I, too, would like to thank the noble Lord, Lord Puttnam. I had the privilege of serving on the Joint Committee which scrutinised the draft Bill. I felt that it was a good exercise and the Government should be
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congratulated on it. That pre-legislative scrutiny has helped the passage of the Bill.

As we all know, this is a framework Bill. It is now down to all of us—whether in opposition or in government, as citizens, and now businesses as well—to get on and implement its provisions in order to save the planet, or whatever the cliché is. But the work is still to be done.

Lord Puttnam: My Lords, I have no desire to delay the House and I know better than most how the credit roll at the end of a movie can be exasperating, so I shall keep my contribution as short as possible. I want to say on behalf of the members of the Joint Committee how involved and engaged we were in the process, and we are hugely appreciative of the Minister for the way in which he has treated our recommendations. Interestingly, around 70 per cent of our recommendations have been accepted and incorporated in the Bill that will now go to the other end of the corridor. That is not a bad day’s work.

I think we would all agree that the Climate Change Bill cannot succeed in a purely party political environment. We are in this together and we will succeed or fail together. As the Bill passes to the other place, and in every sense I wish it godspeed, I want to point out to the Government that the atmosphere out there in the world at large regarding these matters has changed in the 10 months since we started our consideration of the Bill. Just recently, articles by John Vidal, Andrew Rawnsley, Martin Kettle and Ian Sample have all essentially made the same point—that there is a developing informed scepticism about the commitment of this House and the Government in general to the intentions that lie behind the Bill.

Like many noble Lords, I thoroughly enjoyed President Sarkozy’s extravagant flattery last week, but there is another voice out there. Some of your Lordships may have read an article recently published in the Guardian by the dean of the Lee Kuan Yew School of Public Policy in Singapore, Professor Kishore Mahbubani. I am grateful to him for allowing me to précis his words:

Professor Mahbubani describes three crucial flaws in the following terms:

The Bill is a fantastic opportunity for this country to prove that it will not remain guilty of those flaws, and in that sense I commend it and wish it well.

Lord Rooker: My Lords, I am most grateful for the kind remarks that have been made. The Bill was new ground for many of us. I fully expected to follow its passage through the other place while doing the farming job so that I would be up to speed by the time it finally arrived here. I was as surprised as anyone else to be told last November that it would start in
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your Lordships’ House because I have only taken one other major Bill through this House first, the Police Reform Bill when I was at the Home Office.

The Bill has not been party politically contentious, and that is an important aspect of it. As my noble friend has just said, while it has been considered for around four months in this House, it also underwent the scrutiny of the Joint Committee. I know it will be a surprise to the other place where, like the Human Fertilisation and Embryology Bill, it will be treated as though it has never been debated. Nevertheless, I think that we are sending it across in better shape, and I thank everyone for their help and co-operation. I thank in particular my two colleagues on the Front Bench for dipping in and out and for keeping me in order so that I have said the right thing at the right time on most occasions. I certainly thank the team in the Box and those who are not present today. I have not always followed the notes I have been given, but they were helpful in putting what I wanted to say into context.

Sometimes you have to take the will of the House. The only way you can get that is to stand at the Dispatch Box and listen. Indeed, I have to say to the noble Lord, Lord Taylor, that I did not have any choice. When we won by two votes I was not prepared to risk defeat on the amendment—it could easily have gone the other way—and soured the day’s work. I decided while listening to the debate that it would be a good idea, with all the caveats I put on to it, that we should accept the amendment.

The House is grateful to the Joint Committee for its work because it will be shown to have been a real credit to the activities of committees of both Houses when the Bill is considered in the other place. We have had the odd late night on the Bill, which meant that staff were dislocated, and I am grateful for their efforts. I have had very good back-up. I have the best private office in Defra and in Whitehall, and I am extremely grateful for all the help I have had during the passage of the Bill.

On Question, Bill passed, and sent to the Commons.

