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Baroness Hamwee: My Lords, I was interested in the position of any government nominee or representative on the board.

Lord Whitty: My Lords, that raises the wider question of the responsibilities of directors and others in terms of immunity. No Crown immunity applies here. The responsibility of the directors will be no different from that of directors of other companies, but in the context of health and safety further discussions are to be pursued--an announcement as to that will be made in a couple of days--in a

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consultation paper issued by the Home Office. The government director will be in no different position from others in that respect.

My noble friend Lord Hoyle, the noble Baroness, Lady Thomas of Walliswood, and other noble Lords asked about relations with the Ministry of Defence, in particular the RAF. The MoD fully supports the PPP. The department has been part of the steering group from the outset and has been very much involved. It is fully content that the PPP will deliver what it needs from the air traffic control system. NATS will be under a licence obligation to continue to collaborate with the MoD. There is nothing in those rumours. We are working very closely with the RAF and others on the military side.

My noble friends Lord Clinton-Davis and Lord Hoyle and the Select Committee in the other place have referred to alternatives. It is suggested that the Post Office model should be used rather than the one we have chosen. The Post Office and NATS are very different businesses and each requires a different solution. The Post Office is much bigger and has a higher turnover than NATS but its investment relative to its business is small. The Post Office is increasingly doing business in a competitive situation as compared with UK air space, which is a monopoly that is not exposed to competition. I do not believe that the Post Office model is appropriate. Further, we do not believe that the model of the Canadian trust company advanced largely by the Liberal Democrats can be immediately read across to the UK situation. That model deals with considerably more air space but much lighter traffic. Therefore, that is a much smaller and less complex organisation which does not have assets or income, or at least capital backing; it has mainly debt. We are looking, therefore, for a more stable financial situation for what we propose under our PPP.

My noble friend Lord Lea of Crondall raised a number of issues relating to the European aspect and was almost as nostalgic as the noble Lord, Lord Marsh, in relation to the 1968 Bill. My noble friend and I probably have our initials on the TUC document on integrated transport, circa 1972. At the time it was the last word on this subject. I did not return to the subject for about another 28 years. On the European dimension, we believe that the PPP will place us in a better position to play a key role in the future of air traffic control in Europe. We also believe that there is a trend towards more efficient commercialised air traffic control providers in Europe. We are aware of investigations by the Dutch who are looking at a similar structure to our own. We believe that, if anything, the remainder of Europe will follow us down the road to a more commercialised or joint public/private approach which will have access to greater capital than a purely state-provided air traffic control in Europe would do. That is part of the European Commission's approach to ideas for a single sky for Europe where it will clearly want efficient national service providers and a more integrated and harmonised approach to air traffic control across the European air space. It is an important area.

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Perhaps I may correct the position implied by my noble friend Lord Lea on charges. Eurocontrol does not set charges. However, it has a set of principles on which they can be set. Those were changed last year to provide incentives for commercialised providers which would include organisations like the NATS PPP.

The noble Lords, Lord Brabazon of Tara, Lord Clinton-Davis, and Lord Hoyle also referred to the nature of the government share in this context. The noble Lord, Lord Brabazon, raised the issue of the golden share, or the special share. He queried, as did other noble Lords, whether this was being challenged at European level. The special share offers a way to safeguard the essential public interest directly through equity in the company. It does so in a way which does not unduly interfere with day-to-day operational control but it supports the Government's position. Although it is true that the European Commission has objected to special shares in certain cases, those cases do not seem to us analogous with this position. Therefore we are reasonably confident legally that we can go down this road.

In relation to the size of the shareholding, we are starting from the position of a 49 per cent government share in the PPP in addition to the golden share. The legislation provides for the possible dilution of the proportion. However, that would not be possible without a clear government decision. The company itself could not do it. It cannot fall below 25 per cent without a legislative change put to Parliament. In no way is this reducing the value of the government share. It would be simply a reflection of additional capital coming into the company were that to take place. However, there are safeguards over the circumstances in which any reduction can take place.

I was grateful for the words of my noble friend Lord Elder in relation to the two centre strategy and the support that has within Scotland. I can assure him that the PPP company will continue to be committed to that strategy.

