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Lord Clinton-Davis: My Lords, before the Minister develops his argument in another direction, perhaps he will deal with this. His officials have met the representatives of the three trade unions concerned. They remain dissatisfied with the provision of safety. They are not compelled by the Government's argument. If the three trade unions concerned are not satisfied, will the Minister take the opportunity to meet them again before discussion of the Bill is completed in this House?

Lord Macdonald of Tradeston: My Lords, I am grateful to my noble friend Lord Clinton-Davis. Given his past experience in areas of transport, I am very respectful of his intervention.

For the past six months, we have worked with interested parties to identify their specific concerns. If there is more yet to be done in that area, then I am certainly very ready to continue the dialogue, as my noble friend requests. I trust your Lordships will agree that we have taken appropriate action to address concerns with regard to safety procedures. First, we have separated the public safety regulator from the service operator, as everyone wants us to do. Secondly, we have a rigorous selection process which will ensure that the strategic partner shares our commitment to safety. Thirdly, there will be a main board director of NATS who has specific responsibility for safety.

For those reasons, I cannot agree with critics who assert that strategic partners from the private sector would, through undue emphasis on profit, put passengers at risk. Your Lordships can be assured that this will not be a "sale without safeguards". This PPP is a specific solution for a special company. It is calculated to provide future benefits to air traffic users, both airlines and passengers, military and leisure fliers, as well as the country as a whole.

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Part II of the Bill includes our proposals to improve local transport services, particularly buses. Local authorities have a unique role to play in delivering integrated transport since we believe that they are best placed to provide local solutions for local problems which they best understand.

The Bill will require local authorities to publish local transport plans setting out their policies for the promotion of safe, integrated, efficient and economic transport facilities in their area. We have made clear that these policies should give a high priority to road safety schemes in order to deliver our new road safety targets. Local authorities are already producing local transport plans on a non-statutory basis. This Bill, by putting them on a statutory footing, will reinforce their importance.

Local transport plans, or LTPs, will ensure that local authorities take a comprehensive look at their transport powers and breadth of objectives for urban and rural transport, capital and current expenditure and public and private transport. These LTPs are also the basis on which public funding is now allocated.

The local transport settlement for 2000-01 was some £755 million. This is 20 per cent up on the previous year and will rise by a further third to £1 billion next year, demonstrating our determination to deliver integrated transport across England for pedestrians and cyclists as well as for passengers and motorists.

In the settlement for the financial year 2001-02, following the next spending review, SR2000, to be announced next month by my right honourable friend the Chancellor of the Exchequer, we will indicate the likely funds available for the full five years of the local transport plans. Local authorities can then invest with greater certainty to deliver the integrated transport system that they have long argued for and communities have long deserved.

We see better bus services as a key to local transport solutions. The Bill therefore requires authorities to develop a bus strategy as part of their local transport plan. Our proposals also give local authorities new powers to put in place good quality bus services tailored to local circumstances. The Bill introduces a package of enabling powers relating to partnerships between bus operators and local authorities. These draw on practical experience of more than 150 quality partnerships already working on a voluntary basis around the country. After decades of decline, these partnerships have been instrumental in increasing bus patronage in many areas.

Putting quality partnerships on a statutory basis will allow all parties to invest with confidence. Local quality standards can then be imposed and enforced for the benefit of the passenger; for example, to provide more accessible and comfortable buses. For the benefit of the wider community, partnerships can help meet traffic reduction and air quality objectives. Existing voluntary schemes which are working well can be subsumed into the new contractual arrangements.

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Integrated ticketing and better passenger information are particularly useful in making bus travel a more attractive alternative to the private car. The Bill introduces powers for local authorities to require bus operators to participate in joint ticketing schemes, and it places a duty on authorities to secure the provision of bus passenger information in their area.

We are also taking powers in the Bill for local authorities to enter into "quality contracts" for bus services if required. Under quality contract schemes, local authorities would determine networks and service levels and let exclusive contracts for them.

We do not see quality contracts as the norm but believe we are right to provide for this option. The extent to which we need to resort to it will depend greatly on the bus industry's continued willingness to work in partnership. However, the imposition of quality contracts will be subject to a strict "public interest" test and to prior consent of the Secretary of State or the National Assembly for Wales.