Channel Tunnel Rail Link (Supplementary Provisions) Bill

6.40 pm

Report received.

Lord Bradshaw moved Amendment No. 1:

(a) any railway undertaking operating on the rail link will be subject to regulation under the Railways Act 1993 (c. 43), the Transport Act 2000 (c. 38), the Railways Act 2005 (c. 14) and the Railways Infrastructure (Access and Management) Regulations 2005 (S.I. 2005/3049), and(b) any reference to a “rail link facility” in those Regulations shall cease to apply.
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The noble Lord said: My Lords, it was nice to listen to the finale of the Climate Change Bill and to hear the congratulations which followed it and the unanimity described. In this case, the Minister faces opposition from all sides of the House.

In Grand Committee, the main point the Minister made concerned getting the best deal for the taxpayer. I have reread that debate and the only plausible argument—it is not a sound argument—put forward by the Minister concerned the independence of regulation. In the debate following the report of the European Committee, his noble friend Lord Jones of Birmingham said:

On the day of that debate we saw the noble Baroness, Lady Vadera, in her office. She reiterated the Government’s commitment to independent regulation. She banged the table and said, “That is what we believe in”. In the Regulatory Enforcement and Sanctions Bill, the next Bill to come before the House, the noble Baroness, Lady Vadera, has tabled an amendment to Clause 71. Amendment No. 102 provides for the independence of the economic regulators of the Gas and Electricity Markets Authority, the Office of Fair Trading and the Office of Rail Regulation. In all, five bodies have been excepted from the general regime laid down in the Regulatory Enforcement and Sanctions Bill which applies to other regulators.

These regulators have been excepted because each of them was set up by statute and their duties are clearly defined in statute. These duties include granting access rights and reviewing the efficiency with which the infrastructure operator conducts its business. If the regulators feel that an infrastructure operator is charging too much or is being inefficient, they say so. It is not a question of saying so when it suits the department, which we all know can be a changing feast; the department may or may not make up its mind, this year, next year or sometime never. The rail regulator has to produce a quinquennial review to a very strict timetable.

The Minister’s arguments have turned on two things. On the question of the independence of the regulator, the Government are speaking with two distinct voices. It is incompatible that you should argue in this Bill for the department to carry out the regulation and argue for the independence of regulators in another Bill. In Grand Committee, I repeated that I had been told by a significant and serious potential purchaser that it would rather have the competent, consistent regulation of the Office of Rail Regulation than the kind of regulation that would undoubtedly be operated by the department as part of the political process, which could change, not change or not be issued. Anyone who invests wants certainty and the potential purchaser would choose to be regulated by the Office of Rail Regulation, which it
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has become used to and which operates with other rail regulators in Europe. The noble Lord, Lord Berkeley, may have something further to say on this.

I am sure the noble Lord would never accuse me of being a half-hearted friend of the railways. I am absolutely consistent in my support of the railways. I have received in the past few weeks—they passed through his hands—some terrible, evasive answers which have not given information, given misleading information or given information that does not answer the question. We want satisfaction on this issue. When the Minister responds, I hope he will either give us satisfaction or say that he will take the matter away, talk to other Ministers and come back with a formula that satisfies us. This is a serious issue and I am not playing around. I beg to move.

Lord Hanningfield: My Lords, I support the amendment, to which I have attached my name. I shall not repeat what has been said, but it is important to note that the Bill as it stands will increase the regulatory remit of the DfT. However, with the DfT also being the vendor of both the infrastructure and the UK arm of Eurostar, it could result in a number of potentially damaging consequences, including higher access charges, lower levels of utilisation and conflicts of interest, as well as all the other consequences mentioned by the noble Lord, Lord Bradshaw.