In relation to NATS staff pensions, the Government recognise that the staff still have important concerns. They have decided that NATS staff who were in the employment of the company at the time the PPP was established should be entitled to remain in the Civil Aviation Authority's pension scheme. The company would participate in the scheme as a non-associated employer. Existing pensioners' positions would remain unchanged, therefore, in accordance with the undertaking given. They continue to belong to the CAAPS and receive the benefits that the scheme offers.

Clearly, we shall return to many of the air traffic control issues and I have taken 20 minutes explaining the position. However, the core of the Bill rests elsewhere. The Committee will look in detail at air traffic control, but it also needs to look in detail at some of the other areas.

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As regards local transport plans, which are the central part of the Bill, I can underline the points made by the noble Baroness, Lady Scott, and my noble friend Lord Morris about their importance. My noble friend referred in particular to Manchester; to the role of quality partnerships and the support given to the Metro in Manchester. I can assure him a similar step in improvement in local transport plans will be welcome and will no doubt be referred to in the 10-year plan of my noble friend Lord Macdonald. I can also assure my noble friend Lord Berkeley that walking and cycling are still key components of local transport plans and safety in general is a major part of the guidance to local transport authorities in drawing up those plans.

The noble Lord, Lord Beaumont of Whitley, referred to road traffic reduction targets in this context. We issued a detailed document in reaction to the national road traffic reduction legislation in January. It indicated that the national volume of traffic was probably not a useful indicator, as he accepted. We will be looking at objectives, targets and benchmarks related to congestion and pollution and will expect authorities to develop their own particular types of target to reduce the volume and congestion element of traffic within their areas.

The main area of concern about local traffic plans related to buses. They are an important part of our integrated transport policy, as my noble friend Lord Hogg underlined. The aim is to accentuate the positive parts of the earlier legislation, but also to eliminate its negative effects. I can assure him and other noble Lords that the difficult and delicate relationship between the local authorities and operators will be preserved through the system, but we need to move from the status quo, which is restrictive on what can be done between local authorities and the operators, to a system where quality partnerships are the norm and in some cases quality contracts will need to be entered into.

I also note the point made by the noble Lord, Lord Bradshaw, about buses in general and about bus lane enforcement in particular. We will consider that, together with his points in relation to the powers of the traffic commissioner. We are keen to learn lessons from the London pilot schemes in relation to bus lane enforcements and regard that as a particularly important part of ensuring that public transport gets through and an important part of improving traffic flows in general.

The noble Lord, Lord Brabazon, and others referred to the suggested need for bus quality partnerships to include timetables and frequencies. There is an important distinction between quality partnerships and quality contracts. Quality contracts give local authorities detailed controls over timetables and frequencies. It would not seem right to blur the distinction between two separate legal concepts and, in partnership terms, much give and take can be undertaken between operators and local authorities. However, in terms of legal enforcement of timetables and frequencies, that would only be in the context of quality contracts.

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I can assure my noble friend Lord Hogg that quality contracts will not be the norm. That would be a major departure from the current arrangements because they would give operators exclusive rights for up to five years to run services to a local authority's specification and performance criteria. In general, that can be done through partnership, but in order to encourage those partnerships it is important that the power to move into quality contracts exists.

However, we shall ensure that moving into quality contracts is subject to a strict test. The Bill as amended in another place provides that the local authority must be satisfied that quality contracts are the only practical way to deliver the local authority's bus strategy. I hope that that gives my noble friend Lord Hogg the reassurance that he required.

The noble Lord, Lord Bradshaw, and others raised the issue of competition and competition powers. We have made a number of changes to the Bill in another place to ensure that the new powers of local authorities are subject to a tailor-made competition test. Clause 141 and Schedule 10 will ensure that the powers cannot be used to favour particular operators but can be used to benefit passengers, even though otherwise the OFT may judge them to have adverse effects on competition. I believe that that is a major move which recognises the reality of the type of arrangements which must be made in the relationship between the local authorities and the operators.

It was also made clear in another place that the OFT is at this moment consulting on a draft block exemption for ticketing schemes. That is very important and we hope that some way may be found, either under Clause 124 of the Bill or quite independently, to decide whether such arrangements are exempt from the Chapter I prohibition in the Competition Act. I believe that that matter is still under discussion, and I hope that your Lordships will regard this as a commitment on that front.

