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It may assist the Committee to note that Amendment No. 11 to Clause 35 and Amendment No. 18 to Clause 36 are simply consequential on the insertion of the second proposed new clause following the deletion of Clause 23, and that Amendment No. 36 to Clause 60 and Amendment No. 38 to Clause 65 are simply consequential on the deletion of other clauses. I beg to move.

Lord Hanningfield moved, as an amendment to Amendment No. 3, Amendment No. 4:

The noble Lord said: I also speak to Amendment No. 8. My amendments are a reaction to the new clauses proposed by the Minister. As he outlined in considerable detail, the clauses expand the objectives of the ORR and place a duty on it to publish reports. I shall address each new clause in turn. He asked us not to press our amendments but we should put forward our reasons for tabling them so that we can debate the issue.

The first new clause proposed by the Minister extends the primary objectives of the ORR to facilitate the construction of Crossrail—which I agree is important to have in statute—so that there is clarity of purpose, responsibility and accountability relating to the ORR’s involvement in the project. Although I agree that that is important, at what cost will the Minister be prepared to allow the ORR to achieve this specific objective, especially when the other, more general, objectives relate to protecting the interests of passengers, promoting the use of the rail network and promoting efficiency and economy?

I am concerned that adding a specific, albeit temporary, objective for the ORR to facilitate the construction of Crossrail will lead to that objective being prioritised over the ORR’s more general duties. The Crossrail project will be high-profile because of its size and cost and there will be pressure on all involved to deliver. However, that should not be at the cost of other rail users and operators.

The amendment aims not to remove the new objective from the list but, instead, to ensure that it is balanced against the ORR’s wider duties and will protect the interests of passengers and rail operators from the undoubted disruption to services during Crossrail’s construction. Although it is important that we deliver this crucial project—we all agree on that—we must not deliver it at a cost to the existing rail network, on which our citizens and economy undoubtedly rely.

On the second new clause suggested by the Minister, I applaud the Government for their intention and commitment to increase transparency and reporting—an intention that I hope the Minister remembers when we come to my proposed amendment to Clause 66. As the Committee will see from my amended version of the clause, I do not oppose the purpose or intention; my only frustration is with frequency, on which the noble Lord has commented at length. However, at what point should we expect to receive these reports? The Minister’s amendment would mean that it would be down to either the Secretary of State or the ORR to choose, but I find that level of uncertainty unacceptable.

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My amendment would therefore place a direct duty on the ORR to publish an annual report regarding its past performance and future strategy to achieve the new objective imposed on it relating to Crossrail.

The aim of my amendment is simply to clarify when the ORR must publish a report relating to its Crossrail activities. On a massive £16 billion, seven-year project, it is important that adequate checks and safeguards are in place. The current wording, “from time to time”, lacks definition and clarity, and provides no reassurance that regular updates to Parliament, the rail industry and the public will be given by the ORR. I hope that the Minister and other Members of the Committee will agree that this is a more pragmatic approach, and support my endeavour for consistent and timely reporting. I beg to move.

3 pm

Lord Berkeley: The two amendments tabled in my name and that of the noble Lord, Lord Bradshaw, and the amendments tabled by the noble Lord, Lord Hanningfield, have enabled this debate. I have no problem with the two major government amendments to which my noble friend spoke, but I have a problem with some of his statements that seem to backtrack on the industry processes policies that I thought we had all agreed a long time ago. I am pleased that the Government have withdrawn these clauses about the access option and the regulator, which caused enormous problems with the industry.

However, I get the impression that there is still some wishful thinking in the department over how this issue is interpreted. My noble friend mentioned a judicial review. I do not think that a judicial review has been sought by anybody in the industry since privatisation nearly 15 years ago, but I may be wrong. He also mentioned blocking rights. They came up in the Select Committee and the conclusion was that industry processes could be used to resolve them. I hope that the Government mean what they say about using industry processes. The text of my noble friend’s two amendments is fine, and I hope that his statement, which I shall have to read in great detail, is not trying to put the clock back to recover a few things that the Government let go in these railway clauses.

It could be argued that the first government amendment is unnecessary because the regulator has a duty to consider all matters in respect of railways under Section 4 duties. I know that it was included for the Olympics. My understanding from the ORR is that, in practice, these things do not have much effect because it has to consider everything anyway, so why put it in? In future, we will talk about the west coast main line project. It will probably cost about £10 billion as opposed to the £16 billion for Crossrail, but it is still a very big project and nobody has said that there must be special clauses saying that the regulator must look at the west coast main line with or without the effect of the other operators, so I am not sure why this is needed. Perhaps I am arguing against my amendment, but at least we have had an opportunity to talk about it.

Turning to the second government amendment, what is going to be in this report? My noble friend has not said, and it is not in the amendment. My amendment requires the report to include the effect on other

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operators, which any normal report on project progress would include. What will be in this report? Is it that TfL and the Government have agreed how to finance it, that construction has started or that there is a new regulatory regime? Is it going to be about the finance? It is nice to have a report, but what is so different about this from the rest of the railway? Is it a report by the ORR explaining whether it is meeting its objectives? I am sure that that report would be very short and say yes. If my noble friend can give an outline of what will be in this ORR report, I can look further and see whether I think it is all right.

