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Lord Whitty: The noble Earl, Lord Attlee, is slightly inconsistent in his approach. On the one hand he wishes us to specify absolute control over the number of staff for the SRA and in another breath he says that the Secretary of State should not interfere with the financing of the SRA and its decisions.

Perhaps I may look at the staffing issue first. As my noble friend Lord Berkeley has said, we are giving the SRA a significant additional role and we expect it to be able to assess with the rail regulator the requirements for the staffing of those bodies. That means that the authority will need to assess how many staff it needs to carry out its duties. We have given it the power under the Bill to do so, and we should not disturb that.

So far as concerns Amendment No. 278, the noble Earl suggests that he is trying give some civility of framework for the SRA. In fact, the time horizon for the authority will be considerably longer than the three years suggested by the noble Earl. My noble friend Lord Macdonald will soon be publishing the 10-year plan for transport which will provide the overall planning framework for the railways and other transport modes. Within this broad structure, the authority's three-year budgets will be set, along with three-year budgets for other DETR spending programmes in future spending rounds. Plans for replacement of the franchises, for example, will look to a 20-year time-scale. Each franchise will include commitments by the SRA to pay subsidy or by the franchisee to make premium payments to the SRA over the whole lifetime of the franchise. Each franchise will be signed off by Ministers and, as part of that signing off, will need to give the authority appropriate assurances about funding to cover franchise commitments. Therefore, the long term is clearly catered for and Amendment No. 278 is unnecessary.

The effect of Amendments Nos. 279 and 280 would be to remove the borrowing limits for the authority. The main way in which the authority will receive its funds is through grant-in-aid from the Secretary of State. Nevertheless, the authority may need to borrow and that is why we have given the limit to such borrowing. There is no magic about the £3 billion figure, there are no secret calculations to show that that is what the authority will be borrowing. Quite simply, the £3 billion relates to the existing borrowing limit for the British Rail Board, one of the bodies that will be wound up into the authority. It seems sensible for that limit, which as the noble Earl implied is not currently exercised to its full degree but remains on the statute book, to be retained and carried forward into the SRA. We want the authority to have the flexibility to borrow if necessary.

Amendment No. 281 would remove the requirement for the Secretary of State to prepare a financial framework and Amendment No. 281A would make

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the Secretary of State's role simply one of approval rather than engagement in the preparing of it. Neither amendment would be helpful. Some sort of financial framework is needed to achieve this, and it is not sufficient assurance in terms of responsibilities to Parliament and probity of public finance for the Secretary of State, who is responsible for the SRA, simply to approve the framework by a rubber stamp. Therefore, I do not believe that the amendments are helpful, and in some cases the objective of stability of funding would not be better achieved by the noble Earl's amendments as distinct from what is already on the face of the Bill. Therefore, I hope that the noble Earl will not pursue them.

Earl Attlee: I thank the Minister for his reply. He mentioned the 10-year transport spending plan. Will that be set in stone? What will happen if the economy suffers a setback, tax revenues are reduced and savings then have to be found?

Lord Whitty: The noble Earl echoes questions that have been put to his leader in another place about tax guarantees and other unwise commitments previously made by the Tory leadership.

So far as concerns the 10-year plan, the resources will be committed. Clearly, there will be some flexibility in the application of those resources as transport modes and priorities change. But the resources will be announced by my noble friend and they will be committed. The SRA will have its appropriate share of those resources.

Earl Attlee: I thank the Minister for his reply and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 278 to 281A not moved.]

Schedule 14 agreed to.

Clause 204 [Purposes]:

Lord Beaumont of Whitley moved Amendment No. 282:

    Page 120, line 10, at end insert (", and

(d) to oversee the specification of rail services in metropolitan areas, responsibility for which it shall delegate to the appropriate Passenger Transport Executive, or in the case of Greater London, Transport for London").

The noble Lord said: This amendment would add to the purposes of the appropriate authority. Throughout the passage of the Bill, we have argued sometimes and agreed often about the necessary level of devolution. My previous amendment today sought to lift that from local to regional level. The amendment gives specific responsibility to the metropolitan areas, so that they may have their own say at a lower level of democratic responsibility than the rest of the clause covers. I beg to move.

Earl Attlee: Under Clause 244(2), the directions and guidance given by the Secretary of State will override the requirements of passenger transport executives in relation to franchises. The Government should not

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interfere with the legitimate requirements of PTEs, which have the local knowledge necessary to ensure that franchises are properly specified. It is no business of the Government to give directions or guidance that conflict with the local expression of needs.

10.30 p.m.