The noble Lord, Lord Bradshaw, suggested that there should be a much wider exemption for bus operators from the provisions of the Competition Act. I believe that we shall probably debate that issue at some length in Committee. We want to maximise the benefits of an integrated approach but, on the other hand, competition also provides a way of getting benefits to the consumer. Therefore, we need to find a balance. We believe that broadly the position is right but we shall consider further arguments in that respect.

The noble Baroness, Lady Hamwee, rightly referred to the fact that sharing of information is probably the most important aspect of co-operation between operators and between operators and local authorities. Our initiative on Transport Direct helps to deliver many of the benefits of an integrated information system which will be developed not only for bus timetables but also for train and other public transport provisions. Therefore, through-ticketing arrangements are reflected also in the through-information system.

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In relation to buses, the noble Lord, Lord Brabazon, also suggested that there was a hidden power in Clause 142 to abolish fuel duty rebate. So far as that is concerned, I believe that to some extent he has the wrong end of the stick. Fuel duty rebate is being examined because it may not be the best way to subsidise the bus industry. Possibly we need to look at a more flexible approach to the way in which we subsidise and provide grants to the bus industry. At the moment, it tends to benefit particularly the least fuel-efficient buses. Therefore, we are examining that matter. However, it is not a way of abolishing fuel duty rebate altogether, as he seemed to suggest in his earlier remarks.

With regard to concessionary fares, I am grateful for the welcome that has been given both to the basic provision and to the extension for the disabled, which my noble friend Lord Macdonald introduced. With regard to the further concerns in relation to the question of whether or not there should be a national system, I can see the attraction of such a system. On the other hand, it would represent a major departure from the present position in which schemes are local authority-based and it would be quite bureaucratically complex. We recognise that a national bus pass is an attractive idea and we have suggested to the bus industry that it might look at industry-based schemes which in effect would deliver a voluntary industry-based scheme. I shall be glad to discuss that further, both in Committee here and with the industry.

The suggestion was also made that we should look again at age discrimination between men and women. We debated that matter at some length during the GLA Bill. Veterans will recall that I insisted that the concession relates to retirement age. Although eventually there will be some harmonisation of retirement age, at the moment we see no reason to depart from the provision that bus passes come with retirement age.

The noble Baroness, Lady Hanham, asked how the concessionary fares scheme would be paid for. In the announcements made earlier in the year, it was made clear that the scheme would be met from public expenditure. Therefore, the minimum concessions would be met centrally by provisions through the rate support grant. I believe that that is the information the noble Baroness sought.

Road-user charging is perhaps the other main controversial part of the Bill. I was challenged by the noble Baroness, Lady Hamwee, to say whether that is a revenue-raising or transport management measure. It is both. We require revenue as hypothecation backing to transport schemes but it is also a means of demand management. The noble Lords, Lord Montagu and Lord Marsh, said that congestion rations itself and the motorist has had a rough time. The real cost of motoring from 1975 to 1999 did not increase, whereas the real marginal cost of public bus transport rose 80 per cent. We must do something to change the marginal costs and reduce the attractiveness of using cars, particularly in congested urban areas.

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The Bill provides for local authorities to introduce road-user charging schemes and workplace parking charges. It requires that all proceeds will be directed into real improvements to local transport, so they are not taxes in the normal way that the noble Lord, Lord Dixon-Smith, refers to them. Nor are they stealth taxes. We are pretty up front about that. The Bill also requires that local people are fully consulted, particularly the business community, and that some public transport improvements be made before charging starts. Schemes will be well researched--to take up the point made by the noble Lord, Lord Montagu--to ensure that they have a real impact on solving congestion and do not just raise revenue.

Because of all the pre-requisites, we expect that charging schemes will take four or five years to implement, although there may be small-scale schemes before that. In London, the introduction of such a scheme comes under Greater London Authority legislation and relates to the mayor's own strategy. Again, full consultation will be required by the mayor. He has clearly indicated that he will consult widely and take business interests into account. In his case, the scheme will need to be seen in conjunction with improvements in public transport in London. Although London may be slightly ahead of the game, it is not treated differently from other areas except that it is the mayor's decision.