Lord Bradshaw: Like other Members of the Committee I will read carefully what the noble Lord, Lord Bassam, said. I do not believe that the Office of Rail Regulation is a soft touch; no one in Network Rail regards it as such. I am concerned that the Government allow it to be as independent as possible because then it will fulfil all the duties to which the noble Lord, Lord Hanningfield, referred. If responsibilities are blurred with the department, there is a danger that something might be left out. I shall be interested to read what the Minister has said and will perhaps comment more fully having digested it.

Lord Bassam of Brighton: I appreciate that I spoke at some length and it was not easy to follow. It is Thursday afternoon and noble Lords have been hard at it as legislators all week, so concentration can lapse, eyes can close, and so on. I moved through the arguments carefully, but the noble Lord, Lord Bradshaw, has got it right when he says that he will read what I said very carefully. That is very wise—not because I said it, but clearly because we had to give a lot of detailed explanation, which is not always easy to follow.

The noble Lord, Lord Hanningfield, made points that I expected him to make, and I understand the argument that Crossrail should not unduly disrupt the running and development of the rest of the network. The noble Lord has his special position of protecting all interests relating to Essex—for which I have a lot of affection, as the noble Lord knows—so I expected him to argue in those terms. He made some important points, and I reassure him that there should be no cost to other operators for the new objective. The ORR will have to balance its objectives carefully. There is no overriding priority given to the new objective; it is simply there. That should ensure that the ORR does not try to meet its objective at any cost. That is not our intention.

My noble friend Lord Berkeley, as ever, is a supportive sceptic. That is his role, which he is very good at, and I congratulate him on it. When he takes the time to read carefully what is on the record about the replacement of clauses, he will see that we have set out a careful story, and I am sure that he will appreciate and understand better how we see this working. My noble friend questioned the duty of the ORR, the nub of which was what would be in the reports. It is what it says on the tin. It is in the proposed new clause, which states:

which means when the timing is right and proper and there is something valid to report—

That is pretty clear in its intent. It is a clear statement.

Lord Berkeley: Will my noble friend give a quick example? It may be clear to him but it is not quite clear to me.

Lord Bassam of Brighton: If an event requires thinking through and digesting, of course the ORR will want to report on it and draw conclusions from it—if, of course, it has some impact on or import for some parts of the network to which it is relevant and on the delivery of passenger services. The new clause is intended to cover those sorts of things.

Lord Hanningfield: I agree with the noble Lord, Lord Bradshaw, that we will want to read the Minister’s remarks in some detail. If we need to, we will comment on them further at the next stage. However, I am grateful to the Minister for giving some reassurance, albeit not cast-iron reassurance, about the disruption of other services, particularly those into London, while Crossrail is being constructed. That has concerned us all during the Crossrail debates, so I was grateful for his comments on that.

I am disappointed that there is no time limit on or suggestion of when the ORR reports will be delivered, but I understand why the Minister said what he did. Again, we will read his comments. I beg leave to withdraw the amendment.

Amendment No. 4, as an amendment to Amendment No. 3, by leave, withdrawn.

[Amendment No. 5, as an amendment to Amendment No. 3, not moved.]

On Question, Amendment No. 3 agreed to.

[Amendment No. 6 had been re-tabled as Amendment No. 8A.]

Lord Bassam of Brighton moved Amendment No. 7:

(a) what it has done, or proposes to do, to further the objective given to it under section (Objective of ORR in relation to Crossrail);(b) how it has exercised or proposes to exercise its functions in connection with the operation of Crossrail passenger services.

[Amendments Nos. 8 and 8A, as amendments to Amendment No. 7, not moved.]

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On Question, Amendment No. 7 agreed to.

Clause 22 agreed to.

Clauses 23 to 34 negatived.

Clause 35 [Award of Crossrail franchises to public-sector operators]:

Lord Bassam of Brighton moved Amendment No. 9:

“(a) which relates wholly or mainly to the provision of one or more Crossrail passenger services, or(b) which relates wholly or mainly to the provision of one or more other services for the carriage of passengers by railway where—(i) the services run wholly or partly on the route of Crossrail, and(ii) the services are likely to be subject to substantial disruption because of the construction of Crossrail.”

The noble Lord said: I will not take quite so long this time, but I will take a little time. Clause 35 disapplies the prohibition in the Railways Act 1993 on a public sector operator acting as a franchisee, which potentially provides flexibility to accommodate a public sector operator of Crossrail passenger services, if that is considered desirable. This group of amendments, consisting of Amendments Nos. 9, 10 and 12, extends that flexibility in two respects that I shall explain in a moment.

3.15 pm

Constructing and bringing Crossrail into operation will be challenging, and flexibility is required to achieve that in the least disruptive way possible. Conventional private sector franchises are best suited to stability, although they can and do cope with a degree of change. However, the point will come in relation to the Crossrail project when, for a period, it may be more practicable and cost effective to manage the passenger train operation in the public sector rather than the private sector.