It is essential that we avoid these pitfalls and I hope the Minister will be able to give us some reassurance on this. The ORR should be the economic regulator of the CTRL. Independent regulation is essential for consistent and robust governance and we should promote it in the House. We all echo the points made by the noble Lord, Lord Jones, who advocated that governance should depend upon strong and independent national regulatory authorities. He also said that he was taking a particular interest in this legislation. I repeat what the noble Lord, Lord Bradshaw, said: we need more satisfaction on this issue before we complete the process of legislation and I hope the Minister will be able to help us today. I support the amendment.

Lord Berkeley: My Lords, I, too, support the amendment, which is designed to create the same regulatory framework for the CTRL as happens on the rest of the network. As my noble friend says, if the text is inadequate perhaps he could suggest some improvements, but that is the intention.

As both noble Lords who have already spoken have said, the idea is to enable the independent regulator to fulfil duties not just to set the original charges in accordance with the regulations, which is very important, but also to be able to manage—actually, “manage” is probably the wrong word—or to oversee the operation of the infrastructure manager and, if necessary, require it to introduce efficiencies.

To return to the setting of charges, there is no doubt at the moment that the lack of charges is putting off other operators from using it. The noble Lord, Lord Bradshaw, mentioned a potential investor. I happen to have met today another equally credible
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investor who could buy the infrastructure manager. I got exactly the same answer to my question as the noble Lord did. It is not a question of whether the regulator would provide a better deal than the Department for Transport would. For the past 10 to 15 years the regulator’s office has established a precedent, a method of operation and a credibility that make it probably one of the best regulators in this country and certainly the best in Europe—although the latter is maybe not saying a great deal. I shall come on to that.

These companies are saying they want certainty. It is the risk of changes of mind by the Department for Transport, or changes of policy, that they cannot price. These investors start off, not with the politics of the House of Lords or the House of Commons, but with a spreadsheet, and they do not like uncertainty. Even though they may be told by the Department for Transport, “We’ll make sure the charges are really high so you’ll get lots of lovely revenue and therefore you can pay us more”, they will not believe it. They will probably realise that, as with the Channel Tunnel, high charges do not necessarily mean extra revenue.

Here we have two investors, whom we happen to have met, who are saying that they would much rather have the thing regulated by the Office of Rail Regulation alongside the rest of the railway. Then we would probably pay more than if it were not, which to some extent puts paid to my noble friend’s argument that the Government want to do it this way because they will get more revenue. If he has evidence from other investors—if I and the noble Lord, Lord Bradshaw, have got it wrong—we would like to hear about it. At the moment, that is my view from the point of view of the investors.

Then there is the question of those who will run trains on the line. We shall come to this again when we discuss the second amendment in the name of the noble Lord, Lord Hanningfield. One of the operators I have spoken to who wants to do this said, “Since we don’t know what the charges are going to be yet, or the regulatory framework, we are not investing in the equipment that needs installing in the locomotives to enable them to work with the signalling on this line”. They have delayed investment.

As I mentioned briefly in Committee, there is still no approved network statement nor any charges, nearly two years after the first bit of the line opened. If this had been regulated by the ORR from the start, the infrastructure manager would, quite rightly, have received a hefty fine. If you do not know how much you are going to pay, you are not really going to bother to decide whether you are going to run trains on the line. You do not know whether you can do it without making a loss. This is another example of the lack of stringent regulation that we find because the ORR is not doing it.

I return to the costs. One usually finds a relationship between the costs of maintaining a piece of railway and the charges. The regulator, as we all know, is doing an enormously complicated assessment of how much money Network Rail needs to maintain its network. It is likely to say, “You already reduced your costs by 31 per cent last time and this time we will probably want somewhere between 20 per cent and 30 per cent”.
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It is easy to say that the Channel Tunnel Rail Link is a new line and it will be very efficient, but it is actually being operated by Network Rail at the moment under a kind of subcontract from the present owners. I suspect that if the Office of Rail Regulation got its teeth into this, it would find ways of saving money even now and might well say to the operators, “You can save 20 per cent in the next five years”. Again, the lower the costs, the lower the charges and the more traffic that will use the line. It is really quite simple.