Workplace parking is our other measure for altering the marginal costs of motoring relative to public transport and providing additional resources. Local authorities will be given the power to introduce workplace parking areas. There will be national exemptions for emergency vehicles and disabled persons and exemptions or concessions for parking at NHS hospitals--the details are still being worked out. Exemptions can be introduced at local level and could include concessions where employers introduce green travel plans on the lines to which the noble Lord, Smith of Leigh, referred in respect of Manchester airport. We are not necessarily promising that to Manchester airport--it will depend on local decisions. That is another means of ensuring that local employers develop green transport plans.

The noble Lord, Lord Dixon-Smith, and others referred to such schemes as taxes on employers. The main expense to employers is precisely the huge costs that congestion in urban areas and inter-urban networks impose on business. The schemes will partly offset congestion costs, reduce delay, cut the cost of goods being on the road, and reduce the expense of managers and sales people being on the road. The proposed costs are nothing compared with the huge costs imposed on business by failing to tackle congestion in the past 20 years.

We do not expect any generalised charging on trunk roads for many years. We will use the interim to promote debate on how trunk road user charging could be introduced and to develop a better understanding of problems such as diversion--which

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the noble Baroness, Lady Byford, raised in relation to small towns and rural villages. We need to examine the technology of possible charging and other means of traffic management on the motorway network. Therefore, we are not providing general powers within the Bill until we have had that debate and are clear what we want to do. The powers in relation to trunk road networks relate only to the situation where local transport schemes cover an area which is a highways authority road and the powers to charge on bridges and tunnels.

The noble Earl, Lord Attlee, asked specifically about the Dartford crossing in this context. It will come as no great surprise to noble Lords--I seem to remember an exchange with the noble Lord, Lord Dixon-Smith, a few months ago on this very issue--that we will be continuing to consult on the continuation of road user charging on the Dartford crossings. I do not wish to pre-empt the outcome of that consultation in this debate.

There has been reference to hypothecation. The hypothecation guarantee is not indefinite because, in the medium to long-term, reserving all charging revenue for local transport may not enable value for money criteria to be met. Nevertheless, the 10-year minimum hypothecation is in the Bill. Longer periods of hypothecation can be agreed at the outset on a scheme-by-scheme basis if it is justified; for example, by the need to finance a longer-term PFI deal. There will also be a general review of hypothecation arrangements before the first 10-year period has elapsed so that future arrangements can be decided.

I say to my noble friend Lord Hughes that we have already circumvented the Treasury rules in this context with the very full and vocal support of the Chancellor of the Exchequer and the Treasury itself. This is a new way of mobilising more funds into public transport and into road improvements in a way which also has the beneficial effect of improving the traffic management in the area concerned. That seems a sensible relaxation of Treasury rules and one which could be applied in transport generally. We are certainly keen to see local authorities taking up the options under these provisions.

Somewhat surprisingly, there were only two brief references to the issue of streetworks in this debate. My noble friend Lady Turner of Camden referred to them. The noble Lord, Lord Peyton, was in his place at the beginning of this debate and will doubtless be promoting his own Bill in this respect shortly. There is clearly deep concern in this House. Your Lordships will be aware of the action that we have currently put in hand to use the powers under the New Roads and Street Works Act 1991 to provide for charging for streetwork overruns. We will be introducing regulations under that provision later this year. We have not ruled out further action but we will no doubt have a serious debate on this matter later during the passage of this Bill.

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I move on now to rail. Clearly, the creation of the Strategic Rail Authority provides a new sense of direction for the rail industry to face up to the challenges of this century. It is important that the SRA works very closely with Railtrack and with the operating companies and indeed, as the noble Baroness, Lady Wilcox, indicated, with consumers. It is important that the rail passenger council has an independent view on these matters and is built in to the decision-making.

The SRA provides a new start for the rail industry. It has already started, in its non-statutory form, to develop strategic priorities. The ability to provide longer franchises through franchise replacement will enable train operators to offer far more long-term investment and long-term commitments.

