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Viscount Astor: My Lords, I did not realise that the noble Lord, Lord Snape, and the Minister were such famous footballers. I hope that the Minister is not about to score an own-goal—probably for the first time. I hesitated to rise in an internal Labour debate, but as the noble Lord, Lord Bradshaw, intervened perhaps I should.

The Government's position is correctly described as "baffling". When we discussed the matter in Grand Committee, a number of points were made. On re-reading the debate, I realise that I had not gained a clear understanding of the Government's position. I do not understand why they do not want PTEs to be co-signatories of franchises which they are part funding. I do not understand the explanation.

There have been criticisms of PTEs. Some train operating companies have said that PTEs exacerbate the situation and make it more difficult for a service to be established. They say that negotiations take longer, the procedure does not work and it mucks up the system. Equally, there have been criticisms by those who represent passengers that PTEs do not do enough. Under the Bill, a rail passengers council will be created and the rail passenger's committee will be abolished. There are genuine criticisms of PTEs.
 
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I shall listen carefully to what the Minister says. I am sympathetic to the point made by the noble Lord, Lord Morris of Manchester. I am not yet 100 per cent convinced because I want to hear what the Government say. Perhaps I am as baffled as anyone about where they are coming from because it seems that they are taking away local responsibility and centralising it.

The noble Lord, Lord Bradshaw, made an interesting point suggesting a period of time after which, if PTEs are not co-signatories, they would drop out of the loop. I shall be interested to hear the Minister's views on that suggestion: on when consultation starts and stops. There may be a way through and perhaps it should be discussed between now and Third Reading. I do not know what the noble Lord, Lord Morris, intends to do and we will listen closely. We have not yet been quite convinced by the Minister's replies, but we have some genuine questions which need answering before I can say to the noble Lord, Lord Morris, that we will march through the Division Lobbies. And looking behind me, perhaps I may suggest to him that I do not have quite as many passengers in the carriage behind me as I need to get there. One would need to fill the train first. I look forward to the Minister's response.

Lord Faulkner of Worcester: My Lords, I intend to intervene only briefly. I fully support the remarks made by my noble friends Lord Morris of Manchester, Lord Burlison and Lord Snape and the noble Lord, Lord Bradshaw. In Grand Committee, we had a good debate about the role of the PTEs and their achievements and I do not want to go over that ground again.

There is one aspect of the Government's approach which I find most puzzling. If the PTEs had demonstrably failed the people they exist to serve, if they had not provided new rail services, if they had not opened up new opportunities for people to travel by train and to leave their cars at home, and if they had provided a service which recorded huge levels of dissatisfaction among the public, one could understand why the Government would want to take away their powers as co-signatories to franchises. However, it is demonstrably not the case that they have failed.

As the noble Viscount says, there have been some irritations on the part of train operating companies over the speed with which some of the franchises have been signed. That is normally because the PTEs are attempting to wring out of the franchisees—the train operating companies—a higher level of service than that which they wanted to provide. An example is the delay of the signing of the Scottish franchise and the wish of the Strathclyde PTE to continue the service of through trains between Glasgow and Leeds—an aspiration with which I have considerable sympathy.

One should look at the record elsewhere. Last week, I was in west Yorkshire and saw the Airedale line at first hand. It has benefited from new rolling stock and has achieved huge increases in ridership. Now 75 per cent of the people travelling to Leeds in that corridor
 
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do so by train as a result of the improved service, the re-opening of stations, increased safety at stations and an attractive package of fares. That is the kind of railway service which we should be encouraging. I am afraid that if the co-signatory powers are removed, it will be much more difficult to achieve that.

I hope that my noble friend will take account of what has been said today and of what was said in Grand Committee. I hope that in the final stages of the Bill he will indicate that the Government accept the logic of what we have all been saying.

Lord Davies of Oldham: My Lords, to paraphrase the old saying, I can look after the Opposition but God protect me from my friends! This has been an interesting debate and we have gone over much of the ground we covered in Committee. The points of difference remain between us but not because in any way I seek to gainsay the achievements and activities of PTEs. That is not the nature of the argument. As my noble friend Lord Morris would recognise, I would be the last person to decry past achievements, including those on Merseyside by Lord Sefton who was responsible for that area when in local government. I recognise those achievements, but I want to put the role of the PTEs into a new context which is envisaged by the Bill.

The Government are altering the current rail arrangements with respect to PTEs because the current system was built for a different time and does not fit with the ambitions set out in the rail White Paper. The Government are attempting to build a structure which works for the future and not to recreate the past. If I can express it pithily, forward not back. Crucial to the structure set out in the rail White Paper, the Secretary of State will be responsible for setting the strategic direction and the amount of national funding which will be invested in the railways. The system which the PTEs are seeking to retain cuts across that structure.

That is not to deny the PTEs having a role within the new structure and I shall delineate that role in a moment. However, I want to demolish the notion that within the new framework it would be appropriate to retain the PTEs and their powers as they were. Of course we are sympathetic to the concerns of passenger transport executives. When the rail White Paper was published in July last year, it was announced that the PTEs would not be a direct party to franchise agreements under any circumstances. However, before the Bill was introduced in November, the Government, having listened to the arguments of the PTEs, concluded that it should include a provision, which we now have, to allow the PTEs to be party to franchise agreements at the invitation of the Secretary of State.

Our problem is straightforward. The amendment which my noble friend proposes would allow passenger transport executives to dictate to the Secretary of State, who is responsible for rail across the whole country, what services should be provided in their area. I recognise that there is some protection
 
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against that as subsection (1C) of the amendment allows the Secretary of State not to take on board those proposals if it would,

"have an adverse effect on the provision of services for the carriage of passengers or goods by railway",

or if it would increase the amount of expenditure on the railways. However—and this is the crucial point—it would be for the Secretary of State to prove that these tests had been met. If it was disputed by the PTE, we could end up in protracted negotiations which could, ultimately, have to be decided by a court. Delay costs money—taxpayers' money—and we are eager to reduce those costs.

The new provisions are based on the premise that what we had in the past was an adversarial arrangement which would perpetuate and exacerbate the old system, in which some PTEs have used the fact that they have to co-sign a franchise before it can be let as a powerful lever in their negotiations with the SRA. I reassure my noble friend Lord Burlison that there is no question of the PTE for the northern franchise being excluded from that position until a review is completed. There is no question of peremptory action in those terms. But that powerful lever has been used by PTEs in their negotiations with the SRA, and we do not want that replicated in respect of the Secretary of State.

We should be aware of the extent to which PTEs have made significant contributions in the past, and we want them to continue with those contributions, but within a new framework, based not on the adversarial relationship but one in which there is co-operation and a partnership approach, with clear financial accountability for decisions taken. The new system set out in the White Paper matches responsibility with accountability. The Secretary of State will consult the PTEs before issuing an invitation to tender for any franchise that includes services to, from or within a PTE's area. Therefore, the PTEs will have a clear opportunity to set out the needs and ambitions of their areas and the Secretary of State will be required to balance the needs of the PTEs with the needs of the wider franchise and the wider network, which is something that the PTEs have neither the ability nor the responsibility to do. That is the Secretary of State's responsibility, and his role as a funder for the majority of the system. He also has accountability to Parliament for the overall strategy and development with regard to the railway, which has been the subject of debates under previous amendments this afternoon.

Once the baseline specification for a franchise, including services in PTE areas, has been set, the PTEs will also have the right to amend the services in their areas—buying additional services or reducing services or retaining the services. That will give PTEs the flexibility to make choices about the balance of transport in their areas, and allow them to make rational decisions based on financial accountability. I contend that that is a clear improvement on the present system.
 
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