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Lord Islwyn: My Lords, does the Minister appreciate that at present, there is a great deal of inconvenience to rail passengers, particularly over the safety factor? In recent years there have been considerable sales of railway land. We live in a horrendous time in terms of railway history. It has been suggested to me that consideration should be given to keeping relief land at the side of railway lines.

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Relief lines could then be used to avoid inconvenience to the public. In terms of sale of land, that issue should be given serious consideration.

Baroness Thomas of Walliswood: My Lords, as other noble Lords have said, the amendment of the noble Lord, Lord Berkeley, is an acute probing amendment. I await with great interest the Minister's reply. This subject has been discussed in your Lordships' House with regard to a number of Bills. I became a Member of your Lordships' House six years ago and certainly since then we have discussed that question many times. No doubt it was discussed by other noble Lords long before I arrived. It is a matter of immense importance that we retain the land that is required for the Strategic Rail Authority's use.

Another important issue is the price at which that can be done. Public authorities--for example, local authorities--are obliged to seek the highest price for the land. That has sometimes hampered them in using the land for the best purpose in terms of the public service. It is important that we should try to avoid that pitfall and the kind of round-the-rabbit financial arrangements which might be used, as is suggested in the latter part of the speech of the noble Lord, Lord Berkeley. I await the Minister's response with great interest and hope.

Earl Attlee: My Lords, I listened carefully to what the noble Lord said in moving the amendment. I confess that I do not know how it works, but I have sympathy for the issue and agree that we need to have a long-term strategy. We must avoid short-term financial considerations.

Lord Macdonald of Tradeston: My Lords, the House will agree that this matter has already received a great deal of attention both here and in another place, and that we have made much progress. I know that my noble friend Lord Berkeley and noble Lords opposite have been heartened by the assurances that we have been able to give during the passage of the Bill. As my noble friend Lord Berkeley said, since the Committee stage, the shadow SRA has appointed the noble Lord to its property advisory group. My noble friend is advising the SRA on property. The SRA is advising me on policy. So I am in a rather contradictory position. I am never sure which of his many hats he is wearing at any given time. But I look forward to him giving me advice on how I should be answering him in the near future.

The amendment probes the extent to which the SRA will be free to dispose of land at its railway value, rather than at the higher value which might be obtained for non-railway use. We have already made it clear that there is no statutory impediment to the SRA retaining land that has a reasonably foreseeable railway use. As regards disposal, land decisions will be taken in the context of the SRA's emerging strategy. The SRA will consider carefully how best to use its financial powers and to manage its land holdings to meet its strategic objectives. It will consider on an individual basis cases in which there is a conflict between railway use and land value.

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Where the SRA has taken the decision that a site is required for railway use, it will need to obtain the market value for that land reflecting the limitations on its use. Value-for-money considerations will apply as they do to any public body, but the SRA will have freedom within the agreed policy on land matters. It will not be a case of, say, a supermarket coming along and the SRA being obliged to accept a higher bid reflecting its value for retail development. The decision that the land is required for railway use will already have been taken after careful scrutiny.

Of course, railway users' bids will have to be realistic and reflect the full railway value. Safeguards will also be needed so that the SRA can be assured that a purchaser for railway use will not then maximise the value of the land in the interests of its shareholders. Our current advice--PPG 13--states that local planning authorities should identify and, where appropriate, protect transport sites.

More generally, support for rail freight will be channelled through a new, improved freight grants scheme. That provides a transparent way of using the SRA's broad financial powers under Clause 210.

On the question of whether the powers will be general or specific, they may be either. Clause 208(1) compels the publication of directions or guidance by the person giving the directions or guidance. Perhaps I may say to my noble friend Lord Islwyn that the SRA will not own land of the kind to which he referred. It is really Railtrack which owns the adjacent land, and the regulator is considering licence changes relating to that Railtrack land.

With those reassurances, I hope that my noble friend will now withdraw his amendment.

Lord Berkeley: My Lords, I am grateful to my noble friend for his comprehensive and useful explanation of what is a complicated problem. He is absolutely right. Transport use is not always the perfect solution to everything. I know of one instance where a bus company wishes to buy some railway land. It wants to move its bus station to the new land so that it can sell off the existing bus station land for commercial development. That hardly meets the spirit of "transport use". I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 222 [Regulator's power to require provision etc. of railway facilities]:

[Amendments Nos. 262 and 263 not moved.]

