who deliberately seek to evade paying their fare and those who simply cannot buy a ticket because the facilities to do so are not available.

Lord Macdonald of Tradeston: My Lords, that is certainly a suggestion that the Rail Regulator and the strategic rail authority might bear in mind. I know that where these machines are in operation they seem to work well. However, we should also be aware that where any penalty is about to be imposed it is possible under the present system for checks to be made to ascertain whether ticket offices were open and facilities for buying a ticket available. When a penalty is imposed, information is issued on how an appeal may be made against that penalty.

Lord Faulkner of Worcester: My Lords, does my noble friend agree that there is a considerable difference between a penalty fare and a fine imposed by a court for deliberately attempting to evade payment, and that no criminal stigma whatever is attached to the many distinguished public figures who cheerfully pay up when they find that, because of an honest mistake, they do not have a ticket? However, will my noble friend confirm that deliberate fare evasion is stealing by another name and that penalty fares were introduced in the 1980s on what used to be called Network SouthEast because the railways were losing in excess of £50 million a year and people who did not pay their fares were being subsidised by those of us who did?

Lord Macdonald of Tradeston: My Lords, I readily confirm that a penalty fare is a supplementary fare and is not a fine and that fare evasion is a criminal offence. However, the amount of moneys raised--I think of London Transport rather than the railways in this connection--are small in the context of the overall revenues raised by London Underground, for

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example. However, I take my noble friend's point about the importance of deterrence. That deterrence must, of course, always be mediated by discretion.

Lord Brabazon of Tara: My Lords, is the situation not confusing for passengers? On the Gatwick Express and the Heathrow Express one is positively encouraged to buy one's ticket on the train, but on the Stansted train, if one does not have a ticket, one is liable to a penalty fare. How can the average passenger know what he is supposed to do on those trains? How can foreign visitors in particular know what they are supposed to do?

Lord Macdonald of Tradeston: My Lords, I am, of course, grateful to the previous government for the thorough work they undertook when instituting the present system in 1996. I accept that there can be differences, but there is no appropriate system that fits all train services. For example, guards travel on InterCity train services, but the majority of branch line stations are unstaffed. I accept that there is inevitably confusion, particularly for those new to our transport systems. However, I hope that advances in technology, and in smartcard travel and so on, will begin to minimise the kind of inconvenience that is too often experienced.

Lord Harrison: My Lords, does my noble friend the Minister agree that in a few years' time, if Britain belonged to the single currency, tourists coming into the United Kingdom, or British tourists returning, say, from Portugal with escudos jingling in their pockets, would not be embarrassed at barriers trying to buy tickets for trains?

Lord Macdonald of Tradeston: My Lords, the question of the euro is just slightly less sensitive than the question relating to the escudos. Therefore I shall reply by saying, "In all probability, yes".

Directors' Remuneration: Consultative Document

2.54 p.m.

Lord Smith of Clifton asked Her Majesty's Government:

    Whether they are satisfied with the response of companies in implementing the recommendations of the combined code issued by the Department of Trade and Industry in July 1999 requiring shareholder involvement in the determination of executive directors' remuneration.

Lord McIntosh of Haringey: My Lords, the Department of Trade and Industry issued a consultative document on directors' remuneration in July last year which set out the Government's proposals for strengthening the current regulatory and best practice frameworks in this area. The consultative document made it clear that the Government are

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concerned that some quoted companies have failed to comply in full with the spirit of the recommendations made by the Greenbury Group in 1995. The responses to the consultative document have been carefully considered and the Secretary of State expects to announce his conclusions next month.

Lord Smith of Clifton: My Lords, I am grateful to the Minister for his Answer. I am glad to learn that the Secretary of State will make an announcement on this matter. However, only last month the Pensions & Investment Research consultancy showed that about 27 per cent, or 500 companies in this country, were putting directors' remuneration to their shareholders at general meetings. That is a low degree of compliance. I should like further assurance that the Government will take this matter seriously when the Secretary of State makes his announcement next month.

Lord McIntosh of Haringey: My Lords, the figures that the noble Lord mentioned are an improvement on the PriceWaterhouse conclusions of May 1999 which were reported to the House by my noble friend Lord Sainsbury in October last. However, the noble Lord is quite right to say that the position is not satisfactory. I give him the assurance that this is one of the issues that will be addressed when the Secretary of State makes his announcement.

Lord Lea of Crondall: My Lords, given that executive remuneration has been growing by 10 to 15 per cent year on year for many years now, while the remuneration of other people has grown by only 3 to 5 per cent--in other words, the result of this is growing inequality--and given the resulting scepticism when it is suggested that shareholders should blow the whistle, does not my noble friend the Minister agree that there will be a need for Ministers to revisit the basic parameters of public policy when they undertake the review which the Minister mentioned?

Lord McIntosh of Haringey: My Lords, I am not sure what my noble friend means by revisiting the basic parameters of public policy. Certainly the statement which the Secretary of State will make next month will cover all of the issues which were addressed in the consultative document last year. In the end it must be for shareholders to determine remuneration, but it is for government to ensure a framework for remuneration which supports the need for directors to be accountable to shareholders. My noble friend refers to the rise in directors' remuneration over the years at a rate higher than inflation and higher than the rise in remuneration of their employees. Clearly an increase in differentials between directors and employees, except in exceptional circumstances, is not in the best interests of a company or its shareholders.

Lord Mackay of Ardbrecknish: My Lords, before the Government announce their conclusions on the matter of directors' remuneration, will the Minister undertake

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that the Government will consult with some of his noble friends who have experience of high salaries, share options and golden handshakes? Is he aware that many of them are singularly absent today?

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