We are also honouring the promise to introduce a national minimum standard for local authority concessionary fares schemes. This will guarantee all pensioners a cheap bus fare scheme which is at least as generous as half-fare. Further, in future they will no longer have to pay £5 or indeed anything at all for the concessionary bus pass. This will benefit around 3 million pensioners.

A number of local authorities--in London for example-- already offer more generous or even free bus travel for pensioners. The measures in the Bill will not affect those schemes. What the Bill will offer is a guaranteed half-fare as a minimum across England and Wales.

We recognise that many local authorities also allow concessionary travel for blind people and/or half fares for disabled people. I am pleased to announce that we intend to bring forward amendments to the Bill to extend the minimum half-fare scheme to disabled people in all localities.

Part II also strengthens the powers of traffic commissioners to fine bus operators for running unreliable services. The Bill provides the Secretary of State or the National Assembly for Wales with the power to make grants to local authorities for general transport purposes and also contains a power to amend the current fuel duty rebate scheme. Both those powers are simply to provide proper flexibility for the future.

Part III of the Bill contains our proposals for road- user charging and the workplace parking levy. As your Lordships will be aware, we have already made those powers available to London's mayor and boroughs as part of our Greater London Authority Act 1999. The Transport Bill will grant similar powers to local authorities outside London.

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New charging powers can help local authorities to tackle the problems of congestion and pollution. Less congestion means faster and more reliable journeys for motorists, more punctuality for bus passengers and reduced costs to businesses.

In addition, the Bill provides that net revenues raised from such local charging schemes will be retained locally and ring-fenced for spending on improvements to local transport for at least 10 years. Our proposals therefore ensure that new charges will be invested to tackle the problem of traffic congestion and help fund improved alternatives to car travel where needed.

I should like to make it clear that the Government are not imposing charging on local authorities. Some will not charge; some will. This Bill simply gives local authorities powers to tackle traffic problems by introducing charging where it is judged appropriate.

However, local authorities which want to charge will have to submit their plans for raising and using revenues to improve local transport to my right honourable friend the Secretary of State, or to the National Assembly for Wales, for approval. Your Lordships may be assured that we do not currently envisage that any scheme will be approved by the Secretary of State unless and until some public transport improvements are made before charging starts; all proceeds are apportioned to fund further improvements to local transport; and adequate consultation has taken place with local people and businesses. For electronic charging schemes, the appropriate technology must be in place to make the scheme effective. Finally, the scheme must be judged fair and proportionate and calculated to make a contribution to integrated transport at the local level.

We have not set deadlines for the introduction of charging schemes. Those involving new technology will take time to test. I can report, however, that 25 local authorities in 12 areas have expressed interest in using the road-user charging and the workplace parking levy powers contained in the Bill.

Local authorities will also be able to ask my right honourable friend the Secretary of State, or the National Assembly for Wales, to introduce charging on specific trunk roads, but only if that is necessary and complementary to their local scheme. The Bill will also allow large trunk road bridges and tunnels--that is, of at least 600 metres in length--to be subject to charges. Those might be introduced to promote our objectives of tackling congestion and pollution, or to provide additional funding to build costly infrastructure. However, your Lordships should be aware that we have no plans to charge for existing tunnels and bridges that are currently free from tolls.

I now turn to Part IV of the Bill--our proposals to improve the railways. The Bill establishes the Strategic Rail Authority--the SRA--and sets out its powers to improve services for the travelling public. The primary purposes of the SRA will be to promote the use of the rail network; to secure its development; and to contribute to the evolution of an integrated transport system. In other words, it will give the industry a long-term strategy for integrated growth.

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The authority will have a general power to enter into agreements for the purpose of securing the provision, improvement or development by others of the railway. This includes a wide power to give financial assistance. For example, the SRA's powers would enable it to fund the integration of tramways with the main rail network, but not to assume prime responsibility for funding such light rail networks, which will remain a responsibility of the DETR.

The SRA will take over consumer protection functions from the rail regulator. The SRA and rail regulator will have enhanced powers to deal with poorly performing companies. The rail regulator will also have a new power to require facility owners, such as Railtrack, to enhance facilities or to provide new facilities, subject to the owner being adequately rewarded. I am pleased to announce to your Lordships that we shall be bringing forward an amendment at Committee stage to ensure that where rail services have been interrupted--for example, because of engineering work--the substitute services by road must be suitable for disabled passengers.