Earl Attlee moved Amendment No. 264:

    Page 134, line 45, at end insert ("if the Regulator is satisfied the person to whom the direction is given will not otherwise be adequately rewarded as set out in section 16E above").

The noble Earl said: My Lords, in moving this amendment, I should like to speak also to Amendments Nos. 265 and 288. I do not intend to move Amendment No. 289 because the Minister convinced me in Committee that the regulator has the matter in hand.

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Subsection (2) of what will be new Section 16F of the 1993 Act enables the regulator to require the applicant for a direction to reward or make payments to the recipient of the direction. The amendment would limit such power to cases where the regulator is satisfied that the recipient will not otherwise be adequately rewarded as set out in the current provisions of new Section 16E.

The current drafting of new Section 16F(2) is:

    "The Regulator may include supplementary provisions in any direction under section 16A above, including (in particular)--

    (a) provision adding detail (for instance, as to the time by which, or standard to which, the person to whom it is given is to do anything which it requires him to do); and

    (b) provision imposing requirements on the applicant (for instance, to make arrangements for rewarding the person to whom the direction is given or to make payments to him)".

But there are no tests similar to those in Section 16E.

New Section 16B is extremely damaging to the working of Clause 222 and the new sections it adds to the 1993 Act. The person making the application may have to go to considerable lengths and expenditure, only for the application to be made commercially unviable when the regulator uses his unfettered powers under new Section 16F(2)(b). That uncertainly might deter an applicant from pursuing a project under the new section.

Under the amendment, the applicant would be able to anticipate the payments or rewards. The Minister may point to new Section 16A(3), which effectively allows the applicant to withdraw so that he will not burn his fingers beyond the cost of the feasibility study but nothing in the Bill counters the uncertainty of new Section 16F(2)(b), which creates the serious risk of an investment bottleneck.

Amendment No. 265 suggests that the Bill could be improved without Clause 222, which gives the regulator the power to impose an obligation on a private company to make an investment that, presumably, is not commercially viable. I say "presumably" because otherwise it would not be necessary to use the blunt and sometimes unpredictable instrument of legislation. The Government defend that provision on the ground that it may be in the public interest. Government interference on that scale in a private company is the worst of both worlds. The way to tackle investment in the public interest where there is no commercial benefit to Railtrack is to reform the incentives and subsidy system so that there are good commercial reasons for Railtrack to make the necessary investment.

The authority can in any case make grants if it so desires under Clause 210. It would still be possible for Railtrack to reject a project but it is hard to see why it would do so. In the event of a safety consideration, Railtrack would only need to put its hands up to the Health and Safety Executive and cry "Foul".

Apart from commercial unviability, I cannot imagine why Railtrack would not want to go ahead with a good project. The role of the Government and regulator is to set strategic objectives and implement

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them via the authority through enforcement of licence conditions and adjustment of the subsidy and incentive system. Surely it is better to let Railtrack get on with it rather than indulge in intermittent management of the company.

Amendment No. 288 is designed to ensure that the regulator operates in a way necessary to encourage Railtrack to increase access to the rail network. I beg to move.

9.45 p.m.

Lord Macdonald of Tradeston: My Lords, Amendment No. 264 would make any provision under new Section 16F subject to adequate reward. I understand the motivation but the amendment is unnecessary. New Section 16F specifies some of the matters that the regulator may include in an order under new Section 16A. We make it clear in new Section 16E that the regulator may only give a direction under new Section 16A if he is satisfied that the person directed will be adequately rewarded for improving the facility, which extends to any ancillary provision under new Section 16F.

As to Amendment No. 265, Clause 222 will enable the regulator to give the appropriate person a direction to provide a new railway facility or to give a railway facility owner a direction to improve or develop an existing facility. We recognise that is a powerful tool but in some cases it is justified. The industry is running a public service and there must be the power to force through vital improvements, to ensure that the infrastructure is adequate to meet the demands of a growing network and, above all, is safe. That power is not designed to replace normal commercial judgments, does not preclude voluntary arrangements and does not excuse facility owners from licence conditions and safety cases. It is an extra where really needed--and in all cases, the facility owner will be adequately rewarded. The authority will have to support an application. The final decision belongs to the rail regulator. He will be operating under his duties in Section 4 of the Railways Act 1993, including the duty to act in a way which he considers will not make it unduly difficult for holders of network licences to finance their activities.

The power is a long stop to be used where strategic issues are in question. I hope that your Lordships will agree that it is a necessary long stop and that Members opposite will feel able to withdraw their amendments.

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