It may help if I give five key examples that are likely to be encountered in sequence as the project progresses. The first example is in the construction period, during which there will inevitably be some disruption for suburban services, which might be better managed as part of the project. This example relates to the amendments, which I shall return to in a moment.

The second example is later during construction, but before the new central tunnel section is opened. It may be useful to commission the new Crossrail rolling stock by using it for some existing suburban services that will later be subsumed by the Crossrail services, which would enable some trialling.

The third example is once Crossrail services start running through the central tunnel section. The services are likely to be phased in, so there must be close co-ordination with the phasing out of the suburban services that Crossrail services replace.

The fourth example is that ancillary services may sensibly be operated along with Crossrail services. This example also relates to the amendments, to which I shall return in a moment.

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The final example is the stabilisation period. Since Crossrail is an entirely new service, it will only be during this period that performance data can be produced on which a competitive franchising process is based. Such a competition in the phasing-in and stabilisation periods could result in franchise bids factoring in at least some element of project risk, which may be better managed as part of the project delivery.

I return to the amendments, which, as I said, do two things. First, proposed new subsection (1)(a) enables ancillary or complementary services to be included within a Crossrail public sector train operation. It does so by allowing a Crossrail public sector franchise to be mainly, rather than exclusively, for Crossrail services that run through the central tunnel. That is to aid franchise mapping, so as to avoid services closely related to Crossrail services becoming orphans because they do not logically fit into another group of services that are franchised.

Secondly, proposed new subsection (1)(b) provides for a public sector operation for services that are likely to suffer substantial disruption because of the construction of Crossrail. Those services might be those where significant compensation would have to be paid as a consequence of the disruption to some of the services in the franchise. Better value for money may be achieved by managing those services as part of the overall project delivery. Whether this is done, and at what time, would need to be decided by the Secretary of State, taking account of not just the project’s interests but also wider policy in relation to franchising.

Once the likelihood of disruption to those services has subsided, or the interim Crossrail public sector operation is no longer considered useful, then the expectation is that the services will be procured from the private sector, on current plans, by means of a concession let by Transport for London. However, the department and TfL have agreed to review whether it would make better sense for the DfT rather than TfL to be the franchising authority. For a DfT-let franchise, the expectation is that the Crossrail services would also be procured from the private sector.

Nevertheless, flexibility is retained in the clause in case some future circumstance applies—we are talking here about unforeseeable events more than 10 years hence—that meant that the Secretary of State found it necessary to take on the franchise and to operate it in the public sector for a time.

The clause, and this group of amendments to extend the flexibility that it provides, is a practical and sensible measure to help ensure that Crossrail is constructed and brought into operation in a way that is both efficient and effective. I beg to move.

Lord Bradshaw: I wonder whether I might reply to this amendment and at the same time, with the leave of the Committee, deal also with Amendment No. 13, which relates to the same subject and could probably have been grouped with Amendments Nos. 9, 10 and 12.

The Minister referred to franchising the services. I heard what he said about the fact that there might need to be an interim public sector operator, although I think that that would be immensely complicated to arrange. However, I will not comment on that further. I wanted to take the opportunity of deciding whether

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Transport for London is letting the franchise and how that affects the services that use the rest of the network.

Transport for London now lets some franchises for London Overground and it makes a far better job of doing so than the Department for Transport, having put in place a sensible structure. Anyone who has used those overground services will know that they have improved immeasurably since Transport for London took them over. However, it begs the question of how services which may be franchised by Transport for London are to fit in with the rest of the network.

Perhaps I may draw attention to a really serious problem—and I assure the Minister that I have taken the widest possible soundings from the most senior people in the industry. The franchise periods being set by the Department for Transport are ludicrously short if one of the objectives is to draw investment into the system. I instance the new South Central Trains franchise—I hasten to add that I have not discussed that with the managing director—which is for five and a half years. Bearing in mind that the franchising will operate assets that will last for 30 or 40 years, it beggars belief that the Government consider this to be an efficient system. The Welsh Assembly has agreed with Arriva Trains Wales a 15-year franchise, which is scarcely enough to get a payback but it would bring in its train modest improvements. Merseyrail, which has let its own franchise, is a 25-year franchise, and Chiltern Railways was originally let as a 25-year franchise.

In all those cases, there has been substantial investment not only in hardware but in recruiting and training the most competent managers. With a very short franchise term, all the best people will be on the lookout to see where they can go to get away from the franchise reletting process, which is entirely process-driven in the department and does not reflect the interests of the staff, the management or, above all, the passengers. I hope that the Minister will have something further to say about this because I believe that it is a major problem in the industry.

Lord Berkeley: I should like to go back to the amendments in the name of my noble friend. He talked about the amendment allowing the public sector to take over the franchises of lines on which Crossrail trains would run. That, to me, means that the Government would take over the operating of all services on the Great Eastern Railway and First Great Western lines.

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