The rail users' consultative committees--the passengers' watchdogs--will have new duties to keep under review matters affecting the interest of rail users and a power to make representations about these matters. Re-named as rail passengers' committees, they will also have a statutory basis for encouragement of better bus-rail links and interchanges. The passenger representative now appointed to the Strategic Rail Authority will mean that the passenger's voice is ever present in its counsels.

The SRA will be able to retain penalty income from enforcement action, including that taken by the rail regulator. Naturally, we expect companies to improve their performance so that enforcement is not necessary. But where it is, penalties will go towards investment in the railway.

The measures in this Bill bring greater public accountability to the railway industry. The Bill will allow the SRA to plan for an expanding and safer network. It will require those who own the network or run trains on it to meet their obligations. The SRA will have the capability to take over franchises "as a last resort"; for example, if a franchise were terminated or if there were no acceptable private bids.

The railway industry has had more than its share of criticism. No doubt some of it was deserved; some of it inescapable given the fragmentation of the industry in the recent past. But there are now positive signs of increasing cohesion, indeed, a revival, of Britain's railways with growth in patronage, new investment in rolling stock and infrastructure, and a large number of safety initiatives.

The Government take rail safety very seriously. That is why we have set up several inquiries to review safety systems and regulation. As an interim measure, Railtrack's current functions in respect of the safety cases of train operating companies are being transferred to the Health and Safety Executive. Additionally, Railtrack is being required to separate its safety functions from its commercial interests in a new independent company called Railway Safety.

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Further measures must await the results of Lord Cullen's inquiry into the Ladbroke Grove crash and the joint inquiry on train protection systems to be undertaken by Lord Cullen along with Professor Uff, who conducted the Southall inquiry. It would not be appropriate to take steps now that would pre-empt that advice. However, by increasing investment with the help of this Bill, we invest too in greater safety.

The National Rail Summit, on 25th May, pointed the way for more investment to improve performance and increase capacity. The Bill will help deliver a modern railway capable of meeting the growing needs of passenger and freight customers by providing safe, punctual, reliable services.

The Bill also contains powers for the Vehicle Inspectorate to impound heavy goods vehicles found to be operating illegally. I pay tribute to the noble Earl, Lord Attlee, for bringing forward these measures in the last Session.

Illegal lorry operators are a small minority in a very responsible industry, but by flouting the law on goods vehicle operator licensing they avoid the checks on professionalism, safety and pollution which are vital to the licensing system. We are determined to act against operators who choose to bypass the licensing system and we believe that the measures in the Bill will enable us to take action against these cowboy outfits.

The Bill will allow school crossing patrols to cover all pedestrians rather than just school-age children by extending the existing powers so that patrols can assist anyone crossing the road. It is also our intention to bring forward amendments at Committee stage to remove the restrictions on times when school crossing patrols may operate. This will complete the package of measures, promised by Government in the 1998 integrated transport White Paper to widen the operational scope for school crossing patrols.

This is a large and complex Bill, and it will come as no surprise to your Lordships to hear that we intend to table a series of government amendments. I reassure your Lordships that they will be limited in number and, when marshalled together, will cover a dozen or so issues. These amendments will be largely technical or drafting amendments which do not raise new policy issues. Other amendments are being tabled to respond to issues raised during the passage of the Bill through the other place or in response to representations made to us from interested parties.

Our amendments to Part I of the Bill are largely of a technical nature, aimed at facilitating the details of the sale of NATS and to ensure effective regulation of the air traffic services provider. As I have indicated, we shall be tabling amendments to Part II of the Bill relating to concessionary fares.

The amendments we propose to introduce on road user charging and the workplace parking levy will be limited to technical amendments. The amendments to the railway clauses will again be mainly technical in nature but, as stated, we shall also be tabling an amendment to ensure that where rail services have been interrupted, a substitute service by road must be suitable for disabled passengers.

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Amendments to Clause 245 concerning school crossing patrols will complete the package of measures on this matter promised by the Government in the integrated transport White Paper.

All the amendments will be tabled in Committee. I can assure your Lordships that the amendments will be tabled in good time before the start of Committee to ensure that the House has sufficient opportunity to consider them.