To answer the noble Lord, Lord Freeman, the Government's contribution will be known when the current spending review is completed. We shall publish that in the context of our 10-year investment plan. Clearly, public and private resources will be needed. I was grateful to the noble Lords, Lord Freeman and Lord Marsh, for bringing their experience to register at least some degree of support for the Strategic Rail Authority's role. I do not necessarily follow the precise arithmetic of the noble Lord, Lord Freeman, in relation to the gap to which he alluded, but provision will be made through the activities of the Strategic Rail Authority directly under the new franchising arrangements. Other public money may well be provided through the 10-year plan. I fear that the noble Lord will have to wait until at least July or possibly slightly later in the year for the details. But we recognise a resourcing problem.

As the noble Lord, Lord Marsh, said, it is extremely important that we secure new investment; that we secure a long-term framework for that investment; and that we secure a new partnership between government and industry in the railway industry.

It is important that all the regulating authorities work together. It is important that it is seen as a co-operative exercise and not, as noble Lords have implied, as a threat of back-door nationalisation. The SRA will have stronger powers. I was distressed to hear the noble Earl, Lord Attlee, put on record that some of those stronger and more effective powers will be opposed by the Opposition. That is not a constructive and sensible approach even from the perspective of the Opposition. Certainly, we shall defend rigorously our commitment to more effective regulation within that area.

Safety on the railways is a very important part of our consideration. Lord Cullen has started his inquiry and we expect his report by the middle of next year. All of his recommendations will be considered and dealt with urgently and seriously. To answer my noble friend Lady Gibson and others, where immediate improvements to rail safety can be made without pre-empting the report of Lord Cullen, we are making

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them. We are taking measures to change Railtrack's safety responsibilities so that responsibility for accepting railway companies' safety cases will transfer from Railtrack to the HSE, and the Safety and Standards Directorate will, as my noble friend Lord Macdonald said, be removed from Railtrack's direct control into a subsidiary company with a separate chair and board. Those changes will be implemented immediately.

I welcome the reference by my noble friend Lord Berkeley to the increased co-operation between the CBI, the Freight Transport Association and the rail freight industry to try to create a cross-modal approach to freight. The SRA will have a key role in developing rail freight. There are naturally concerns about what has been the past attitude of Railtrack and what we need to do now. I understand the concerns also about property sales referred to my noble friend and others. But we are in a new area with a statutory strategic rail authority which will have the power to improve the facilities for rail freight. The shadow SRA has already begun to develop the strategy which will be incorporated into the 10-year plan as and when it has statutory powers.

My noble friends Lady Goudie, Lord Berkeley and Lord Elder all referred to freight grants for short sea shipping. At this stage in my speech, I have to be a bit careful how I say that! Certainly it was in the integrated transport White Paper and we are looking at means of introducing grants to short sea shipping in that context or another. Therefore, I hope to give the assurance sought on that.

Finally, I turn to the points made by the noble Earl, Lord Attlee, in relation to HGV impounding, about which I underline the appreciation of my noble friend Lord Macdonald for the noble Earl's earlier efforts in that respect. There is no reason to delay further the introduction of impounding schemes. I know that the industry has been looking for that for some time. We need VI examiners to be able to check quickly at the roadside that a vehicle is operating illegally. The new computer system which we are introducing will enable them to do that and allow operators to contact the traffic area offices by all means of communication.

We shall introduce the impounding provisions when the IT systems are in place. I note the concerns of the noble Earl and his intention to table further amendments in that respect, particularly relating to drivers' hours. No doubt we shall have interesting discussions in Committee on that matter. He also promised or threatened further provisions on road safety. As the noble Earl knows, he and I see eye to eye on a number of such issues. I believe that the majority of our road strategy can be delivered without further new powers and mainly through the local transport plans. Nevertheless, I shall consider positively any constructive ideas he has in that respect.

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This has probably been the longest winding up that even I have done. I apologise to noble Lords who should not have had such an interesting debate to which I have had to reply! I suspect that this is a portent of the long nights which await us and will keep us awake for some months yet. I commend the Bill to the House.

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On Question, Bill read a second time, and committed to a Committee of the Whole House.

Colchester Borough Council Bill [H.L.]

Committed to an Unopposed Bill Committee.

        House adjourned at ten minutes past ten o'clock.

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