I look upon the noble Lord, Lord Jones, as a kind of ambassador for many good things that we do in this country. He made a speech during a debate on 14 March, when we were focusing on energy and transport issues. While he is going around the world, he clearly believes that the kind of private sector arrangements we have here for the network industries and the regulation that goes alongside them are something that we are proud of. Personally, I am proud of what is happening on the railways now; it is rather good. The noble Lord said in the rest of the paragraph, which the noble Lord, Lord Bradshaw, did not quote, that:

and all that. He is really saying that we want to sell this to the rest of Europe. We cannot do that unless our own house is in order. I have been talking to people in the Commission about this today. They said, “Well, Tony, it’s all very fine you saying what a great regulatory framework you’ve got, but if your Department for Transport decides it wants to regulate something because it’s easier and it thinks it’ll make a bit more money, how are you going to sell this to the rest of Europe?” That is what our railway business wants from this country—many companies are starting to operate on the Continent—but we have to have a sound home base.

For me, this is quite simple. I hope my noble friend can answer this question: what is making the Government continue down this path when two major investors and one major operator say that they would pay more money if the Government went down the road of making this railway regulated in the same way as the rest of the network? I look forward to hearing what he has to say.

The Earl of Mar and Kellie: My Lords, I support the amendment. It is important that the Channel Tunnel Rail Link, or High Speed 1, should be incorporated wholly into the public railway network in a uniform fashion because I hope that one day we will have a high-speed network, and I do not want the precedent to occur whereby the high-speed lines are for some reason governed differently.

Lord Bassam of Brighton: My Lords, I am grateful to all noble Lords who have made a contribution to this debate, which I fully acknowledge is an important one. It has been the main thrust of concern and discussion on the Bill as it has gone through its various stages, so it was no great surprise to me when the noble Lords, Lord Bradshaw and Berkeley, later
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joined by the noble Lord, Lord Hanningfield, put this amendment down for further discussion today. They have been commendably clear in terms of what they are after, and I congratulate them on that. It is very welcome that we can clear the air on this. I hope that noble Lords will bear with me; I have a lengthy series of points to make, but I ask them to follow through the argument. I shall also try to answer some of the points that have arisen during the course of their contributions.

7 pm

As explained, the amendment would subject High Speed 1 to the same regulatory scrutiny by the Office of Rail Regulation as the national rail network. I disagree with the suggestion of the noble Earl, Lord Mar and Kellie, that a separate system of regulation somehow separates the line in discussion from the rest of the network. That point is not entirely relevant to the debate. We have had much discussion on this, but I am happy to expand on the points and provide some of the assurances that noble Lords seek.

Noble Lords are concerned that the new railway falls outside the scope of regulatory arrangements which cover the national network. I clarify that the Bill makes only minor changes to the existing situation. It does not exempt High Speed 1 from regulation. High Speed 1 has never fallen within the regulatory regime in the Railways Act 1993 as a result of provisions within the CTRL Act 1996. This Bill is more of the same, with some minor differences.

In Committee, we discussed the dining habits and the dining partners of the noble Lord, Lord Bradshaw. We have been joined today by the dining partners of the noble Lord, Lord Berkeley.

Lord Berkeley: My Lords, I did not have lunch, tea or any other meal with him.

Lord Bassam of Brighton: My Lords, I apologise; that is what I thought I heard. The noble Lords have regaled us with their reflections on conversations that they have had, perhaps at lunch, perhaps on other occasions. When they got stuck into the hors d’oeuvre, and before the noble Lord, Lord Bradshaw, got round to sipping his nicely chilled Chablis, there was clearly a meaningful conversation to be had with a potential purchaser of High Speed 1, who indicated that it would be happier with regulation by the Office of Rail Regulation rather than with regulation by the Secretary of State. I hope that fair consideration was given to the issue in those congenial discussions, because it is clear that it requires some thinking through.