We believe that the Bill will help to reverse years of decline and will ensure that all concerned work together to give Britain a transport system fit for the 21st century. This country needs and deserves a safe, modern, integrated and efficient transport system that offers people real choice. Already there is evidence of real improvement. Private investment by the rail industry has doubled since 1996-97, upgrading stations and rolling stock. One thousand three hundred extra train services are running each day to meet growing demand which is now at its highest for half a century. There are 150 bus quality partnerships in towns and cities, increasing bus usage and halting decades of decline. Bus industry investment has doubled and is now running at £380 million annually, providing around 8,000 new buses a year, greater travel choice for the disabled and almost 2,000 new or enhanced services in rural areas.

Trunk road maintenance is now properly researched and its condition is stabilising. Local road maintenance is being tackled through substantial increases in local transport plan budgets. On top of that, and much more, an extra £280 million for transport spending this year was announced in the Budget, funding the start of new rapid transit links in Manchester and London, as well as many other welcome initiatives.

Much has been done in the past three years to upgrade and integrate our transport network, but clearly there remains a great deal more to do. Later this summer we shall publish our 10-year plan which will set out the transport outcomes the Government want to see over the next 10 years, together with the investment strategy--for both public and private sectors--needed to create more choice and more opportunity for more people to travel in safety and comfort at affordable prices and to get to their destination in good time.

The Bill is about delivering the powers that are needed to transform our transport system into one that begins to rival the best in Europe. It provides a constructive, responsible statutory basis for the long-term future of transport in this country. I commend it to the House.

Moved, That the Bill now be read a second time.--(Lord Macdonald of Tradeston.)

3.43 p.m.

Lord Brabazon of Tara : My Lords, I thank the Minister for the long and detailed explanation of what is, after all, a long and detailed Bill. We have many

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speakers to listen to this afternoon. I look forward, in particular, to the three maiden speeches we shall hear later.

It is with a somewhat heavy heart that I rise to speak on yet another Bill when the Government already have a huge backlog of legislation before this House. However, we are really speaking about four Bills rolled into one. It has been said that the Government's transport policy has been modelled on the buses: you wait for three years with no transport legislation and then it all comes along at once.

The Bill is also growing at a disturbing rate, suggesting that the Government published the Bill first and thought about what should be in it later. We remain concerned that after 18 years in opposition and three years in power in which to construct their transport policies, the Government still do not really know what they think about transport.

The Bill began life in another place at an already hefty 258 pages, 231 clauses and 26 schedules. A couple of thousand amendments in Committee later it was reported back to the other House, where yet another ream of amendments was suggested. It has now reached us as a strapping Bill of 330 pages, 253 clauses and 30 schedules. I have no doubt that by the time we have finished with the Bill it will be so large and unwieldy that we will thank the Chancellor of the Exchequer for permitting 44 tonne trucks so that we can send it back to another place.

Seriously, I had hoped for an assurance from the Minister this afternoon that we would not have a repetition of the Greater London Authority Bill. This time last year, that Bill was virtually redrafted in this House with nearly 1000 government amendments. I have to say how disappointed I was to hear the section of the Minister's speech in which he seemed to promise us something which is more or less along the same lines. That is not to say that we do not welcome some of the amendments he foreshadowed this afternoon.

We have a huge advantage over our friends in another place. The Government have appointed the two most senior transport Ministers from among our ranks. Our colleagues in another place had to contend with the Bill being argued, albeit admirably, by a Minister whose brief did not even include transport. We will take full advantage of our position to question fully the noble Lords, Lord Macdonald and Lord Whitty, on the more baffling, incredulous and downright dangerous aspects of the Bill.

We have many objections to this legislation. Instead of far-sighted measures that will improve investment capability, expand passenger choice and grant people more freedom to travel, the Bill is all about allowing more taxation, more regulation and more control by central Government.

This country needs action and policies rather than consultations, focus groups and endless leakages to the media. As the Minister mentioned, I understand that the Government will shortly publish their 10-year plan for transport. But the question must again be asked why the Government have taken three years to come

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up with such a plan. Action is needed to get the country moving. Some elements of the Bill offer that sort of action. However, there are others, particularly the botched privatisation of National Air Traffic Services and the new stealth taxes, that we shall oppose.