Lord Macdonald of Tradeston: The amendments relate to the rights, powers and duties of passenger transport executives, which have wide powers under Section 34 of the Railways Act 1993. In respect of each passenger service in their area, they will be able to give notice to the SRA specifying the level and quality of services needed to meet public requirements in their areas.

Section 34 provides that the SRA will need to ensure that the level and quality of services--including fares--specified by the PTE are included in the specification. PTEs can be a co-signatory with the SRA to any franchise agreement in respect of such services, which gives them a unique and prominent role in franchising.

We do not need to modify the executives' powers to specify services in their areas and the Bill does not do so. However, local transport needs may have, from time to time, to be balanced against the broader national picture. I hope the Committee accepts our general view, which is entirely consistent with the policy to create a new strategic framework, that if there is a conflict between local and strategic considerations, the latter should prevail.

That brings me to the detail of these amendments. Amendment No. 282 provides for the SRA to delegate responsibility for specifying rail services in metropolitan areas to the appropriate PTE or, in the case of London, to Transport for London. However, the SRA would continue to oversee the process. I hope that the noble Lord, Lord Beaumont of Whitley, will forgive my saying that the words "oversee" and "delegate" are somewhat ambiguous. They might be taken to describe the current arrangement: the PTEs specify what is required but the SRA oversees the process in terms of its wider implications.

However, I suspect that the noble Lord has something a little more radical in mind; namely, a reduction in the ability of the SRA to intervene in the specifications made by the PTEs. Amendment No. 361 would have a similar effect and remove the requirement for the SRA to disregard PTE specifications which were contrary to directions and guidance given by the Secretary of State or (for Scotland) Scottish Ministers. As I hope I have explained, I do not believe that we should go that far. The SRA would be able to set aside the PTE's specification if, but only if, to accept it would be contrary to the guidance given by the Secretary of State or Scottish Ministers, or it would have an adverse effect on passenger or goods services, or it would cost the SRA money. The SRA might still accept the PTE specification even if it would have an adverse effect on passenger or goods services or add to SRA costs. In this respect the SRA will have discretion.

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In the event of a conflict between local and national demands there is an opportunity under the dispute resolution provisions in the 1993 Act for the Secretary of State, who is ultimately accountable to Parliament for local and national railway services, to determine where the balance lies. We believe that that makes the balance between local and national interests just right.

The noble Lord's amendment also contains provisions in respect of London where the position is somewhat different. Transport for London will not have powers equivalent to the PTEs to specify services to be provided under franchises. On the other hand, the Mayor has power to issue directions and guidance to the SRA in relation to rail services in London which the PTEs do not have.

Without going into unnecessary detail, train services within London are so interwoven with regional and national services that a separate power for TfL to specify local services would be inappropriate. On the other hand, the Mayor will have a much broader influence through his directions and guidance in which he will be able to reflect the contribution that railways can make to his broader responsibilities for the economic and social well-being of London. That careful distinction would be undermined by the amendment, which would give the Mayor detailed powers to specify services alongside his broader powers of direction and guidance. We believe that that would tip the balance too far in the direction of local over national interests in respect of what is the heart of the national rail network.

I turn to Amendment No. 362, which affects the dispute resolution provisions that I mentioned earlier. If any dispute arises between the SRA and PTE in relation to a franchise agreement, or a proposal for such an agreement, either party may refer the dispute to the Secretary of State for determination under Section 34(17). The Secretary of State will be able to consider the arguments and give to the PTE or the authority such directions as he considers fit. That may include a requirement under Section 34(19) for the authority or PTE to enter into a franchise agreement on such terms as the Secretary of State decides.

Amendment No. 362 is not desirable because it would remove a helpful new provision which was added in Committee in another place. This provision clarifies that any disagreement between the PTEs and the SRA as to what should be specified in a franchise agreement will be a dispute for the purposes of Section 34(17) and that the Secretary of State will be able to resolve it as he sees fit. The clarification was inserted in the Bill following representations made by the PTEs that Section 34 of the Railways Act does not make sufficiently clear that the Secretary of State can direct the SRA regarding what should go in the franchise agreement.

I have no doubt that the authority and PTEs will continue to work together in the current franchise replacement negotiations to achieve a franchise settlement which reflects both local and national needs. The directions and guidance to the SRA by both

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the Secretary of State and the Scottish Ministers will be published and the PTEs will be able to take account of them in drawing up their statements. Therefore I do not expect that in practice conflict will arise between those statements and the directions and guidance. But Clause 244 ensures that in the unlikely event of an irreconcilable dispute between the authority and a PTE regarding a franchise specification, the Secretary of State can intervene.

I hope that in the light of those explanations the noble Lord will withdraw the amendment.

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