The sale of NATS on the cheap provoked the most controversy when it was debated in another place. Ninety MPs signed an Early Day Motion condemning the partial privatisation. Forty-five Government Back-Benchers disobeyed their Whips and opposed the clause at Report stage. The Labour-dominated Select Committee dismissed the Government's plans as being,

    "the worst of all possible options for the future structure of the company".

Clearly, there are many on all sides of Parliament who see problems with the Government's choice of partial privatisation. Like their PPP for the tube, it is botched and is neither the most efficient nor the most sensible thing to do.

The Select Committee also admitted that the status quo was not beneficial for air traffic safety. We welcome the separation of the provider, NATS, from the regulator, the CAA. We do not believe that full privatisation would cause any threat to safety, particularly in an industry where safety is the main function. But, unlike the Government, we have been listening to people's concerns and will seek to raise these matters and the vital issue of national security as the Bill makes progress through this House.

As the Minister pointed out, our airlines and airports are already in private hands and part of profitable enterprises, and civil aviation just happens to be the safest form of transport. A sensible privatisation scheme would present no safety threat at all.

As is known, we on this side of the House proposed a full flotation of NATS to create a great new British company with effective golden share arrangements that would protect the business from unwelcome foreign take-over and provide the widest possible share ownership among the British public. The Government's proposed public/private partnership, however, is something of a mess. The Secretary of State has many friends, but not I fear on this issue. Although, as I said, we reject the notion that safety is incompatible with private ownership, we have several concerns in relation to the proposed scheme.

This public/private partnership provides poor value for the taxpayer. National Air Traffic Services is probably worth between £1 billion and £1.5 billion, and the PPP offers release of loans of about £300 million and net proceeds of £15 million from the sale of operational control of the business. A straight flotation would raise considerably more for the taxpayer, especially if sold in stages rather than in one go. Furthermore, sale proceeds are likely to be significantly enhanced after 2002 when the new Swanwick centre becomes operational.

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The Government's PPP will not extend share ownership. It is a complex, part-trade sale forced on NATS to try to disguise the reality that it is just privatisation by another name. A straight flotation would create thousands of new shareholders. But this way the strongest bidders appear to be either foreign companies, some perhaps partly or wholly state owned, or others which are already key suppliers to National Air Traffic Services. The only UK bidder appears to be the Airline Group, but there is no guarantee that its bid will be successful. The PPP will create not a new British company, but probably a foreign-owned subsidiary, and that does not appear to us to be in the national interest.

Sale of control to a trade bidder carries extra risks. A straight flotation provides for continuation of the same business, but under the same management; a trade investor offers the downside risk of adverse interference in the management of the company and, in particular, in procurement issues. NATS could finish up tied to a less satisfactory supplier of equipment and there are also risks of transferring control to a state-owned entity in another country. Moreover, the shareholding structure of the PPP creates its own uncertainties about who will be in control of the business. The Government intend to hold more shares than the so-called "strategic partner" and the draft articles of association for the partnership company and the draft strategic partnership agreement are both complex documents. In this privatisation, confusion about who is responsible for safety could give rise to safety concerns. NATS management is excellent and has no need of outside expertise from a trade investor.

Why do the Government continue to talk about the retention of 49 per cent when Clause 48 specifically spells out that the Government's shareholding could be reduced to 25 per cent? What will happen if there is a rights issue then? What is Clause 48 worth when it has a Henry VIII provision stuck in it so that, at the stroke of a pen, the Government can, at a later date, tear up the golden share and the share restriction provisions in the clause? It is incumbent on the Minister to tell us exactly what the golden share is for, given that the European Commission made it clear that it regards it to be illegal under European Community law. The Government's PPP is a bad privatisation that we cannot support.

The Conservative Party invented privatisation, but we have never been the party of privatisation for its own sake. Privatisation should be a means of improving efficiency and effectiveness, but the Government's privatisation carries risks and disadvantages compared to our scheme. The Deputy Prime Minister brought this so-called PPP to Parliament only because the Treasury is forcing him into the privatisation against his will. It is flawed by the Government's attempt to pretend that they are not privatising something when they are. Having promised before the election that,

    "Our air is not for sale",

Labour is now promising a back-door privatisation.

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